HC Deb 23 June 1939 vol 348 cc2639-44

12.21 p.m.

Sir Richard Acland

I beg to move, in page 10, line 24, at the end, to insert: and to submit to the Minister a report thereon, and the authorised person, who may be the person who has previously carried out the regular audit of the books and documents of the person providing, dealing in, storing, or having control of the said articles, may incorporate in his report any information which he considers relevant whether he has acquired it from his study of the books and documents or from any other source. I move the Amendment to get an answer to a question which I put to the Minister upon the new Clause moved by the hon. Member for Ipswich (Mr. Stokes). In dealing with the Clause the Minister said that we all wanted the same thing, which was to prevent all excessive profits. I want to try to preserve that atmosphere. I am not one of those who suggest that hon. Members are not sincere when they say they want to limit profits, but I think I can add something which will not create ill-feeling but which will not be disputed. There are certain people who question whether the Minister and hon. Members opposite are sincere in their desire to limit profits. Certain things have been said and done upon which such people can found their suspicions, however wrongly. I hope, therefore, that the Minister will try to accept the Amendment in order to sweep away those suspicions. I fully appreciate the powers contained in Clause 9 (2). The Minister has power to direct that a company or an individual shall keep his records in a particular form. I hope that the Minister will also appreciate the very real importance of being told to hold a post mortem examination in a particular case. The Minister will not be able to send his servants around to the thousands of people who are now contracting for the Government in order to tell them in what form to keep their books, but over and over again the real effectiveness of Clause 9 will be shown when someone will suggest, in relation to a certain contract, very likely one which is to be repeated, that excessive profits are being made. Then the Minister will want to investigate the suggestion. I am sure the Minister will agree with me.

Mr. Burgin

May I interrupt the hon. Gentleman? I certainly do not agree with him, because he seems to misunderstand Clause 9. It is a Clause which gives ample power to hold a post-mortem and for a post-mortem to be held by the firm's auditor.

Mr. Messer

To decide what shall be done with the remains?

Sir R. Acland

Let me tell the right hon. Gentleman what I had in mind. The Minister will, I am sure agree, that seeing the books does not tell you very much. You can go to a firm, wave Clause 9 in their face, and say, "These are our powers." They will reply, "All right, these are our books." I remember a case in which the very eminent lawyer for whom I was "devilling" at the time thought he had secured, after tremendous difficulty, a great triumph in forcing from a very large company disclosure of their documents. They brought up 10 lorry-loads of them and put them in a huge set of offices reserved for the purpose, with the observation, "There are our books; do what you like with them."Of course, nobody could make anything at all out of them.

The point that the hon. Member for Ipswich was making was that there is one gentleman who knows about the firm's books and to whom a disclosure will really be of some value, and that is the man who has been through the books, perhaps for many years, for the ordinary audit purposes. The Minister has satisfied me that Such a person may be appointed to examine the books, and, therefore, the first part of my Amendment may seem superfluous, but I felt that I must put it in its order in order to hang the second part upon it. The point on which I am not satisfied by the Minister is whether that person, if he is appointed, will be quite sure that he is entitled to use, for the purposes of his examination, the knowledge he has previously acquired, and whether he will not feel that he is in the position of having to divide himself into a dual personality, so to speak—the one personality who knows everything about the firm's accounts, and the other personality who merely has to look at the books of the firm as they stand and accept such explanation as the firm's officers may give him in relation to the matter he is then reviewing, but feeling that it would be wrong of him to cross-examine the officers of the firm on the basis of the knowledge which he has acquired while working for them as their auditor.

If this Amendment were added to the Clause, it would put both of these points beyond doubt. I cannot claim that the words of the Amendment are necessarily the best words for the purpose, but they are the best words I could devise to cover the purpose. They would show quite clearly that the person to be appointed may be the person who has previously conducted the audit, and that, in examining the books as the servant of the Minister, he may make use of information which he has acquired when he was acting as the servant of the company.

Sir P. Harris

I beg to second the Amendment.

12.29 p.m.

