CLAUSE 1.—(Powers for Expediting Production of War Material.)

HC Deb 10 March 1915 vol 70 cc1453-94

(1) Sub-section (3) of Section one of the Defence of the Realm Consolidation Act, 1914 (which gives power to take possession and use for the purpose of His Majesty's naval and military services certain factories or workshops or the plant thereof), shall apply to any factory or workshop of whatever sort, or the plant thereof; and that Sub-section shall be read as if the following paragraphs were added after paragraph (b):—

"(c) to require any work in any factory or workshop to be done in accordance with the directions of the Admiralty or Army Council, given with the object of making the factory or workshop, or the plant or labour therein, as useful as possible for the production of war material; and

(d) to regulate or restrict the carrying on of work in any factory or workshop, or remove the plant there-from, with a view to increasing the production of war material in other factories or workshops; and

(e) to take possession of any unoccupied premises for the purpose of housing workmen employed in the production, storage, or transport of war material."

(2) It is hereby declared that where the fulfilment by any person of any contrast is interfered with by the necessity of complying with any requirement, regulation, or restriction of the Admiralty or the Army Council under the Defence of the Realm Consolidation Act, 1914, or this Act, or any regulations made thereunder, that necessity is a good defence to any action or proceedings taken against that person in respect of the non-fulfilment of the contract so far as it is due to that interference.

(3) In this Section the expression "war material" includes arms, ammunition, warlike stores and equipment, and everything required for or in connection with the production thereof.

Motion made, and Question proposed, "That this Clause stand part of the Bill."

Sir F. BANBURY

I have a Clause down which I am afraid is out of order, because, although it does not actually impose a charge it gives the option of the Government to make a charge. I will therefore make a few remarks on the present Motion so that I may explain why I put the Clause down. It was because the Chancellor of the Exchequer appeared to think it was necessary that compensation cases should go through all the formalities of the Lands Clauses Act. No one on this side of the House would suggest that that should be necessary.

Mr. DENMAN

I have an Amendment to the Clause, of which I handed in notice this afternoon.

The CHAIRMAN

I am sorry no Amendment has reached me. The hon. Member did not rise when I put the Clause and now the Question has been put, "That the Clause stand part of the Bill." The hon. Baronet is in the course of his speech on that Motion, and I regret I cannot go back.

Sir F. BANBURY

I put down the Clause in order to show that there was a way which would enable the Government to pay compensation without going through all the long formalities of the Land Clauses Act. I showed the Clause to my right hon. Friend the Leader of the Opposition and I think I may say that he approved of it. It would be perfectly easy for the Government to bring in a Clause of this sort at a later period. It will require a Resolution in Committee authorising expenditure, therefore it is quite impossible for a private Member to move it. The Government might probably do that. I do not put my opinion against that of the Chancellor of the Exchequer for a moment, but I am very doubtful whether he has the powers that he says he has under the Vote of Credit. Yesterday I asked the right hon. Gentleman by what authority the Admiralty or the War Office could pay compensation, and he said under the Vote of Credit. If he will excuse me saying so, I think he is wrong. The Vote of Credit does not give power to do anything except to pay money for something which has already been legalised by the House of Commons. This Bill is quite a new departure, and I do not think it has been legalised at any time before. I do not see the chairman of the Public Accounts Committee here, but unless there is something legalising the payment of compensation the right hon. Gentleman will find the Public Accounts Committee will say that the Government have no power to make a payment.

I have also been advised by a right hon. Friend sitting on this side of the Committee that only a few days ago he made inquiry at the War Office and was told by them that there was no power to pay compensation. However that may be, it is very necessary that some authority should be given to the Government to pay compensation. It is not right that they should come down here and say, "We are not bound to pay compensation, but by an act of grace we will do so." That is introducing an element of favouritism, which no one on either side of the Committee, nor even the right hon. Gentleman himself, would desire for a moment. I put the Amendment down, not believing that it was perfect—unfortunately I am not a lawyer and I put down what occurred to me in my simple-mindedness—but as being something which might meet the necessities of the case. I earnestly trust that the right hon. Gentleman will consider whether it will not be possible, when we come back in April, to introduce a short Bill empowering the Admiralty or the War Office to pay compensation, and, if they think it necessary, something in the same form as the Clause I have put down.

Mr. TYSON WILSON

I should like to thank the right hon. Gentleman for the time that has been given for the discussion of this Bill. In Clause 1, Sub-section (1) (c), power is taken to take over any factory or workshop, or the plant or labour therein. We ask that in taking over the labour, the right hon. Gentleman should give us an assurance that the men will not be asked to receive less wages than they are receiving at the present time, although they may have to do some other work. The men desire to do all they possibly can to expedite the output of munitions of war. If they are taken from skilled work to do work that is semi-skilled, I hope we shall have a pledge that there will be no change in wages. In taking over a factory it may be necessary to transfer the workman from a firm in one town to a firm in some other town. I want to get an assurance from the Government that if the men are transferred from one town to another they shall be given what is called a subsistence allowance. What I mean by that is, that no workman shall be placed in a worse position, so far as home life is concerned, if he is sent from London to Birmingham or from London to Glasgow, and that he shall be given a subsistence allowance. The Committee will realise that married men will be placed at a great disadvantage unless some such provision is made for them. The right hon. Gentleman will realise the importance of the point to the workmen who may be transferred.

Mr. T. M. HEALY

I wish to ask the Government what is their proposal with regard to the question of broken contracts. I understand there is a provision in the Bill that the workshops taken over shall be protected. That is quite right. But what about the person whose work is in hand at the workshop? The job may be a very big one. There may be a very big order, and it may suddenly be stopped. Every manufacturer in the country has to have recourse to these engineering shops, which are the foundation beds of manufacture. Is there to be no compensation for a person whose contract is broken? You are merely providing that it shall be a good defence by the person with whom the contract is running—that is to say, the engineering shops will have a good defence if an action is brought against them for breach of contract.

4.0 P.M.

What consolation is that to the man who has given an order for a particular piece of machinery—a printing press or boiler, or whatever it may be? That order is in hand, and the person who has given it is expecting completion of it, when suddenly the Government step in and say to an engineering firm, "Do not conclude this order." He will say, "Here is an Act which will give me a complete defence. I have broken the contract because the Government has directed me to break it." What about the man who has been injured by the breach of contract? Is he to have no claim against the Government? I quite understand that this may be a smaller matter than I think it to be. We do not know what the Government are going to do, nor do we wish to know, neither do we wish to have information which may give strength or comfort to the enemy. The Government may think that such a provision is unnecessary. We do not know. We are in the dark as to the proposed extension. It undoubtedly means that many private individuals who have contracts running will be disappointed in the fulfilment of these contracts. It is a very poor thing to be told, "Oh, the Government have taken us over, and when the War is over you will be looked after!" Remember that the bread and butter of the local working man is at stake here, too. It cannot be done, and therefore the local workmen may have to be dismissed unless some assistance is afforded. If the Government is only intending to take two or three shops it may be a small matter, but if they are going to take over a great many of the shops there must be a good many contracts broken, and in that case the person who suffers should have compensation.

Mr. HOLT

I really want to raise substantially the same point which the hon. and learned Gentleman has raised. First of all, when you start breaking contracts you cannot possibly tell who is the person who is really going to be injured. Take a contract to supply a particular form of machinery. The man who is under contract to do that may in reality be only a sub-contractor for someone else, and the person who is not getting the piece of machinery which the Government prevent him from getting may be exposed to an action for damages by a third person. The Government under this Clause gives A an answer to an action for damages brought against him by B, but that may involve B in an action for damages by C to which he has no answer whatever. The Government ought really to carefully consider what the position is of those persons who have bought from a man whom they are preventing from fulfilling his contract and are themselves under a contract to re-sell those goods to someone else, possibly after having manipulated them with other goods or used them as part of more complicated machinery than that which they are buying. It seems to me that that is a very serious question which ought to be dealt with, and if it is not possible for the Government to think out a plan which will deal with it satisfactorily as far as the subcontractor is concerned, it would be much better not to let the original manufacturer have a right to break his contract, but to make him responsible for damages and leave him to deal with the Government, because the Government would be in a much better position to judge what ought to be done as regards the man with whom they have actually interfered than it will be to judge of what is fair and right as regards these people in the chain of contracts.

Then there is another person whose position ought to be considered. There is the man who has made a contract for the erection possibly of large works, possibly of a thing like a steamer, who is prevented by the Government from receiving a small part of the machinery which is necessary to complete the whole, and he might have paid a very large sum on account towards the completion of the whole work. The result of that will be that he will be kept out of the money he has already paid for an almost indefinite period of time, because the Government are preventing him from getting a small amount of machinery or manufactured articles which are necessary to enable him to get the whole piece of work completed. I think there are some problems here which do not appear to be fully met by the Bill, and I hope the Government will seriously consider and do what they can to meet them.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

The hon. Member (Mr. Tyson Wilson) is concerned about workmen who are transferred, under the Bill, from one district to another; but there is no compulsory transfer.

