HC Deb 05 August 1947 vol 441 cc1305-25

(1) This section applies to any electricity holding company who shall, not later than three months after the passing of this Act, serve on the Minister notice in writing stating that they wish this section to apply to them by reason of the fact that they were, at the date of the last audited balance sheet of the Company, before the first day of July, nineteen hundred and forty-seven, either directly or indirectly, the beneficial owners of extraneous assets specified in general terms in such notice and being property situate outside Great Britain, or being property situate within Great Britain which is not reasonably required for the efficient and economical administration or operation of the undertaking of any authorised undertakers or power station company:

Provided that no such notice as aforesaid shall have effect unless accompanied by a certificate signed by the auditor of the company and stating that the company was at such date as aforesaid the beneficial owner of the extraneous assets specified in the notice.

(2) Every company to which this section applies shall be deemed not to be an electricity holding company for the purposes of the provisions of this Act.

(3) If, not later than three months after any company to which this section applies shall have served a notice under subsection (1) of this section, the Central Authority shall, by notice in writing to the company, require that all such, if any, of the property of the company as is reasonably required for the efficient and economical administration or operation of the undertaking of any authorised undertakers or power station company shall vest in the Central Authority, then the beneficial interest of the company in all such property shall, on the vesting date or one month after the date of such notice, whichever shall be the later, vest, by virtue of this Act and without further assurance, in the Central Authority.

(4) There shall be paid by the Central Authority to the company by way of compensation for the property vested in accordance with the preceding subsection such sums as may be agreed between the Central Authority and the company or, in default of agreement, as shall be determined by arbitration under this Act as the fair market value of the beneficial interest of the company in such property.

(5) Not later than two months after any company to which this section applies shall have served a notice under subsection (1) of this section, either the Central Authority, or any person employed by the company wholly or mainly in the administration or operation of any one or more authorised undertakers of power station companies, may serve upon the other and upon the company a notice in writing requiring that any agreement for personal services made between the company and such person, and in force at the vesting date, shall apply and have effect as though such person had been employed by an electricity holding company, and thereupon the employment of such person by the company shall, for the purposes of the provisions of this Act, be deemed to be employment by an electricity holding company.

(6) Any question arising under this section as to whether any property is reasonably required for the efficient and economical administration or operation of any authorised undertakers or power station company, or as to whether any person was employed wholly or mainly in the administration or operation of any one or more authorised undertakers or power station companies, shall be determined, in default of agreement, by the Minister.

The Solicitor-General (Sir Frank Soskice)

I beg to move, "That this House doth disagree with the Lords in the said Amendment."

This Amendment is designed to deal with certain holding companies, and to provide that in the event of a holding company which falls within the description contained in Clause 13, having what are described as extraneous assets or assets which are not required for the convenience and economic operation of a statutory electricity undertaker, that holding company can opt to be treated as being outside the Bill. The proposal is that the company should give notice showing that it has some extraneous assets or some other such assets not required for the purpose of a statutory electricity undertaking. If the company gives that notice and the notice is supported by a certificate from an auditor, then the company should have an indisputable right to be treated as a non-holding company and, therefore, as not being within the purview of Clause 13. I must ask the House to reject this Amendment and there are a number of reasons which I would like to urge in support of that submission.

I would like, to contrast the holding companies, as they are described in Clause 13, and the holding companies which would be given the right to opt out of the Bill under this new Clause. Under Clause 13, holding companies do not fall within its purview unless their holdings in their own subsidiaries consisting of statutory electricity undertakers exceed three quarters of their total assets. Therefore, only a limited number of holding companies are included. I am told that, as a matter of figures, there are some n large holding companies which come within the statutory description contained in Clause 13, and that there are some nine outside. The new Clause from another place would enable those companies—any of those 11 companies which are prima facie within the scope of the Clause—to say that they have something in the nature of assets which can be described as extraneous or unnecessary in the sense which I have indicated, and can claim to be outside the Bill. There is no limit upon the smallness in value of the assets which qualify a holding company to be treated as outside the scope of Clause 13. As the new Clause is drafted, if any of the II holding companies which are now within the scope of Clause 13 can claim to possess any trifling asset, almost valueless in point of value, if it is an extraneous asset—a foreign asset—or an asset which may be said to be not necessary for the purpose of operating a statutory undertaking, it has an indisputable right to be outside the Bill.

That is a perfectly impossible position. I ask hon. Members to think what it really means. If a large electricity holding company which in every other way complies with the requirements to bring it within Clause 13, can say, "We have as part of our assets no more than £100 invested abroad," it is given the right to claim to be outside the Bill. In my submission the new Clause makes complete and absolute nonsense of Clause 13. One might just as well strike out of Clause 13 the provisions which relate to holding companies There is no point in bringing them in if we give the right to opt out in a way in which they cannot be stopped. After all, practically every large company—I am sure every one of the II electricity holding companies which are now within the Clause—must be able to point to some asset which is not in point of fact presently necessary for the purpose of operating a subsidiary statutory electricity undertaking, or some asset which can be described as a foreign asset. Virtually, this new Clause would give the right to every one of the companies brought in, because they comply with the requirements of Clause 13, the right to opt out. The effect of that is to nullify a part of Clause 13 which is an important part, and which is part of the framework upon which is built the machinery for bringing within the scope of the Bill the undertakings to which it extends, and, if we emasculate the Clause in that way, we would, as a matter of logic, have to recast the whole thing.

