The Relationship Between Governments and Government-Controlled Corporations
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The Empire Club of Canada Addresses (Toronto, Canada), 25 May 1964, p. 1-22
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Bridges, The Right Honourable Lord, Speaker
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A joint meeting of The Empire Club of Canada and The Institute of Public Administration of Canada.
The address divided into two sections: Nationalized Industries, and the other bodies in the range between the Nationalized Industries and Government Departments (the Intermediate Band) in Britain. First, the Intermediate Band. The structure of Government: a brief history. Examples of the organizations in the Intermediate Band. Reasons which have led to a special type of organization being adopted. Four extremely diverse bodies not covered by what the speaker explains. The relationship between the Government and the industries nationalized after World War II: coal, electricity, railways, gas, air corporations (the last nationalized before World War II). The general pattern of the nationalization Acts passed in the years 1945-1949. One important change in 1961. Some examples and history to show the powers given to the nationalized industries and how that was brought about. A consideration of how that has worked, looking at the relationship between the Minister and the Boards responsible to him, the relationship between the Boards and Parliament, and the relationship between Parliament and the Boards. Some problems and concerns. The main forces which have been at work in the last 20 years. What Canada might learn from the British experience.
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25 May 1964
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English
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Full Text
MAY 25, 1964
The Relationship Between Governments and Government-Controlled Corporations
AN ADDRESS BY The Right Honourable Lord Bridges, P.C., G.C.B., G.C.V.O., M.C., F.R.S., CHANCELLOR, READING UNIVERSITY
JOINT MEETING OF THE EMPIRE CLUB OF CANADA AND THE INSTITUTE OF PUBLIC ADMINISTRATION OF CANADA
CHAIRMAN, Lt. Col. B. J. Legge, E.D., Q.C. CHAIRMAN, TORONTO REGIONAL GROUP THE INSTITUTE OF PUBLIC ADMINISTRATION OF CANADA
INTRODUCTION
The President, The Hon. D. R. Michener

MR. MICHENER:

In presenting our distinguished guest, Lord Bridges, to this audience I can assure him that he is among friends and admirers who are delighted that he has given us this opportunity to meet him in person.

The members of the Institute of Public Administration have long known of him as one of the shining lights of their profession who, as Sir Edward Bridges, served his country throughout the Second World War in that most crucial office of Secretary to the War Cabinet.

Of his work in this capacity his Prime Minister, Sir Winston Churchill, wrote words which I cannot forbear to quote even though they will not be new to many and probably haunt our guest wherever he goes. Speaking of the fusion of the all out war of military and non-military problems, he said, "That no friction occurred between the Military staff and the War Cabinet staff was due primarily to the personality of Sir Edward Bridges, Secretary to the War Cabinet. Not only was this son of a former Poet Laureate an extremely competent and tireless worker, but he was also a man of exceptional force, ability, and personal charm, without a trace of jealousy in his nature...... In these parts we accept Sir Winston's every dictum.

From 1946 until his retirement from the Civil Service eleven years later, Lord Bridges was Permanent Secretary to the Treasury, which Sir Winston might have, but did not, describe as the Civil Service post which there is nothing else higher than. Outside of the Civil Service, and both before and since that period of his life, Lord Bridges' careers have been equally notable.

The members of The Empire Club of Canada, in fact all of us, honour Lord Bridges for his gallant military service in World War I before he had finished his undergraduate work at Magdalen College. We admire his amazingly varied and energetic service since his retirement, to architecture and the arts generally, to nuclear science and to the universities, to mention only some of his present interests and activities.

Although Lord Bridges is Chancellor of Reading University and an honorary LL.D. of Cambridge, Oxford men throughout the world have good reason to bless him for lifting the weatherbeaten faces of the old colleges and buildings of Oxford and restoring to them the original glory of their golden sandstone. He was chairman of the Oxford Historic Buildings Appeal which raised about 21/a million pounds sterling for this purpose, and is now chairman of the trustees who are supervising the ten year program of rehabilitation.

