HC Deb 05 December 1932 vol 272 cc1323-58
Sir S. CRIPPS

I beg to move, in page 21, to leave out lines 4 to 27, and to insert instead thereof the words: having regard in particular to—

  1. (i) the average net profits earned by the undertaking or the part of the undertaking, as the case may be, for the three financial years last preceding the date of the passing of this Act, after meeting all proper charges, including adequate provision for the replacement or renewal of all assets subject to depreciation or obsolescence; and
  2. (ii) the probability, taking into consideration all the circumstances of the case and the nature of the undertaking, that those profits would have continued to be earned by the undertaking or the part of the undertaking, as the case may be, if this Act had not passed; and
  3. (iii) the amount of any direct pecuniary loss arising to the undertakers by reason 1324 of any liability or obligation attaching to them in connection with the part of an undertaking being a liability or obligation which was reasonably assumed before the appointed day by the undertakers in the ordinary course of their business as such, and which the Board on being required so to do by the undertakers refused to take over."
7.42 p.m.

This Amendment is designed to put back into the Bill the Clause dealing with compensation which was originally there. The present Clause, which consists of nine Sub-sections, proposes to lay down the considerations which the arbitration tribunal are to take into account in determining the compensation to be paid by the board on the transfer of certain undertakings, the largest of course being the independent omnibus undertakings which appear in the Schedule, for which compensation has not yet been assessed, and not including the local authority undertakings which have already been dealt with under another Clause. In the determination of compensation, which is always a difficult task, it is absolutely essential that the considerations should either be left wholly at large, for the tribunal itself to decide what are the material factors, or that some perfectly precise guide should be given to them as to what matters they should consider. What we complain about in the present Clause, and in Subsections (2) and (3), is that it is laying down a very vague task for the arbitration tribunal, and one which really is quite incapable of being carried out in any circumstances. Sub-section (1) says that the tribunal "shall have regard to all the circumstances of the case and shall, subject to the provisions of this Section, determine the value of such undertaking," and award a consideration equivalent to that value. Sub-section (2) starts with the words "The arbitration tribunal shall endeavour to secure." I do not think that the Attorney-General has ever seen in any Act of Parliament a statement that an arbitration tribunal "shall endeavour to secure" something. They have to decide matters and give determinations. But when one starts with the words "shall endeavour to secure," it shows that what is going to follow is something rather vague and probably something which cannot be obtained. What they have to "endeavour to secure," is that the standard of consideration payable in respect of the several undertakings and parts of undertakings transferred by this Act…shall be fair and equitable as between the several owners thereof. I have not been able to appreciate what is meant by the "standard of consideration." Those words are very difficult to interpret and they are words which will have to be interpreted the very first time any matters arise as regards compensation for the Arbitration Tribunal to decide. The Sub-section goes on to say: in order to secure that result (the tribunal) may, amongst the circumstances to Which they have regard in determining the value of any of the undertakings mentioned in Sub-section (1) …. have regard to the nature and value and the consideration paid for the transfer of any other undertaking or part of an undertaking …transferred by this Act, whether that consideration is fixed by this Act or by agreement under this Act. What I understand that passage to mean is that if the arbitrator is trying to fix the sum which John Jones is to be paid for his independent omnibus undertaking, they have to look, among other things, to what the Metropolitan Railway Company got for that railway and try to make some standard applicable both to the Metropolitan Railway and to an undertaking which may consist of a couple of omnibuses. That obviously is something of which the tribunal would be quite incapable. No tribunal could possibly do that. It is not to take into account the value of similar undertakings or undertakings of a similar type or anything of that sort. It is "any other undertaking" which has been transferred. Sub-section (3) sets out that: Where the arbitration tribunal are satisfied that in settling the consideration payable in respect of the transfer of any such other undertaking or part of an undertaking… any factor has been taken into account which is relevant to the case pending before them, they shall …take such factor into account and shall in respect of that factor make their award on a similar basis. That provision opens up the whole of the negotiations with regard to the acquisition of other undertakings. Let us again take the example of the Metropolitan Railway Company. Every single matter mentioned between the negotiators in that case is opened up by this Subsection. One could ask, "Did not the chairman of the Metropolitan Railway put forward such-and-such a contention, and was not that one of the matters weighed in arriving at this settlement?" If he did so, then the tribunal in making their award have to take into account that factor whatever it may be, and have in respect of that factor "to make their award on a similar basis." It is not a similar basis to that upon which the settlement of the sum was arrived at but it is a similar basis in relation to the consideration given to the matter in the course of the negotiations. Whether that is desirable or not, I am not at the moment discussing, but I am suggesting that to put such a Sub-section before an arbitration tribunal is trying them very high indeed. It is setting them an immensely difficult task.

If you are going to impose such a task on the tribunal, you must define it with the greatest precision unless you are going to court applications to the Court of Appeal in every case, on the interpretation of these two Sub-sections. We propose to substitute for these vague Subsections a precise method which, we believe, is perfectly fair and which lays down a basis upon which calculation of the value of these undertakings can be made by the Arbitration Tribunal. The introductory words in the Clause are that the tribunal shall have regard to all the circumstances of the case, and the first part of our proposal is that they shall have regard, in particular, to the average net profits earned by the undertaking or the part of the undertaking for the three preceding financial years, which is a common basis of compensation in such matters. The second matter to which we suggest that they shall have regard in particular, is the probability, taking into consideration all the circumstances of the case and the nature of the undertaking, that those profits would continue to be earned by the undertakings. That is a very common consideration in compensation cases. The third part of our proposal is that the tribunal shall have regard to the amount of any direct pecuniary loss arising to the undertakers by reason of any liability or obligation attaching to them in connection with the undertaking—that is to say financial commitments into which they have definitely entered and which the board has refused to take over.

These three proposals in our Amendment set out three clear, definite and fair grounds to form the basis of the compensation which is to be paid to these undertakings, but we press upon the Attorney-General that whether he agrees that these three particular factors are the right factors or not, there ought to be inserted some precise words rather than the vague generalities of Sub-sections (2) and (3) of the Clause as they stand. These simply say that you are to try to find out everything mentioned in the negotiations in any case that has been concluded, either before or after the passing of the Act, and having done that you must try to assess compensation, if you can, on the same sort of basis. For the sake of avoiding expensive litigation we ask the Attorney-General in mercy both to the undertakers whose businesses are being acquired and the Transport Board to make a more definite basis upon which the arbitration tribunal can work.

7.53 p.m.

Sir K. VAUGHAN-MORGAN

This, I understand, is a Clause which was subjected to a great deal of criticism in another place when the question of carrying over this Bill was under consideration. I think it was said then that the Clause was only partially intelligible, and that it had been constructed under considerable pressure and with great difficulty. May I ask the Attorney-General if I am correct in reading this Clause as an attempt to constitute what may be described as a kind of yard-stick, and in saying that the value assessed as the value of a certain undertaking is to be utilised as a measuring instrument of compensation in all the other cases to be determined? If that be the case, is there not a serious risk, if too high a value is placed upon undertaking No. 1, that all the other undertakings, numerous as they are, will be similarly assessed at too high a value? In such an event the difficulty of the Transport Board's task to make the new undertaking operate successfully must be largely increased. On the other hand, in the unlikely event of too low a value being put on one undertaking, it would result in the other undertakings receiving less than their fair valuation. In those circumstances a simpler procedure than that proposed here would seem desirable. Perhaps the Attorney-General will deal with that point.

7.55 p.m.

The ATTORNEY-GENERAL

I think anybody who has ever essayed the task of laying down the principles which are to guide a tribunal has found that it cannot be done without difficulty. I remember when the House of Commons attempted the task of laying down the principles upon which the tribunal for dealing with claims for War losses compensation was to arrive at its findings. The ascertainment of the standard revenue of the railway companies was another example of an attempt by Parliament of that kind. As regards the War Losses Compensation Tribunal the principles laid down by Parliament were much criticised in the courts, and were said to be very difficult to understand, but the comparative fewness of the appeals from that tribunal justified the efforts of Parliament to lay down guiding principles in what were novel circumstances.