4.0 p.m.

The only argument, so far as I know, which has been put forward in support of the new Clause is that there is no reason why, if an electricity holding company has some asset which it wants to use and retain, and which will not be taken over by the Central Authority, it should be wound up and dissolved in accordance with the requirements of Clause 16. That is really the only reason which has been put forward for emasculating Clause 13 in the way in which it is sought to do. It is simply and solely a matter of convenience. Let us suppose that we have a company, 98 per cent. of whose assets will be taken over when the concern is nationalised, but which has 2 per cent. of assets left which can be described as extraneous assets or assets unnecessary for the purpose of that company. It is suggested that it should be allowed to remain in existence in order to retain possession of the 2 per cent. of other assets instead of being dissolved in accordance with Clause 16 (6). I would submit that there is no possible case for that.

After all, what would happen? The securities of that undertaking will be quoted, and compensation on the Stock Exchange value will be paid to the holders of those securities. We take the view that the Stock Exchange basis of compensation is perfectly fair and proper. Supposing we do have an electricity holding company of that sort. Fair compensation will be paid, the bulk of its undertaking will be taken over by the State, and there is no reason in logic to keep it in existence when it is only a shadow of its former self, and when it cannot really be said to be the same company in any real sense of the term. It is right and proper that, when nearly all its assets have been acquired by the State, it should be dissolved, and, if it is desired subsequently to reconstruct it, or to bring in another company for the purpose of acquiring the remaining assets, that would be another matter. So far as this new Clause is concerned, we feel that it would make nonsense of Clause 13—

Colonel Crosthwaite-Eyre (New Forest and Christchurch)

The learned Solicitor-General said something about bringing another company into being. Would he expand what he has in mind on that point?

The Solicitor-General

I did not catch the early part of what the hon. and gallant Gentleman said.

Colonel Crosthwaite-Eyre

The hon. and learned Gentleman said that the holding company, if it wanted to carry on, could found a further company in order to take over the assets that were extraneous. Would he expound that point and say how that could be done?

The Solicitor-General

If the former shareholders of the company desired to float a new company and acquire the assets, there is nothing to stop them doing so. The only object of the new Clause would be to eliminate that step. I will put it, as a matter of business sense, that it is right that, if a company carrying on an undertaking loses that undertaking, so that it is not really the same company at all, that company should be dissolved, because it is only a shadow of its former self. For those reasons, the new Clause does not really add anything to the Bill, but merely makes part of it needless.

We have taken the trouble to find out what assets will be affected in the II companies. We find, for example, that it will apply in two cases. In one, a transport undertaking is carried on by one of these companies and the likelihood is that, when the Transport Bill becomes an Act, that asset would, in any case, be acquired by the State, if it is a long-distance haulage undertaking, as I believe it is. In the ordinary course, it will come under transport nationalisation. Another of the companies has, I believe, a holding of foreign investments, which can quite easily be valued. Another has something in the nature of an estate company, judging by the names in which certain shares are held. In each of these cases, there should be no difficulty about the valuing of the assets. I, therefore, ask the House to say that no case has been made out for this new Clause and, accordingly, to reject it.

Lieut.-Colonel Elliot (Scottish Universities)

Like you, Sir, I have spent the last night out of bed, and this admittedly, is a complicated subject, which is none the easier to understand by this method of approach. I think there was an oversimplification on the part of the Solicitor-General when he said that there was no justification for the new Clause. The fact is that we have been wrestling with the problem which the new Clause represents ever since the Committee stage of the Bill, and the Government have looked with favour upon our attempts at trying to find some method or other of dealing with this question. The Parliamentary Secretary himself, on the ninth day of the Committee proceedings, pointed out that this did represent a real difficulty, and that, if it were not for the managerial functions which the holding companies represented, he did not really contend very strongly that it was necessary to take them over. He said: If, on the other hand, it should be argued that there was some extremely important reason why holding companies should be allowed to go on as separate entities and not be taken over, we might consider that,"—[OFFICIAL REPORT, Standing Committee E, 25th March, 1947; c. 395] It was agreed in a friendly spirit with my right hon. Friend the Member for Southport (Mr. R. S. Hudson), and again, it was referred to during the Report stage, when it was agreed that there had been no stonewall opposition in the other place.

My first point is that, quite clearly, there is something here which does require to be dealt with. It is clear that it does not raise any moral issues in the case of the companies, for those with 74 per cent. are on one side of the line, and those with 26 per cent. on the other. It is merely a matter of administrative convenience which we are discussing, and we fully agree that it applies to a relatively small number of cases, though that is all the more reason why we should settle with even a small number of cases. I think that the Solicitor-General's argument seemed, in a way, to fall into the same error in which the Lord Chancellor seemed to be when dealing with the matter in another place. The Lord Chancellor himself said that he had not had very much time to consider it, and he added: I only saw this new Clause a few moments ago. Therefore, he seemed to consider—and in some way or other I noticed a trace of this in the arguments of the Solicitor-General—that there was an infringement of the Stock Exchange valuation basis. There is no suggestion in the new Clause of any infringement of the basis on which the Government have now agreed as to the Stock Exchange value being taken as the basis upon which compensation is to be paid. That is the first point. Secondly, there is no suggestion whatever that any electricity assets are, in any way, being taken out of nationalisation by the new Clause. We are agreed upon that, but it did seem to me that the Solicitor-General was rather suggesting that this new Clause removed some important assets from the ambit of nationalisation.