I don't know when he finds time to sit, even in the House of Lords.

If he will permit me to use his own words, they will provide the clue to this seemingly limitless capacity to serve and to build:

"As I get older," he said, "I feel most strongly what an appalling waste of time it is ever to be bored, when there are so many things of absorbing interest in the world."

May I now present The Rt. Hon Lord Bridges of Headley and ask him to address us. I was delighted when it was suggested that one of my lectures should be on The Relationship between Governments and Government-controlled Corporations.

This subject presents many facets of interest. But I was soon daunted by the wealth of material. At one end of the scale in our country there are the great nationalized indus tries (coal, gas, electricity, railways and air corporations) and a few other very large public corporations of a different type, such as the B.B.C. or the Atomic Energy Authority.

Between them, and Government Departments, there is a great array of organizations which differ-some slightly,. others to a considerable extent-from Government Departments organized in the normal way.

What should be my starting point? How should I avoid losing my way? In this country you have your Financial Administration Act 1951 which divides Crown Corporations into three groups. We have no such Act. Indeed there is no single term to describe this varied organizational fauna.

I shall divide my lecture into two sections. I shall devote most of my time to the Nationalized Industries. But I will say a word first about the other bodies in the range between the Nationalized Industries and Government Departments which, as a convenient shorthand, I shall call the Intermediate Band.

I shall confine myself to describing the position in my own country but I hope that what I say may bring to light some issues which may interest you.

One is apt to think of Government Departments organized on orthodox lines as being the normal, and to regard every other way of doing Government business as a deviation probably a fairly recent deviation from the normal.

This is misleading. In my country until 100 or 150 years ago we were governed through a very large number of small, separate offices, usually taking the form of Boards or Com missions, each charged with a very narrow range of duties: some dealing with what we would today call Central Government; some with Local Government, e.g., paving, lighting, police, some delightfully frivolous, e.g. the licensing of Hackney coaches to which the poet Congreve was appointed in 1695 by the Chancellor of the Exchequer "being desirous to place so eminent a wit in a state of ease and tranquillity." But as Parliament became more democratic, Ministers more busy, and businesslike, most of the little Boards were absorbed into Government Departments to make a more compact Administration. Examples are the Inland Revenue and the Ministry of Agriculture.

But this process of tidying up or tidying away Boards and Commissions did not mean that no new Boards or Commissions were set up.

English history presents endless examples of new Boards or Commissions being set up, to deal with some special abuse, or to undertake some new policy which was regarded as specially important or which needed to be handled in an atmosphere free from political interference. But the problems which seemed so difficult at the outset, after a while often ceased to be regarded as justifying a special type of organization and have been absorbed, as another cog, into the general machine of government. This process has been repeated indefinitely. It is still going on today.

I shall now give a few examples of the organizations in the Intermediate Band, which I suspect add up to at least 200. All I can do is to illustrate, with a few examples, the reasons which have led to a special type of organization being adopted.

The underlying motive is nearly always to secure a greater degree of freedom than is possible in a Government Department: either to remove some question from the ambit of party politics, or to make possible a different type of administration.

The oldest device for de-politicalization is, I suppose, to remove salaries from Votes and put them on the Consolidated Fund, as was done for our Judges centuries ago. This was done also for the Comptroller and Auditor General and also for the members of the National Assistance Board, who administer relief outside the scope of State unemployment and pension schemes. But this device is rather outside the scope of this lecture.

We have in the last half century devised other, much simpler, less formal means of securing a substantial degree of independence by what is no more than a convention. The University Grants Committee until this year was directly responsible to the Chancellor of the Exchequer. The Chancellor settled direct with the Committee the total sum which he could grant to them. This was a decision taken by a Minister. But it has always been left by convention to the . Committee to decide themselves how they would allocate between particular universities the global grant approved by the Chancellor.

