HC Deb 23 June 1947 vol 439 cc64-75

(1) The accounts of every Electricity Board shall, subject to the provisions of this Section, contain particulars showing—

  1. (a)the amount of any loans which, during the period to which the accounts relate, have been made either by the Board or by any other person under a guarantee from, or on a security provided by the Board to any member or officer of the Board, including any such loans which were repaid during the said period; and
  2. (b) the amount of any loans made in manner aforesaid to any member or officer at any time before the period aforesaid and outstanding at the expiration thereof; and
  3. (c) the total of the amount paid to each of the members as remuneration for his services, inclusive of all fees, percentages, or other emoluments, paid to or receivable by him by or from the Board.

(2) If, in the case of any such accounts as aforesaid, the requirements of this Section are not complied with, it shall be the duty of the auditors of the Board by whom the accounts are examined to include in their report, so far as they are reasonably able to do so, a statement giving the required particulars.

(3) In this Section the expression "emoluments" includes fees, percentages and other payments made or consideration given, directly or indirectly, to a member as such, and the money value of any allowances or perquisites belonging to his office.—[Lieut.-Colonel Elliot.]

Brought up, and read the First time.

Lieut.-Colonel Elliot (Scottish Universities)

I beg to move, "That the Clause be read a Second time."

Clause 41 of the Bill lays down that these accounts shall be laid in conformity with the best commercial standards. We are fortunate in having had recently put through the House a Bill prescribing high commercial standards, but we do not wish to enjoin too strict regulations upon these new bodies and, therefore, we should be content with the provisions of Section 45 of the Companies Act, 1929, which is, in fact, the Section we have embodied in this new Clause. That Section was found necessary in order to ensure disclosure of borrowings by directors and officials from a company's funds, and it also required the disclosure in the accounts of all emoluments paid to directors. I think that the Minister will have no objection to accepting this Clause, which merely sets out in the Statute the more general phrases which he himself has laid down in Clause 41.

It is obviously desirable, from every point of view, that these things should be explicitly set down in the Statute when we have Statutes to refer to, and not left to subsequent consolidating legislation in which they would, no doubt, be embodied. When we have an opportunity of doing that, it should be done here and now, and perhaps the Minister will not desire, on this occasion, to ask us to rely on his assurances from the view that common sense is bound to prescribe a course of procedure such as that which we now enjoin upon him. The many-sidedness of truth may be paralleled in the future with the many-sidedness of common sense; therefore, let us seize this opportunity when we have it and when we are all agreed, and let us have in the words of the Statute the provisions which I now beg to move.

Colonel Crosthwaite-Eyre

I beg to second the Motion.

The first two Subsections deal with loans, new and outstanding. As my right hon. and gallant Friend has said, the Companies Bill now before the House goes very much further than this proposal. I would ask the Minister to look at the Cohen Report—page 49, paragraph 94, which states: We consider it undesirable that directors should borrow from their companies. If the director can offer good security, it is no hardship to him to borrow from other sources. If he cannot offer good security, it is undesirable that he should obtain from the company credit which he would not be able to obtain elsewhere. As a result of that, Clause 33 of the Companies Bill makes it impossible for any director to borrow from his company except within very narrow limits. We have not gone as far as that, chiefly because, I think, the Companies Bill has not been through all its stages, and its final form is not known for certain. We have taken Sections 45 and 128 of the 1929 Act and slightly modified them to bring them, as nearly as possible, into conformity with the recommendations of the Cohen Committee. In launching a new venture of this sort, a practice should not be allowed to commence which is condemned by an impartial Committee— and a very good Committee—for the whole of private industry. It is obviously unsound for any member, particularly when dealing with public money, to be in a position to borrow it, except subject to complete control. We have tried in this new Clause to see that every protection is given and that any loan granted to a member of the board shall be safeguarded as much as possible.

With regard to remuneration, we would ask the Minister to bring the proposed new boards into conformity with what is to be done in private industry. I admit that we have not here exactly the same words as are applied to private industry, but hon. Members on this side are not wedded to the actual phraseology, and any Amendment necessary to bring it strictly into line with the Cohen Report would be acceptable to us. The Cohen Committee have made it very clear in Sections 89 and 90 that in private industry it is essential that if the shareholders are to have a true representation of what is happening in their company, the amounts of emoluments paid to the directors should be disclosed. If the consumer is to be safeguarded, any remuneration paid to members of the boards should also be disclosed. Unless this is done, the people who will ultimately have to pay cannot get a proper understanding of the accounts. For those reasons, I hope the Minister will accept this Clause. It is designed to bring the accounts as near as we can to the best commercial standards which he himself lays down later in the Bill. By accepting the Clause he can do no harm to the Bill, but it will maintain the safeguards to the consumer by showing every one the true and fair value of what is happening.