If we are agreed that, first, the stocks of the electricity holding companies will be nationalised without any question, and, second, that they will be nationalised on the basis of Stock Exchange values, as the Government intend, then it is clear that we must be down on some very narrow point indeed. The narrow point is simply this. Is it necessary first to annihilate the company, and then to produce some other device to bring these assets to life again? A holding company might be compared with those tanks which exist in restaurants in more fortunate countries than ours, where live fish can be seen swimming about, and where the customer can designate a particular fish, and have it taken out and cooked. No one objects to the Government designating the particular fish which they wish to have taken out of its container and cooked. All we say is that it is unnecessary to break the container, and leave all the fish lying on the carpet, and then to pick them up and put them into an ad hoc container, and try to revivify them. How much simpler it would be to leave the container. Take the fish out and let them be dealt with, but why deal with other creatures which the Government do not intend to take out—lobsters, crabs, or suchlike—and, for that purpose, go through the elaborate business of destroying the container, and then building it up again? For various reasons, the companies do not see why that process should be carried out.

There are, in fact, at least three distinct reasons why it should not be carried out. First of all, the holding companies have other duties. On the Committee stage, my hon. Friend the Member for Stockport (Sir A. Gridley) gave examples of those other duties. He mentioned a company of his own which was actively engaged in other work; until it knew where it stood under this Bill, the other work was held up altogether. Clearly, that is inadvisable. Secondly, there are companies in other walks of industry over which the penumbra of nationalisation is extending, which, similarly, may find themselves held up. There are the gas companies, for instance. I had understood that the right hon. Gentleman and his Department were themselves impressed with the desirability of doing nothing which would slow up the work of analogous companies in other walks of industry. Thirdly, there is the point to which the hon. and learned Solicitor-General referred, that one, at least, of these companies was possessed of foreign investments. It was brought out in discussions in another place that the title there might not be held to be valid, and, indeed, in this case, the fish would rapidly die if left on the carpet. It would very quickly have to be picked up and put into another container.

There are a number of reasons why we should not conduct this somewhat elaborate mechanism when a Clause has been put on the Order Paper which would do all that the Government have asked for in any of their demands, without the necessity of what one might call the "shattering" procedure. The Government, first of all, ask for the assets. They get them under the Clause. Secondly, they ask for the Stock Exchange valuation. They get that under the Clause. Thirdly,—and this was the demand of the Parliamentary Secretary—they asked for "the managerial staffs. They get them also. Fourthly, they said that there may be other oddments necessary to carry out the work of the holding company, and they also get these. Having got all these things, it seems to us that there must be some woollen curtain, let us say, between the two of us, which is preventing us understanding each other's point of view. Frankly, I do not understand why, the point having been narrowed down so much, it is impossible for us to come to a reasonable composition on the matter.

4.15 p.m.

We have put down a Clause which comes from another place, and which seems to meet all the points. If there were any further suggestion which the Government have to make, we would be only too happy to fall in with it. The main point is, why destroy the holding companies which actually exist? Why find it necessary to go through the somewhat elaborate procedure of reconstituting some other organisation to deal with assets which, in some cases, will need to be carried on? Now that we are on the last stages of a very long Bill, over which a great deal of argument has passed in remarkably good temper, why not shake hands across the Floor of the House and come to some mutual arrangement? For all these reasons, I hope that the Government have not said their last word on the matter, and that they will be able to find a way over the small space which divides us, and thus enable us to come to an adequate settlement upon it.

Colonel Crosthwaite-Eyre (New Forest and Christchurch)

My right hon. and gallant Friend has covered most of the ground on this subject, but it seems to me that the Government are really mistaking the purpose which they are setting out to achieve. They have said, time and time again, that they only wish to take over the assets of the holding companies in so far as they are electrical. Equally it was made clear in another place that they did not want the extraneous assets. It seems to me that the real question on which we differ from the Government is how that policy can best be carried out. We say, in the case of the holding company, "Take from it what you want, but leave what you do not want." The Government, however, say, "No, we are going to take the lot, and then, if and when it may be found desirable for either us to sell or the company to buy back that which the Government do not want, well and good."

I was very interested to hear that the hon. and learned Solicitor-General, as did the Lord Chancellor in another place, offers this solution again today. But I think that, if he looks at it, he will see that solution is impossible, because the first requirement would be that the shareholders of the holding company would have to put up a completely fresh lot of capital in order to acquire their own property. I think he will agree that if anything makes nonsense, that does. Again, he did not answer the question about the price at which the shareholders would be entitled to buy back their own property. Would it be at Stock Exchange valuation, or at market value? The Lord Chancellor, in another place, as reported in adjoining columns of HANSARD, said first one and then the other. He started by giving an indication that he thought it would be at Stock Exchange prices, and, in the next column, said at market prices. I think that if the hon. and learned Gentleman looks at that Debate again, and considers the implications of what was suggested, he will see that not only is this suggestion absolutely impracticable, but also thoroughly unfair to all parties concerned.