In this case if one looks at the Clause as it stands one is apt to say that it is difficult to understand, that it is unintelligible, or that it will be difficult to apply. I am more sanguine about it, however, than the hon. and learned Gentleman opposite. I think that the Clause when examined will be found to lay down, perhaps in rather formal language, precisely that which the tribunal, without any direction from Parliament, would try to do. Let us assume that we are sitting upon such a tribunal. We should first desire to fix an amount which would give proper compensation to the person whose undertaking was being taken, that is to say, to see that that person got value for his undertaking. Our next effort would most certainly be to guide our assessment in the case of B, by the principles, so far as we still thought them good principles, applied in the case of A. That is to say, we should not give B a larger number of years' purchase than A, if the two undertakings were precisely similar. In other words, we should try to arrive at an award which would be equitable as between all the different parties. Everybody agrees that it would be unfair to give a preference to A over B or B over A. The idea in everybody's mind would be to give compensation which was equitable to all those making claims.

Then, I think, in trying to discharge that duty the Tribunal would be faced from time to time with this question. Somebody would say, "This undertaking has such and such a feature." The Tribunal would very likely say—if the facts justified it—" That feature was present in another case and we dealt with it in a certain way. We had better deal with that feature in this case, as we dealt with it in the other case—indeed in common fairness we ought to do so." I think that that would be the way in which any of us would approach this question. Now let as see what the Clause proposes: The arbitration tribunal shall endeavour to secure that the standard of consideration payable shall be fair. "The standard of consideration," the hon. and learned Gentleman says, is a novel expression. It may be novel—I do not remember it occurring elsewhere—but I think "the standard of consideration" merely means the rate or the range of consideration; it means the figure in the scale to which consideration to be given. The consideration payable is, in other words, what a layman would call the sum or compensation. The Sub-section says: The arbitration tribunal shall endeavour to secure that the standard of consideration"— Let me paraphrase that by saying "the compensation payable."

Sir S. CRIPPS

Then we do not want the words "the standard of."

The ATTORNEY-GENERAL

I think you do want the word "standard," because you are going on to the words afterwards which deal with two, three, or more comparable cases. Therefore, you want the word "standard," so as to show that you have what my hon. Friend behind me called a yardstick, some measure which you will be able to take and apply from one case to another. I think the word "standard" does import something into the Clause. It goes on to say that the standard of consideration ….shall be fair. We all agree with that. It has to give a man what is fair, and no more than is fair. Then it goes on: and equitable as between the several owners thereof. We must all agree, as I have already suggested, that one omnibus company is not to be preferred to another. The Clause goes on to say, in Sub-section (3), that any factor which has been taken into account in the case of one arbitration shall be taken into account similarly in another arbitration. Is not that doing exactly what any of us would do? If we had a whole range of arbitrations to conduct, we should probably say, if we were fair-minded and actuated by common sense, "I have dealt with such and such a factor in this way, and I shall apply the same considerations to the present case."

Sir S. CRIPPS

Surely it applies to such things as the Underground agreement, the Metropolitan agreement, the Hertfordshire agreement, and so on, with which the Arbitration Tribunal have had nothing to do

The ATTORNEY-GENERAL

Certainly; I think that the suggestions which I have been laying before the Committee are equally good as applied to agreements already arrived at and embodied in the Bill, because the idea over the whole range of these settlements, whether compulsory, statutory, by agreement, or by arbitration, is that they are to be as nearly as can be equitable between all the parties concerned; that it is to say, that if the tribunal finds, by examining the documents and the facts, as they have power to do under Sub-section (4), that some agreement embodied in the Act has been arrived at by a particular route, they shall follow that same route in arriving at a fair and equitable sum in the case of the arbitrations entrusted to them. I fully accept what the hon. and learned Gentleman says as to the arrangements which are taken over on terms embodied in the Bill. The factors in those settlements are to be imported into—or that is the wrong way of putting it. It is not the factors to be imported, but the use made of the factors is to be taken from one agreement and put into another settlement of a claim.

The Amendment which the hon. and learned Gentleman proposes is the Clause as it appeared in the previous Bill, and it was not a Clause that the Select Committee thought satisfactory. I am not for a moment asking this Committee to be bound hand and foot by the decisions of the Select Committee. This Committee is in a position to take its own line, but it has the advantage of all the consideration given to this question by the Select Committee, which did not find the Clause in the previous Bill satisfactory. They invited everybody to have a hand at making a satisfactory Clause. Very eminent counsel tried their hands at it, and the most eminent people in this line of country worked away at it, but none of them could agree upon what they thought was a proper Clause, and the Select Committee, therefore, produced the Clause in the Bill. The first proposal in the Amendment is to take the average net profits earned by the undertaking …for the three financial years last preceding the date of the passing of this Act. If that were adopted, it would immediately offend against one of the principles that I have already tried to state, namely, that everybody should be treated equally, because those three financial years are not the three years upon the basis of which the Underground undertaking has been compensated. Therefore, you immediately get inequity instead of equity as between the Underground undertaking and those that come to be settled afterwards.

Mr. ATTLEE

As the arbitration is to be founded on a variety of agreements, were all the agreements embodied in this Bill for the same period of years and the same basis, because if not, that argument applies as much to the right hon. and learned Gentleman's Clause as to our Amendment?

The ATTORNEY-GENERAL

The agreements that have been made, I am informed—and I can only repeat to the Committee what I have been informed—have been arrived at on the basis of three years or periods which would not be the periods mentioned in the Amendment. The Amendment takes the three years preceding the passing of the Act, and they would be 1929, 1930, and 1931, but these agreements were arrived at for the most part early in this year. Therefore, 1931 has not been a factor. Therefore, paragraph (i) of the Amendment would not allow the result to be produced which we aim at in the Clause as it is in the Bill. Paragraph (ii), of course, is based upon paragraph (i), because it says that the tribunal is to take into consideration the probability of the profits being maintained as if the Act had not passed. Having arrived at the profits for the three years mentioned in paragraph (i), the hon. and learned Gentleman wants the tribunal to say what are the chances of those profits being maintained at that rate for the years to come. The two paragraphs hang together. The hon. and learned Gentleman might say that paragraph (ii) would, in his judgment, be the right way of approaching the question, even if paragraph (i) is not to be taken.

Sir S. CRIPPS

We should be prepared to have the three years the right hon. and learned Gentleman mentioned, namely, the years taken in the other agreements.

The ATTORNEY-GENERAL

The hon. and learned Gentleman says he would be quite prepared to take the three years 1928, 1929, and 1930. That, of course, makes a considerable difference in the criticisms of his Amendment which I should make, but, broadly speaking, my criticism of paragraphs (i) and (ii) of his Amendment, which are merely the Bill as it originally stood, is that they do not direct the tribunal to do that which I think the tribunal ought to aim at first of all, namely, fair compensation and equitable as between all the parties. I can quite conceive that it would be a monstrous injustice, unless equity between all the parties required it, to compel one of these undertakings to have three particular years chosen as the years governing their compensation, and I think I can make this point clear by reference to the Excess Profits Duty. The amount of duty which the undertaking was liable to pay depended upon the years which were taken for the purposes of comparison. An omnibus undertaking might have been only a budding undertaking in one of the years in question and it would be wrong to take those three particular years. If you put in a direction of this sort, the tribunal would be bound hand and foot and would have no choice but to take the three years, even though they would be thoroughly unrepresentative, and probably only the last of the three years would be typical of the success or otherwise of the undertaking in question. I think it is better to give the tribunal a direction that they are to give fair com- pensation and equitable as between all the parties concerned.