The financing of our cultural institutions is arranged on rather the same basis. With two exceptions, all our national museums and galleries have their own Boards, most of whom are appointed by the Prime Minister. Then we have our Arts Council (rather like your Canada Council) which provides subsidies for opera, ballet, symphony orchestras, the visual arts and so forth. The funds for the Museums and Galleries and for the Arts Council are provided by the Exchequer, but we have established a convention whereby Ministers do not interfere in the allocation by the Arts Council of their grant, or in the use made by the Board of each Museum or Gallery of its purchase grant.

Culture suggests the British Council. It has a Royal Charter, and operates almost entirely on funds provided by Government. It is controlled by a fairly large Executive Committee on which some Ministers are represented. The reason for this arrangement is that while the Government believes strongly in the Council's work, it is agreed that its activities should neither be, nor appear to be, under detailed Ministerial control.

The layout of our scientific organizations is at present under review and I shall not go into details. Some of these organizations draw their funds from the interested Govern ment department. But two very important bodies, the Medical Research Council and the Agricultural Research Council, receive grants in aid direct from the Treasury. These two Councils are responsible for the policy pursued in medical and agricultural research and for how the money is spent, subject to a very general over-all Treasury control. This arrangement stems in part from the view that you will get the best results from scientific research if you allow as much freedom as possible to the experts in charge of the work.

Then there is a very large group of organizations where it is important to use highly skilled professional advice and experience in some branch of Government work. A device adopted here is to incorporate in what would otherwise be regarded as a Government Department, a Board of professional persons who direct the work of the Department under the general guidance of Ministers. Sometimes certain powers are delegated to the Board, which thus acts in some sense as a buffer between the Government and the interest concerned. Three examples of this would be;

(a) The Export Credits Guarantee Department which has a statutory Advisory Committee under independent Chairmanship;
(b) The War Damage Commission set up during World War II which was given considerable discretion to settle various issues which arose in handling bomb damage claims. (This year it is being absorbed into the Inland Revenue Department.)
(c) The Public Works Loan Board which handles under general direction from the Treasury the provision of loans for capital purposes for local authorities which cannot raise money on their own credit.

Coming rather nearer to the nationalized industries, the execution of some of our agricultural policies rests on a number of statutory marketing boards outside the Civil Service. Eight producer-controlled marketing boards were set up to stabilize and regulate the marketing of the farm products with which they are concerned, e.g. milk, eggs and potatoes, in accordance with the Government's agricultural policies. They are, however, responsible, especially for their commercial operations, only to the farmers who elect them. Those of the boards which disburse subsidies do so as the Government's agents under agency contracts, and the producer prices of which those subsidies form part are determined by Ministers. But in other respects the Government can control these boards only on public proof of an abuse of authority. Here the main motive for having separate Boards or Commissions is administrative convenience. The work is quite different from normal Civil Service work and it is easier and probably more efficient to hive it off to separate bodies. At this point I thought that I would stop and give no more examples-at once then came into my head the following four extremely diverse bodies not covered by what I have said.

The Bank of England-surely the most important of our nationalized corporations. But I do not need to tell you what it does or how little it was changed by being nationalized.

Trinity House-which could be described rather naughtily as the most ancient, glamorous and glorious of all public utilities.

The Race Course Betting Control Board-the indirect offspring of the attempt of a Chancellor of the Exchequer, 40 years ago, to tax bookies; and The National Stud which resulted from a rich patron of the Turf leaving his Stud to the Nation.

So, you see, completeness and reasonable brevity just cannot be reconciled.

So much for examples. You may ask whether it is an advantage to have this large assortment of bodies conforming to no general pattern.

It is of course wildly untidy, often illogical, and impossible to describe. But it has made it possible to tailor the organization to meet particular needs, and as a result to make the administration acceptable to those conecrned. But it is fair to add that the degree of delegation of powers to Boards or Commissions in the Intermediate Band does not usually concern very controversial matters.

On practical grounds, I doubt whether there is much to find fault with in this part of the field, save the difficulty of making it comprehensible.