5.0 p.m.

Mr. Shinwell

As hon. Members have just said, it is my intention to provide in the Bill, in Clause 41, that the accounts shall conform to the best commercial standards. Those words were framed after considerable discussion in the Standing Committee which dealt with the Coal Industry (Nationalisation) Act, and they were adopted for the purpose of enabling the National Coal Board to present its accounts in a prescribed and satisfactory form. It does not appear to me to be necessary that the additional requirement in respect of loans to mem- bers of the new boards should be included in this Bill, and I will tell hon. Members why. I am not fully acquainted with the practice of commercial concerns, but I gather from what the hon. and gallant Member has just said that it is, or was, customary for members of boards of directors or boards of management to receive pecuniary assistance on occasions, apart from their fees, in the form of loans, and the Companies Bill is designed to provide that that custom shall be abandoned.

Mr. Pickthorn

Surely, the right hon. Gentleman is not using the right word. He talks about this practice being customary; the fact is that it was not prohibited, but it does not follow that it was customary.

Mr. Shinwell

The hon. Member is quite right; it was not habitual either with the directors or with the undertakings, but it occasionally happened.

Colonel Crosthwaite-Eyre

I think the right hon. Gentleman has got it wrong. The 1929 Act said that any such loan must be shown in the balance sheet; the present Bill prohibits it.

Mr. Shinwell

I am not making any accusation against company directors; I acquitted myself at the beginning of any profound knowledge of this subject, but I listened to hon. Members opposite and, as they indicated that these things sometimes occurred, I accepted what they said, and there it is. Let us now consider the position in respect of anationalised undertaking. I say at once that if the intention of hon. Members in promoting this new Clause is to secure that surreptitious financial assistance should be provided on occasions to members of the electricity boards, whether national or regional, I would regard such a practice with the utmost distaste, and indeed I would expect that nothing of the sort would happen. There is provision in the Bill—or will be, with the consent of hon. Members—to safeguard the public against practices of that sort, and the position is that I as Minister—or whoever happens to be Minister—-can give directions to the boards. It would seem to me that a distasteful and wholly disagreeable practice of this kind would be inimical to the public wellbeing, and, therefore, the Minister could intervene. That being so, it is unnecessary to make provision in the Bill for this safeguard.

The position will be this. The Minister appoints the members of the Central Authority. Under the provisions of the Bill he also appoints the members of the regional authorities, and because he has the power vested in him to make such appointments, he will fix their remuneration. That is distinct from the position which has developed in connection with the mining industry. There I appointed the members of the National Board, but I did not appoint the members of the divisional boards, and in appointing the members of the National Board, I fixed their salaries. I would remind hon. Members that their salaries were announced in the House, and, therefore, there was nothing surreptitious about it; nor was it necessary to provide safeguards about stating those matters in the annual accounts. The pronouncement was made in the House about the salaries of the members of the National Coal Board, but I did not make any announcement about the salaries of the divisional boards because I was not responsible for the appointments.

Those are the facts; there can be no dispute about them. In the electricity industry under this Bill, I shall be empowered to appoint the members of the National Board, and I shall state their salaries, and I shall also state, if need be, the global amount, and, if necessary, in the accounts I can provide a statement in detail of their expenses. I shall also fix the salaries and any other emoluments of the members of the regional boards, and therefore I shall be called upon by the House, quite naturally and rightly, to make a statement of what has been done. If that is so, surely hon Members cannot expect any more Finally, the contemplated British Electricity Authority, gathering up the financial activities of the various regional boards with its own financial activities, will present accounts to the Minister, and the Minister must present those accounts to Parliament. Those accounts, as I have indicated, must be presented in such a way as to conform with the best commercial standards. They will be detailed accounts, and the House will expect nothing less than that. No self-respecting or responsible Minister, whoever he might be, would allow any nationalised undertaking to escape its obligations in that regard. The House and the public are entitled to full information about matters of that sort in the measure that the Minister is directly responsible. If the Minister is not directly responsible, clearly the House is not entitled to ask for details which are within the purview of the board itself. That being so, and having ascertained as far as I could the intentions of hon. Members opposite in promoting this Clause, it does not appear to me that it is necessary to include these words in the Bill.