If it be said that our words are vague, so they are, in a way, but we know that these arbitration tribunals and the gentlemen who are likely to be appointed are very familiar with assessing compensation. The principles of compensation, broadly speaking, are very well laid down. Nobody knows that better than the hon. and learned gentleman opposite, and I believe he could tell me out of his head at this moment more about the principles of compensation than I have ever dreamed of. But after considering it, I prefer the Clause as drawn up by the Select Committee. When it comes to paragraph (iii) of the hon. and learned Gentleman's Amendment, he really is trying there to do over again something that is dealt with in Sub-section (6) of this Clause, in paragraph (a), where there is a direction that the arbitration tribunal is to consider the effect of severance or separation between that part of the undertaking that has not been transferred to the board and that part which has been transferred. The hon. and learned Gentleman's Amendment would cover the same ground. It would cause great confusion, and if he will look at them, I think he will agree that you cannot really read the two directions together without completely mystifying the tribunal.

My last word is this: The hon. and learned Gentleman says that our Clause begins with a curious expression: The arbitration tribunal shall endeavour to secure. When we put words in another Clause to the effect that somebody's duty was to do something, the hon. and learned Gentleman said, "It is very hard to impose a duty on somebody when it cannot be enforced by the courts." When we use an expression of this sort, that the tribunal "shall endeavour to secure," the hon. and learned Gentleman says, "That is very vague." Both criticisms are—

Sir S. CRIPPS

Right.

The ATTORNEY-GENERAL

They cannot both be right. One of the two may be right. I think the arbitration tribunal ought to "endeavour to secure," and I am for putting in ordinary straightforward language that which the tribunal is to set its hand to, namely, an attempt to secure fairness and equity. Why not say so in straightforward English for once?

Sir S. CRIPPS

Not in this Clause.

The ATTORNEY-GENERAL

The hon. and learned Gentleman seems to want terms of art, as the lawyers say.

Sir S. CRIPPS

I will accept that, if that is all that the right hon. and learned Gentleman wants; I do not mind that. It is what follows that I object to.

The ATTORNEY-GENERAL

I can only deal with one thing at a time. As far as the words "shall endeavour to secure" are concerned, there is no objection to them in themselves. I have tried to deal with what follows. Let me say in all candour that I do not regard this Clause as perfect. I have not anything in my mind that I can suggest to the Committee as being perfect. I am not so bold as to think that I can do what the Select Committee, with very skilled draftsmen at its disposal, were unable to do. The hon. and learned Member for East Grinstead (Sir H. Cautley) was a, member of the committee, and I do not know how far his skill can be moved to suggest a better Clause. On the whole, however, I commend it to the Committee as the most workmanlike, the most straightforward, and the most common sense direction which the Committee would desire to give to the arbitration tribunal which will have to make awards in a most complicated and long series of claims.

8.17 p.m.

Mr. ATTLEE

After hearing the Attorney-General's argument both in regard to the Clause in the Bill and the paragraphs suggested by us, it appears that the real logic of his argument is that we should not have Sub-section (2) or Sub-section (3). What he really said was that these matters are very difficult and that what we have actually to rely on is the experienced arbitrators who understand this kind of thing, and that, if we give them a general direction that they are to award what is fair and equitable, they will be all right. I think that that is perhaps the logical position for the right hon. and learned Gentleman to take up. His defence of Sub-section (2) was, to say the least, not very enthusiastic. He semed to mix up decision on principles, decision by comparison of factors and decision by comparison of results. What the Bill says in these Sub-sections is that the arbitrators are to have regard in determining value to. a variety of precedents. This Bill, as I understand it, is founded on a large number of separate agreements. The arbitration tribunal have, somehow or other, to make their awards for several undertakings and to bring out some sort of comparable result to what has already been agreed on with other undertakings. The first thing then is to have a variety of models to select from.

I have only just learned from the Attorney-General that, as a matter of fact, a definite period of years has been taken. When we proposed a period of years, the right hon. and learned Gentleman first of all suggested that our period was wrong because it was not the same period as that on which the agreements were founded. When we told him we were willing to take those three years, he said that that would be wrong because to apply the same three years to different undertakings might have different results according to how long an undertaking has been running, and that in that case it would be wrong to take any particular one of the agreements that have been made because they have been made on a three-year basis and that the three-year basis is often very unfair. The result is that the arbitrators, and also the Counsel who appear before them, will have a large variety of precedents, and the Arbitration Tribunal will be in the position of selecting their authority in accordance with the award they want to give. It is a very convenient practice. It occurs in India where the various pundits have laid down contradictory propositions, so that you first of all decide the justice of a case and then select the particular precedent you want on which to found it. Precisely the same thing can be done by the arbitrators under this Clause.

The extraordinary thing is that there is no consideration of the application of certain principles. The arbitrators have to apply the factors that went to make the agreements. How are they to find out what were the factors that went to make these agreements? Agreements have been made that such and such shall be the compensation to such and such undertakings. How can you evaluate the persuasiveness of Mr. Morrison or his officials, or the complacence of Lord Ash-field or someone else? I do not know how you can evaluate these factors and supply them to the arbitrators. I do not know whether they are to have before them all the people who took part in these negotiations. Are they going through all the elaborate documents and correspondence to find out what the factors were? The right hon. and learned Gentleman said at one time that it was not a matter of factors, but Sub-section (3) says clearly that they have to take such factors into account. The question is: Are they relevant or not? I do not see how you can get an exact relevance between two matters, one of which has been the subject 'of friendly negotiations, the other of which is the subject of arbitration. The right hon. and learned Gentleman's main point was that you must have justice and equity through the various undertakings. We all want that, and I cannot understand how the right hon. and learned Gentleman thinks that he gets it. This arrangement, it seems to me, will open the widest field for different awards because of the various factors and considerations that are to be taken into account.

The right hon. and learned Gentleman criticised our proposal, but it is at least one that can be understood by everybody. The average net profits is a very clear factor. The right hon. and learned Gentleman says that that may be very unjust, for the average net profit of something that has been running full blast for three years is one thing, and the average net profit for something which has only just been started is another, and if it is based on that it will be unfair. We recognise that, and therefore the average net profit is modified by paragraph (ii), in which the circumstances of the case are to be taken into consideration, and also the probability of the profits continuing to be gained. I seriously suggest that to tell the arbitration tribunal that they have to try and judge by a series of results and a varying amount of factors is not as satisfactory as saying to them, "You shall do justice and equity between these various people, and you shall take into account certain principles, and these are the principles." The principles are given. Generally, the average net profit is the basis of all the agreements that have been come to, together with the probability of future profits, but both these considerations are subject to the overriding consideration of being just and fair between the various undertakings. If I were an arbitrator I should think that that gave me a much better line on which to go than the Clause as it stands in the Bill.

The right hon. and learned Gentleman suggests that paragraph (iii) in our Amendment has already been dealt with in Sub-section (6). That relates to a Tilling or an independent undertaking; I do not know whether it applies to a Lewis undertaking, but that, as I read it, is simply a question of compensation for severance, and our paragraph (iii) is not purely a matter of severance. If the right hon. and learned Gentleman thinks that that is entirely covered by Sub-section (6), we are satisfied. I suggest seriously that unless the right hon. Gentleman can put up a better defence than to say it is the sort of thing about which nobody could agree, about which no lawyers could agree, and that therefore the Select Committee made up this plan and we had better take it, he would be well advised to accept our Amendment, and between now and Report stage try to lick it into shape, if he thinks it needs licking into shape, or frankly admit that it is impossible to lay down any definite terms and cut out both Sub-sections (2) and (3) and simply leave it to the arbitrators to do right having regard to the circumstances of the case.

8.26 p.m.

Sir H. CAUTLEY

This Clause gave very great difficulty to the Joint Committee. We had before us the trains, the tubes and the independent omnibuses, all varying in their foundation, in the conditions on which they had been carried on, and the number of years they had been going. There were some 200 undertakings; many of them had been dismembered and parts added to larger undertakings, and other parts left out. Some of them had been started quite recently, others had been going for years and were practically worn out. All kinds of undertakings had to be dealt with. On top of that—and this was perhaps the greatest difficulty of all—we were presented with an arrangement made by the Underground undertakings on no basis of principle whatever, so far as we could discover, and during the course of the hearing we received notice from time to time of various other settlements made with local authorities or other bodies. I cannot charge my memory exactly, but as far as I can recollect nobody was satisfied with the Clause as it then appeared in the Bill.

