HL Deb 25 April 1945 vol 136 cc52-60

3.31 p.m.

LORD MESTON had given Notice that he would ask His Majesty's Government whether, in valuing goods under the business scheme under the War Damage Act, 1943, they will take into account any rise in the costs of replacing and repairing goods that has taken place since the date of the damage, or is likely to take place after the war, and whether they will now make early payment of at least part of all claims; and also ask His Majesty's Government to consider amending Section 104 of the War Damage Act, 1943, in order that "deeds" and "documents" (e.g., books of account) may be deemed insurable under the said Act.

The noble Lord said: My Lords, I rise to ask the question that stands in my name. As your Lordships know, the business scheme came into operation on April 17, 1941, but the Government very fairly decided to apply the scheme to those people whose goods were destroyed by enemy action before the scheme came into operation. I understand that compensation is based on the cost of replacement at the date of the damage, and that the Government do not reopen claims solely on the ground that the cost of replacement has increased since the date of the damage. If that be the correct position I most respectfully ask His Majesty's Government to reconsider the matter.

It may be that when the time comes for payment of compensation to be made the price of goods, or of some goods, will have risen by 50 per cent. or even l00 per cent. as compared with prices prevailing at the date of the damage. Moreover, those people who lost their goods in the early days of the war, say in September, 1940, will be at a disadvantage as compared with those who lost their goods at a later date, say in September, 1944. The cost of replacement in September, 1940, was not a great deal higher than the cost of replacement at the outbreak of war. The cost of replacement in September, 1944, was very considerably higher than the cost of replacement in September, 1940, Therefore, when compensation comes to be paid those people who lost their goods in September, 1940, will have been assessed on a lower basis than those who lost their goods in September, 1944, and hence early losers will suffer more than later losers because of the great increases in price. The same line of argument applies to goods badly damaged by enemy action and requiring to be repaired or reconditioned, If it has been impossible to get repairs carried out reasonably soon after the date of the damage, it may be that the cost of repair, owing to the rise in wages and in price of materials, has materially increased by the time repairs are in fact executed. It does appear that in such a case some consideration should be given to people who through no fault of their own have suffered through an increase in the cost of repair.

I now pass to consider another point. A number of people whose goods have been destroyed by enemy action are anxious to receive some substantial payment on account of compensation—that is to say, some amount in advance before the full claim is finally paid. I understand that the technical term applicable to such an advance is an "early payment." I understand the policy and practice of His Majesty's Government on this point to be as follows: Claims assessed at £100 or less are paid at once. Early payment of the whole or any part of claims assessed at more than £100 is not made unless the Government are satisfied either that the repair or replacement of the damaged or destroyed goods is expedient in the public interest or that it is expedient that payment should be made to avoid undue hardship. Expediency in repair or replacement in the public interest is given a fairly wide interpretation. Such, I understand, is the practice of the Government in this matter, and I know that there is a large measure of satisfaction with the manner in which the Government have handled the business scheme.

It is submitted that the Government should now make early payment of at least part of all claims, subject possibly to one proviso—namely, that the claimants are still carrying on business. There are a considerable number of people—who may be called deserving people—who have not as yet received any compensation under the business scheme and who admittedly are not doing work of national importance within the narrow meaning of that term. Let me give a concrete example within my own knowledge, an example which will incidentally also illustrate some of the other points which I have already mentioned. The office of a firm of chartered accountants in the City of London was destroyed by enemy action on May Io and II, 1941, and it was impossible to salvage anything. The firm was covered under the business scheme for £600 and a claim was submitted as follows: Furniture, £390; clients' books and effects, £122; library, £58; stationery, £30; making a claim of £600 in all. The figure of £122 for clients' books and effects was entirely struck out as the books in question—namely, statutory books and so forth; for limited companies—had been used, and not being booksellers the firm of chartered accountants could not claim for this particular item. With the claim then standing at £478 and all vouchers lost to substantiate the prices paid for the furniture, with reluctance the firm of chartered accountants agreed to a depreciation figure of 5 per cent. making the claim £454 2s.—which still remains unpaid, but agreed, by the Government.