Mr. R. S. Hudson

The right hon. Gentleman's arguments, of which he told us he had a number, really amount to saying that he believes that this Clause is unnecessary. I am bound to say that, with regard to the point he made about emoluments being published, as long as he carries out his promise it does gosome way to meet us. But he has not met the point about loans. He objects to the practice of granting loans to members or officers of the boards. Incidentally there are no regional boards, as far as I know, although the Minister referred to them. They are area boards. I think he objects to these loans; and so do we, and I cannot see why he objects to a specific provision being made in the Bill. It would be better to accept the first part of our new Clause regarding loans, even if he thinks he cannot accept the second part regarding emoluments. If the Minister persists in his refusal to accept the principle, he cannot complain if the public at large and we on this side of the House remain suspicious, not necessarily about what he will do, but what it thinks some of his successors may do. Either the thing is right or it is wrong; if it is wrong, let us specifically prohibit it in the Bill and then there can be no question that the public will be reassured.

Commander Galbraith (Glasgow, Pollok)

I do not quite understand the point made by the right hon. Gentleman in his brief remarks. He seemed to make a difference between what was his responsibility and what might not be his responsibility, and he said that the House would not be entitled to have details. If the House is not entitled to details, then presumably no one is entitled to them. That is rather an important point. Surely, the Minister must be responsible for the whole of this new machinery, and the House must be entitled, in the public interest, to ask him for information on any points on which they may have doubts. I do not know whether the right hon. Gentleman will clear up the point I am putting to him, but I put it to him seriously and not merely to raise some side issue.

Mr. Shin well

I am not making any complaint, for this is quite a proper question to put to me, but I think I answered it on a previous occasion. I will endeavour to simplify the matter. When I appoint a number of persons to a nationalised board, I fix their salaries and their emoluments Inasmuch as that is my obligation, I must on the appropriate occasion inform Parliament of my activities. When appointments are made, not by the Minister, but by the board itself, it is asking too much to say that I should acquaint the House with the details of salaries and expenses of officers of the board and indeed with every minute detail of expense incurred. The House is entitled to information on the global figures, but just as on Supply Day the House is entitled to ask for details of Government expenditure, so it would be entitled to ask similar questions on the accounts of a nationalised undertaking when they were presented to the House. There is a distinction between information furnished to the House by the Minister in respect of appointments for which he is directly responsible, and information on matters for which he is not directly responsible.

5.15 p.m.

It appears to me that the point made by hon. Members opposite is really irrelevant to the substance of the new Clause, which, as I indicated, is a question of loans made to directors. There are no directors in a nationalised undertaking. They are members of the board, and they are paid salaries. They are not paid fees as in the case of a director of a commercial undertaking. They may be paid £100 a year. £500 a year or £1,000 a year, or fees for attendance at each meeting. Such a? person, finding himself in financial difficulty, might approach the secretary of the board and ask for a little financial assistance but one cannot conceive of the chairman of the Electricity Board or the chairman of the National Coal Board going to the Secretary and asking for a loan of £5, £500, or £1,000. If anything of the sort happened, I imagine the secretary would say, "It is time you were off the board."

Colonel Clarke

Surely, the sort of case we are considering is that in which some official of the board says, for instance, that his wife has had a serious operation and he would like a little advance of salary. Another case could be where an employee is moved from one town to another and is unable to get a house; and asks for a sum of money in order to put down the deposit on a house.

Mr. Shinwell

Now we are getting down to brass tacks. If that is what hon. Members have in mind, it is quite unnecessary to have any provision of this sort in the Bill. If there is provision in the Bill for the welfare of officers in the undertakings, and if, unfortunately, the wife of an official of the board met with a mishap of some kind and he found himself financially embarrassed as a result, and wanted some assistance, one would expect that he would apply to the welfare and benevolent fund raised by the members of the staff in order to assist one another. That is all that is necessary, I would deprecate any kind of arrangement within a nationalised board whereby either a member of the board, or an officer or an employee of the board, apart from salaries and expenses to which he was justly entitled, would receive any temporary financial assistance. A nationalised undertaking is not a money-lending institution. [Interruption.]The right hon. Gentleman must not be so childish. The point at issue is not one of great substance; it is as unsubstantial as the hon. and gallant Member for East Grinstead (Colonel Clarke) has now described. Surely, we do not require a provision in the Bill to meet contingencies of that kind. It is much better to leave it to the common sense and intelli-

gence of the members responsible for the running of the undertaking.

Sir A. Gridley

May I say that in all my experience as a director I have never known any board to be asked by a director for a loan or for any financial assistance, and I say that after many years' experience. I quite agree with the right hon. Gentleman's remarks about loans to directors or members of the area boards being distasteful. Would it be equally distasteful to him if area boards decided they would buy a house for a member of the board? Assistance may be given in more ways than one. It may not be by loans or other financial help; it may be from some source which could be quite right in the circumstances.