I come now to the most important part of my subjectthe relationship between the Government and the industries nationalized after World War II. These are coal, 1946; electricity, 1947; railways, 1947; gas, 1948; I shall include the air corporations, although these were nationalized before World War 11.

To simplify the story, I shall not deal with the iron and steel industry, nationalized in 1949, and denationalized in 1953, nor with the road transport, nationalized in 1947, and also denationalized in 1953.

I shall not set out the powers conferred on the Minister in regard to each industry. Ignoring minor variations and basing myself on the Act which nationalized the coal indus try, the general pattern of the nationalization Acts passed in the years 1945-49 is as follows:

(a) The property of the industry is vested in the Board, the members of which are appointed by the Minister for fixed terms. (Serving civil servants have not been appointed to these Boards, but some retired civil servants have been appointed.)
(b) The Minister may give general directions to the Board as to the exercise and performance of its functions, in relation to any matter affecting the national interest.
(c) The Board has a duty to make both ends meet, taking one year with another.
(d) Provision of capital finance depends on the approval of the Minister and the Treasury.
(e) The Minister can ask for and obtain such information as he requires.
(f) Besides general powers, the Minister has specific powers in regard to particular matters. These vary somewhat from industry to industry: but there are certain common themes. Thus most public corporations are required to consult the Minister about big programmes of reorganization or development, also such matters as training, education and research.
(g) Accounts and Reports are submitted to the Minister and presented to Parliament.
(h) The auditor is appointed subject to the Minister's approval.
(j) It was understood that all the Boards would have commercial freedom to fix prices of the commodities, or services which they sold, safeguards for the consumers' interest against the risk of a monopoly being provided by Consultive Councils.
(k) Area Boards. From the outset the Gas Industry was decentralized far more than the other nationalized industries. Its twelve Area Boards were almost autono mous as regards manufacture and supply of gas. The organization of the Electricity Industry was remodelled in 1957 into the Central Electricity Generating Board, and twelve Area Electricity Boards responsible for distribution.

Only one really important change has been made in these powers. In April 1961 the Government published a White Paper on the Financial and Economic Obligations of the Nationalized Industries (Cmnd. 1337). In this paper the Government announced their intention to set financial targets for the nationalized industries-in several cases in the form of a percentage rate of return on the new capital invested in them. This would act, both as a means of financial control, and of judging the merits of capital requirements.

All the nationalized industries now borrow direct from the Exchequer; and their demands for new capital are an important part of the nation's Public Investment program. For the last four years these have been the subject of an Annual White Paper and of a debate in Parliament.

But this broad summary of powers gives very little clue to general ideas in the minds of those who were responsible for framing these schemes, or as to the kind of relationship which they wished to bring about between the Boards, the responsible Minister and Parliament. This means going back a bit.

In the 1930's there was a gradual evolution of political opinion in both the main political parties in favour of an autonomous public corporation as the model to be adopted for industries or activities to be brought under public control. Two examples contributed to this line of thought.

The British Broadcasting Company was set up in 1922 with very limited aims-to acquire a licence from the Postmaster General to create and operate certain stations as a public utility service to the public by means of wireless telephony and telegraphy. The B.B.C. was from the outset managed by Lord Reith (as he later became) as a public corporation fulfilling an important public service; and in January, 1927, was established as a Corporation by Royal Charter. Very limited powers were assigned to the Postmaster General, who described them as follows:

In the ordinary matters of detail and day-today work the Governors are absolutely masters in their own house. . . . As regards matters of general policy . . . I am prepared to take a certain measure of responsibility because-of course-we must retain a measure of control over larger matters of policy.

The second example is the London Passenger Transport Board. Its members were appointed not by a Minister but by five appointing trustees. The Minister was given no general powers of direction but had certain limited powers in regard to specific matters.

The Act setting up this Board was passed in 1932 by a Conservative Government, but Mr. Herbert Morrison (Lord Morrison of Lambeth) who had been Minister of Transport in the Labour Government of 1929-31, was its progenitor and had a lot to do with converting his party to the public corporation idea. "The Board must have autonomy and freedom" (so Herbert Morrison wrote) "in business management. It must not only be allowed to enjoy responsibility; it must have responsibility thrust down its throat."