Mr. Burgin

I must ask the House to accept my assurance that Clause 9, as one Clause of the Bill, gives to the Minister ample powers of a most general character to achieve the object which Members in all parts of the House have already said they desire shall be achieved. We are most anxious that all the discovery Clauses in the Bill, giving power to call for returns, to press for information, to look at books, to determine the way in which the records shall be kept, to ask for their production, to take copies and extracts, and to call for verification, should be as ample and as wide as possible, and these Clauses have been drawn with the full advantage of the whole experience of the Ministry of Munitions in the last War and of the advances in accounting and costing that have been made in the 20 years that have since passed. The words of the Amendment are not necessary at all. At any stage, before a contract is entered into, during the lifetime of the contract, and afterwards, it is possible for the Minister to call for the production of information in whatever form the Minister likes to demand, to verify it in whatever way he likes and to have that verification made by anyone that he cares to appoint. There is unlimited power to cross-examine, to verify and to ascertain. On all these matters the cost must be completely reconciled with the financial accounts of the business if the real profit is to be ascertained, and that is a cardinal principle in investigation. I do not want to put any limit on the sources from which the information will be obtainable, and I want the obligation of the contractor to supply it to be wide. I am advised that all the different Clauses under which returns have to be made, records kept, and disclosures made, are ample in the Bill as drafted.

Mr. Alexander

May I ask the Minister whether the governing words of Subsection (1) of Clause 9: The Minister may direct any person producing, dealing in, storing or having control of any articles required for the public service, and so on, would in fact permit of the post-mortem which he has mentioned? It seems to me a little doubtful, if a contractor had actually gone out of business, whether he would be covered any longer by that provision.

Mr. Burgin

I have been advised that it does cover the power to undertake a post-mortem. We dealt with that question when the new Clause moved by the hon Member for Ipswich came before the Committee, and the ground on which I asked the Committee to decline to accept that Clause was that the powers were expressly given in Clause 9. I will, of course, look at the matter again, but I have no doubt at all about it.

12.33 p.m.

Mr. Edwards

In view of the fact that my hon. Friend the Member for Ipswich(Mr. Stokes) made such remarkable accusations in the House, and that the Minister undertook during the previous stage of the Bill that he would accept certain assistance from Members on this side in ferreting out these people, we intend to asist him in that direction. It may be unnecessary, but I should like to get complete satisfaction on this point: When Lord Baldwin made his first statement about rearmament, he used these words: We are determined that this national interest shall not be exploited for private gain, and I think the present Prime Minister repeated those words. I should like now to ask the Minister whether he is satisfield that in the Bill as it stands he has complete power to give satisfaction to the community that the promise of Lord Baldwin will be carried out satisfactorily.

12.34 p.m.

Mr. Burgin

I can only speak again with the permission of the House. My understanding of the matter is that, long before you come to the question whether profits have proved to be abnormal, or ought to be taxed in some special way because they are abnormal, the business like, proper method is to control those profits in the contract which you are making with the contractor. This Bill is designed to give to the Minister powers of every kind to ascertain what is the proper price, as well as the proper profit, to be paid for particular services or a particular manufacturing contribution, and the reason why I gave that assurance so definitely to the right hon. Gentleman for Hillsborough (Mr. A. V. Alexander) is that Clause 9 deals with any person producing, dealing in, storing or having control of any articles required for the public service. That defines the class. Almost everything is required for the public service, and that, therefore, means any person who is dealing, not necessarily under a contract, with these substances; and it gives me power, whether before, or after, or independently of a contract, to make all these inquiries. I am satisfied that the powers are as wide as an Act of Parliament can give me, and that they should be adequate, properly administered, to achieve the purpose we have in view.

12.35 p.m.

Sir R. Acland

With great respect, the Minister has not answered the question which I have now addressed to him on two occasions. If he will allow me to say so, he is quite ingenious in these matters, and I cannot avoid the feeling that he is failing to give a direct answer to the quite simple question which I asked him, because the direct answer would be "No."

Mr. Burgin

What is the question?

Sir R. Acland

I think the Minister will find it in what I have said before to-day and on Tuesday. It is: Will a firm's own auditor, if and when he is chosen to conduct a post-mortem into a contract to see whether the price is fair, within the wording of this Clause—

Mr. Speaker

Will the hon. Member confine himself to asking a question? He has already spoken.

Sir R. Acland

The Minister asked me what was my question, and I am merely repeating it. Will the auditor, as a servant of the Government, be able, within this Clause and within the etiquette of the profession of accountancy, to make use of the information he has acquired as a servant of the company, perhaps 12 months earlier? Will the Minister give an answer, yes or no?

Mr. Burgin

I should not have thought the answer was as simple as that. I am not able to state the position as to the professional etiquette of an auditor's relations with a client. That is not within any Minister's knowledge. But I am entitled to procure information from the firm's auditor. If he is instructed to do the work, he is under an obligation to reveal information which he has. There is no means, short of the rack, to make a person reveal information which he does not wish to; but an auditor who knows facts in relation to a matter which he has to investigate will not only be enabled, but be under a duty, to reveal that information.

Sir R. Acland

The Minister has gone very much further than before, and I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.