It would be fair to say that we on this side of the House consider that a holding company should be treated in exactly the same way as any other holder of electrical shares. If, for instance—and I think this is a fair parallel—I, as an investor, have £100 invested, £95 in an electrical undertaking and £5 in an outside undertaking, and the Government take my electrical shares from me, they would not take the whole £100, and then say, "If you can think of some way, we will give you back the other £5, which neither you nor we want," that would be parallel to what they are now doing. They are deliberately taking something which they do not want, and, further, they are treating the holding company in a way in which they treat no other holder of electrical shares. There is no justification whatever for doing that, because, as my right hon. and gallant Friend said, under this Clause, they can get everything for which they have asked at any stage of the Bill, either in this House or in another place. The Parliamentary Secretary, if I may say so, flirted with this Amendment from time to time during the Committee stage.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Gaitskell)

It was another girl.

Colonel Crosthwaite-Eyre

Well, the hon. Gentleman certainly made good use of his half-holiday in making love to this one. It was only after he went and got further sustenance from the Minister that he came back refreshed in order to do further battle. I appeal to the Minister not to view this Amendment with prejudice, but to try to regard it from the point of view of what he is trying to achieve, which is simply to take over certain electricity undertakings in this country. As it is he is likely to take over a great many things with which he will not know what to do. I would like to ask him, as a matter of interest, what he proposes to do with a tramway in Athens which he will at the moment acquire. I do not think he will find it a very useful investment; in fact, I should think it would be rather a drag. What is he going to do with various properties in South America which he is going to acquire? He has given us no answer Therefore, for all these reasons, he should accept this Amendment which will give him everything he wants. It might involve slightly redrafting Clause 13, but a little more redrafting would not hurt The Government would get what they want, they would allow companies to continue using assets for which the Government have no use, and which the companies would use to the benefit of the shareholders and the country as a whole.

Colonel Clarke (East Grinstead)

I would like to refer to the point which was made by the Solicitor-General who said that if a company had £100 or more or extraneous assets, it would be able to opt out of the Bill. I think he meant that the company would be able to opt out of Clause 13, and not out of the Bill, because it will continue to exist and hold its extraneous assets plus British electricity stock. In order to clarify my own mind I have imagined a sort of diagramatic picture of a holding company, and I have envisaged what would happen on the vesting day. I would like to emphasise the inequities which will occur. The ordinary company, of course, has a head office, with a board of directors and a secretariat; it has its holdings in extraneous assets—say 24 per cent.—and 76 per cent. in British companies. It also has a certain number of consulting engineers. Perhaps it has a laboratory and a research department. On the vesting day the company ceases to exist, the directors disappear, the assets are taken over by the Central Electricity Authority, and the staff is absorbed into that authority.

The following unfortunate results may occur. First, certain foreign countries may refuse to acknowledge the right of the British Government to hold assets in those countries. Secondly, as the Government will have already paid the English holders of those foreign securities, on British electricity stock the country will suffer a double loss. Again there might be a case in which one of the English companies was held by this holding company, the holding company owning half the ordinary shares. The remaining half will be owned, perhaps, by an investment trust company. The investment trust company would get a totally different compensation for what it held directly than for what it held through the holding company, because the Stock Exchange values of the two would be different. The Stock Exchange value of the holding company would probably be influenced by the fact that it holds foreign assets. There might be a considerable difference in the value of the compensation for ordinary stock of the same English company.

Under this Amendment that position would be avoided. In the first place, the head office would remain in being. I do not expect sympathy for the directors, but, after all, they are only human. They would have a job to do, and the same thing would apply to the senior members of the staff who would probably not be required by the Central Electricity Authority. I suggest the State would be saved a good deal of trouble. They would take over the British companies; they would take over such of the staff as they require, and I believe the reason that the Minister wants to take over these holding companies is because he wants the staff of the holding companies. This is really like the press gangs of the old days. If the whole matter could be simplified in that way, I cannot see why the Minister cannot reconsider his non-acceptance of this Amendment.

Sir Arnold Gridley (Stockport)

I would like to intervene for a few moments before we have the Ministerial reply to the arguments which have been presented from this side of the House. I do not know what holding companies will be involved in this Clause; neither have I taken the trouble to investigate in what way they may be affected—whether advantageously or disadvantageously—but I would like to deal with the argument presented by the Solicitor-General. He referred to the case of a holding company which has, perhaps, only £100 in extraneous assets, and he proceeded to base his argument upon that case. I would like him to take the case of a holding company which has 24 per cent. of its investments in extraneous assets. If a holding company wishes to continue in existence after it has passed over to the State all its electricity subsidiaries, I have never yet understood—and I have never heard any argument presented from the other side of the House to show—what interest the Government can possibly have in whether that holding company continues in existence or not. On that question, the Government should give a considered answer if they have one.