In order to illustrate the hardship caused in this case by the rise in prices let me give four examples. The Government have agreed to pay £6 for a steel filing cabinet which was purchased in 1938. In October, 1942, the claimants were able to obtain a similar article for £9 15s. 7d. The Government have agreed to pay £6 for another steel filing cabinet which was purchased in 1938. In November, 1942, the claimants were able to obtain a similar article for £10 17s. 7d. The Government have agreed to pay £35 for a Royal typewriter with a long carriage which was purchased in 1939 at that price. The claimants replaced it in June, 1941, with a thirty-year-old rebuilt machine at a cost of £38. Likewise the Government have agreed to pay £35 for another Royal typewriter which was purchased in 1939 at that price. The claimants replaced it in June, 1941, with a second-hand machine for £45. These claimants, in order to set up their offices again, have had to spend 16o, and this figure would have been considerably increased had not the claimants been able to obtain some furniture from their own personal homes, such as chairs, tables and carpets, for use in their new offices.

The short position is therefore as follows: The claimants have had to spend £160 in order to set up their offices again. The sum of £454 2S. is still owing to the claimants. In this connexion, however, it is only fair to the Government to say that interest at 2 ½ per cent. per annum has accrued on the aforesaid sum and will continue so to accrue until final settlement is made. It is submitted, however, that even the accrued interest will not compensate for the increase in the cost of replacement that has taken place. Last, but not least, the claimants had to work for about three months for nothing on replacing their working papers which were and are uninsurable under the business scheme.

The last remark brings me to the question of amending Section 104 of the War Damage Act, 1943. Section 104 provides in terms that the expression "goods" does not include "evidences of title to any property or right or of the discharge of any obligation, or any documents owned for the purposes of a business." In February of this year the Chancellor of the Exchequer in another place said deeds of property are not insurable under the War Damage Act, 1943. So far as documents owned for the purposes of a business are concerned, I would refer to the case of Hill versus The King reported in The Times of March 2, 1945, which was a proceeding by way of Petition of Right. The suppliant was an insurance broker. On December 20, 1940, his office and furniture and other goods and thirty-three books of account were destroyed. The thirty-three books included a large daily brokering journal, several ledgers, clients' ledgers and an underwriting journal and ledger. It was held that these books of account were documents owned for the purpose of the business, and hence were not insurable, and the Petition of Right was dismissed.

Now it is perfectly true that "deeds" of property are merely evidence of title to property and are not property in themselves. Likewise, documents owned by a person for the purpose of his business, such as books of account, are merely evidence of transactions but no more. There is, therefore, no way out of the difficulty except to ask His Majesty's Government to consider amending Section 104 of the War Damage Act, 1943, in order that deeds of property and documents owned by a person for the purpose of his business, should be made insurable under the Act, and should always have been regarded as so insurable. There are numerous arguments against my contention, but there is one very good argument in favour of my contention—namely, that deeds relating to property and documents owned by a person for the purposes of a business are of essential importance to the owners, and have to be replaced, and such replacement must be paid for by the owners. It is submitted, therefore, that they should always be deemed to have been insurable in the same way as other goods.

3.42 p.m.

THE LORD CHANCELLOR (VISCOUNT SIMON)

My Lords, my noble friend Lord Meston, on several occasions, has thought it right to take advantage of his position in this House to put questions about the War Damage Act and its operation. I have been very glad to do my best on each occasion to answer what, for courtesy, I will call his speech. It is, of course, a carefully prepared document, and I am grateful to him because he has, I think, usually supplied the Government with a copy of what he was proposing to read.

In the present case, I think that what Lord Meston has overlooked is that we are really dealing with a contract that is made between an individual who is insured under the business scheme and the Board of Trade, I think it is—at any rate the Department that makes the contract itself, the policy of insurance. It is a business scheme in more senses that one. The property which is being insured consists of certain chattels connected with business. If you examine the policy of insurance the form of it is all set out in Regulations made under the Act, and you will find what it covers and what it does not cover. I do not think it is a very helpful method of proceeding to ask a question in the House of Lords as to whether the policy cannot be treated as covering something which it manifestly does not cover. Presumably the rate of premium is related to the liabilities accepted.

I give as an illustration one which my noble friend mentioned at the end of his speech. He said that traders insured under this scheme who have the misfortune to suffer war damage which destroys their possessions, do not get any compensation in respect of trade books, books that contain lists of customers, or books that contain any other necessary records of transactions and the like connected with their business. That is quite true. But why is it so? Well, the primary reason is that Parliament—your Lordships' House and the other House together —when it passed the War Damage Act, in express terms provided that insurance under this business scheme should not cover business books. It is therefore, if I may say so with all possible courtesy, rather beating the air to submit—I think that was the word used by my noble friend—that the business books, when they are destroyed, should be paid for under the scheme. The law of the land says that they are not to be included, and they are not included, in the contract.