Mr. TYSON WILSON

It is practically compulsory. If work is offered to a man by a Labour Exchange and he does not go, his unemployed insurance money is stopped.

Mr. LLOYD GEORGE

I am very glad to hear it. The Government are quite prepared to meet the point of my hon. Friend by dealing with it on exactly the same basis as they now deal with workmen who are transferred from the dockyards. I think he will find that that will be quite satisfactory. Now I come to the question of compensation. I think the hon. Baronet Sir F. Banbury) will find that the terms of the Vote of Credit are quite wide enough to cover compensation under the conditions which I indicated yesterday, and that is the view which has been taken by the Government on the advice of those who have been looking into the matter and informing the Department for the "conduct of Naval and Military Operations; for assisting the Food Supply, and promoting the Continuance of Trade, Industry, Business, and Communications, whether by means of insurance or indemnity against risk, the financing of the purchase and resale of food-stuffs and materials, or otherwise; for Relief of Distress; and generally for all Expenses arising out of the existence of a state of war." That is very sweeping and comprehensive. If it is found that under these very wide terms we still are unable to pay compensation, we could not remedy it in this Bill. We should have to bring in another Bill which would have reference not merely to operations under this measure, but to more general operations which we have taken under the original Act. Therefore we will undertake, at any rate, that no technical difficulty of that kind will stand in the way with the assent of Parliament. We submit a proposal to Parliament which will enable us to pay necessary compensation, not merely for what is done under this Bill, but for what has been done under the Defence of the Realm Act in 1914. I hope that will satisfy the hon. Baronet.

As to the general question raised by my hon. and learned Friend (Mr. T. M. Healy) and one or two others, of course business men will be subjected to inconvenience—and some business men to a great deal of inconvenience. That is inevitable. But this is a state of war, and we cannot conduct war and allow business to be conducted as usual. Instead of "business as suual" we want "victory as usual," and you cannot have that unless everybody in the community is prepared to suffer all kinds of inconvenience and, if necessary, sacrifice. I do not think you can therefore hope to have the same complete measure of compensation which you would enforce in time of peace, where you take one man's property for the benefit of the public. After all, this is for the general defence of the realm. Those who remember the French Parliament in 1870 or 1871 will remember M. Thiers' remarkable speech when similar proposals were placed before the French Parliament. There were suggestions of compensation to people whose property had been destroyed and business interfered with, and he delivered one of the most remarkable speeches of his career in which he objected in toto to the idea of giving compensation to anyone for anything which was necessary in order to defend the integrity of France. I agree that this is on a different basis, but in France, where we have the French armies bombarding their own towns and villages, destroying workshops and houses, tenements, and agricultural equipment, they cannot consider compensation. In France, as the Leader of the Opposition pointed out yesterday, all this has been done. But why was it done? I went over in September or the early part of October to look into this very matter. They have done it there under the pressure of invasion. It was done just at the time when the German armies were rushing into France, and people were terrified, and there was no legislation necessary. It is the fact that we are immune from legislation—

Sir F. BANBURY

I wish we were!

Mr. LLOYD GEORGE

No, I am sure the hon. Baronet does not.

Sir F. BANBURY

Radical legislation!

Mr. LLOYD GEORGE

I hope this is good Conservative as well as good Liberal legislation. It is because we are immune from invasion that we are able to discuss these things with great calmness as if they were matters of compensation. They are really matters of life and death to this country. It is essential that we should increase, and increase enormously, our output of munitions of war. We have done all we could, short of taking powers to extend our facilities for making munitions of war, and we have waited so long that we have been criticised for waiting too long. I do not think we should have been justified in bringing in a drastic Bill of this kind unless we felt that we could not get very much further without it. The hon. and learned Gentleman (Mr. T. M. Healy), though not complaining of it, said that the Government might be in possession of facts which perhaps for the moment he was not informed of. I do not think it is desirable to state the whole of the case even in a matter of this sort. The hon. and learned Gentleman can just as well imagine as I can why it is essential that we should get the fullest power.

Mr. HEALY

I have not the least objection.

Mr. LLOYD GEORGE

No, I said so; but whatever the inconvenience may be to individuals, the national need is so overwhelming that I hope even those who are disappointed in the matter of contracts will put up with it for the time being. Of course it is a very hard case where a ship has been contracted for. That is a case we have considered. It is one of the cases which were put when we were trying to discuss the Bill. It was one of the specific cases we had in our mind. We said it seems to be unfair that in that case the shipowner shall be disappointed of his ship, but however great his disappointment and however great his temporary loss, it is a loss which I am confident he would face if he knew that it was necessary that the whole of the energy and resources of that particular firm of engineers should be turned on to the production, let us say, of shells. All those who know the military position know how much depends upon getting an adequate supply, and if necessary an overwhelming supply, of the necessary explosives at the critical moment.

A very remarkable letter appeared in one of the evening papers to-day from an officer in France. Any hon. Member who has any doubt at all about the need for this Bill has only to read that letter and he will realise that the Government has not brought it in without the most urgent need for it. That is my only defence for taking the Bill in its present form. I hope the Committee will not press the Government too far in regard to compensation. I agree that compensation has to be paid to a man whose property you are taking away. But the doctrine of compensation can be so over-elaborated that a demand can be put forward on behalf of a man who indirectly suffers from the effects of engineering works being taken over. If you begin that, you find that the whole community suffers. If you begin to limit your engineering output, the community does suffer undoubtedly. But we have all to contribute, in the measure of inconvenience which we bear, towards bringing this terrible war to a successful and triumphant issue for our country. I am sure that unless we are equipped with full powers of this kind we shall be unable to supply the necessary materials of War for that purpose.

All these questions which have been raised to-day are questions more of administration than of the form of the Bill itself. If the Committee insisted upon inserting all sorts of conditions and restrictions here they would only cripple the powers of the War Office in dealing with the problem, and they would probably find that there are a hundred and fifty matters which we never could have foreseen and for which we had made no provision at all. It is very much better to secure the right sort of people to administer these affairs. More depends upon that than upon any conditions that can be inserted by Parliament after the fullest consideration. I hope that we shall be able to get these matters administered by the right sort of people, and that business men will do their best to assist us in the interest of the country in regard to all of them. I cannot believe, like my hon. and learned Friend, that this is a case of routine and machinery, and that there is very little to be done. I cannot imagine anything of that sort. It is impossible for the Government to take over works and to make the owners drop contracts which they have in hand without causing some inconvenience. All these things had much better be considered in reference to each particular case. In each particular case these matters can be better arranged with the management than by anything we could conceivably insert in an Act of Parliament.

Mr. BONAR LAW

I feel so strongly the force of what the right hon. Gentleman has said about the need of getting these powers and of putting them quickly into operation, that I certainly would not say a word if I thought that by doing so I would delay the getting of this Bill. There was one thing said by the right hon. Gentleman with which I do not quite agree. He said that the mobilising of French industry was due to the invasion of Frame, and that we were not quite ready for it. I quite agree that, taking the War as a whole, that may be, but I think that from the beginning of the War the House of Commons has realised its full importance, and I am sure that if the Government had asked these powers six months ago they would have got them from the House of Commons quite as readily as now. I agree with what the right hon. Gentleman has said about the difficulty of dealing with individual cases of hardship that may arise. I may go further and say that in my belief the effect of passing this Bill will be that there will be no need for the Government to take over works of any kind. It will give them power, and the knowledge which manufacturers have that the Government have power will be sufficient motive power to bring their patriotism into operation and to give them protection against Articles of Association or anything of that kind.

In my belief by passing this Bill we shall get more output in the ordinary way by the ordinary owners of factories. I believe that will be the effect. As regards the question of compensation, I entirely agree with what the right hon. Gentleman has said. Nobody has a right to expect that he is going to be scot free, not only from inconvenience, but from loss of money in a case of this kind. All I would ask is that what the Chancellor of the Exchequer has said should be quite clear to all the officials responsible for administering these powers. In other words, it should be understood not only by him, but by everyone who is going to act for the War Office or the Admiralty, that the payment of compensation is not an act of grace, but that people have the right to compensation where real damage has been done to them. What often happens in cases of this kind has happened again. I have a letter from a friend of mine in which he states that he had a building taken over, and that this deprived him of his means of making his livelihood. This is his experience as described to me. He went to an official of the War Office and said. "My damages are so and so." He was told, "That is far too high. I will give you so and so." He replied, "That is nonsense," to which he got the reply, "You are not entitled to anything. If you get anything, it will be as an act of grace." He told the official of the War Office to go to a pretty warm place, and I do think it is worth the while of the Chancellor of the Exchequer to consider whether in some shape or other something should not be put in the Act of Parliament—not to give people the right to go to the Courts of Law, but to make a claim, and to be able to show that it is the intention of this House and Parliament to give reasonable compensation in case of damage.