Mr. Shinwell

The answer to the hon. Gentleman is that if there is a contractual obligation which the board must accept, in the normal way they must provide a house if that is part of the obligation. On the other hand, if there is no contractual obligation when an employee is moved from one district to another and he has told the board that he must have accommodation and asked them to assist him to find that accommodation, I would not regard that so much as a loan as assistance which was essential for the proper conduct of the undertaking. In any event, those are matters which might be arranged as between the board and some building society. There was a slight irrelevance in the remarks of the hon. Member for Stockport (Sir A. Gridley). We are speaking here of financial assistance of a temporary kind. I beg hon. Members not to imagine that we shall countenance proceedings of that kind.

Question put, "That the Clause be read a Second time."

The House divided: Ayes 90; Noes, 198.

Division No. 269] AYES. [5.22 p.m.
Amory, D. Heathcoat Buchan-Hepburn, P. G.T Eden, Rt. Hon. A
Astor, Hon. M. Bullock, Capt. M Elliot, Rt. Hon Walte
Baldwin, A. E Byers, Frank Fraser, H. C. P. (Stone)
Baxter, A. B. Challen, C. Fraser, Sir I (Lonsdale)
Beamish, Maj. T. V. H. Channon, H. Galbraith, Cmdr T. D
Beechman, N. A. Clarke, Col R. S. George, Lady M. Lloyd (Anglesey)
Birch, Nigel Clifton-Brown, Lt.-Col. G Grant, Lady
Boles, Lt.-Col. D. C. (Wells) Crosthwaite-Eyre, Col O E Gridley, Sir A
Boothby, R. Darling, Sir W Y Grimston, R. V
Bower, N. Digby, S. W. Hare, Hon. J H. (Woodbridge)
Boyd-Carpenter, J. A. Dodds-Parker, D D Headlam, Lieut- Col Rt Hon Sir c
Bracken, Rt. Hon. Brendan Drewe, C Hinchingbrooke, Viscount
Braithwaite Lt.-Comdr. J, G Duthie, W S Hope, Lord J
Hudson, Rt. Hon. R. S. (Southport) Manningham-Buller, R. E Savory, Prof. D. L.
Hutchison, Lt.-Com. Clark (E'b'gh, W.) Marshall, O. (Bodmin) Smiles, Lt.-Col. Sir W
Jeffreys, General Sir G Marshall, S. H (Sutton) Spearman, A. C. M
Keeling, E. H Mellor, Sir J Stanley Rt. Hon. O
Kendall, W. D. Morris, Hopkin (Carmarthen) Strauss, H G. (English Universities)
Kerr, Sir J. Graham Morris-Jones, Sir H. Studholme, H G.
Lambert, Hon. G. Morrison, Rt Hon W S (Cirencester) Sutcliffe, H.
Lancaster, Col. C. G. Nicholson G. Taylor, Vice-Adm. E. A (P'dd't'n, S.)
Legge-Bourke, Maj. E. A. H Noble, Comdr. A. H. P Thorp, Lt.-Col R. A F
Lindsay, M. (Solihull) Peake, Rt. Hon. O. Touche, G. C.
Lipson, D L Peto, Brig. C. H. M. Wadsworth, G
Lucas, Major Sir J. Pickthorn, K Walker-Smith, D
Lucas-Tooth, Sir H. Prescott, Stanley Ward, Hon. G. R
Macdonald, Sir P (I. of Wight) Prior-Palmer, Brig O. Wheatley, Colonel M J
Mackeson, Brig. H R Raikes, H. V. Willoughby de Eresby, Lore
McKie, J H (Galloway) Rayner, Brig. R.
MacLeod, J. Robinson, Wing-Comdr. Roland TELLERS FOR THE AYES:
Macpherson, N. (Dumfries) Ross Sir R D. (Londonderry) Major Conant and
Major Ramsay.
NOES.
Adams, Richard (Balham) Griffiths, D. (Rother Valley) Parkin, B. T
Alpass, J. H. Guest, Dr. L. Haden Paton, J. (Norwich)
Attewell, H. C. Gunter, R. J Peart, Thomas F.
Austin, H Lewis Guy, W. H. Piratin, P
Awbery, S. S. Hale, Leslie Popplewell, E
Ayrton Gould, Mrs. B Hall, W G. Randall, H E
