GAS STOCKHOLDERS (COMPENSATION)

HC Deb 12 December 1949 vol 470 cc2366-431

3.40 p.m.

Colonel Clarke (East Grinstead)

I beg to move, That this House views with deep concern the losses caused to creditors, co-partners and other holders of gas securities by the issue of British Gas Stock at a valuation that bears no relation to its true value at the date of issue, and urges on the Minister the necessity either to ensure the issue of a shorter-dated stock in satisfaction of compensation and making such stock convertible at par with Gas Stock already issued, or by some other method to rectify the present injustice. I should like to emphasise that this Motion has been drawn with considerable care. I believe it is not over-critical or over-controversial, in spite of very much provocation to be both, because I am certain that we have here a real grievance. I believe, too, that this Motion is constructive, but not too dogmatic. If the suggestion which we put forward does not commend itself to the Minister, we suggest that he should put forward a better one himself. I would add that our recommendation for a fresh issue of stock of shorter date is based on the fact that before long it will be necessary for the Gas Council to make a fresh issue in order to raise more capital, and we cannot believe that, when that is done, the terms of that issue will be the same as those of the current issue.

I would also ask the Minister to note the order in which we have placed the injured persons in this Motion. We have put them in the order of creditors, co-partners and shareholders, and our reason for doing so is because we consider that that is really the order of priority in view of the injury they have sustained. Creditors have fared the worst, then come the co-partners and last but not least the shareholders.

I believe there may be many hon. Members present in the Chamber who have not had the opportunities that some of us have had of studying the Gas Act. It may therefore be to the advantage of everyone if I deal in rather careful detail at the beginning with the background behind this Motion. It will be well known to everyone that the gas industry was nationalised last year, with vesting day on 1st May, 1949, and that the owners were promised their compensation. That compensation, however, did not mean cash. Actually, they had to take a loan which has been forced upon them in the form of an issue of British Gas Stock. Before the amount which the creditors, the stockholders, were to receive was decided, certain things had to be taken into account, depending, in the first place, on the value of the gas securities taken over—and I refer to gas securities in the sense to include both share capital and secured loans to creditors—and, secondly, the amount of gas stock which, in the opinion of the Treasury at the vesting date, equalled the value of those gas securities.

I want to say straight away that I think that the decision by the Treasury on the amount of gas stock that should be issued was a very fair one. Our complaint is not about that at all; the inequity and hardship come from a different source. I think it can be put down to faulty machinery and to faulty working of that machinery. It is known, of course, that the gas securities were valued on a Stock Exchange basis, and that was done with many other nationalised industries. I regret the method, but I am not going to deal with it here.

The relevant point is that some two-thirds of these securities could not receive a value on vesting day because they were unquoted on the Stock Exchange, and their value had to be ascertained by negotiations between the stockholders' representatives and the Treasury. Further, there were other securities which came under Clause 26 of the Act, which gives to companies which could prove diminution of income owing to the effects of the war, a right to some additional compensation.

Therefore, on the vesting day, some two-thirds of the securities could not be valued until these negotiations had taken place. In many cases, it has taken months to ascertain these values, and quite a number have not yet been ascertained. This delay, which could have been prevented by a postponement of the vesting day—and such a postponement would really have been in the interests of nationalisation and would have saved a good deal of the rush that took place—has been aggravated by three other factors. First, I understand, there are only two members of the Ministry's staff who are authorised to negotiate. I believe that they are first-class men in their job, but it would be impossible even for a first-class man to do the work of 10.

The appeal tribunal, which was an essential part of the machinery, was set up only in July of this year, and the rules were not available until August. I think that was a poor show, and there was no sense of urgency in trying to get the thing through. There was a further delay, after settling the actual value of the stock, because the stock was issued only at intervals, sometimes of as much as six weeks, and sometimes, I believe, even longer than that, so that it was not on tap, as it were, as I think it should have been.