What everybody wanted to make sure of was that they would get as good terms as those with whom settlements had been made. Two years before I had been chairman of a Select Committee of this House dealing with Bills from the London County Council and Lord Ash-field's company which were intended to bring about a voluntary arrangement. In that case we had inserted a provision that nobody who came in later should receive worse terms than those who had first come in, and it was suggested in this case nobody who came in later should receive worse terms than Lord Ashfield's company. If that had been agreeable it might have met the difficulty, but it proved not to be agreeable. One of the further reasons why the Clause had to be drafted as it is is that we never could get the amount of compensation paid to Lord Ashfield's company dissected. We never knew how much had been paid for the omnibuses, how much for the tubes and how much for the buildings, and it is in consequence of that that we find in the Clause that the Underground undertakings are to be treated as one. The local authorities' undertakings are separated in this arbitration because their terms varied—the terms on which they got their money, the length of time they had been running, the amount paid off and the way in which repayments are dealt with. For instance, the London County Council carries on its business in a totally different way from any of the other local authorities.

Under such conditions, what could the Joint Committee do I The Clause in the Bill was admittedly no use, and we set to work, with the counsel who were giving attention to this matter, to try to devise a Clause that would meet the general view. Counsel did succeed to a very considerable extent, but they could not succeed completely, and the Clause was finally settled by the Committee. What we aimed at—and I venture to say the Clause does it—was to leave it open to the arbitrator to take into account settlements already made as far as he can get to know them, and to apply those terms to the other settlements which will come before him. I submit that that is

as near to fair play and equity as it was possible to get under the circumstances.

Question put, "That the words proposed to be left out, to the end of line 19, stand part of the Clause."

The Committee divided: Ayes, 228; Noes, 30.

Division No. 15.] AYES. [8.33 p.m.
Albery, Irving James Goff, Sir Park Mayhew, Lieut.-Colonel John
Anstruther-Gray, W. J. Goodman, Colonel Albert W. Mills, Major J. D. (New Forest)
Applin, Lieut.-Col. Reginald V. K. Gower, Sir Robert Moreing, Adrian C.
Apsley, Lord Graham, Sir F. Fergus (C'mb'rl'd, N.) Morris, Owen Temple (Cardiff, E.)
Aske, Sir Robert William Grattan-Doyle, Sir Nicholas Morrison, William Shephard
Baldwin, Rt. Hon. Stanley Graves, Marjorie Moss, Captain H. J.
Balfour, George (Hampstead) Grenfell, E. C. (City of London) Muirhead, Major A. J.
Bateman, A. L. Griffith, F. Kingsley (Middlesbro', W.) Nation, Brigadier-General J. J. H.
Beauchamp, Sir Brograve Campbell Grimston, R. V. Pearson, William G.
Beaumont, M. W. (Bucks., Aylesbury) Guest, Capt. Rt. Hon. F. E. Penny, Sir George
Beaumont, Hon. R. E. B.(Portsm'th, C.) Gunston, Captain D. W. Percy, Lord Eustace
Belt, Sir Alfred L. Hacking, Rt. Hon. Douglas H. Perkins, Walter R. D.
Birchall, Major Sir John Dearman Hamilton, Sir R.W.(Orkney & Zetl'nd) Petherick, M.
Blindell, James Hammersley, Samuel S. Peto, Sir Basil E. (Devon, Barnstaple)
Borodale, Viscount Hannon, Patrick Joseph Henry Peto, Geoffrey K. (W'verh'pt'n, Bilston)
Bowater, Col. Sir T. Vansittart Harvey, George (Lambeth, Kenningt'n) Pickford, Hon. Mary Ada
Bower, Lieut.-Com. Robert Tatton Harvey, Major S. E. (Devon, Totnes) Potter, John
Bowyer, Capt. Sir George E. W. Haslam, Henry (Horncastle) Powell, Lieut.-Col. Evelyn G. H.
Braithwaite, J. G. (Hillsborough) Haslam, Sir John (Bolton) Pownall, Sir Assheton
Brass, Captain Sir William Headlam, Lieut.-Col. Cuthbert M. Pybus, Percy John
Briant, Frank Heilgers, Captain F. F. A. Raikes, Henry V. A. M.
Broadbent, Colonel John Henderson, Sir Vivian L. (Chelmsford) Ramsay, T. B. W. (Western Isles)
Brown, Col. D. C. (N'th'I'd., Hexham) Heneage, Lieut.-Colonel Arthur P. Ramsbotham, Herwald
Buchan-Hepburn, P. G. T. Herbert, Capt. S. (Abbey Division) Rankin, Robert
Burqin. Dr. Edward Leslie Hills, Major Rt. Hon. John Waller Rathbone, Eleanor
Burnett, John George Hope, Capt. Hon. A. O. J. (Aston) Hay, Sir William
Butt, Sir Alfred Hornby, Frank Reed, Arthur C. (Exeter)
Cadogan, Hon. Edward Horobin, Ian M. Reid, Capt. A. Cunningham-
Campbell. Rear-Admiral G. (Burnley) Horsbrugh, Florence Reid, William Allan (Derby)
Caporn, Arthur Cecil Hudson, Capt. A. U.M. (Hackney, N.) Rentoul, Sir Gervals S,
Cautley, Sir Henry S. Hume, Sir George Hopwood Rhys, Hon. Charles Arthur U.
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Inskip, Rt. Hon. Sir Thomas W. H. Robinson, John Roland
Cezalet, Thelma (Islington, E.) Jackson, Sir Henry (Wandsworth, C.) Ropner, Colonel L.
Chalmers, John Rutherford James, Wing.-Com. A. W. H. Rosbotham, S. T.
Chamberlain, Rt. Hon. N.(Edgbaston) Janner, Barnett Ross Taylor, Walter (Woodbridge)
Clarry, Reginald George Jesson, Major Thomas E. Russell, Richard John (Eddisbury)
Colfox, Major William Philip Joel, Dudley J. Barnato Salmon, Major Isidore
Colman. N. C. D. Johnston, J. W. (Clackmannan) Salt, Edward W.
Conant, R. J. E. Jones, Sir G. W. H. (Stoke New'gton) Sandeman, Sir A. N. Stewart
Cook, Thomas A. Jones, Henry Haydn (Merioneth) Sanderson, Sir Frank Barnard
Cooke, Douglas Jones, Lewis (Swansea, West) Savery, Samuel Servington
Copeland. Ida Ker, J. Campbell Scone, Lord
Cranborne, Viscount Kerr, Lieut.-Col. Charles (Montrose) Shaw, Helen B. (Lanark, Bothwell)
Crooke, J. Smedley Kerr, Hamilton W. Shaw, Captain William T. (Forfar)
Crossley, A. C. Kirkpatrick, William M. Simmonds, Oliver Edwin
Culverwell, Cyril Tom Knatchbull, Captain Hon. M. H. R. Slater, John
Davies, Edward C. (Montgomery) Law. Richard K. (Hull, S.W.) Smith. R. W. (Aberd'n & Kinc'dine, C.)
Davies, Maj. Geo. F.(Somerset, Yeovil) Leckie, J. A. Smith-Carington, Neville W.
Davison, Sir William Henry Leech, Dr. J. W. Somervell, Donald Bradley
Dawson, Sir Philip Lewis, Oswald Somerville, Annesley A. (Windsor)
Dickie, John p. Liddall, Walter S. Somerville, D. G. (Willesden, East)
Drewe, Cedric Lindsay, Noel Ker Southby, Commander Archibald R. J,
Duggan, Hubert John Liewellin, Major John J. Spencer, Captain Richard A.
Duncan, James A. L. (Kensington, N.) Llewellyn-Jones, Frederick Stones, James
Eales, John Frederick Lloyd, Geoffrey Storey, Samuel
Edmondson, Major A. J. Locker-Lampson, Com. O. (H'ndsw'th) Strauss, Edward A.
Elmley, Viscount Lockwood, John C. (Hackney, C.) Strickland, Captain W. F.
Emmott, Charles E. G. C. Lovat-Fraser, James Alexander Sugden, Sir Wilfrid Hart
Entwistle, Cyril Fullard Lyons, Abraham Montagu Summersby, Charles H.
Erskine, Lord (Weston-super-Mare) MacAndrew. Lt.-Cot. C. G. (Partick) Tate, Mavis Constance
Erskine-Bolst, Capt. C. C. (Blackpool) MacAndrew, Capt. J. O. (Ayr) Thomas, James P. L. (Hereford)
Essenhigh, Reginald Clare McKie, John Hamilton Thomas, Major L. B. (King's Norton)
Flelden, Edward Brocklehurst Maclay, Hon. Joseph Paton Thompson, Luke
Fleminn, Edward Lascelles McLean, Major Alan Thomson, Sir Frederick Charles
Foot, Dingle (Dundee) Maitland, Adam Thorp, Linton Theodore
Fraser, Captain Ian Makins, Brigadier-General Ernest Todd, A. L. S. (Kingswinford)
Fremantle, Sir Francis Mallalieu, Edward Lancelot Touche, Gordon Cosmo
Ganzoni, Sir John Manningham-Buller, Lt.-Col. Sir M. Train, John
Gillett, Sir George Masterman Margesson, Capt. Henry David R. Turton, Robert Hugh
Gilmour, Lt.-Col. Rt. Hon. Sir John Marsden, Commander Arthur Vaughan-M organ, Sir Kenyon
Glossop, C. W. H. Martin, Thomas B. Ward, Lt.-Col. Sir A. L. (Hull)
Ward, Irene Mary Bewick (Wallsend) Wills, Wilfrid D. Worthington, Dr. John V.
Warrender, Sir Victor A. G. Wilson, Clyde T. (West Toxteth) Wragg, Herbert
Watt, Captain George Steven H. Windsor-Clive, Lieut.-Colonel George Young, Rt. Hon. Sir Hilton (S'v'oaks)
Wells, Sydney Richard Winterton, Rt. Hon. Earl
Whiteside, Borras Noel H. Withers, Sir John James TELLERS FOR THE AYES.—
Williams, Herbert G. (Croydon, S.) Wood, Rt. Hon. Sir H. Kingsley Mr. Womersley and Dr. Morris-Jones.
NOES.
Adams, D. M. (Poplar, South) Edwards, Charles McEntee, Valentine L.
Attlee, Clement Richard Greenwood, Rt. Hon. Arthur Maclean, Nell (Glasgow, Govan)
Banfield, John William Grenfell, David Rees (Glamorgan) Maxton, James
Batey, Joseph Groves, Thomas E. Milner, Major James
Brown, C. W. E. (Notts., Mansfield) Grundy, Thomas W. Parkinson, John Allen
Cape, Thomas Hall, F. (York, W.R., Normanton) Salter, Dr. Alfred
Cocks, Frederick Seymour Hall, George H. (Merthyr Tydvil) Thorne, William James
Cove, William G. Hicks, Ernest George Williams, Edward John (Ogmore)
Cripps, Sir Stafford Lansbury, Rt. Hon. George
Dagger, George Lawson, John James TELLERS FOR THE NOES.—
Davies, Rhys John (Westhoughton) Lunn, William Mr. John and Mr. C. Macdonald.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