Barstow, P. G Hamilton, Lieut.-Col. R Ranger, J.
Barton, C Hannan, W. (Marvhill). Rees-Williams, D. H
Battley, J. R Hardy, E A. Reeves, J.
Bechervaise. A. E Harrison, J. Ridealgh, Mrs. M.
Berry, H. Hastings, Dr Somerville Robens, A.
Beswick, F. Henderson, Joseph (Ardwick) Roberts, Goronwy (Caernarvonshire)
Blackburn, A. R Herbison, Miss M. Rogers, G. H. R
Blenkinsop, A. Hicks, G. Royle, C.
Blyton, W. R. Hobson, C. R. Sargood. R
Bowden, Flg.-Offr. H. W. Holman, P. Scott-Elliot, W
Bowles, F G (Nuneaton) Holmes, H. E. (Hemsworth Shackleton, E, A
Braddock, Mrs. E M. (L'pl. Exch'ge) House, G Sharp, Granville
Braddock, T (Mitcham) Hoy, J. Shinwell, Rt. Hon. E
Bramall, E. A Hudson, J. H, (Ealing, W) Silverman, J (Erdington)
Brooks, T. J (Rothwell) Hughes, Hector (Aberdeen, N.) Simmons, C J.
Brown, T. J (Ince) Hughes, H. D. (Wolverhampton, W.) Skeffington-Lodge, T C
Bruce. Maj. D W T Hynd, H. (Hackney, C.) Skinnard, F W.
Burden, T. W. Hynd, J. B. (Atterctiffe) Smith, H. N (Nottingham, S.)
Butler, H W. (Hackney, S.) Janner, B. Smith. S H. (Hud S.W)
Castle, Mrs. B. A Jay, D. P. T. Snow, Capt. J. W
Chamberlain, R. A Jeger, G. (Winchester) Sorensen, R W.
Champion, A J. Jones, D, T (Hartlepools) Soskice, Maj. Sir F
Chafer, D. Keenan, W Sparks, J. A
Chetwynd, G. R Kinley, J. Stamford, W
Cluse, W S. Lavers, S Stephen, C.
Cobb, F A Lewis, A W J. (Upton) Stewart, Michael (Fulham E.)
Cocks, F S Lipton, Lt -Col. M Strauss, G R. (Lambeth N.)
Collindridge, F. Longden, F Stress, Dr B
Colman, Miss G. M McAdam, W. Stubbs, A. E
Comyns, Dr. L. McEntee, V. La T Swingler, S.
Cove, W. G. McGhee, H. G Sylvester, G. G
Daggar, G Mack, J D. Symonds, A. L
Davies, Ernest (Enfield) McKay, J (Wallsend) Taylor, H B (Mansfield
Davies, Harold (Leek) Mackay, R W G. (Hull, N.W) Taylor, R. J (Morpeth)
Taylor, Dr S. (Barnet)
Davies, Hayden (St. Pancras, S.W.) McLeavy, F Thomas, D E (Aberdare)
Davies, R J (Westhoughton) Macpherson, T. (Romford) Thomas, I. O (Wrekin)
Deer, G Mainwaring, W H Thorneycroft Harry (Clayton)
Diamond, J Mallalieu J P W Thurtle, Ernest
Dodds, N N Martin,. H Titterington, M F
Donovan, T Mathers, G Toliey, L.
Dugdale, J (W. Bromwich) Medland, H. M Turner-Samuels, M
Dumpleton, C W Mellisn R. J Vernon, Mai W F
Dye, S Mikardo. Ian Viant, S. P.
Edelman, M. Moody, A. S Walkden, E.
Edwards, John (Blackburn) Morley, R Wallace, G. D. (Chislehurst)
Evans E. (Lowestoft) Morris, P (Swansea, W) Wallace, H W. (Walthamstow. E.)
Farthing, W. J Moyle, A. Warbey, W N.
Fernyhough, E Naylor, T. E Wells, P L. (Faversham)
Follick, M. Neal, H. (Claycross) Wells, W T (Walsall)
Foot, M M Nichol, Mrs. M E. (Bradford) West wood, Rt. Hon J
Gaitskell, H. T. N Nicholls, H R (Stratford) Whiteley, Rt Hon w
Ganley, Mrs. C S Noel-Baker, Capt F E. (Brentford) Wigg, Col G E
Gibson, C W. Noel-Buxton, Lady Wilkes, L.
Gilzean, A. Oldfield, W H Wilkins, W A
Glanville, J. E. (Consett) Orbach, M. Willey, O G. (Cleveland)
Goodrich, H E. Palmer, A. M F Williams, J. L. (Kelvingrove)
Gordon-Walker, P C Parker, J. Williams, W R. (Heston)
Williamson, T. Wyatt, W. Zilliacus, K.
Willis, E Yates, V. F
Wills, Mrs. E. A. Young, Sir Ft (Newton) TELLERS FOR THE NOES
Woods, G S Younger, Hon. Kenneth Mr. Pearson and Mr. Daines.