The ATTORNEY-GENERAL (Sir J. Simon)

That is so.

Mr. BONAR LAW

What the Chancellor of the Exchequer said yesterday was that it was not to be left to the officials of the War Office, but to somebody who was to decide in the capacity of arbitor. That is all we want, and I think it ought to be, in some shape or form, put in the Act of Parliament. If that is the condition, I think we might ask the Chancellor of the Exchequer to consider whether it is not possible to make some provision of that kind quite definitely in the Bill. The only other matter to which I wish to refer is one of detail. The hon. Gentleman made a point which. I think, the Chancellor of the Exchequer did not quite understand. It is not a question, as I said to him, of compensation in money, but this is the question—one person is free by this Bill from having an action for damages raised against him. Well, I think that equally anybody who is in the position of sub-contractor should be free in the same way. Like my hon. Friend behind me, I have the good fortune, or it may be the misfortune, not to be a lawyer, but it seems to me that you should protect everybody who will be affected by this measure. If the Attorney-General tells me that is so, I will be satisfied.

Sir J. SIMON

That is the intention.

Mr. BONAR LAW

I think that entirely meets the point, which is a perfectly legitimate one. The whole House of Commons is anxious that these powers should be given, and that there should be no unnecessary delay in giving them to the Government.

Mr. HOGGE

I wish to ask one question. I see that in Sub-section (c) there is a reference to "factory or workshop." I wish to know what is the definition of factory or workshop? Is it the definition under the Workmen's Compensation Act or not? The reason why I ask is that, in my opinion, everybody should be roped in for the national good who can be. People with small concerns may be called upon as well as the owners of big concerns.

Sir GEORGE YOUNGER

I listened very carefully to what the Chancellor of the Exchequer said when speaking on the question of compensation. It was in answer to a question of mine he told the House what he proposed to do in the matter. The right hon. Gentleman said that if it should be found that there was no power for doing what he proposed, he would see that a short Act was passed. He made that perfectly clear, but what he did not make clear was that in the event of his finding that he had no power he would pass a single-Clause Act giving the right of compensation. It is not satisfactory that this very important question should be left as the right hon. Gentleman has left it. What we want is that something should be done to show that these people have the right to compensation, and that it is not paid merely as a matter of courtesy.

Mr. HEALY

I quite agree with what the Chancellor of the Exchequer has said, but he himself has belied the position which he had taken up, because the Government have given compensation. In the general view of the Chancellor of the Exchequer compensation should be paid, but this Bill, in my opinion, is defective in many of its provisions, which can be amended without doing any damage. Take this case: Suppose I have given an order for a steam engine at a particular place. It is half-finished, and the engineer has expended £3,000 or £4,000 on the work. Am I entitled to go to some other place and start that all over again? I have placed my order and put my penny in the slot. Where am I entitled, under this Bill, if the shop has been taken over by the Government, to go for an engine? Am I entitled to go next door and renew the order? If I cannot do that, that is part of the injustice of the Bill. You are only protecting the man whose shop you are seizing, and not the man who is dealing with the owner of the shop. My suggestion is that no action should be brought for anything done or undone by reason of the passing of this Bill. It should provide that claims may be made in the prescribed manner, and then you can make rules under the Act. I would take away all right of action in respect of anything done or undone. That would be the affirmative side of the case. Then, in regard to the negative side, any man who has a contract running with the owner of a shop which is taken over by the Government should have the right to transfer that work to another shop. A man might send over to America or to some other neutral country. This Bill impounds the contract where it was legally made, but it leaves the man to the end of the War in the position of being unable to transfer the work for the ship, boiler, engine, or whatever it may be. The Bill is defective in many ways, and I think that it would be safer to insert a general Clause which would enable a contractor to take his order somewhere where it could be executed.

Mr. HEWINS

I see the point which has been raised by the hon. and learned Gentleman (Mr. T. M. Healy). I doubt very much whether in the circumstances it would be possible to carry out his suggestion. I wish to insist upon what the Chancellor of the Exchequer said about the way the Act was to be administered. I cannot see in the Bill itself, or in what was said by the right hon. Gentleman, that the Government have so far worked out any plan of organisation. This Bill has obviously been drafted without the Government having before their eyes any actual organisation. I do not know whether the Chancellor can assure us that he, or Lord Kitchener, or the President of the Board of Trade has any actual scheme; but if the Chancellor of the Exchequer, or the President of the Board of Trade, tries to draw up a schedule of firms producing things which will come under the definition of war material, as referred to in this Bill, he will find that it will come to many thousands. Under modern conditions, war is very largely the whole of the industries of the country organised for a particular purpose.

I cannot believe that the Government has really thought out any scheme. Take the case provided for in this Bill, that of taking over the business of a firm. I should have thought that stronger Government powers would have been quite enough, but, at any rate, when you go through the list trade by trade—so far as the general public are aware—there is no classified list of firms available, except those which have been compiled for the purpose of the industries concerned, and I imagine that those do not throw much light on the subject from the War Office point of view. There are at present from 80,000 to 90,000 firms in the country engaged in production in an effective way. Of those firms, an enormously large proportion produce war materials within the meaning of the definition of the Bill, and the ramifications are perfectly extraordinary. Take pottery: who for one moment supposes that it is related to munition? And yet it is related very closely. So, unless there is a scheme going thoroughly into the whole matter, the Government may find themselves let in for an exceedingly large thing. I am not pressing the Chancellor of the Exchequer to disclose any particulars which the Government think it undesirable to disclose, but if he could give us some kind of general sketch of what is in the mind of the Government it would be well. I do not very much like the idea of local committees, because I am sure that the essential thing about the whole matter is rapidity of action.

Mr. LLOYD GEORGE

That was with reference to what the Leader of the Opposition said about France. I did not promise to do the same thing here, but we must have a Central Committee.

Mr. HEWINS

I should say despotic power. But from what I know about the firms in the country, there is no need whatever to be under any anxiety as to the production of the necessary munitions of war if we do organise the firms. But neither in what the Chancellor of the Exchequer said, nor in the Bill, do I see any trace of a scheme at all at the present time, and I would like very much to know whether the Government are prepared at this moment to take action and to put the industries of the country in a posture for war. That is what we intend to insist on. We do not want to give vague and undefined powers to compensate the firms or workers of the country; what we want is a definite scheme of war organisation of industries. The Government have had seven months to prepare such a scheme. It was in August when the discussion of this matter began. I think that many representations were made to the Government about it. There has been ample time to work the scheme out in detail, and it ought not to be necessary at all to hurry a Bill like this through in the way in which we are doing at the present time. What we on this side want is the knowledge that the Government are determined to carry out a complete and effective scheme for promoting the efficiency of our industries for war purposes.

Mr. J. W. WILSON

I would ask in reference to Sub-section (c) and the requisitioning of factories, workshops, plant, or labour referred to therein, whether the Government is prepared, if necessary, to take action in reference to the efficiency of labour. Some of us think that it is fast becoming necessary to put the efficiency of labour alongside the efficiency of the military and to take in hand if necessary the further restriction of the opening of public-houses, and of the temptations to drink, particularly in the neighbourhood of these works. I thoroughly believe myself, from inquiries made in industrial parts of the country, that a great part of the working men of this country are working overtime and giving very good work. At the same time, there is undoubtedly a section, and though it is a small section, it may be that it can do a great deal of harm—

The CHAIRMAN

That is opening a very large question.

Mr. WILSON

It comes under Sub-section (c).

The CHAIRMAN

No, I have been searching the Sub-section and I think that this does not come in.

Mr. WILSON

In reference to the efficiency of labour?

The CHAIRMAN

I do not think that this applies to Sub-section (c).

Sir J. HARMOOD-BANNER

There is one point which deserves reconsideration by the Chancellor of the Exchequer. That is the question: What is to be done in the case of large works where there are several departments? There are many large works in the country which may have one department for the Admiralty, or for war purposes, and other departments where neither the hands, the machinery, nor the appliances are in any way applicable for purposes with which the Government are concerned, and it would give considerable satisfaction to the owners of the large works if they knew that the other departments, which are not required by the Government, will be dealt with as considerately as possible. That is to say, we want to secure that, while portions of the factories which are useful for war purposes should be used to the very utmost extent, the other parts of the trade should not be injuriously affected. Works may contain many shops. There may be one shop which the Government require, and at the same time all these other shops should be applicable for the general purposes of trade. While we all agree that the Government should take, and take even without compensation if necessary, whatever they want for the purpose of the War, we do not want our factories affected more than is necessary, so that our general trade may come back to us later on.