Sir PHILIP DAWSON

I beg to move, in page 21, line 19, at the end, to insert the words: Provided that in the case of a Tilling undertaking the consideration payable to the undertakers shall not be less than such an amount of Transport Stock as will produce in respect of any year in respect whereof interest shall be paid on London Transport Stock at the standard rate income equal to the average annual net profits of the undertakers from the undertaking or part of an undertaking transferred for the three completed financial years ended the thirty-first day of December, nineteen hundred and thirty. 8.41 p.m.

I should like to say that I have no interest in Messrs. Tilling or in any of the other undertakings which will be affected by this Bill. I wish to call attention first of all to the statement made by the hon. and learned Gentleman the Attorney-General in the Debate on Tuesday last, in which he said: Messrs. Tilling have expressed the desire to receive transport stock and not cash, the amount of the stock to be settled by the arbitration tribunal. I was going to call the attention of the Committee to the fact that Messrs. Tilling, one of the best-managed transport undertakings in London and in the country, are, at any rate, a little more confident as to the interest-earning character of the transport stock than some hon. Members of this Committee, because they prefer, not sovereigns or pounds but transport stock as the price of their undertaking."—[OFFICIAL REPORT, 29th November, 1932; col. 733, Vol. 272.] I am quite sure that there was no intention that it should be so, but this statement is misleading. The learned Attorney-General never meant it to be so, but as a, matter of fact, it is misleading. What Messrs. Tilling asked for, and what I am asking now on their behalf, is that they should be treated in exactly the same way as the Underground group has been treated. They have no option but to accept stock, and that is the fact which puts a slightly different complexion to what was put upon the matter by the Attorney-General.

Messrs. Tilling are one of the very oldest omnibus companies in London. They started in 1860, and they have given most excellent service during many years which they have been in operation. They operate throughout my constituency, and I can give testimony to the admirable omnibuses and to the service in general. They have acted in close co-operation with the London General Omnibus Company ever since 1913, and they are the joint owners in many cases of omnibuses which operate jointly with the Underground Company. Now they are selected for treatment different from that which is meted out to the Underground companies. The Underground companies' help was essential for this Bill, and therefore the terms had to be arrived at with them. When Mr. Morrison was in charge of this Bill, he met Messrs. Tilling, but the offers that he made to them were of such a nature, and were so much worse than the offers made to the Underground companies, that Messrs. Tilling, did not see their way to accept them.

Later on, when the present Minister took up the Bill, it was found necessary to consult the Metropolitan Railway because their opposition would have made it very much more difficult to carry this Bill through the House of Commons. They were consulted and arrangements were made with them and the Underground Group that gave satisfaction to them. The hon. Gentleman suggested equal treatment for everyone, and I agree with that. In these circumstances, why should Messrs. Tilling not have equal treatment with the Underground Group? That is all that they ask, namely, that they should receive compensation based on their net earnings during the three years 1928–1930. Their concern is a very big one. While the Metropolitan Railway carried 86,000,000 passengers, and the Underground Railways 357,000,000, Messrs. Tilling carried 152,000,000. They are a very old, a very well established, and a very large concern, and I hope that my request that they should have equal treatment with the Underground companies will not be refused, because in my judgment they are entitled to it.

8.46 p.m.

Mr. REMER

I should like first of all to refer to the statement of the AttorneyGeneral which has been quoted by my hon. Friend. My reason for desiring to do so is that I saw the Minister shaking his head at the time that the quotation was made. If I may be allowed to do so—

Mr. PYBUS

If I may interrupt the hon. Member for a moment, I do not think he is entitled to register a decision by whether he thought that I was or was not shaking my head.

Mr. REMER

I thought that the hon. Gentleman was expressing disapproval of what my hon. Friend the Member for West Lewisham (Sir P. Dawson) was saying. Perhaps I might he allowed to read a letter which I personally have had from Messrs. Tilling. Having quoted the particular passage in the Attorney-General's speech which my hon. Friend has just read, they say this: This is an entire misconception, whether deliberately for purposes of policy or not, of Tilling's case. Messrs. Tilling have from the very first had as their main thesis the principle that they should receive the same treatment as the Underground Group, no more and no less. The arrangements entered into by the promoters with the Underground Group have been made on a basis whereby that group take for the purchase of their undertakings holdings of London Passenger Transport Stock sufficient to give them approximately the average annual income arising -from the operations of that group for the three financial years ending 31st December, 1930. I think that that shows quite clearly that Messrs. Tilling and the Metropolitan Railway are in exactly the same position, or were in exactly the same position, the only difference being that, whereas the Metropolitan Railway has the main line railways to guarantee it and get the Government out of a difficulty, Messrs. Tilling have no one to guarantee them, and are placed in this position, that, while they have a better and more efficiently managed concern than the Underground, earning larger profits, the Minister is not prepared to take them over on the same basis as the Underground.