It was implicit in the idea of an autonomous corporation that the Minister responsible for it should not be liable to. answer questions in Parliament on detailed matters of ad ministration, for this would result in a degree of interference inconsistent with commercial management.

These, then, were the powers given to the nationalized industries, and the conception on which these powers were based. How have they worked? This is best considered under two heads: the relationship between the Boards and Ministers and the relationship between the Boards and Parliament.

On the relationship between the Minister and the Boards responsible to him, I cannot do better than quote the account given by Herbert Morrison in his book Government and Parliament.

Clearly it is desirable [he writes] that the Minister should keep himself familiar with the general work of the Board or Boards with which he is concerned. It is wise for him with his Parliamentary Secretary and principal officers concerned from time to time to meet the Chairman and, indeed, the members of the Board, to discuss matters of mutual interest either formally or informally. On such occasions both the Board and the Minister will be conscious of their legal rights: the legal right of the Minister to give general directions or to withhold approvals, and the legal rights of the Board within the field of day-today management; but it is also desirable that such discussion should be free, frank, forthcoming and co-operative. It is well that the Minister should have a sympathetic understanding of the difficulties and problems of the Board and should not wish needlessly to harass or humiliate them, otherwise he might unduly damage the Board's sense of responsibility to the nation which is an obligation upon them and a public asset. Similarly, the Board has to understand that the Minister may have to answer criticisms in Parliament and that he is not bound to defend the Board unless he understands its position and thinks that it is right. Therefore, these informal discussions between the Minister and the Chairman frequently take place and in themselves are good. It is very necessary, however, that the Minister should not be drawn into acquiescence in policies which he would find difficult to defend in public, and that a Board should not take a course which it believes to be wrong and against the interests of the undertaking or the public merely because the Minister asks it to oblige him. The Board has a perfect right to say to the Minister, "Give us a general direction in writing which will be published and we will obey, but otherwise we are sorry that we cannot act as you would wish." What is wanted is friendly co-operation without prejudice to the rights and responsibilities of either the Minister or the Board.

You see the idea: free, frank and friendly discussion about everything about which either party wants to discuss, avoiding detail and keeping to issues of policy; but each party being fully conscious of the responsibilities of the other party.

This all sounds very sensible, jolly and matey. But it has been described as "old boy basis" and has occasionally been complained of on this account. Thus there have been occa sions when Members of Parliament have felt that a Ministry may have persuaded a Board, on some matter not within his powers, to come to a decision different from that which the Board would have reached if left to their own judgment.

For example, for reasons of policy, the Government may have required a nationalized industry to carry out some service which involves a loss, which the Board of the indus try would not have incurred of its own judgment. It has been urged that in such cases the right course would be a State subsidy to meet the loss.

Another instance is the extent and the timing of increases in charges. Railway fares are an example. Here the Government has conflicting interests: the size of the railway deficits and the effect of an increase in fares on wages policy.

These suspicions and difficulties were for a time rather a sensitive point. But they have been lessened since the issue of the White Paper on the Economic and Financial Obliga tions of the Nationalized Industries in 1961, and have also been eased by the work of the Select Committee mentioned below.

Now I turn to the relationship between the Boards and Parliament. Here I must summarize the events of the last 15 years on two points-first parliamentary questions; secondly the right of Parliament to enquire in a more comprehensive manner into the way in which these industries were being run. In effect, this has meant the proposal to have a Standing Select Committee to enquire into the nationalized industries.

Parliamentary Questions. These can be put to Ministers only on public affairs for which they are responsible. Given the very general but rather vague terms in which the powers of Ministers responsible for the nationalized industries have been defined, there has been much doubt as to the matters affecting the Boards on which questions to Ministers were admissible.