Mr. HODGE

To me it is quite amazing that when the Government propose to do anything of an exceptional character a certain section of the community are always like a pack of hungry wolves seeing how they can bleed the Government in the shape of compensation. There are at present a great many firms in the country who have devoted themselves to making munitions of war, and their ordinary industrial contracts have had to be set aside. But there has not been a word from anybody so far as compensation is concerned, and I think the Chancellor of the Exchequer is to be commended for—

Sir F. BANBURY

What about the trade unions?

Mr. HODGE

I did not interrupt the hon. Baronet when he spoke. Probably he will permit me to go on to express my own thoughts in my own way. I know of my own knowledge that there are a great many manufacturers in this country at the present moment who cannot get the machinery that is necessary for their ordinary industrial pursuits, because of the fact that the firms which make it are engaged in the manufacture of armaments and munitions of war, and those firms are being held up as a consequence. They have never thought of asking for compensation. We have got to realise that every section of the community are making sacrifices at the present moment.

Sir F. BANBURY

Trade unions.

Mr. HODGE

I do not consider that there ought to be any favoured section in the community. I quite agree that if works are taken over by the Government the firms concerned ought to suffer no loss, but to extend it further than that would lead the Chancellor of the Exchequer into unknown paths. I hope, therefore, that the Chancellor of the Exchequer will remain firm so far as that point is concerned. There is one other point that I would like to impress upon him. There are certain trades in this country that are not working whole time at the present moment. I believe that a great many of those men could be drafted into districts where they could do the unskilled work. Take the tinplate trade for example. In South Wales at the present moment there are only 61 per cent. of the tin-plate mills in operation.

There is a shortage of labour if the whole of the mills were working, due to the number of men who have enlisted, but still 49 per cent. of the men have not enlisted, and the men who remain are distributing the work, some of them getting three days a week and some four. As against that, in the steel works, where the Government have been pressing the workers to make steel ingots for the purpose of going to the armament firms in Sheffield, there is a real shortage of labour, and those tin platers, to my mind, if they were properly mobilised, could be transferred from certain tin-plate districts where they are half idle, into the steel districts where they could do semi-skilled work. I think that it would be a great advantage if the Government were to consult those of us who know something about these matters, so as to help them in mobilising labour for national purposes. It must be understood that if men are brought from one district into another something should be done on the same lines as that which has been done with reference to the dockers—giving them a subsistence allowance. If you bring them away from home to the place where the works are the majority of the unskilled men cannot pay for their board and lodging in the town where they might be working and at the same time keep their families. I trust therefore that the Government will keep that point in view. [An HON. MEMBER: "They have promised that."] I am sorry that I was not present to hear all the remarks which the right hon. Gentleman made. I did not know that reference had been made to this point.

Mr. WALTER LONG

I am sorry that the hon. Member for Gorton (Mr. Hodge) should have chosen, in connection with this question of compensation, to speak of people as a "pack of hungry wolves let loose" as soon as the Government brings forward a proposal which raises the question of compensation. Really it is not a question of a pack of hungry people trying to get something for themselves. All we ask for is really what the hon. Member for Gorton has chosen to ask for—in fact, I do not know whether he realises that he has gone much further than we have gone. All we have asked, and all I rise to ask for, is that where injury has been inflicted upon individuals or bodies by the action of the Government in the interest of the State there shall be fair compensation paid. How does the hon. Member for Gorton deal with these things? He goes further than we do.

Mr. HODGE

No.

Mr. LONG

The hon. Member is really going further than we do. I take a case suggested, the case of a factory which is full of machinery connected with the sewing machine industry. The Government say that they can make a better use of it, and propose to remove it. Does the hon. Member suggest in that particular case that the owner of the machinery is to receive no compensation for damage done? He is receiving injury, and all we ask is to give him fair compensation. However anxious you may be to treat people fairly by giving some amount of compensation, some amount of damage must accrue whatever compensation is paid. There is a case within my own personal knowledge. The War Office is engaged in making a camp in my own county, and, unfortunately, for some mysterious reason, they have selected for the camp a place near which there is a road not much wider than the floor of this House. It is a place in the vicinity of a very small railway station, which has no proper or convenient approach. It suddenly came upon those engaged in the work that it would be necessary that steam engines, lorries, and so forth, should pass from the station to various parts of the camp, and it was found that this particular road was not wide enough for that description of traffic. In order to make it wide enough they took down the wall protecting the property of a retired professional man, and by that destruction they have done permanent damage to the property. What the amount of damage is can only be ascertained in one way, and that is to put the property up for sale and see whether the price realised is what would have been the value if the property had remained uninjured. That is entirely problematical, and all you can do is to compensate the man for the actual injury done to his property at the moment. And that is all we ask. But the hon. Gentle- man goes further, because his is a suggestion which would not only mean giving compensation on the actual injury covered by the act done, but it would mean guarding against contingent losses which may follow in consequence.

We have adopted the formula laid down by other hon. Gentlemen opposite, that in times like these everybody should make some sacrifice, but you have no right to take two men side by side or two businesses side by side and say to one, "You shall bear a double burden." You say to them both, "You must conduct your business on war conditions; you will both bear the same amount of taxation, and you must do everything in your private and commercial life with the constant knowledge that you are living in time of war." But surely it would be a new form of justice to say to one of them, "All these conditions apply to you," and to the second, "All those conditions apply to you; you have to bear all those disabilities; but, in addition, we are going to take your property, take that which represents pounds, shillings and pence, and not give you a single penny of compensation." I quite recognise the difficulty which confronts the Chancellor of the Exchequer. He has admitted it, and what he said yesterday is quite sufficient, for we know perfectly well what he says he will do will be done, and it is admitted that the principle of compensation will be accepted.

But the right hon. Gentleman is reluctant to introduce words into the Bill because he does not at present see how, if words were introduced, it would be possible to avoid litigation. We all want to avoid that. We know that litigation is resorted to by those who are very often the least worthy to claim compensation, the least worthy seekers after justice, while it is putting a weapon into the hands of the stronger which is not always available to the weaker. Further, the majority of those who have suffered injury do not, I am convinced, desire litigation, because they want a prompt settlement of these questions. Some of those questions have been running on now for some months, and, so far as my information goes, the general desire is that there shall be a satisfactory tribunal of some kind established in order that the treatment of these questions shall be immediate. All I want to ask the Chancellor of the Exchequer is this: He has said already that he is willing to make a public announcement in the ordinary way of the appointment of some individual—

Mr. LLOYD GEORGE

Or individuals.

Mr. LONG

Or individuals, to deal with this question. What I want to make clear, and what I respectfully ask the Government is this: "Are they quite clear that when the claimant appears before the tribunal which they will establish, that tribunal—which will have a chief and sub-commissioners, if I may so describe them, who would have to do some inquiry work—may not say to the claimant, "You appear here not as a litigant, and you have no statutory right whatever to compensation. You come here as a mere seeker for relief under the conditions of a mendicant, and you are not personally entitled to the justice we shall do you." That would damnify the whole case of the applicant for compensation, and might reduce the actual amount to which the claimant might otherwise be entitled. Even if the Government cannot introduce words into this Bill without running the risk of litigation, would it be possible to draw up a reference to the tribunal, to be made public after their appointment, and which would make it clear that the Government want the tribunal to grant compensation, which, in their opinion, is just compensation, and which would be, primâ facie, welcomed as just? If something of that kind could be done, it would go a long way to meet the case. I, for my part, would do nothing to further litigation, and I can assure the hon. Member for Gorton that he is not accurate when he says that this is an attempt on the part of hungry people to get money out of the Government. Really, from what I know of many thousands of people in this country, with many of whom I have come in contact, and from many of whom I have heard, whether they own property, or factories, or whatever it may be, or whether they do not, they have but one desire, with all classes and all people in the realm, and that is to support the Government by all means in their power in doing the nation's work, though at the same time they ask that the work shall be done justly if it is to be done well.

Sir J. SIMON

I really do not think that there is very much difference between the right hon. Gentleman and my hon. Friend the Member for Gorton, who used a picturesque phrase which was perhaps not in every way suited to a collection which consists of nothing but lambs; but, at the same time, what I think he was pointing to is the necessity of avoiding those very elaborate and technical rules which sometimes are glorified by the name of compensation; and, if I understood him rightly, that is what he wants to get, and he spoke exactly in the same spirit that the right hon. Gentleman has spoken. Something has been said about compensation. Compensation is not dealt wit a by this Bill at all, as we all recognise, and the fact that it is not dealt with by this Bill is not in any way to be understood to mean that in passing this Bill we consider that no compensation should be provided. The reason why compensation is not dealt with in this Bill will, of course, be obvious when this is remembered: The Bill is only an amendment Bill, and though it raises very large and important questions, it touches only a very small part of the whole thing. Take, for example, the case mentioned several times in debate—the case of agricultural interests that have been very seriously interfered with by certain operations connected with the defence of the realm. That case has to be considered, but obviously it could not be considered within the four corners of this amendment Bill, because this Bill is introduced to deal with certain industrial areas, and it has nothing to do with agricultural questions at all. For that reason, if for no other, you cannot provide what is a proper amount of compensation within the four corners of this Bill. In the next place, I want to say this: The statement which was made by the Chancellor of the Exchequer earlier in the Debate to-day showed, I think, quite plainly the lines on which, as it seemed to us, compensat on ought to be aimed at and provided.