A great deal has been said from time to time about the 19½ years purchase which, whether hon. Gentlemen deny it or not, they know perfectly well they have agreed to as the basis on which the London General Omnibus Company shall be taken over. They know that in their own minds, but they are not prepared to put it forward, in case it might possibly prejudice some of the later negotiations. I quite agree with the comment which has been made that, in the case of a new undertaking, a mushroom growth which had come into operation within the last year or two, it would be unreasonable to say that anything like 19½ years' purchase should be offered as adequate compensation for taking it over: but Messrs. Tilling's concern, which over a long period of years has shown large and increasing profits and has been very efficiently managed, and which, as the hon. Gentleman knows, was on the road running omnibuses before the London General Omnibus Company were, should be given more serious consideration.

Why is it that Messrs. Tilling have earned bigger profits than the London General Omnibus Company? That is quite an easy question to answer. The answer is that they have not spent any money on things like those beautiful signs at St. James's Park Station, which have amused me intensely, showing that a train or omnibus is running here or there on a certain schedule. They have been business people conducting their business on business lines, without wasting money on something which brings in no revenue, but simply amuses little boys and myself, and possibly the Minister of Transport on occasions, by showing that a certain train at a certain moment is at Cannon Street Station, or wherever it may be. If the very efficiently managed transport undertakings of Messrs. Tilling are to be taken over and put under the Underground, their profits, as the Minister knows, will be reduced to the level of those of the London General Omnibus Company, and, therefore, in the new undertaking there will not be the same profits coming in, because, as everyone knows, all Combines mean reduced profits when it comes to the real essence of the business.

I would like to lay further emphasis on the fact that Messrs. Tilling and the London General Omnibus Company have for some years been running as a pool, Messrs. Tilling sometimes running London General Omnibus Company omnibuses, and vice versa. Therefore, it is obvious that if, while participating in this pool, they are making larger profits than the London General Omnibus Company, they should be treated with greater equity than is the case in this Bill. All that they ask is that their shareholders shall receive under the combine the same return in either stock or cash as they are receiving at present. The Minister said just now that he was only going to deal with these matters fairly. Why cannot he deal with this matter fairly, and provide these shareholders with a fair return? This is not a capitalist concern in the ordinary sense of the word. The average shareholding is only £300 per head. In a concern like this, where people have invested their small savings and have been receiving a return over a period of years, they should be treated fairly and equitably.

8.56 p.m.

The ATTORNEY-GENERAL

I have a very warm corner in my heart for Messrs. Tilling by reason of the fact that my first recollection of London is their green omnibuses. I recognise that they have supplied a very important part in London transport. I was the more sorry, therefore, to hear that they have said in a letter to my hon. Friend that the Attorney-General made a statement possibly with a view to perverting the truth, or some such phrase as that. I hope they will acquit me of any improper motive. I stated what I thought to be the fact. I referred to the proceedings before the Select Committee, and I think the Committee will agree that this is a justification for my statement. On the last day on which the Committee sat, Mr. Wilfred Greene, who appeared for the promoters, was discussing with the Committee the Clauses to be put into the Bill to meet the views of the different opponents. Mr. A. B. Miller, a very well-known counsel, appearing for Messrs. Tilling, was there and heard the statement. Mr. Wilfred Greene said that Messrs. Tilling wished to have a definite direction to have stock instead of cash, and that was accepted. I think that is pretty good justification for my statement that Messrs. Tilling had decided, for reasons which were satisfactory to themselves, to have stock. I quite agree. that the amount of stock was always to be left open. They have not agreed to accept any particular ratio of stock in exchange for their undertaking, but that in the presence of their counsel it was stated they wished to have stock is indisputable, nor is there any denial on the part of Mr. Miller. However, let it be that there was a misunderstanding. I do not wish to fasten on Messrs. Tilling a statement which they now think was not a correct statement of their position.

Let us come to the Amendment. I can answer my hon. Friend very shortly. Messrs. Tilling want to be put in the same position, presumably, as the Underground undertakings. The Underground undertakings are not dealt with in two parts, the omnibus undertaking and the railways undertaking, but as a whole. Messrs. Tilling, according to the Clause that we have already passed, will get what is fair and equitable. The only purpose of the proviso which my hon. Friend has moved is, presumably, to give them something which, according to that standard, is not fair and equitable but something hard and fast. They want a particular measure applied to them. If it is fair and equitable that they should get it, they will get it. If it is not fair acording to the arbitration tribunal, they will not.

Mr. REMER

One of their complaints is that they have spent £7,500 in appearing before the Select Committee. If they go before the arbitration tribunal, they will have to spend a very much larger sum of their shareholders' money to protect their right.

The ATTORNEY-GENERAL

I do not think it will be a very much larger sum. That will be impossible, because the proceedings before the Select Committee lasted 30 days, and the arbitration will not last anything like that. But that is a matter that we cannot possibly go into here. In any case, there will have to be arbitration, even if the Amendment is accepted, to apply the principle that they want. The answer is that this proviso seems to suggest that they are not to get what is fair and. equitable. I am afraid they must be content with getting a fair and equitable award from the arbitration tribunal which will be paid in stock. If Messrs. Tilling wish to be paid in cash, I think they should have told the Joint Committee so when that statement was made. The second objection to putting a hard and fast rule like this into the Bill is that Messrs. Tilling will have to satisfy the tribunal that the profits upon which they want the award to be based are maintainable. If they can satisfy the tribunal, no doubt they will get the same number of years' purchase as other undertakings in the same position, but, if the circumstances are not the same, they ought not to have the same number of years' purchase. It really all comes to the question of what is fair and reasonable, and I am afraid, with all the affection that I have for Messrs. Tilling and with all the gratitude they deserve from the London public for the magnificent way in which they have carried on their undertaking, they ought not to be in a privileged position but must be content to take their fair award from the arbitration tribunal.

9.1 p.m.

Mr. D. G. SOMERVILLE

I would press the Attorney-General to reconsider the matter. He stated on a previous Amendment that he had a perfectly vacant and open mind in connection with the wording of a paragraph, and he emphasised very strongly the necessity of any arbitration being perfectly fair and of applying the standard on which the previous arbitration had been given to the Clause in question. Surely that is on all fours with what the Amendment is asking. Certain terms are given to certain groups guaranteeing a certain return and surely Messrs. Tilling, who carry an enormous number of passengers and who were one of the first lines of omnibuses on the streets, should be put on all fours with these companies whose profits are guaranteed. It is rather begging the question to say that they agreed to take stock. It was a question of how much stock. If the stock does not give them the same return as they have been earning, it is not much use to them. I do not think they can be accused of agreeing to accept stock when the question of the stock was in dispute. In view of the profits that they have earned—their shares stand at a high premium if my memory serves me right—they are just as much in a position to say their profits are going to continue as the General Omnibus Company or the District or the Metropolitan Railway. In the circumstances, I think the Government should reconsider the matter.

The Attorney-General asked: "Are they going to be put in a privileged position?" He admits that the other groups whose profits are based on the three-year period of earnings are in a privileged position, and that is one of the things that the Committee objects to very strongly. It may be very good business for those interests to be taken over on the basis of the three years ending 1930, but my feeling, and that of many Members, is that it is very bad business indeed for the people who have to use the transport of London to pay on a basis of the three years ending 1930, when business was extremely good and there were more people travelling than there are to-day. The returns for that year are very much larger than the returns they are going to earn in the present year. The Attorney-General admitted that they were in a privileged position. Why are Messrs. Tilling not to be in an equally privileged position? What have they done that they should be treated in this way?

The ATTORNEY-GENERAL

My lion. Friend has no cause to become indignant. Messrs. Tilling will be dealt with on the basis of the earnings of the years in question. No -doubt that will be a factor to be taken into account. The hon. Gentleman is asking, and the Amendment is asking in effect that a definite years purchase on a three years' average should be taken. That is another question altogether.

9.6 p.m.