We want the State to take over everything that it needs for the proper conduct of this industry in the future, but I do not understand why holding companies who are losing 76 per cent. of their assets to the State, and who have 24 per cent. in extraneous assets, should not continue in existence and leave their electricity stock as an investment. Probably, they would expand much more rapidly with their 24 per cent. of investments in other undertakings. I cannot see why the Government will not say, "We do not care a button about the holding companies. Once we have got from them all that we need, if they like to go on in their wisdom or unwisdom, that is a matter entirely for them. It does not concern the Government." I think we ought to ask the Government why are they so keen to kill the holding companies when it is neither going to disadvantage them or benefit them if they are allowed to continue in existence.

4.30 p.m.

The Parliamentary Secretary, when this was debated in Standing Committee upstairs, used as an argument that some of these holding companies are very valuable organisations, and that it might be of interest to the State to take them over to help to run the area undertakings. That point has been fully met. There, again, the Government are getting all that they ask for and that they need. It does seem to me that the Government may land themselves in difficulties if they do take over the holding companies with all their assets, and then have to get rid of the 24 per cent. which they do not want. The case has been quoted of a tramway undertaking in Athens. There may be other assets—there were at one time, and may be today for all I know—in Poland. We have Members on the other side thinking we ought to get out of Greece and let that country settle its own problems. What would happen in that case to all those assets? We do not know. I do not know how one is going to manage the assets in Poland today, having regard to the position of Poland under the thumb of another country. Surely, it would be wiser for the Government to do as we ask. If they are not going to do so, I hope we shall have sound reasons for their stubborn adherence to the position that they have taken up.

The Solicitor-General

The hon. Member for Stockport (Sir A. Gridley) asked about the companies whose extraneous assets are 24 per cent. The answer I would make is that, so far as I know, of the 11 companies at present within the scope of Clause 13, it would apply to none of them. So far as I know—I speak as the result of a certain amount of research by those who advise me—in the case of none of these companies could it be said that there is anything like 24 per cent. of extraneous assets—in the case of each of them. In the case of two there are unnecessary assets—that is, the other category of the assets—in transport undertakings which will, presumably, in due course, be acquired by the State when the Transport Bill becomes law. With regard to the others, beyond saying that there is not a 24 per cent. extraneous assets percentage, I cannot give further information. One seems to have, as I said in my earlier remarks, something in the nature of shares in the investment of an estate company of some sort. Again, it is a comparatively small investment.

In answer to right hon. and hon. Gentlemen opposite, what I would say is this. There are two systems. There is Clause 13 with its system; and there is the new system embodied in the new Clause. There is not really a case for keeping both of them. One is a contradiction of the other. They do in the long run much the same thing. In both cases, both in the machinery of Clause 13 and in the machinery of the new Clause, the same result, or a very similar result, is achieved in the end: and, therefore, it cannot be said that there is a case for these two systems to co-exist. I ask the House to take the case of a holding company with extraneous assets. It can dispose of those assets, having obtained the approval of the Minister under Clause 29, before the vesting date. They can be disposed of by way of sale with the Minister's approval. Then, of course, no question arises of re-opening any pre-vesting day transaction. In the event of assets being acquired by an area board, the area board itself has the power to dispose of the assets under the general powers which it has under Clause 2. That would be post-vesting. So that either pre-vesting or post-vesting a holding company's assets can be transferred to another body.

The case made for the Clause really is that it is justified by its simplicity, but I would ask the House to say that if we have two co-existing systems we do not make for simplicity, but that, on the contrary, we make for a quite unnecessary complication. If the question of these extraneous assets were a major question, that is to say, if there were a very large number of holding companies, prima facie, within the scope of Clause 13 and if the amount of their holdings were in each case something like 24 per cent., then one would be disposed to approach this proposal in an attempt to explore it much more fully. I make haste to say we do not approach it in any atmosphere of prejudice at all. I think the right hon. Gentleman rather complained that I showed some degree of hostility to it. I certainly did not mean to do so.

The burden of my argument was meant to be, that if one system is an adequate system, we do not need another. It really is—if one looks at the actual figures—a problem within a very small compass. The extent of these extraneous assets is not sufficient to justify, in the view we take, the proposals of the new Clause, which would be superimposed on Clause 13, and which, in the event, would nullify the provisions of Clause 13, and render it almost entirely useless, because each one of these companies would come in under the new system instead of coming in under the system embodied in the Bill. Therefore, I simply say that no case for the new Clause has been made out, and that no real advantage, indeed, no advantage of any sizeable character, is obtained by keeping the new Clause. It is for that reason, and not because we view it with any hostility, but because we see no reason for it, that we ask the House to reject it.

Mr. Pickthorn (Cambridge University)

I had not intended to intervene on this. I do not know if the learned Solicitor-General is the only Minister who is prepared, for one reason or another, to talk about this, and I would not wish to put on him the burden of speaking three times on it; but it did seem to me—if Ministers could bear to listen to me for two minutes—that really his argument will hardly do. His argument was that this is setting Up a second system and that, therefore, it is excessively complicated. That was the first part of his argument. The second part of his argument was that the number of companies affected—or affectable, rather—by the new Clause is small, and that the proportion of their assets is small. If, says he, there were far more holding companies and if there were far more of the holding companies which had 24 per cent. of extraneous and unnecessary assets, then there would be a far stronger case for the new Clause. That seems to me completely to destroy the first part of his argument. If the argument against the new Clause is its complication, then this submission, that it would be worth considering if far more companies and far more assets would be affected, seems to me to break down.