This proved to be very controversial. In early days no doubt the controversy was fanned by political opposition to nationalization. But M.P.'s generally have resented not being able to pursue matters which affect their constituency by the usual weapon of parliamentary questions: while Ministers have throughout been determined that the autonomy of the Boards should not be sapped through agreeing that they should answer in Parliament detailed questions of administration.

In support of this stiff line about Parliamentary Questions, there has been talk of the Boards having M.P.'s breathing down their necks; or of the impossibility of administering the Boards in the full glare of publicity.

There have been many debates about this in Parliament since 1947. A rather more liberal ruling than that previously in force was announced by the Speaker in June, 1948, of which the main provision was as follows:

. . . I am prepared, if it is generally approved, to exercise my discretion to direct the acceptance of questions asking for a statement to be made on matters about which information has been previously refused, provided that, in my opinion the matters are of sufficient public importance to justify this concession.

This rule still operates.

But Parliament was not satisfied and in 1961 an Ad Hoc Select Committee was set up with double-headed terms of reference, the first half of which covered the admissibility of Parliamentary Questions.

The witnesses before the Select Committee included two chairmen of Boards of nationalized industries (Lords Hurcomb and Citrine). Both were emphatically against the admission of questions on matters of day-today administration. The Committee recommended no concession on Parliamentary questions, and none was made. This position formally stands unchanged. But, as I will explain later, it has perhaps been eased in other ways.

The same ad hoc Select Committee also considered the wider issue of Ministerial responsibility for the nationalized industries. Two ideas were discussed. One, put forward by Mr. Herbert Morrison, was that there should be periodic investigations of each nationalized industry, say, every seven or five years, by a Royal Commission.

I was among those who gave evidence before this Select Committee and I was asked what I thought of the suggestion. I was against it for the following reasons. Such a Commission might well sit for two years. Another year would be spent in deciding what action should be taken on its report. And one would also have to allow a six months dead period before the Royal Commission was appointed, when everybody would say "better wait for the Royal Commission." This would mean that 31/a out of every 5 years the Board of a nationalized industry would be either waiting for the harrow, under the harrow, or recovering from it. This suggestion did not gain support.

The crucial issue before this ad hoc Select Committee was whether a Select Committee should be appointed in each session of Parliament (in effect a permanent Committee) to enquire into the Nationalized Industries. It would be modelled on the Select Committee on Estimates, which examines estimates of Government Departments each year.

Most of the evidence given by the nationalized industries was against the appointment of a Select Committee, but much the weightiest piece of evidence came from Lord Hurcomb who said this:

If there was some sort of relationship, not of investigation or probing into financial detail, or in which challenge to its efficiency were the main object, but designed to get to know what the undertaking was doing.... if one could establish that sort of relationship so that the organization did not feel itself perpetually under the harrow, but was having an opportunity of explaining its policy and endeavours, and answering any challenge there might be put to what it had done, including its financial results, I think in a broad way that would be extremely helpful to the organization, and ought to go a long way towards informing the mind of Parliament.... One of the very greatest handicaps under which anyone in my position suffers is that he gets no opportunity of stating his own case or of explaining what his difficulties are direct to Members of Parliament. It is true I meet a great many individually, or I may dine with some group or other from time to time, but one does not have the opportunity of putting before a Committee of Parliament, or a group of Members of Parliament, even the bare facts. It has been borne upon me, if I may say so, without causing offence in any quarter ... that a great many misapprehensions do exist, and perhaps decisions are taken on some supposition of fact which it not correct. A Committee of this sort would, or ought to mean ... that a large number of Members of Parliament would have the opportunity of satisfying themselves and conveying, not by way of attack and of public speech, but by way of suggestion to the organization, the points where they thought something might be going wrong, or, at any rate, would be worth looking into. That would be of great value.

The ad hoc Select Committee seem to have been convinced by this evidence. They recommended that a Select Committee should be appointed by Standing Orders of the House of Commons each session with power to send for papers, persons and records, and that its object should be to inform Parliament about the aims, activities and problems of the corporations and not of controlling their work: and that the staff of the Committee should include an officer of the status of the Comptroller and Auditor General who should be an officer of the House of Commons with high administrative experience; at least one professional accountant; and such other staff as required.