They are not included for, amongst other reasons, one very obvious one. I do not know if my noble friend has a suggestion to make, but my imagination does not enable me to conceive how you can pay a sum of money for such a loss. What is the money value of such business books? As he says, this is not the case of a bookseller who has books for sale on his shelves; these books of which he speaks are account books belonging to traders and relating to their business. It is a great inconvenience no doubt if they are destroyed, whether by an ordinary fire or by action of the enemy, but what is the value which could be paid for them? The only way in which you could hope, in the days which now apparently are happily over, to preserve these useful records of your business was to do what many people have done m recent times, that is to duplicate them, and keep the copies in some other and safer place. Let me take an example which has apparently come to the notice of my noble friend. He speaks of a case in which a figure of something in the neighbourhood of £16o was claimed for books. Why are they worth £160? They are merely so many pages on which are written so many names, or the records of so many transactions. It is obvious that you could not pay compensation in such a case under a system of insurance, devised with the assistance of both Houses of Parliament, and set out in express terms in an Act of Parliament which excludes such things altogether.

The same argument really applies to the rest of the matters to which my noble friend has referred. This, as I have said, is a contract, and it is not a contract which is pushed at anybody in the dark. The terms of the policy are contained in the Schedule The people who have got claims are people who have got a copy of the policy. Under that policy they undertake to pay a certain rate as a premium, and in return for that premium they get an undertaking that they will be compensated for certain things. I really do not know the method by which it is proposed—even by a question in the House of Lords—to secure any alteration of the terms of a binding contract. My noble friend, I think, perhaps means to suggest that there should be an amendment of the Act. I have pointed out how difficult it would be to make such an amendment as regards business books, because I do not know how they could be valued.

As regards the rest of it, the matter is to a large extent covered by commonsense reasons. It is the case that if there are special reasons for making an early payment the Department which manage this matter do their best to pay as soon as possible after the claim is proved. But the general principle, the principle that is laid down, is that payments are not made until after the war. They are deferred until after the war. It may be a disadvantage to have a policy of insurance governed by that rule, but if that is the rule laid down, it is no use complaining after you have accepted the policy. In order to be as little harsh as possible, the provision is further made that small claims, for £100 or less, will be paid snore promptly, so as to help the small shopkeeper and the small man generally. Your Lordships will see, however, that in the general management of the financial side of this business, where we are dealing with claims which in the last resort must amount to many millions of pounds, it is an understandable requirement that they shall not be instantly paid, but that it shall be understood and agreed that they will be settled when the war is over. There is, however, this exception. Where the Board of Trade are satisfied either that the repair or replacement of goods is expedient in the public interest, or that failure to pay at once will produce undue hardships, they will do their utmost to make the payment at once.

I do not know anything about the case which my noble friend mentioned, nor do I think that any of your Lordships know it, but if this firm to which my noble friend has referred has not applied for early payment, it had better do so. It there are reasons why the money should be paid at an early date it had better show what those reasons are. If my noble friend will inform the firm of chartered accountants of whom he spoke that it would be as well to communicate with the Board of Trade and see whether it is not possible to be paid more promptly, that would be a very practical course to take; but I venture respectfully to think that it is not a useful way to proceed on this matter in your Lordships' House by way of question and answer. I am not in the least unwilling to reply, but the question is what is the most useful way to proceed. All this information is given in the Statute and in the rules, and my noble friend is a considerable expert as to what they contain.

If he wishes to suggest amendments in the law, we shall be grateful to him for any suggestions which he may have to make. But what he has called to the attention of the House is not that sort of thing at all, but simply the working of a contract which has been entered into between the persons who have suffered and the Board of Trade, who issue the policy of insurance; and I am afraid that your Lordships' House cannot be occupied at great length with a discussion on whether or not there is hardship there. It might mean that there would have to be a new policy negotiated and a new or amending Act of Parliament. I hope that the practical suggestion which I have made—that he should advise these chartered accountants, if they have not already made a claim for early payment, to do so and give their special reasons—will be of some assistance, but for the rest I do not think that I can carry this matter further.

LORD MESTON

My Lords, I am very much obliged to the noble and learned Viscount for his answer. I do not propose to move the Motion standing in my name with regard to war damage value payments.

House adjourned during pleasure at four minutes before four o'clock.

House resumed.