His argument seems to me to break clown on this point also. The Solicitor-General says that it is two systems. But, surely, it is not? It is an attempt to apply the same system by different methods to two different entities. What we are trying to do is to make sure that in each case stockholders shall be treated the same. Why, because a stockholder is a company, should it be treated differently from stockholders who are individuals? Essentially, all these holding companies are holders of stock in electricity concerns. All other holders of stock in electricity concerns are to lose their stock in electricity concerns, but are not to lose any of their other investments. We are asking that the same should apply to this class of holders of electricity stock. Thus, we are not asking for a different system, but that the same system should be applied, or, if the Solicitor-General likes, that the same principle should be applied but by different techniques, because the parties to whom it is necessary to apply them are themselves different and, therefore, demand different techniques. I submit that those two arguments really do destroy the case put up by the Solicitor-General, and I think it is due to the House that we should have a better case put up by one of the other Ministers in charge of this Bill.

Mr. Hopkin Morris (Carmarthen)

This argument is really much ado about nothing, because in Standing Committee the Parliamentary Secretary agreed to have a look at this and to consider it. The argument this afternoon turns on the amount of extraneous assets a holding company may possess, and on the one side we have had the illustration that they can be 24 per cent., or any amount. The Solicitor-General resists the Amendment because he thinks the extraneous assets may be little, or very small. That is purely hypothetical, dealing only with the amount of extraneous assets, leaving the principle of the argument entirely untouched. The Parliamentary Secretary admitted that there was a principle worth looking at. Why not give effect to the principle? Because the Government are now saying that a holding company would be wound up, but if it has extraneous assets when it is wound up the company can be re-formed in order to deal with the extraneous assets. Why should it be re-formed? The much simpler thing would be, that the company should be allowed to remain in being and deal with the extraneous assets, and for the Government to deal with them under the provisions of the Bill. Why all this ado about nothing? It would be much simpler merely to accept the Amendment.

Lieut.-Colonel Elliot

With the leave of the House, I wish to speak again for only a few minutes, for I do not wish to delay the proceedings. It is clear that, for some reason or other, we have not succeeded in reaching agreement on this point. I am in strong agreement with the arguments advanced by my hon. Friend the senior Burgess for Cambridge University (Mr. Pickthorn) and the hon. and learned Member for Carmarthen (Mr. Hopkin Morris) in regard to the principle of the thing, that it is unnecessary to smash up a going piece of machinery merely to extract from it a piece of scrap. It would be much simpler—as could be done under the Amendment—to unscrew the part it is desired to take away and to leave the going machinery.

Mr. Shinwell

What will be done with the scrap?

Lieut.-Colonel Elliot

There is no scrap. If the part it is desired to take away is unscrewed and the going part is left by itself, then there is no scrap. I see the Minister's point, but he does not grasp our contention that by this technique there would not be any scrap. By his method there would be scrap; the holding company is destroyed, and there is salvage, scrap. In our contention the parts which are, in fact, detachable are unscrewed, and each part then goes on by itself. I cannot for the life of me see why the Minister continues to resist the Amendment. However, I am sure we will not do any good by arguing further about it, and I do not propose to continue the argument. But I leave it on record that this afternoon we put before the Minister the simple suggestion that when there is a machine composed of two detachable parts, each viable by itself, the two pieces should be allowed to work, but that the Minister said: "No. I prefer to shatter it to bits, and then to remould the pieces nearer to my own heart's desire,"—to adapt some words from the Rubaiyat of Omar Khayyam, who was given to wine, woman and song. I do not suppose that any of those inducements has brought the Minister to his present contention, but I should be happier in my mind if it were so, because, apart from that, he seems to have acted on some process of ratiocina

tion which I have so far failed to understand, and I do not like to feel that a clever, intelligent, hard-working man is proceeding upon some process of reasoning to which I myself cannot in any way get a clue. That is what disquiets me about the whole of our short Debate upon this. Therefore, the sooner we dismiss it and pass to the blunt argument of the Division Lobby the better.

Question put, "That this House doth disagree with the Lords in the said Amendment."

The House Divided: Ayes, 260; Noes, 103.