This recommendation was made in 1952. But the controversy was not over. It was not until 41/2 years later that a Select Committee really got to work. And why?

First of all the Government said that they accepted the report, subject to certain comments. But these comments turned out to involve such drastic limitations on the powers to be conferred on the Select Committee that the Select Committee reported after only four meetings that the restrictions imposed on it were so severe that there was nothing it could usefully do.

At long last, a Select Committee was set up with the following, much less restricted, terms of reference:

. . . to examine the Reports and Accounts of the Nationalized Industries established by Statute whose controlling Boards are appointed by Ministers of the Crown and whose annual receipts are not wholly or mainly derived from moneys provided by Parliament or advanced by the Exchequer. They were not-as recommended-given the support of a whole-time officer, of the rank of Comptroller and Auditor General. But after some years this demand has now been happily settled by strengthening the staff assigned from the House of Commons office to serve the Committee.

The Select Committee were given a very broad hint by Mr. Butler, at that time leader of the House of Commons, that their appointment was an act of faith and that much would depend on the good sense and goodwill of the Committee. They were also told that the matters which they could usefully investigate lay between two extremes which they ought to avoid. These were:

(a) matters of day-today administration;

(b) matters of major government, as distinct from commercial policy.

At last in 1957 the Committee got to work. They started off gently by inquiring into a relatively small and fairly uncontroversial Board, namely the North of Scotland Hydro Electricity Board. This has been followed in successive years by reports on the Air Corporations, the Railways, Gas, the National Coal Board, the Electricity Industry and a report published in 1962, summarizing the Committee's main recommendations and the action taken thereon.

Let me now sum up the relationship between Parliament and the Boards. My reason for spending so much time on the controversies in Parliament is to bring out one essential point, that in a Parliamentary democracy, Parliament, if really determined, will get its way about the information it regards as essential about the working of important Boards. These controversies have been hammered out in Parliament, and arrangements have now been reached which are regarded as acceptable and workable.

It is true that the Government has stood pretty firm on Parliamentary Questions. But this does not prevent Members of Parliament from getting the information they require. Admittedly they cannot usually get it in Parliament, where both question and answer would receive the great publicity which attaches to parliamentary proceedings. But today when a Minister refuses to answer a question in Parliament about one of the nationalized industries, his reply will very often be that he is sending the Honourable Member's question to the Chairman of the Board and asking him to reply direct. Again, M.P.'s who write direct to the Chairman of the Board nearly always get the information they want.

Generally, there is no doubt that the work of the Select Committee has enabled Parliament to get to know much more about the working of the nationalized industries. Their reports have contained much valuable information, detailed analyses and many interesting recommendations. In the nature of the case, not all their recommendations have been adopted. But their reports are regarded as helpful by the Ministers and the Department concerned and, indeed, by the Boards themselves.

The act of faith, as Mr. Butler called it in 1952 when agreeing to the setting up of the Select Committee, has fully justified itself. Indeed, my chief surprise is that Parliament has not always found the time to debate these admirable and interesting reports.

When one turns to the relationship between the Boards and Ministers, one asks oneself whether this is the right way to pose the question. What has become of the concept of the autonomous corporation? Is this still today a fair description to apply to these important industries under the control of the Government of a country which has gone far in the direction of economic co-ordination, or has the concept been eroded?

Let me mention a few points which have a bearing on this. First, under an Act of 1945 the Minister of Power has the statutory responsibility of co-ordinating the fuel and power industries of the country. This has meant close consultation between the Minister of Power and the Chairman of the Boards of the Coal, Gas and Electricity Industries over their activities and policies.