5.0 P.M.

What I say now is not intended in any way to enlarge or limit what the right hon. Gentleman said, but I may add that, as the right hon. Gentleman said, it is very important that we should deal with this matter promptly. To have this thing hanging about for a long time would leave people seeking compensation in a state of uncertainty as to what they were going to get, and would really inflict a disadvantage upon them of a very serious kind. We hope—I am not offering any pledge—to be able before our present sittings are suspended, before we break up for a few weeks, to announce the names of the Commission who will be asked to deal with this very important matter. I should think there must be more Commissioners than one; but, at any rate, before the sittings are suspended we shall announce the constitution of the Commission which is suggested, so that the House will have an opportunity to discuss our proposal. It is inevitable that the Commission will have to be left with a good deal of discretion. This is not a case where you can lay down any very precise or elaborate rules, saying exactly what they are to do or what they are not to do. If we choose the right kind of body—if we choose Commissioners who command the confidence of reasonable and sensible people who have claims, it would be right and proper that, within certain limits they should have laid down some principles or some rules by which they propose to be guided. And as soon as that is worked out, I trust it may be found that there will be much less disputing about these matters than there sometimes is in connection with compensation. There is another point which has been raised and with which I desire to deal. The Leader of the Opposition asked whether Sub-section (2) would be certain to protect not only the individual who was himself complying with the Regulations, but the person who was contracting with him, and it may be other persons connected with the working of a series of sub-contracts. This is not a case where we can afford to be in any doubt, and I think it would be very much better if the Committee would agree to insert a few words to prevent the possibility of misunderstanding. We can only do that with the assistance of the House by recommitting the Bill just to insert those words, and I hope that if we do so it will be done with the general understanding that the recommittal is merely for that purpose and that we are not to have a general discussion over again. It was suggested by an hon. Friend behind that it might be done by putting in that famous pair of adverbial expressions, "directly or indirectly," but I do not think that that is quite the best way. What I would suggest would be that we should insert after the word "necessity" the words "on the part of himself or any other person." The Sub-section would then read:—

"It is hereby declared that where the fulfilment by any person of any contract is interfered with by the necessity on the part of himself or any other person of complying with any requirement, regulation …"

then he is to be protected if by reason of that compliance he does not perform his contract. I think that would make it clear and will meet the case referred to by the hon. Member for Hexham (Mr. Holt), who pointed out that you may have one man complying under compulsion with the Regulations, and in consequence of that compliance you may have another man who is in his turn threatened with proceedings because he also is behind time and unable to do what he contracted to do. There was another suggestion made by the hon. and learned Member for North-East Cork (Mr. T. M. Healy) which we have done our best to consider. He thinks we might provide a Clause which would stop these claims at the very outset. Our Sub-section only says it shall be a good defence, but the hon. and learned Gentleman suggested that we might say that no action should be brought. I doubt whether there is much difference between the two things. In most cases the claim would very likely be for nothing more than a breach of contract. It would be quite impossible to interfere and stop the action without investigation as to whether is was a good claim. It might be a good claim not touched by this Statute, and, on the other hand, it might be a claim which would fail because of the Statute. It is not really until the thing is looked into and until the details of the scheme are known that it will be seen. I hope the hon. and learned Gentleman will be content if we make it quite clear by the Amendment in the way I have suggested.

Mr. HEALY

made an observation which was inaudible.

Sir J. SIMON

I do not think the War Office is going to be bound automatically merely because there is collusive judgment between two private persons. That is not my understanding of the matter. This is merely for the purpose of defending one contractor as against another where, owing to the Regulations of the War Office, it is not possible to comply with the conditions about time. That is the suggestion which I made, and if the Committee feel that we do now fairly cover the ground, I would invite them to agree to the Clause, and as soon as we have finished the Committee stage we propose to move to recommit straight away in order that we may insert those words.

Mr. HEALY

I am not going to controvert what the Attorney-General has said, but I wish to make one suggestion with regard to the delay of a contract placed already. I think at least it should be in the option of any person injured to determine the contract, and I would suggest these words:—

"Where the execution of a contract made before the passing of this Act was delayed by anything done hereunder, such contract shall be deemed to be determined unless the parties thereto otherwise agree in writing, and any moneys paid under such contract shall be refunded."

It seems an extraordinary thing that you should take the right to impound a contract and hang it up during the period of the War, and that the man who has made that contract and perhaps paid caution money should not have the right to go elsewhere with his order, and that by reason of the passing of this Act he must continue to leave his contract unexecuted. It seems to me only common justice that where the Government, say, take over engineering works, the man who has a contract with those works should have the right to go elsewhere.

Sir EDWIN CORNWALL

Every Member of the House realises the tremendous scope of this Bill and the enormous powers which it is proposed to give to the Government, but at the same time no one can hesitate about giving those powers at the present time. I am very much impressed with what has been said by several hon. Members as to how this Bill is to be used. You cannot attempt in a Bill of this kind to lay down any conditions, rules, or regulations, since the whole matter is far too extensive. We all hope that the main purpose of the Government will be achieved, and that the resources of the country will be used for the purposes of the War. It is clear, however, to all of us—and especially to those of us who have experience of business and of public bodies—that this Bill, when it becomes an Act of Parliament, in its working must lead to endless complications, such as those mentioned by the hon. and learned Member for Cork (Mr. T. M. Healy). Everyone can see that when the Act begins to be put in force you are going to have complications in directions which none of us can now realise. I only rise to make this point: Not only does the Act depend on how it is to be worked, but you have also to consider the question of the Commission that is to be appointed. I have never been very satisfied myself with the way the Government appoints Advisory Committees or Boards of Control when it gives up the control itself. One can understand the Government taking the responsibility, or the War Office, or the Civil Service, or any Department doing so. But as a rule when the Government feels that neither itself nor any particular Department Should take the responsibility and seeks to appoint a Commission of Control, it generally ignores altogether Members of Parliament or public men connected with Parliament. The Government in those cases seeks to go to some well-known gentlemen—no doubt estimable persons—who have not been in public life and have no responsibility in public life, and who have no responsibilty as Members of Parliament.

I think if you are going to have a Commission of Control such as is now suggested, and when the House of Commons is asked to give these enormous powers to the Government, that Members of Parliament ought not to be excluded from that Commission, and neither should the eminent persons who are not Members of Parliament be excluded. I do not know what is in the mind of the Chancellor of the Exchequer, but I can imagine that he may have in his mind some eminent person who is not a Member of Parliament, or two or three such persons. I do not wish to exclude them or to suggest that they should be excluded, but I do think, as this Act of Parliament we are passing is taking a leap in the dark, some representative Members of Parliament suitable for this purpose, and who have had experience in large engineering or manufacturing businesses, should be put on this Commission of Control in conjunction with any other outside eminent persons. We ought not to hand over so important a measure as this to entirely non-representative men. I hope the suggestion I have made may receive the consideration of the Government, because we are being asked to pass an Act which must lead to complications far and away beyond anything we can imagine.

Mr. PETO

I understood that the Attorney-General was replying to the Leader of the Opposition, but I noticed that he did not refer to the very definite suggestion made by the Leader of the Opposition that we should have a very short Bill which would make perfectly clear what the views of the Government were on this question of compensation. Another suggestion was made by the right hon. Gentleman the Member for the Strand (Mr. Long) that the same effect might be produced by laying down very clearly the terms of reference and establishing the status of all the parties who claim compensation. I have not heard from the representatives of the Government whether they propose to adopt either one or other of those measures. It seemed to me there was an underlying current in what was said, even by the Chancellor of the Exchequer, in referring to the speech of M. Thiers on an historic occasion, suggesting that compensation was out of the question, and that everybody ought to be prepared to bear their share of the burden. If compensation is paid, or not paid, it will not add by a single penny to the cost of the War in this country, and only alters the question of who bears that cost. The giving of fair compensation is merely carrying out the principle which the Chancellor of the Exchequer so often enunciated in his Budget, namely, that of distributing the burden fairly over the whole community. Although the Chancellor of the Exchequer may be very generous, it is not he who is going to pay this compensation. If fair compensation is paid because the land of one man is needed, or the business of one man is needed, it merely means that the amount will be distributed over the whole community and that each will be bearing his share of the burden. I do think it would be very much more satisfactory if this House were asked to pass a very short Bill, called the War Emergencies Compensation Bill, or with some title of that kind, showing perfectly clearly that compensation was to be paid in all these cases, and that would make it quite clear also that there was no question of a "pack of hungry wolves," as was suggested by an hon. Member.