During all this delay, the value of Government securities was steadily falling, and British Gas Stock was falling with them. Therefore, the actual cash which the owner of gas securities could realise by selling his British Gas Stock, when allotted to him has been consistently falling since a day or two after vesting day. British Gas Stock fell as low as 82. At that time, the unfortunate receivers were getting it at a discount of 18 per cent. At 12 o'clock today, it was quoted on the Stock Exchange at 90 maximum. That was after a rise of half a point over the weekend, no doubt due to the result of the Australian election.

There has been a very considerable anomaly between the various shareholders. Let us take the cases of two men each of whom had £100 in gas securities. One of them had securities in a company which was valued on vesting day, and he was able to sell the stock which he received at par or slightly more. Today, he would have been able to sell it only at a discount of 10. That is very unfair, and has caused a very great deal of dissatisfaction.

To give some idea of the number of people involved I will quote a few figures regarding the amount of stock issued at par, or slightly below, between vesting day and about the second half of June, and the amount issued at a discount since then. About £95 million worth of stock was issued at or about par. Since then, a further £67,500,000 has been issued at a discount, and the greater part of that sum—£51 million—issued on 21st November, was issued at a value of only 88⅛. Therefore, it will be seen that a great number of persons and institutions are involved.

I will illustrate my case by citing a few specific examples of hardship, and I shall deal first with creditors because, as I have already said, they are the hardest hit. I particularly want the Minister in his answer to give a considered reply in regard to them. The bulk of these creditors obtained loans for various reasons. Between 1945 and vesting day it was not easy for companies to raise money in the ordinary way by the issuing of stocks and shares owing to the threat of nationalisation. That is quite understandable because nationalisation has cast its shadow before it for some considerable time in the case of every nationalised industry. It is a regrettable fact that it appears as if on nationalisation these loan contracts are going to be partially dishonoured. That is something which has never happened before in the gas industry, and I hope that some means will be found to prevent it happening in the nationalised gas industry.

The reason is that under Section 17 (6) of the Act, gas boards may not take over liabilities and obligations in respect of securities. Therefore, they may not pay cash; they have to pay for them by issuing Gas Stock. That being so, the same thing has happened as happened to the holders of securities—since about the second half of June they have nearly all had to be paid off at a considerable discount. I will give one actual instance of a dishonoured loan. Near Manchester there is the Mossley and Saddleworth Gas Company which in 1946 borrowed some £75,000 under two different loans in order to extend their works and their mains. The money was borrowed on an arrangement to repair at par in five years' time—in 1951. At the time the money was borrowed both sides were confident that it would be repaid at par. The gas company naturally hoped that nationalisation would not take place and that sooner or later they would be able to fund the loans in the form of securities. On the other hand, if unfortunately nationalisation did take place, the company believed that the British Government would be prepared, as they were, to repay the debt.

The Gas Council and the area board are now repudiating the covenant to repay the cash, contending that these loans were really securities, and. there- fore, must be paid off in British Gas Stock. The lenders have been offered repayment at a discount of 15 per cent. which would actually show them a loss of twice the amount which they would have received by way of interest on the loans during the five years in question. It is really a ridiculous position. They are not shareholders at all. The persons lending the money lent it in the same way as people provide raw materials for industry; they lent it not in the form of a permanent investment or anything of that sort, but as a business transaction. I feel that these cases concerning creditors are perhaps the worst that I have to bring forward, and I particularly hope that the Minister in his reply will be able to give some satisfaction to these people.

I should now like to deal with the case of co-partners, and I think I can best illustrate what I have to say by giving the House an example of what happened to a large gas company very near my own constituency. It is the Brighton Gas Company, and I would say at once that they have not asked me to raise this matter for them, and that I am doing it entirely on my own account. This company had its valuation delayed partly because some of its stock was subject to claim under Section 26 of the Act, and partly because some of it was unquoted. That, of course, required computation and agreement between the stockholders' representative and the Ministry. The trustees and co-partners of that company held some £140,000 worth of 5 per cent. standard consolidated stock. It was not until 25th July this year that the value of that stock was announced. It was then stated that £135 of British Gas Stock would be issued to compensate for £100 of this stock.

