CLAUSE 4.—(Provisions as to members of board.) (Hansard, 5 December 1932)

§ The ATTORNEY-GENERAL
I beg to move, in page 4, line 16, after the word "Minister," to insert the words "after consultation with the Appointing Trustees."
Sub-section (1) of Clause 4 reads: There shall be paid to the chairman and other members of the board such salaries, or fees, and allowances for expenses as the Minister may determine. 6.8 p.m.
It may be that the Appointing Trustees will require to know what particular status a new member will have upon the board, and for that purpose the Minister, who fixes the salaries, should be required to consult them on the matter.

§ Sir K. VAUGHAN-MORGAN
I beg to move, after the words last inserted, to insert the words "and with the consent of the Treasury." 6.9 p.m.
I think the purpose of this Amendment is sufficiently clear. As hon. Members will be aware, I am rather concerned as to the future financial prospects of this under- 1294 taking, and desire that there should be every possible opportunity of securing such protection as this provision would afford.

§ Mr. PYBUS
We have considered this Amendment, and are prepared to accept it.

§ Mr. ATTLEE
I am sorry that the Minister is going to accept this Amendment. It is not in itself a matter of very great importance, but, looking at it from the point of view of principle, the interference of the Treasury in business undertakings has not been very happy in the past, and I am surprised at such a proposal coming from the other side of the House. Conservative Members have been agitating with regard to the Post Office, where I think Treasury intervention in the matter of salaries and so on is most unfortunate. I think it is a bad precedent that the Minister should accept this Amendment.

§ Mr. PYBUS
I beg to move, in page 4, line 17, after the word "months," to insert the words: or, in the case of an original member, twelve months. 6.11 p.m.
This Amendment is to enable members of the board who have been appointed originally to have a longer period than six months in which to dispose of their securities. The period which the Clause allows in such cases is considered to be unduly short, and one which might impose some hardship on original members of the board. It is, therefore, proposed to allow such original members a period of 12 months in which to dispose of their holdings of stock or securities in other transport companies in the London area.

§ Mr. H. WILLIAMS
I should like the Minister to tell us why he proposes to extend this period. In the ordinary way it should not be a matter of any particular difficulty for the hypothetical members of this board—I call them "hypothetical" because we do not know who they will be until the appointing trustees have come to their decision—in the ordinary way I should not have thought it would have taken them as long as 12 months to 1295 get rid of their securities in these well-known undertakings. It may be, of course, that the Minister anticipates that the members of the board will be such large holders that, if they all sold rapidly, it would depress the price of the. stock just at the time when the board was coming into being. Perhaps he will tell us. I do not know whether I should be in order in raising at this moment the question why they are required to dispose of their transport stock at all—

§ The DEPUTY-CHAIRMAN
That question can be raised on the Question, "That the Clause, as amended, stand part of the Bill."

§ Mr. WILLIAMS
I will raise it at that point.

§ Mr. H. WILLIAMS
I will now raise the question to which I was just referring, and perhaps the Minister or the Attorney-General will be good enough to give me an answer. In the case of a limited company, it is, of course, customary to ask that any director shall have a minimum holding in the company. Often it is a very small holding, but he must be a shareholder to qualify as a director. In this case the qualification for a member of the board appears to, be that he shall have no interest in the company. I should have thought that it would have been very much to the advantage of the undertaking if the gentlemen engaged in its conduct stood to gain if they were successful in their enterprise, particularly if they were holding "C" stock, the dividend on which may vary according to circumstances. I should be glad to know what was the reason that inspired the Government to prohibit these people from being in a position to take advantage of any share of the profit through their holding of stock.

§ The ATTORNEY-GENERAL
The short answer is that the House of recent years has always required, so far as I know, people managing public undertakings to divest themselves of any holdings in companies which may possibly cause their interest to conflict with their 1296 duty. I venture to think that that is a sound principle, and the House is not likely to depart from it after all these years.

§ Mr. WILLIAMS
I am very sorry, but the Attorney-General has not answered my question, which relates to the disposal, not of holdings in other companies, but of holdings in the company of which they are the directors. I am referring to the Transport Stock which they may hold, not to stock which they may hold in, say, the Associated Equipment Company, or any company over which they have no direction. I am referring to any stock that they may hold in the actual undertaking of the board, which is entirely different from that referred to by the Attorney-General in his reply.

§ The ATTORNEY-GENERAL
If my hon. Friend will forgive me, the word in the Clause is "company." This undertaking is not a company. It is only their shares in companies that they have to sell.

§ Mr. WILLIAMS
The Attorney-General will excuse me, but, if he will read on, he will see that a member of the board has to dispose within 12 months, as it now is, of any transport stock issued under this Act which he may so hold. If he holds it personally, why should he dispose of it? No element of corruption is introduced by the fact that a man has a financial holding in the business that he is managing. It is essentially desirable that the directors of an undertaking should have an interest, and whether you call them a board or whether they happen to be directors of a limited company does not enter into it. The efficiency of the undertaking would be very much increased if you introduced some definite interest in its financial success instead of leaving it in the position that they would draw their salaries whether they ran the business successfully or unsuccessfully.

§ Sir HENRY CAUTLEY
I think the Attorney-General ought to have given a fuller answer to my hon. Friend's point. It is not only a question of parting with any transport stock that he has. The Clause says: 1297 It shall not be lawful for a member of the board to purchase for his own benefit any securities in any such company or any such transport stock. I cannot understand why a member of the board cannot invest his own money in it. The principle to which the Attorney-General gave utterance is one that I should support to the very full. It is a most beneficial rule, and the object of it is that there shall be no conflict between a person's duty and his interest. But that does not apply here. It is just the other way. I would rather see these gentlemen loaded up with their transport stock. I should be very much obliged if the Attorney-General would give us some better explanation than he has done.

§ Lieut.-Colonel MOORE-BRABAZON
Surely the answer to my hon. Friend is that the only people who will know whether the board is going to be successful or unsuccessful in any one year are the board, and this very necessary provision is put in so that the members of it shall not be able to gamble in stock about which they know and no one else knows. After all, class C is going to vary from year to year as to what it is going to pay, and they will know before anyone else what will be the position on the market. It is thoroughly desirable that they should not be owners and should not gamble in the stock.

§ Sir K. VAUGHAN-MORGAN
My hon. and gallant Friend's explanation fills me with surprise. I had no idea that the undertaking would be conducted, as he seems to suggest, in such a manner that it would be highly speculative and that large changes in the value of the stock might take place. I should be out of order in referring to precautions provided later in the Bill under which the board will be bound to take the public into their confidence. That they should be carrying on this great undertaking in a hole and corner fashion and should at intervals be able to surprise the public by showing either a vast loss or a substantial profit is very surprising. I am certainly inclined to prefer the view as to the real usefulness of those who have to manage the undertaking having a substantial stake in it so that their interest and that of the public may be more combined than would necessarily be the case under 1298 the other arrangement. Perhaps the Attorney-General will look into the matter afresh before Report.