Such a Bill would make it clear that it was not fair to take one piece of land or to take one business in which a man happened to be engaged, and ask that those people should bear the cost while other people should not. Therefore, I think, if we are going to have a Chief Commissioner and some other subsidiary Commissioners, their appointments should be laid down under general rules under which they are to act in a small Bill such as has been suggested by the Leader of the Opposition. I certainly think that, if we are going to let this Bill leave our hands without a single word in it as to the payment of compensation, notwithstanding that we are told by the Chancellor of the Exchequer that there is no reference to compensation in any other Defence of the Realm Act or in regard to any of the wide powers already given to the Government by Parliament, we ought to have the whole of this question shortly, definitely, and clearly laid down in a small Bill which could be passed in a couple of days. The Chancellor of the Exchequer asked for suggestions as to the Commissioners. I would urge that the task should be lightened and matters expedited by the appointment of Commissioners for definite localities—perhaps for every two or three counties to deal with questions of land—and for one county or one city to deal with the question of works. A well-known local man would know the local position, and his decisions would be fairer and much more readily acceptable by the people themselves. In this way we should get matters attended to quickly, which is really half the battle, because the whole question is one of emergency. Compensation which is held up for several months is really no compensation at all. Therefore I hope the Chancellor of the Exchequer will consider the suggestions made by the Leader of the Opposition, and see whether he cannot arrange for the country to know exactly what is the view of the Government on the Question of compensation and how it is going to be carried out.

Sir ARTHUR MARKHAM

Having been associated for many years with the engineering industry and engaged in trade, perhaps I may be allowed to speak on this question. I understood the Chancellor of the Exchequer to say that this was an emergency Bill, and that for the prosecution of the War it was urgently necessary that it should go through at once. To my own knowledge, the works in which I served many years—I will not mention any names, but they are well-equipped works, on the Admiralty and War Office list and employ a large number of men—until the end of this year never received a single inquiry from the War Office or the Admiralty with regard to making munitions of war, although they had during the last thirty years done a great deal of work at different times in both those Departments. In fact, the War Office and the Admiralty never took the trouble to organise the industry, and the Government now, owing to that failure on the part of those Departments, seek to take over the works of other people. Of course, if the Government think that this is necessary, it must be done; but I would ask the Chancellor of the Exchequer whether he can give an assurance on one point. Many industries in this country depend on repairs. There are large engineering shops run in the main for carrying out repairs. If the Government take over these repairing shops in order that they may make munitions of war, industry will be entirely dislocated. Unfortunately machinery does not run without breaking down, and unless machinery can be rapidly repaired you may very well have conditions under which industry cannot be carried on. I hope my right hon. Friend will instruct the Committee he is going to appoint that, as far as possible, works which are in the main engaged in repairing work should not be unduly interfered with—subject, of course, to the condition that any time they may have for making munitions of war should be devoted to that purpose.

I have very strong objection to matters of this kind being carried out by reference. As soon as the Government get into a difficulty they refer the matter to some outside person or body. I think the House would be acting wisely in itself settling, not the amount of compensation, but the principle on which compensation should be paid. There is no desire on the part of anybody for anything to be done unfairly. All that members of the engineering trade require is that if their business is taken by the State they should have fair compensation for the dislocation thereby caused. As I understand the position, the House is going to divorce itself from all control in this matter, and leave an outside tribunal to settle the amount of compensation to be paid. I think the House of Commons ought not to delegate this power. I have already said that for five months the Government did not even take the trouble to inquire of engineering firms whether they could manufacture munitions of war. I might add that, owing to slackness of trade last autumn, the particular firm to which I have referred actually started making engines and machinery for stock purposes, and the Government now tell us that they were wanting munitions of war. I do not want to block this Bill in any way if the Government say it is necessary, but I object to the Government coming down and rushing through legislation of this character without the matter being fully considered.

Mr. DENMAN

I rise merely to thank the Government for accepting in spirit an Amendment which I handed in before the commencement of the Debate. The words they propose to insert are far more effective than those which I put forward. Several Members have suggested that this Bill will be difficult of administration. Speaking for the manufacturers in my own Constituency, I have complete confidence that it will work smoothly, because I am sure that all of them will endeavour to meet the Government in every way, and when people work in that spirit you can administer most Acts. But business men like to know what their legal position is, and I am sure that the words the Government propose to insert will make that position materially clearer

Mr. GOULDING

The House will be grateful to the Chancellor of the Exchequer for distinctly stating that the question of compensation is a real one and is to be very definitely considered, but I think the method in which that compensation is to be awarded requires more elucidation. Take the case of a large engineering works which are at present doing work for the Government, but have also far-reaching contracts not confined to this country or to this continent. How are you going to estimate the damage that they may suffer through the interruption of those contracts? Are the Government themselves when they take over the business going to proceed to the fulfilment of those contracts? If not, what is going to happen? We are under terms to fulfil those contracts within a certain time; if they are interrupted what will be the natural consequence? We are catering for these clients not merely for to-day, but also with an eye to the future. They must get their work done somewhere. The contracts are essential to them, and if we cannot finish them they will go elsewhere; we shall then have on our hands the unfinished product, which will be perfectly useless.

What instructions will be given to the arbitrator to guide him in deciding what compensation is to be given? Will he estimate only the actual loss as regards the particular contract, or will he take into consideration the possible loss of the client, who may have been a client of the firm for many years? Anybody connected with business, especially in the engineering trade, knows perfectly well that, with the changes and adaptability which have to go on from time to time, people like to keep with a firm who have in the past turned out satisfactorily the products they require. If we cannot finish their contracts our clients may go to an American firm, and, if that American firm turns out satisfactorily the particular article they require, the odds are that those clients will remain with the American firm and not return to the English firm who have been interrupted. How is the compensation to be calculated, both as regards the possible loss of the clients and as regards the unfinished product? There are two distinct questions. Surely it is only reasonable that in a business proposition of this kind the House of Commons could be told the lines on which these arbitrations will be carried out.

Mr. LLOYD GEORGE

I think the speech of the hon. Gentleman opposite (Mr. Goulding) is an illustration of the way in which compensation ought most distinctly not to be given. The hon. Gentleman is demanding compensation in a spirit of exacting the uttermost prospective damage.

Mr. GOULDING

No.

Mr. LLOYD GEORGE

He wants not merely compensation for the actual loss in respect of the particular contract involved, but compensation in respect of possible loss of business. That is an impossible demand. His firm is not the only firm that will lose business in consequence of the War. Every business is suffering. Of course we do not know to what extent the prospects of business will be impaired, not merely in the class of business he is engaged in, but in every class of business. If we are going to pay compensation to any particular firm we shall have to pay compensation to a good many firms in the country. I do hope the Members of this Committee are not going to press upon the consideration of the Government these remote and indirect damages in respect of loss; otherwise I think the burden upon the State will not only be merely colossal, but enough to make any State insolvent.

Mr. GOULDING

What I meant to impress upon the right hon. Gentleman was that there should be some pressure put upon the Government to try and finish those contracts which are in hand at the present time, so that the whole thing may not be wasted.

Mr. LLOYD GEORGE

I know; but I was rather dealing with the other point. To compensate firms like these for the actual loss sustained, and also for the prospective loss which might be inflicted upon them in consequence of the loss of business in future, is a position that we cannot possibly contemplate, and I hope the House will not press it upon us. I am not at all sure that the hon. Member need be so alarmed. After all, there is only one place that firms can go to, and that is the United States of America. The United States are very busy turning out munitions of war for various countries—not merely for the belligerents, but for other countries of the world—and I doubt very much whether the United States is going to be a very dangerous rival in regard to contracts of the kind referred to. Another dangerous rival is for the moment out of the question altogether. I agree with some hon. Members who have spoken that it is very desirable that the House of Commons should have the opportunity of discussing the principles of compensation, but I still think that the most businesslike way of dealing with it is not to put down elaborate rules of compensation in an Act of Parliament, but rather first to appoint your Commission—and I hope we shall be able to appoint a Commission which will command the confidence of all—and let the Members of that Commission consider the character of the claims which come before them.