Had that announcement been made on vesting day, and had they received the British Gas Stock on that basis, these people would have been able to realise over £189,000 on the sale of that British Gas Stock. As it was, when it was eventually issued, the stock had fallen to 94, and the co-partners received only £177,660, showing a loss of over £11,000. Actually, I believe that they have held on to it, and therefore the loss today is considerably greater—somewhere be-between £18,000 and £19,000. I feel that that is very hard on co-partners because they have been sufferers under this Act in a number of other ways also, and I hope that the Minister can find some way of meeting their case.

Next I come to the question of shareholders. In this connection I should like to quote an actual case of certain trustees who held stock in the East Cowes Gas Company. They held £750 worth of the original ordinary stock which was unquoted on the Stock Exchange, as very often happens in the case of stocks of the smaller companies. Agreement was only reached between the stockholders' representative and the Ministry with regard to this stock on 12th October, when it was agreed that £210 of British Gas Stock was exchangeable for £100 of the East Cowes Gas Company's ordinary stock.

On 12th October, British Gas Stock stood at a discount of 12 per cent. and therefore there was a very considerable loss at that date. But a further injury was inflicted inasmuch as no stock was actually issued until the third week in November. By that time the price was 83 middle, and a further considerable loss was incurred. The trustees are in a difficult position. They cannot gamble on what is going to happen. They cannot sell and deliver later. They just have to sit and hold on to these stocks and watch them rapidly depreciate in value. Between 30th April and 12th October they could not sell their stock because no one knew its real value. If they had done so, they would have been speculating on trust funds, which they obviously could not do.

In the second period from 12th October to the third week in November, they could not sell because they had not got delivery of the stock. The stock had not been issued. So that in the end, the day arrived when they were in a position to sell, on receiving the stock, at a 17 per cent. discount. For that they had been waiting five and a half months, all the time watching the value of British Gas Stock falling. As I have said before, the fact that British Gas Stock had not been on tap and issued more often has added an additional hardship to the hardship of the discount, caused by the fall in the value of Government securities. I think that is a good example of the hardship inflicted by this inadequate machinery.

While speaking of securities I want to mention one other kind of stock known as redeemable shares. The position of holders of redeemable shares is not unlike that of the creditors to whom I referred just now. In most cases they arose through companies being unable to issue ordinary stocks and shares when they wanted to raise capital, owing to the threat of nationalisation. The only way they could issue them—and it was not at all easy—was by having some very short-dated shares which were more like a note. For instance, the Shrewsbury Gas Company issued 4 per cent. preference shares redeemable in 1962, which at first sight are not unattractive, but actually the threat of nationalisation was such that 99 per cent. of them were left with the underwriters. These redeemable shares are practically a debt, and I think that those who hold them and who are now being paid off at a very considerable discount should receive consideration in the same way as the holders of other securities and creditors.

As regards the holders of securities, the Minister might say that the gas shares would have fallen in value anyhow, that if people still held the original gas shares and there had been no nationalisation they would have suffered a considerable loss because the shares would have depreciated in value in the same way as Government stocks have done. That is a hypothetical line of thought which is difficult to follow. I do not believe it is right, and I think the consensus of opinion in the City would support my view that those shares would not have fallen so quickly. It is difficult to prove it.

In July I tried to find out what other public utility companies' shares had done over the same period. The water companies' shares are about the only ones that can be considered, and there are not very many of them, so that I feel I would not be justified in drawing any conclusion from that fine of research. I would make this point, that whereas the gas securities were valued when they were depressed by war conditions, the Government securities had their value at a time when Government stocks stood high. Therefore, there was much less scope for a fall in the case of gas securities than there was in the case of Government securities. I still feel that probably if the original gas securities had been held they would not have shown so great a loss.