Division No. 366.] AYES. [4.46 p.m
Adams, Richard (Balham) Edwards, W J. (Whitechapel) Lee, F. (Hulme)
Adams, W. T (Hammersmith, South) Evans, E. (Lowestoft) Leonard, W.
Allen, A. C. (Bosworth) Evans, John (Ogmore) Leslie, J. R
Allen, Scholefield (Crewe) Evans, S. N. (Wednesbury) Lever, N. H.
Alpass, J. H. Ewart, R. Levy, B. W.
Anderson, A. (Motherwell) Fairhurst, F. Lewis, A. W. J. (Upton)
Attewell, H. C. Farthing, W J. Lewis, J (Bolton)
Austin, H. Lewis Fernyhough, E. Lipson, D. L.
Awbery, S. S Follick, M Logan, D. G
Ayles, W. H. Foot, M. M. Longden, F
Ayrton Gould, Mrs. B Foster, W. (Wigan) Lyne, A. W.
Balfour, A. Fraser, T. (Hamilton) McAdam, W.
Barnes, Rt. Hon A. J Freeman, Maj. J. (Watford) McEntee, V La T.
Barstow, P. G. Gaitskell, H. T. N. McGhee, H G
Barton, C. Gallacher, W. McGovern, J.
Battley, J. R. Ganley, Mrs. C. S McKay, J. (Wallsend)
Bechervaise, A. E Gibbins, J. Maclean, N. (Govan)
Belcher, J. W Gilzean, A. McLeavy, F.
Berry, H Glanville, J. E. (Consett) MacMillan, M. K. (Western Isles)
Bing, G. H. G. Goodrich, H. E. Macpherson, T. (Romford)
Blackburn, A. R. Greenwood, A W J (Heywood) Mainwaring, W. H
Bowden, Flg.-Offr H W Grenfell, D. R. Mann, Mrs. J.
Bowles, F G. (Nuneaton) Grey, C. F Manning, Mrs. L. (Epping)
Braddock, Mrs. E. M. (L'pl, Exch'ge) Grierson, E. Marshall, F (Brightside)
Braddock, T. (Mitcham) Griffiths, D. (Rother Valley) Mathers, G
Bramall, E. A. Griffiths, W D (Moss Side) Medland, H M
Brook, D. (Halifax) Gunter, R. J. Messer, F
Brocks, T. J (Rothwell) Guy, W. H. Middleton, Mrs. L
Brown, George (Belper) Haire, John E. (Wycombe) Mikardo, Ian
Brown. T J (Ince) Hale, Leslie Mitchison, G. R.
Buchanan, G. Hall, Rt. Hon. Glenvil Monslow, W
Burden, T W Hamilton, Lt.-Col. R. Moody, A. S.
Carmichael, James Hannan, W. (Maryhill) Morgan, Dr. H. B
Chamberlain, R. A. Hardy, E. A. Morris, P (Swansea, W.)
Chater, D. Harrison, J. Morrison, Rt Hon H (L'wish'm, E.)
Chetwynd, G R. Henderson. Joseph (Ardwick) Mort, D L
Cluse, W S Herbison, Miss M Moyle, A
Cobb, F. A Hicks, G Nally, W.
Cocks, F S Holman, P Naylor, T E
Coldrick, W. House, G. Nicholls, H. R. (Stratford)
Collindridge, F Hoy, J. Noel-Buxton, Lady
Colman, Miss G M Hubbard, T. Oldfield, W. H
Cook, T F Hudson, J. H. (Ealing, W.) Orbach, M.
Corbel, Mrs F. K. (Camb'well, N. W.) Hughes, Emrys (S Ayr) Paget, R. T
Corlett, Dr. J Hughes, Hector (Aberdeen, N.) Paling, Will T. (Dewsbury)
Cove, W G Hughes, H. D. (Wolverhampton, W.) Palmer, A. M. F.
Crawley, A. Hynd, H. (Hackney, C.) Parker, J.
Davies, Edward (Burslem) Jay, D. P. T Parkin, B. T.
Davies, Haydn (St. Pancras, S. W.) Jeger, G. (Winchester) Paton, J. (Norwich)
Davies. R J. (Westboughton) Jeger, Dr. S W. (St. Pancras, S. E.) Peart, Thomas F.
Davies, S. O. (Merthyr) Jones, D. T. (Hartlepools) Piratin, P.
Deer, G. Keenan, W Platts-Mills, J. F. F.
Diamond, J. Kenyon, C Poole, Cecil (Lichfield)
Dobbie, W. Key, C. W Porter, E. (Warrington)
Dodds, N N King, E. M Porter, G. (Leeds)
Donovan, T. Kinley, J. Price, M. Philips
Driberg, T E. N Kirby, B. V. Pritt, D. N.
Dugdale, J (W Bromwich) Kirkwood, D Pryde, D. J
Dye, S. Lavers, S. Ranger, J
Edelman, M Lawson, Rt. Hon. J. J Rankin, J
Rees-Williams, D. R. Snow, Capt. J W Wallace, H. W. (Walthamstow, E.)
Reeves, J. Solley, L. J. Webb, M. (Bradford, C.)
Reid, T. (Swindon) Soskice, Maj. Sir F Wells, P. L. (Faversham)
Rhodes, H. Sparks, J. A Wells, W T (Walsall)
Ridealgh, Mrs. M. Stamford, W West, D. G.
Robens, A. Stephen, C. Westwood, Rt. Hon. J.
Robertson, J. J. (Berwick) Strauss, G R. (Lambeth, N.) White, H. (Derbyshire, N. E.)