They fall into two or three, or more, categories. There is, first of all, the man whose buildings have been destroyed. Take the case given by the right hon. Gentleman of the man whose buildings have been damaged and destroyed. I think the way in which he put that case was a perfectly fair way. The claim put forward was a demand, not for compensation on Land Clauses Act terms, but for the actual loss and damage inflicted upon these particular buildings. That, I think, is the spirit in which you can settle cases of the kind. There is the case of the farmer whose land has been destroyed for agricultural purposes for some time to come through the making of trenches and other military operations. There is the third case which comes in—the case of the business. But I would infinitely rather that this Commission should sit down first of all and invite claims, and then themselves consider the principles upon which they should proceed. I think that is the first thing for them to consider. After all, all this is subject to review by the House of Commons. It will take the Commission some time to consider their general principles. We shall report to the House of Commons what those general principles are, and the House of Commons will have the full opportunity of discussing them. If the House of Commons feels that those principles are illiberal they can say so, and not only say so, but the House can give instructions that they shall be enlarged and compensation given on more generous terms. On the other hand, if the House thinks that the payments are extravagant, and that they are imposing an unfair burden on the State, the House of Commons will have the absolute right, through the Executive, to give instructions to the Commission concerning them.

An HON. MEMBER

Will the Commission be officially under any Department?

Mr. LLOYD GEORGE

It will be either under the Treasury or under the War Office. The War Office is primarily responsible to Parliament for the damage, and the money is paid under Votes of Credit; but perhaps the War Office and the Treasury between them may make an arrangement in the matter.

Mr. DUKE

Will the right hon. Gentleman consider whether, as this is an entirely new field for compensation, it would be desirable to pass a short Act setting up the Commission with a limited statutory authority?

Mr. LLOYD GEORGE

Nobody knows better than the hon. and learned Gentleman that the moment you put anything forward in the nature of a right you open the way to all kinds of litigation. I want to avoid that.

Mr. DUKE

I want to avoid it, too, and that is what I meant. If the right hon. Gentleman would set up the Commission with statutory authority he could, in doing so, take care that the right, the eminent domain, of the State under which various powers of entry exist should be preserved, and that the payment made should be a payment declared to be ex gratia by the State.

Mr. LLOYD GEORGE

I will consider the suggestion. I think the Act of Parliament which authorises a Vote of Credit does authorise, and give us statutory authority, to set up any Commission for the purpose of ascertaining the amount which should be paid. However, I will consider the suggestion of the hon. and learned Gentleman. I should very much like to be in a position, before Parliament separates, to announce the Commission and its character. It will take some time to constitute it. I have had admirable suggestions as a result of the Debate yesterday. Some names have been suggested to me which I should like to consider in conjunction with Lord Kitchener, who is primarily responsible for the Department that will make these payments.

Sir A. MARKHAM

Will the right hon. Gentleman consider whether these payments should be suspended until the House has had an opportunity of considering the form of them?

Mr. LLOYD GEORGE

I should be very sorry if this matter were delayed until Parliament had completely discussed the payment of compensation. There would be a good many cases delayed for some time. I hope my hon. Friend will not insist upon pledging the Government that we shall not pay any compensation until the House of Commons has had the opportunity of discussing it. This I can say: there will be full opportunity on the Motion for Adjournment to discuss this Motion. I hope the House will then be better informed as to the character of the Commission we propose to set up. If I fail to make an announcement in the House it will be because I have experienced some-difficulty in getting, in so short a period, a Commission which will be perfectly satisfactory. I trust I may be able to do so, and I ask the House now to let us have the Bill, Clause 1, so that the Bill shall be recommitted with a view to the insertion of these provisions.

Mr. LONG

I cordially recognise, not only the spirit in which the Chancellor of the Exchequer has met us, but also the fairness of the proposal he has adumbrated to the House. I quite see the very great difficulty in the way of making any promises either as to an Act of Parliament, or an amendment to this particular Bill. I quite appreciate that; yet the difficulty still remains to which I ventured to call attention earlier. I understand that the suggestions made remain before the Chancellor of the Exchequer and the Government—

Mr. LLOYD GEORGE

To take one or the other.

Mr. LONG

Yes, that is all we can expect. I will express the hope that nothing will be said here to cause delay or to prevent a settlement of these claims. Once this principle is adopted it is in the interests of economy to settle at once. You are much more likely to get the case settled and disposed of on reasonable lines if you settle it promptly, than if you keep it held up for a long time, with the resultant bitterness and perhaps a determination to get more. So far as I am concerned I cordially support the Government and hope that the Bill will go through.

Sir CLIFFORD CORY

I cannot help thinking that in Sub-section (1) of Clause 2 there is a potential injustice. You may have the case of contracts with engineering and other large works that have been made with the owners of small struggling businesses. In such cases, as the hon. and learned Member for Cork said, when the Government takes the works or the factory it becomes a question whether the smaller man has any basis of claim against the owner of the works larger owing to the delay in the fulfilment of the contract. The hon. Member for Cork suggested that there should be power to cancel the contract. I think that is very desirable, because the machinery contracted for may be necessary to carry on the smaller business. I do not think it is sufficient to give cases of the kind the power of cancellation alone. They should have the power to receive some compensation, for, after having placed their orders, a few months might elapse, and the business might have increased. To a man in a struggling way of business it might be a serious thing if he had to pay £1,000. I think in such a case he should be entitled not only to cancel the contract, but be able to place his orders somewhere else. He should also receive compensation. I trust the right hon. Gentleman will take that case into consideration and amend the Bill so as to provide against possible injustice in the case of small owners.

Mr. BUTCHER

I do not wish to delay the progress of the Bill by unnecessary criticism, but we are now considering a very serious question indeed. So far as payment to private persons is concerned, I entirely agree with the principle, or the object of the principle. I think it is only right that the Crown should be able to enter into the possession of any lands, buildings, factories, or anything else if it desires, for the purpose of helping forward war preparations. But surely if that is right in principle, is if not equally right and reasonable that the subjects whose lands, buildings, or factories are entered upon should receive compensation? May I put the case as it occurs to me? What you ought to provide for should not merely be provided for by a statement in this House, but also by a short Bill, which I have no doubt the Government could easily get. Our two points are these: In the first place, the right of the subject to compensation should, I think, be recognised—in other words, that it should be made clear that it is not merely some ex gratia payment, but some payment to which the subject is entitled to receive on behalf of the Crown in respect of any loss. The second point which ought to be embodied in such a Bill is some general indication of the principles upon which that compensation should be based. At present the whole thing is in nubibus. You have got a statement from the Chancellor of the Exchequer that it is intended to pay compensation. We have it from him that in some cases, at any rate, the compensation is to be limited in a particular way. I quite agree that it is desirable to put a limit, but I think that the limitation ought to be embodied, not in a statement from the Treasury Bench, but in the form of a short Bill.

I agree, if I may respectfully say so, with the view that it cannot be put into this Bill, but is there any reason why, now we are agreed—as I think the Chancellor of the Exchequer admits—that the subject should receive some compensation, as we are also agreed that certain lines should be laid down upon which that compensation should be estimated, why these two principles should not be embodied in a Bill? It would be far more satisfactory to everyone concerned, both to the Crown and to the subject. We are told if this is put into a Bill you would necessarily have a large amount of litigation. I cannot see how that need be so. Let me suggest to the Chancellor of the Exchequer the form of a Bill which would effectively avoid any litigation. It might be stated that anyone injured by the exercise of the Crown of its rights under this Bill, or under the previous Bill of which this is an Amendment, shall be entitled to receive compensation; the amount of that compensation to be decided by a Commission such as the Chancellor has suggested, and that the decision of that Commission shall be final. Where would the law costs come in then? That would, I think, make the thing watertight against law and lawyers.

Mr. DUKE

It would be a very costly process of arbitration.

Mr. BUTCHER

Then limit the procedure so as to avoid the costs! It is admitted that there must be compensation. It is admitted that there must be a Commission to decide upon the compensation. Surely it is not beyond the power of the Chancellor of the Exchequer so to frame the procedure as to limit the cost and the delay to the very minimum! I think in that way you would avoid proceeding, as we are asked to do now, upon an entirely novel principle, and I think it would be far quicker in the end if this House laid down the conditions on which the Commission should act, and got the matter settled at once by this House.

Mr. ANEURIN WILLIAMS

Under the Bill which we have now before us the Government will, I presume, take over the control of a number of industries and factories, and it seems to me of the utmost importance that things should be so arranged that all the factors of production in those factories and industries should work together harmoniously. At present, unfortunately, we see that that is very far from being so. We see that the necessary preparations for the victorious carrying on of this War are very much interfered with by the fact that in many cases the workmen employed find that they are suffering hardship by the diminished purchasing power of their wages, while they also see, or believe that they see, certain employers and contractors getting increased profits. I hope that the Government will be able, when they take over industries under this Bill, to work out some better relation between capital and labour. I can quite see it may be necessary to take over the industries under any circumstances, but I think it would be a great misfortune if that involved the State in conflicts with labour, and, on the other hand, it would be an enormous advantage if it led to the setting up of a better and more harmonious relation between capital and labour.