I now come to certain remedies which we suggest might be applied. The Minister might know of some better remedies. I hope he will consider the suggestions I am about to make, and if he can better them we shall be very pleased. There are three main remedies. First of all, an amendment might be made to the Gas Act, 1948, whereby the valuation might be arranged to be made at the date of issue. I think it would only mean quite a small alteration in Section 25 (1). There are provisions in the Coal Nationalisation Act which are very similar. I suppose an amending Gas Bill will be introduced in due course, as in the case of coal.

My second suggestion involves action by the Minister himself. Could he not agree higher compensation values for securities as they are taken? I believe he has power to do that under Section 25 (10) of the Act. I appreciate that both these suggestions come up against a certain difficulty. They would help those who still remained to receive compensation, but they would not help those who received compensation between the few weeks after vesting date when National Gas Stock held its own at par or thereabouts and the present time when it stands at a discount.

Therefore, in our Motion we have suggested a third remedy, and I believe it might very well be adopted. Our suggestion is that with the consent of the Minister and the approval of the Treasury, the Gas Council could issue a very short dated stock—a sort of Treasury bond with a life of two or three years or something of that kind. The Act and the Regulations which have been issued provide powers for this to be done. I recollect that both in the Electricity and Transport Acts there are more than one class of stock. I recognise, of course, that the Minister cannot compel the Gas Council to do anything of this sort unless he thinks that Section 7 is relevant. That Section gives him powers to give that Council such directions of a general character as to the exercise and performance … of their functions as appear to the Minister to be requisite in the national interest …. It is really very much in the national interest that the nationalised gas industry in its infancy should not repudiate creditors.

I cannot help feeling that the Minister need not exert much pressure; for I feel that the Gas Council must be sympathetic. After all, it is their honour which is at stake and all that is really needed is the Minister's consent. I am strengthened in my belief by the Minister's answer to a Question the other day when he showed a much more conciliatory spirit than when I raised this matter last July. I believe that, as a way out of the difficulty created by the unfairness towards those gravely injured, it might be practicable to offer to the original allottees of British Gas Stock a short option to exchange into the new gas stock, as suggested in the Motion. The option could be sold if the original allotment were not retained.

I have tried to put the case as reasonably as possible. A great many controversial points have been brought up on this subject, but I have tried to avoid them. I trust that the Minister will consider the matter in the same way and will give us a favourable answer. He believes in nationalisation. We recognise it as something which, unfortunately, has to be accepted. It may be modified as much as possible but, by and large, it has to be accepted. I am sure it is in the interests of both sides that, behind the battle which is taking place, there should be the smallest possible number of wounded, disabled and disgruntled persons. If we have a great many such people it can only make the position more difficult.

I believe this great hardship has been caused by faulty machinery and faulty timing. I am sure it was not intended and presumably it was not anticipated by the Minister and the Ministry. I must say, however, that the lack of foresight was a crime in itself. What has happened is quite contrary to the traditions, more than a century old, of the gas industry, which has been most punctilious in matters of this kind. In order that those traditions may remain untarnished in the new set-up of the gas industry, which the Minister has largely been responsible for bringing about, I hope that the Minister will find some way of satisfying these at present extremely dissatisfied people.

General Sir George Jeffreys (Petersfield)

I beg to second the Motion.

4.14 p.m.

Mr. Spearman (Scarborough and Whitby)

My hon. and gallant Friend the Member for East Grinstead (Colonel Clarke), who so admirably opened this Debate, referred to the fact that some of us did not know the background to the same extent as he knew it himself, because we did not have the advantage of sitting on the Committee which dealt with the Bill. I must say that at the time it seemed to me a rather questionable advantage to be on that Committee, and perhaps the Minister would share that view, but as I was not on it, I shall confine myself to one aspect alone.