Mr. SOMERVILLE

Surely the one follows the other. If you are giving a 192 years' purchase to one group, we now know that they are a privileged group. Why should not Messrs. Tilling be equally privileged? Have not they served the public just as well? Why should not they get the benefit of then services? Why give a privilege to one group and not to the other? In those circumstances, and in view of the very strong feeling in the Committee, I ask the right hon. and learned Gentleman to reconsider the whole matter, and, though not necessarily accepting the words of the Amendment, give us a definite form of words so that Messrs. Tilling may receive the consideration in this matter to which I and many hon. Members of the Committee think-they are entitled.

9.7 p.m.

Mr. REMER

I have received a note which has been passed to me from a representative of Messrs. Tilling who happens to be in the Gallery. [HON. MEMBERS: "Order."] I do not think that I am out of order in the observation which I have just made. It is a message sent to me with reference to the question of stock and of cash, and it is a simple one. The question is that Messrs. Tilling are prepared to accept stock—

The CHAIRMAN

I am afraid that the hon. Member has put himself into a position in which I cannot allow him to go on. This is a statement proposed to be given in an unusual way, and, in the circumstances in which he has introduced it, I am afraid I cannot allow him to proceed.

9.8 p.m.

Mr. H. WILLIAMS

The learned Attorney-General said—and rightly—that Messrs. Tilling ought not to be put into a privileged position. That is a sound thing. No one ought to be put into a privileged position under the Bill, but when I read the Bill I find that in the second Schedule there is a long list of large sums of stock to be handed over to certain enterprises. I do not understand why we do not find a similar Schedule with respect to all those other undertakings, so that we may know exactly where we are. We had a pro forma statement from the accountant in which he made an estimate of how this thing would work out. I do not see how any real estimate can ever be formulated as to the ultimate results of the working of this undertaking until we know what the effective capital will be. Either capital has to be raised on the market or in the form of stock issued in payment of the undertaking. Therefore, I was a little surprised when the Attorney-General said that Messrs. Tilling ought not to be put into a privileged position. I do not see why anybody should be put into a privileged position. If arbitration is good enough for one lot of people, it ought to be good enough for all. If certain people are to be dealt with on stated terms, the same principle ought to be applied to all persons whose undertakings can be compulsorily acquired.

Amendment negatived.

9.10 p.m.

Mr. PYBUS

I beg to move, in page 22, line 20, to leave out paragraph (b).

This is a consequential Amendment.

Amendment agreed to.

Mr. PYBUS

I beg to move, in page 22, line 39, to leave out the word "Traffic," and to insert instead thereof the words "Passenger Transport."

This also is a Government Amendment which follows logically upon the substitution by the Joint Committee of tie London Passenger Transport Area for the London Traffic Area as the area of the operations of the board.

Amendment agreed to.

Mr. PYBUS

I beg to move, in page 23, line 3, after the word "eight," to insert the words "or Sub-section (1) of Section 10."

This is purely a drafting Amendment.

Amendment agreed to.

9.12 p.m.

Commander MARSDEN

I have a manuscript Amendment—in page 23, line 7, to leave out Sub-section (9). I apologise to the Committee for having handed it in at a late hour. Subsection (9) says: For the purposes of this section the underground undertakings shall be treated as a single undertaking. I have on the Paper another Amendment which follows, and I will make my arguments for the two Amendments together. If the first Amendment does not receive the approval of the Committee, the second Amendment, I am afraid, will be impossible. The position is one of fair treatment for all parts of the various undertakings brought under the Bill, and I feel that the independent undertakings are also not getting, or may not get, as good terms as the larger undertakings. They have to come before the Arbitration Tribunal, and, as the Attorney-General says, they will, of course, receive fair, equitable and reasonable compensation for that which the Combine is asking. The decision will be arrived at by the chairman of the Arbitration Board on taking the property over on a fair commercial basis. He will, I presume, be quite undeterred and un-swayed by anything which has gone before, and we feel that these independent undertakings may not get quite as good treatment as the bigger undertakings.

I am particularly glad to find that the Minister of Transport is in charge to reply, and I wish to take this occasion of saying how extremely courteous and accessible I have found him on all occasions when having anything to do with transport. The Amendment is not a question of legal niceties. It really raises the general feeling throughout the country, and certainly throughout this Committee, that there should be fair treatment. The subsequent Amendment in my name states that the independent undertakings are not to be less favourably treated than the bigger undertakings. The last four lines of the Amendment relate to omnibuses. If Sub-section (9) remains part of the Bill it would be impossible to differentiate the apportionment of stock and determine on what basis the compensation for the larger holdings had been arrived at. In Part I of the Second Schedule there is an enormous amount of stock allocated to various undertakings. If we were to say that the amount so allocated in each case was the value of the company concerned, we should be stating an inaccurate position of affairs. Over the whole combine this enormous amount of stock has been transferred and against each separate part of it a certain amount of stock was placed, but how that was arrived at we do not know and we should like to know.

The feeling of the independent omnibus companies is that in regard to those parts of the undertakings which are purely omnibuses and have nothing to do with tramways, light railways, local railways or underground railways, if they could find out how the assessment was arrived at on which the compensation or taking-over value was paid to these companies, they would only ask to be treated not less favourably. I emphasise the words "not less favourably." It is possible that when they go before the arbitration tribunal they may find themselves fairly well treated, in which case there will be no need for appeal, but the chairman of the arbitration board will have an opinion of his own and not care what anybody has said, and they may find themselves less well treated. Therefore, the point of the two Amendments is to ask that the small and independent undertakings shall receive not less favourable treatment than the larger undertakings.

The CHAIRMAN

The hon. and gallant Member handed in his manuscript Amendment with the object of making quite sure that his subsequent Amendment was really in order. I think he will agree that it would be for the convenience of the Committee if I put the two Amendments as one—in page 23, to leave out lines 7 and 8 and to insert the words on the paper.

Commander MARSDEN

I beg to move, in page 23, to leave out lines 7 and 8, and to insert instead thereof the words: (9) The Arbitration Tribunal shall secure that the basis of compensation payable hereunder in respect of the independent undertakings, and parts of such undertakings transferred by this Act, shall not be less favourable than the formula or basis of compensation applied by any agreement or award hereunder, or attributable to that part only of the underground undertakings, as consists of the provision of the services of stage carriages, in respect of which schedules have been deposited with the licensing authority under Section six of the London Traffic Act, 1924.

9.18 p.m.

Mr. PYBUS

Like the hon. and gallant Member, I am very anxious that complete fair play should be given to all the undertakings who have not yet come to an agreement and who go to arbitration. Whether those undertakings are large, as in the case of Messrs. Tilling, or small undertakings, of which there are a good number, we are all agreed, and I am sure the Committee is anxious, that an absolutely fair deal should be given to all concerned. If the Amendment were accepted the Tribunal would be directed to apply to each of these small undertakings and the large ones the same measure of value, including the security of their business, as that applied to statutory undertakings of an entirely different character, such as the Metropolitan Railway. It is the intention of the Government that each of the smaller businesses should be taken over on fair terms. When the undertakers go before the arbitration tribunal which has been set up specifically for the purpose of dealing with them, they will have an opportunity of representing their cases, the maintainability of their profits, and what those profits have been in the standard years. I think the hon. and gallant Member, having voiced the case of the parties not yet part of the agreement, can rest assured that no injustice will be done.

Sir K. VAUGHAN-MORGAN

May I ask whether it is the intention of the Arbitration Tribunal to take as the "standard years" referred to by the Minister, the identical calendar years for these smaller units as are taken in the ease of the greater undertakings with whom an agreement has been reached and if not what machinery is to be applied to them for adjustment? Whereas for the bigger undertakings certain years were taken it is thought by the smaller undertakings that they may be called upon to submit to an award based on years less favourable than those which have been taken in the case of the larger undertakings.

9.21 p.m.