Rogers, G. H. R. Stross, Dr. B. Whiteley, Rt. Hon. W.
Ross, William (Kilmarnock) Stubbs, A. E. Wigg, Col. G. E.
Royle, C. Summerskill, Dr Edith Wilkes, L.
Sargood, R. Swingler, S. Willey, O. G. (Cleveland)
Scollan, T. Sylvester, G. O. Williams, D. J. (Neath)
Scott-Elliot, W Symonds, A. L. Williams, J L. (Kelvingrove)
Segal, Dr. S. Taylor, H. B. (Mansfield) Willis, E.
Shackleton, E. A. A. Taylor, R. J. (Morpeth) Wills, Mrs. E. A
Sharp, Granville Thomas, D. E. (Aberdare) Wilson, J. H
Shawcross, C. N, (Widnes) Thomas, John R. (Dover) Wise, Major F J
Shawcross, Rt. Hn. Sir H. (St. Helens) Thomas, George (Cardiff) Woodburn, A
Shinwell Rt Hon E Thomson, Rt. Hn. G. R. (Ed'b'gh, E.) Woods, G. S.
Shurmer, P. Thorneycroft, Harry (Clayton) Wyat, W.
Silverman, J. (Erdington) Thurtle, Ernest Yates, V. F.
Silverman, S. S. (Nelson) Tiffany, S. Young, Sir R. (Newton)
Simmons, C. J. Titterington, M. [...] Younger Hon Kenneth
Skeffington, A. M. Tolley, L. Zilliacus, K
Skeffington-Lodge, T C. Usborne, Henry
Skinnard, F. W. Vernon, Maj. W. TELLERS FOR THE AYES:
Smith, H. N. (Nottingham, S.) Viant, S. P Mr. Pearson and Mr. Popplewell.
Smith, S. H. (Hull S. W.) Wallace, G D (Chislehurst)
NOES.
Amory, D. Heathcoat Grimston, R. V. Nield, B. (Chester)
Baldwin, A. E. Head, Brig. A. H. Noble, Comdr A H. P
Beamish, Maj. T. V. H Headlam, Lieut.-Col. Rt. Hon. Sir C. Pickthorn, K.
Bennett, Sir P Hinchingbrooke, Viscount Ponsonby, Col. C. E
Birch, Nigel Hudson, Rt. Hon. R. S. (Southport) Prescott, Stanley
Boles, Lt.-Col. D. C. (Wells) Hurd, A. Ramsay, Major S.
Bower, N. Hutchison, Col. J. R (Glasgow, C.) Reid, Rt. Hon. J. S C. (Hillhead)
Boyd-Carpenter, J. A. Kendall, W. D. Roberts, Maj P. G. (Ecclesall)
Bracken, Rt. Hon. Brendan Kerr Sir J. Graham Roberts, W. (Cumberland, N.)
Buchan-Hepburn, P. G. T. Lancaster, Col. C. G Sanderson, Sir F.
Bullock, Capt. M. Langford-Holt, J. Savory, Prof. D. L
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) Law, Rt Hon. R. K Scott, Lord W
Byers, Frank Legge-Bourke, Maj. E. A H Shepherd, W. S. (Bucklow)
Challen, C Lennox-Boyd, A. T. Smith. E P (Ashford)
Clarke, Col R. S. Lindsay, M. (Solihull) Smithers, Sir W.
Clifton-Brown, Lt -Col. G Lloyd, Maj. Guy (Renfrew, E.) Spearman, A. C. M.
Cole, T. L. Lloyd, Selwyn (Wirral) Stanley, Rt. Hon. O.
Cooper-Key, E. M. Low, Brig. A. R. W Strauss, H G. (English Universities)
Crosthwaite-Eyre, Col. O E Lucas-Tooth, Sir H Stuart, Rt. Hon. J. (Moray)
Crowder, Capt John E. McCallum, Maj. D Sutcliffe, H
Cuthbert, W. N. Mackeson, Brig. H. R. Taylor, Vice-Adm E A. (P'dd'ton. S.)
Darling, Sir W. Y. McKie, J. H. (Galloway) Touche, G. C.
Davidson, Viscountess Maclay, Hon. J. S Vane, W. M. F
Davies, Clement (Montgomery) Macmillan, Rt. Hon. Harold (Bromley) Walker-Smith, D.
Dodds-Parker, A. D Macpherson, N. (Dumfries) Ward, Hon. G. R.
Dower, Lt.-Col A. V. G. (Penrith) Maitland, Comdr. J. W. Wheatley, Colonel M. J.
Drewe, C. Manningham-Buller, R. E While, Sir D. (Fareham)
Dugdale, Maj. Sir T. (Richmond) Marlowe, A. A. H Williams, C. (Torquay)
Duthie, W. S. Marples, A. E. Willoughby de Eresby, Lord
Eden, Rt. Hon. A Marsden, Capt. A. Winterton, Rt. Hon Earl
Elliot, Rt. Hon. Walter Marshall, D. (Bodmin) York, C.
Fyfe, Rt. Hon. Sir D. P M Marshall, S. H (Sutton)
Galbraith, Cmdr T. D. Molson, A. H. E. TELLERS FOR THE NOES:
Glyn Sir R. Morris, Hopkin (Carmarthen) Commander Agnew and
Gomme-Duncan, Col. A Morrison, Maj. J. G. (Salisbury) Major Conant.
Gridley, Sir A. Nicholson, G

Question put, and agreed to.