Then take the White Paper presented annually to Parliament on Public Investment in Great Britain. This is in two sections. The first covers the Nationalized Industries, the Atomic Energy Authority and the Post Office; the second covers Public Service Investment-Roads, Education, Housing, Water and Sewerage, Hospitals and other investment by Central and local authorities. Figures are given for four years. One past, one current and two future years. The argument of the paper sets out how much the Government thinks should be spent on public investment as a whole, and how the total should be allocated between the different heads. Clearly the capital expenditure of the Nationalized Industries has been integrated into the whole corpus of public investment.

It is worth remembering too that the Government has asked The National Economic Development Council (NEDC -or NEDDY as it is usually called) to do much the same task in general terms for private industry by setting a growth target which is attainable both in physical and economic terms.

Apart from investment, the Government has from time to time taken decisions which of course are within their power of direction on big policy issues. Examples are the de cision that the Central Electricity Generating Board should embark on a large and very expensive program of nuclear energy power stations, as an insurance against the future: or the decision that the Gas Board should import liquid methane, a decision not welcomed in the Coal Industry.

Rather the same line of thought is reinforced by looking at the conditions under which the various nationalized industries have had to operate in the last, say, fifteen years. The Gas Industry has, I suppose, worked with fewest difficulties. It has run on a pretty even keel and I imagine that the Gas Board has operated with a degree of autonomy corresponding pretty nearly to what was envisaged. At the other end of the scale, when it became evident that the Railways could never pay their way, without a big surgical operation, it was impossible for the Government to stand aside from the big social, economic and commercial consequences. In such circumstances the basis of the Act must be regarded as in some sense in suspense until equilibrium has been restored.

Putting all this together, it is clear that since 1945 the direction of the nationalized industries has in important respects rightly and inevitably been brought much closer to those who are responsible for the central direction of the National Economy.

Here again, after a good deal of experimentation a system has been devised which relates the capital demands of the nationalized industries to the needs of the country as a whole.

You may ask what general conclusion my lecture is intended to suggest, and you may perhaps complain that it has been too descriptive and too historical, and that I have done too little in the way of drawing attention to the weaknesses and the strong points of our arrangements.

What I have aimed at doing is to make clear the main forces which have been at work in the last twenty years: the doctrine of the autonomous corporations; the conflict be tween the freedom from detailed control, which this doctrine implies, and Parliament's undoubted rights of examination and enquiry; the relationship between the Government's function of economic co-ordination and the capital demands of the nationalized industries. These are questions about which, to my mind, one learns more from what happens in the clash of events, than from abstract discussion.

The sequence of events which I have summarized show that the arrangements reached after many years are broadly acceptable, and work pretty well. I do not of course suggest that these arrangements have reached finality, or that they are incapable of further improvement. "Democratic institutions are never done. They are living tissue -always a-making."

I have done no more than report the state of the game at the close of play on May 25, 1964. But I hope that the vicissitudes and controversies in my country during the last few years may have been of some interest to you. There is often much to learn from the actions of others-even if we do not seek to imitate them.

Thanks

Thanks of this meeting were expressed by Mr. D. L. Emond, President, Institute of Public Administration of Canada.

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The Relationship Between Governments and Government-Controlled Corporations


A joint meeting of The Empire Club of Canada and The Institute of Public Administration of Canada.
The address divided into two sections: Nationalized Industries, and the other bodies in the range between the Nationalized Industries and Government Departments (the Intermediate Band) in Britain. First, the Intermediate Band. The structure of Government: a brief history. Examples of the organizations in the Intermediate Band. Reasons which have led to a special type of organization being adopted. Four extremely diverse bodies not covered by what the speaker explains. The relationship between the Government and the industries nationalized after World War II: coal, electricity, railways, gas, air corporations (the last nationalized before World War II). The general pattern of the nationalization Acts passed in the years 1945-1949. One important change in 1961. Some examples and history to show the powers given to the nationalized industries and how that was brought about. A consideration of how that has worked, looking at the relationship between the Minister and the Boards responsible to him, the relationship between the Boards and Parliament, and the relationship between Parliament and the Boards. Some problems and concerns. The main forces which have been at work in the last 20 years. What Canada might learn from the British experience.