Mr. C. WILLIAMS

I do not think that the Minister understood my hon. and gallant Friend's position. Already, as I understand the Minister's statement, certain undertakings have come in on terms. It is rumoured that they have received 19¾ years' purchase. It is now proposed to take over other undertakings, small undertakings, which in some cases are not able to look after themselves, and they come in when the large block of money available for compensation, or whatever we choose to call it, has been dealt with. Will not the Minister accept the hon. and gallant Member's Amendment, which provides that these smaller concerns shall have a fair show, or is he going to leave them to chance? It may be said that you have already an amalgamation of 80 or 90 per cent. of the undertakings and that when they agree to work together the chances of the smaller undertakings working successfully is reduced. The Arbitrator Tribunal may say that these small undertakings have stood out and the other companies have been taken in on the basis of years which have been successful. Will they take in these other companies on the same terms? We want an assurance that the smaller undertakings shall get no worse treatment than the other companies. The Minister has not advanced a case for rejecting the Amendment. He seemed to think that there was a great deal in the Amendment and that it would not do much harm, but that the matter had better be left to arbitration. Why not put it in the Bill. Surely the Minister is not hard-hearted. There could be no great objection to making provision in the Bill. I do not know whether 'we shall get any support from the official Opposition, but occasionally it would be wise for the Minister to consider the position of the smaller people as well as the very big people. He could not make the Bill any worse, for it is bad enough as it is.

9.25 p.m.

Lord EUSTACE PERCY

The Minister cannot suspect me of being anxious to delay this Bill or of making the proceedings difficult. I do not pretend to be an authority on this subject or on the Amendment, but one thing which seems to me to be perfectly clear is that the hon. and gallant Member who moved the Amendment put a case and the Minister's answer was clearly no answer to that case or to the Amendment. After all, in discussions of this kind we must expect a certain standard of logical argument. The hon. and gallant Member's Amendment is that the basis of compensation applying to the smaller undertakings should be the same as that applying to the Underground companies. To this the Minister replied. "You are asking that the same compensation should be paid to the smaller undertakings as to the Underground companies irrespective of the maintainability of their profit." Does that mean that the basis of compensation payable to the Underground companies has no relation to the maintainability of their profit? If the basis of compensation adopted for the Underground companies takes maintainability of profits into consideration, then the claim that the same basis should be adopted for other undertakings will equally take maintainability of their profits into consideration. The Minister's answer was no answer at all. I confess I am doubtful where the merits of the case lie, but, in any case, surely we can have an answer which deals with the arguments instead of sliding off them and having no relation to them at all.

9.27 p.m.

Mr. PYBUS

My answer may not have satisfied the Noble Lord and the hon. and gallant Member who moved the Amendment, but they must appreciate that each undertaking varies in a good many ways. For instance in the case of the Underground, we have tubes and omnibuses on the roads, in the case of Tilling's we have omnibuses on the roads, and in the case to which the hon. and gallant Gentleman referred we have a number of undertakers who apparently run omnibuses only.

Lord E. PERCY

Has it, escaped the Minister's attention that the Amendment proposes to separate omnibuses from the Underground in fixing compensation?

Mr. PYBUS

Yes, but the fact remains that it was not possible, and in the provisions which are made for arbitration as to the amount of stock or cash, consideration as to profits over standard years and the maintainability of profits will be taken into account. I may not have satisfied the hon. and gallant Gentleman but I am afraid there is no more to add, for the matter was argued at great length and the Attorney-General replied.

9.29 p.m.

Mr. ATTLEE

It is a pity the Noble Lord was not able to be in the Committee when we discussed the earlier part of the Clause, because if he had been he would not have suggested there would be a possibility of getting compensation on the same basis, because the Attorney-General endeavoured to explain that Sub-section (2) of this Clause gave no agreed amount. We gathered from that that they were going to take a number of results, and take the one they liked. Therefore, really this Amendment has been argued without due knowledge of what has gone before, because it is trying to add something quite precise to something which is already extremely vague.

9.30 p.m.

Mr. C. WILLIAMS

I do not wish to quarrel with the hon. Gentleman who has just spoken, but I have attended throughout, and the position of the Noble Lord is quite unassailable. He is just as little desirous of wasting the time of the Committee as I am, and I am glad he is taking part in the Debate because his case is absolutely unanswerable. We have had no answer whatever of any sort or kind, and if the Noble Lord had been here the whole evening he would have known that, as far as its financial side is concerned, the Bill is a perfectly hopeless one from beginning to end, and that the Government have no justification at all for turning the Amendment down. I only hope that on this occasion we shall have a Division.

9.32 p.m.

Mr. HUTCHISON

I have listened to the arguments of the Minister, and I do not think he has given a definite answer in any way. He has suggested that the Amendment has some good points, and he does nothing further. I want to know if something can be done about it? If the Minister is not prepared to accept the Amendment, can he suggest another which would do as well as this? He talked about undertakers, but, as far as I can make out, with this Bill going through, we shall all need undertakers to look after us.

9.33 p.m.

Mr. MAITLAND

In my opinion, the Minister has given a very proper answer, and I think he was perfectly right when he said that it was utterly impossible to accept the Amendment and to assume that the same set of circumstances could apply to a dozen or to 30 or 40 different concerns. If the Amendment were insisted upon, the effect would be that hon. Members would be assuming that the arrangements already accepted were sound and proper. On that question I must say I am afraid that I am not satisfied at all that that is so. I do not think the Committee has had sufficient opportunity of considering the basis of compensation, but I entirely agree with the Minister that to accept the Amendment and to have no regard at all for the various circumstances would be quite improper.

Amendment negatived.

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

9.34 p.m.

Major NATHAN

I want to raise one point, and to ask for an explanation. The first Sub-section lays clown that the procedure to be adopted by the arbitration tribunal in determining the consideration is to be that the tribunal is to have regard to all the circumstances of the case and is then. to value the undertaking and award a consideration equivalent to the value. That seems to me to be clear and unambiguous, but when I refer to Sub-section (3) I find a reference to the arbitration tribunal which settles the consideration being under an obligation to take into consideration any factor relevant to the case put before them. Under Sub-section (1) the tribunal is already under the obligation to have regard to all the circumstances of the case, arid the question I put is: What are the factors referred to in Sub-section (3) which are not covered by the phrase "all the circumstances of the case" in Subsection (1)? The tribunal under Subsection (3) are under compulsion in making their award to take such factors into account, and under Sub-section (1) they are already under the obligation to take all the circumstances of the case into account in determining the value and the consideration. Perhaps the Government will give some indication of the reasons underlying the insertion of the words in Sub-section (3).

The ATTORNEY-GENERAL

The question of the hon. and gallant Member admits of a simple answer. Sub-section (1) directs the tribunal to have regard to all the circumstances of the case while Sub-section (3) says that they shall not only have regard to the circumstances of the case, but that they shall include the factors in their calculation. You may have regard to a thing and reject it, but Sub-section (3) says that in making their award they shall take such factors into account. They cannot look at them and then walk the other way; they have to take them into account.

9.38 p.m.

Lord E. PERCY

I hope the Committee will forgive me if I draw their attention, in no controversial spirit, to one fact which has emerged out of the discussion. We have been discussing the question of the relative compensation to be given to certain undertakings which have come in by agreement. Undertakings which have not come in by agreement are to have their compensation fixed by arbitration. Broadly speaking, that is the issue. When amalgamations take place in private business, that is precisely what happens; those who are prepared to agree get better terms, and those who come in afterwards have to put up with something which is regarded as fair and equitable, but which is considerably less good than the terms they could have got by agreement. That is what is happening here. The Government, in order to agree with the Underground undertakings, came to a deal, not on any fixed basis of compensation—and that is the real reason why the Amendment of the hon. and gallant Member for North Battersea (Commander Marsden) could not be accepted—not on any fixed basis of compensation, but upon just what the two parties could agree upon.

The point to which I desire to draw the attention of the Committee is this. The significant thing about this Bill is that we are making our first attempt at a big public amalgamation, the terms of which are being fixed by the House of Commons. The real difficulty of such an amalgamation, such a semi-State effort, is that the basis of compensation of treating people who agree with you in one way and those who do not agree in another, however necessary it may be in private, is not the kind of procedure which can be recommended with any security or feelings of safety to the House of Commons and, indeed, it is not a procedure which can be taken with any great dignity by His Majesty's Government. It will prove in the future one of the real problems of any legislation of this kind.