I see it stated that it is the intention of the Government to pay for these industries that they take over on the basis of three years of the average profits. Whether they do that or not, I suppose it will be on some such basis as it was in the case of the railways. But I see it also stated that, in addition to that, they intend to pay to the previous owners one-fourth of the profits above the average profit of the last three years. If that is so, I hope there will also be some plan by which a part of the profits shall be paid to or made over for the benefit of the employés. I quite see it will not be easy, in any case, to ascertain what the profits are to be. But still, that problem has had to be faced in the case of the railways, and presumably it will have to be faced in the case of the industries and factories taken over under this Bill, and I hope it will be successfully faced. If it is faced as regards the owners, there is no reason, I think, why it should not be faced with equal success when you come to dividing a share of the profits for employés. Whether this particular way can be carried out or not, I do hope the Government, in taking over these industries, will not lose sight of the enormous importance of bringing about some arrangement between themselves and the labour employed by which the interest of the State shall also be made the interest of the workmen employed, either by some system of bonus or profit-sharing, or soma other system by which the two interests shall be bound together.

Mr. DUKE

I do not want at all to advise His Majesty's Government as to how they should carry on industries of one kind or another; but this question of compensation to people who are dispossessed by the proposed operation of the Bill is a new and, it seems to me, a very serious question, and I should like to emphasise in a few words the suggestion I made to the right hon. Gentleman in the course of his speech as to the mode in which, consistently with public interests, the House might, perhaps, think it wise to deal with provision for compensation. I cannot at all take the view which my hon. and learned Friend the Member for York (Mr. Butcher) took, that this House ought to lay down the right of compensation. That would be absolutely new. The principle of the Constitution upon the subject, I believe, is a principle which will be found embedded in the Constitution from almost prehistoric times, and certainly before any legal records in this country. There is in the State the right of eminent domain, by virtue of which in military emergency the State may take what it needs. To my mind that is a power of the State which ought not to be trifled with.

If you are going to attach to the exercise of the historic and necessary power of self protection in the State, incidents which result in the springing up of an enormous mass of costly arbitration or litigation, you are putting a burden upon the community which would aggravate the necessary burden of the War. For my part, I am entirely opposed to anything of that kind. I sympathise entirely with the resolution on the part of those who to-day are responsible for administration in this country, that the rights of the State in this particular should be safeguarded, but, of course, this House would insist that powers which are exercised under the control of the House should not be harshly and oppressively exercised. That is the alternative to the prospect of exacting and exorbitant demands which would spring up immediately you had a statutory scheme of compensation. The legal right of compensation is far too serious a matter to be lightly recognised even under the emergency of the present War. It goes an immense way beyond anything that has ever been done.

The difficulty is, how to reconcile the desire of the House of Commons and the community that there shall be fair play in the distribution of the burdens which spring from the War, with a firm resolution that the State shall not be sponged upon because it is in difficulty, and the ancient rights of the State shall be preserved. I venture to suggest to the right hon. Gentleman, as something of a new departure is going to be made, as the Government is going to recognise by its public promise in the House of Commons its duty of considering the question of compensation, whether it should not set up by Statute a Commission, and that the Statute should declare that the duty of the Commission is to ascertain what payments, in its opinion, ought to be made ex gratia by the Crown in relief of the burdens which the War has thrown upon the individual citizen. That would, I believe, avoid any of the danger, which I regard as a serious danger, of enormous costs of arbitration arising out of a statutory scheme of compensation.

I know that my right hon. Friend the Attorney-General—I may call him my right hon. Friend in times such as these—takes the view that there is probably a statutory sanction for the doing of what is necessary in Votes which this House has either made in Supply or is intending to make in Supply. That may be so, but this granting of compensation in cases of entry under emergency is a very great new departure if it is made. It infringes upon an ancient right of the State, and, for my part, I venture very respectfully to press upon the Government that it is much better that what is done should be done upon a fair consideration of what is necessary in the public interests than that you should do it by a side-wind on Votes of Account or any procedure of Supply, and that in a year or two it should be said there is a precedent here for right to compensation by the State.

Mr. BRYCE

I think, before the speech of the right hon. Gentleman, everyone recognised it is very undesirable to add to the burden of the State, and the weighty words he used certainly emphasised that point very strongly. But I think the Chancellor of the Exchequer was a little hard on the hon. Member for Worcester (Mr. Goulding) for asking that the consideration should be something more than the actual damage. That might have been perfectly right if everyone were going to suffer equally under this Act. But everyone is not going to suffer equally. Some people will actually be benefited by the action of the Government. Those who are not commandeered will have a better time than those who are commandeered, and the Government is actually spending money on a number of people who to-day are better than they otherwise would be. The Board of Trade has spent a great deal of time and money in showing how fresh markets can be obtained by manufacturers and traders in this country, and it is a most laudable object. But is it fair that the goodwill of one set of people should be less than the goodwill created at the cost of the State for another set of people? Because that is practically what is going to be the case. I think also the Government might diminish the necessary evils of this tremendous disturbance of industrial effort if they would first of all do their commandeering on the factories belonging to alien enemies. There is a very eminent German firm which has not been taken over by the Government, but which I believe, is doing some work for the Government, and is doing a large amount of other work. There are a good number of other cases, and the damage which will be done to many factories will be diminished pro tanto if the Government will, first of all, determine to commandeer factories of alien enemies.

Sir W. PHIPSON BEALE

I only want to add one word, and that is a word of caution against any attempt by Statute to lay down a principle upon which compensation should be paid. The moment you do it you let in the possibility of an appeal to some kind of Court. The hon. and learned Member for York suggested you could do it by laying down a principle, and then saying that the decision of the Commission, arbitrator, or whatever tribunal it was, should be final, but the only real way is to follow on the principle laid down by the hon. and learned Member for Exeter (Mr. Duke).

Question put, and agreed to.

Bill reported without Amendment.

Mr. LLOYD GEORGE

I beg to move, "That the Bill be recommitted to a Committee of the Whole House," in order to insert the words of which notice has been given.

Question put, and agreed to.

Bill accordingly considered in Committee.

[Mr. WHITLEY in the Chair.]

Mr. LLOYD GEORGE

I beg to move, in Clause 1, Sub-section (2), after the word "necessity" ["where the fulfilment by any person of any contract is interfered with by the necessity of complying with any requirement"], insert the words "on the part of himself or any other person."

Mr. HEALY

I am not going to say anything on the subject of merit at all, but only on the procedure. It should be distinctly understood that the procedure just now adopted has been assented to as an emergency, and not as part of the ordinary proceedings.

Question put, and agreed to.

Clause, as amended, ordered to stand part of the Bill.

Bill reported; as amended, considered.

Motion made, and Question proposed, "That the Bill be read the third time."

6.0 P.M.

Mr. RAWLINSON

In the event of the Crown taking any buildings or factories in any part of the country, directly they are taken over by the Crown, ipso facto, cease to be liable for rates. Now that would be a very severe blow to the local authorities by whom those rates have previously been received. I am told that under the Emergency Act last year there is no power given to deal with this point. Previous Acts of this kind have contained Clauses which give power to the Government to pay the same rates as the previous owner. It is a very technical point, but it is one of considerable importance to local authorities, and I hope that the Government will see the advisability of inserting in another place a similar Clause to that which has appeared in previous Defence of the Realm Acts giving them power to pay the rates in respect of such property, even though it is not made absolutely compulsory to pay those rates. If this is not done the local authorities will suffer a great deal. I hope those who advise the Chancellor of the Exchequer will not proceed upon a dangerous principle which is introduced into this Bill. I refer to the power given to the Government under the terms of the Vote of Credit to do practically whatever they like with the money voted. Surely the Vote of Credit ought to be dealt with reasonably and strictly on the understanding that the money is voted really for military and naval purpose.

Mr. LLOYD GEORGE

Hear, hear.

Mr. RAWLINSON

That can be construed strictly and reasonably, and it may be construed very widely and unreasonably. Supposing you found some particular society was going bankrupt owing to the War, you might make a donation to it of a very large sum. That is a conceivable state of affairs which might arise, but there will be great difficuly in defending such action, and there must be a limit of some kind under the Vote of Credit. You may make Grants for the rates which have been lost to the local authorities, but I do not think that would be a satisfactory way of dealing with the matter, and I hope the Chancellor of the Exchequer will see that this is done in some constitutional way, and that the Government have power to pay the rates in respect of these buildings taken away from their owners so that the local authorities shall not suffer.

Mr. LLOYD GEORGE

I will consider that question.

Mr. JAMES HOPE

Do the Government pay Grants in relief of rates on Government buildings?

Mr. LLOYD GEORGE

Yes; they do that now.

Question put, and agreed to.

Bill read the third time, and passed.