It seems to me that whereas there might be great difference of opinion on different sides of the House as to what is fair compensation, all hon. Members would agree that there should be the same treatment for all shareholders. As far as I know, in the other nationalisation schemes, however much there might be disagreement as to the fairness of compensation, everyone was treated the same. In this case, as my hon. and gallant Friend has shown, that is not so. I have made a calculation and I find that shareholders to the extent of £77 million, or 40 per cent. of the total, got compensation in the form of gas stock which they were able to sell at par, if they wanted to do so. Such a person, therefore, received £100. But £93 million, or about 50 per cent., got compensation at a later date, at a time when the stock was, on an average, at a discount of 10 per cent. Consequently, for every £100, they received £10 less than those who were fortunate enough to have their compensation dealt with at the beginning.

It is not their fault that they were dealt with later, or indeed the fault of the Government that some were taken several months afterwards through no choice of their own, but it seems entirely inequitable that compensation should be quite different. Perhaps I may give a concrete example. Mr. A., who had a holding of £100 of debenture stock in the Southampton Gas Company, had that assessed at the value of £102 10s. of the new gas issue, and he had that agreed on 3rd June and, therefore, was able to sell his holding of the gas stock for £102 10s. Mr. B, who owned the same amount in the Ilford 4 per cent. gas stock debenture issue—£100—which was also assessed at the same price, did not receive it until 12th October, when he was able to sell it at only 88¾. Thus, in fact, he received £91, or £11 less than Mr. A who had his holding in another stock.

The Minister may say that if Mr. A had not sold his gas stock then he would be no better off today than Mr. B, or that if Mr. A had sold his stock and invested in war loans or some other stock which has fallen by the same amount, then again he would be no better off than Mr. B. Of course, that is so, but how about a man who had a loan from his bank to buy his house or for some other good reason and who paid off his loan when he had his stock repaid? In that case Mr. B is £11 worse off than Mr. A. Or there is the case where Mr. A thought that Government stocks were going to fall in price and, therefore, when he got his gas stock he did not keep it but bought a war bond issue with a short maturity date which has hardly fallen at all. In that case, again, Mr. B is, roughly speaking, £10 worse off than the other man for every £100 of stock he held. It must be entirely inequitable that, on the pure chance of when the stock was valued by the Government, the holder should receive an entirely different value.

Mr. Palmer (Wimbledon)

That is true if Government stocks fall, but what if they rise? Suppose compensation were paid at a time when Government stocks were appreciating in value: would the hon. Member be in favour of a payment being made from the shareholder to the Gas Council in a case like that?

Mr. Spearman

I am not dealing with that situation at all. I am suggesting that it should be done in such a way that the man has not to run the risk of the market. I do not think that should be in the contract at all. If I might return to my point, I have dealt with the situation of £93 million, or 50 per cent., who all received £10 less per £100 than the people who were dealt with first.

There is a third section of £15 million, or 8 per cent. of the total, who have not yet been paid back and so cannot sell their stock at all. Their position is an unknown quantity. It may be, as the hon. Member for Wimbledon (Mr. Palmer) said, that there will be a sharp rise in Government stocks and that these people will not lose, but it is very unlikely that they can gain, for it is unlikely that there will be a rise of 10 points. It is quite possible that these people's losses may be less than in the case of Mr. B. Equally it is quite possible that their losses will be a great deal more.

Therefore I am suggesting that the least the Minister can do—and this in no way amends the inequity to which I have referred—to limit, at any rate, the possible loss to these unfortunate people—and I should like to stress that these £15 million worth of securities were mainly held in small companies by small shareholders, whose suffering may be more acute—is to see that they shall not be any worse off than anyone has been yet. The Minister should say they will pay them off—not at 100 which would be unfair to the others and would alter the situation—but on such terms as to treat them not worse than the worst treated man so far.

It is not, obviously, my job to predict how these people may be affected by anticipating what future movements of Government stocks are likely to be, but I would put these three propositions to the Minister, with which, I think, he must agree. First of all, that the value of the compensation depends upon the price at which Government Gas Stock stands at the time when it is received. Secondly, that the price of Government stocks must be lower in the future if the demand for capital exceeds savings, except in so far as physical controls are brought in by the Government of a vastly greater nature to deal with the situation.

The Minister of Fuel and Power (Mr. Gaitskell)

I would not agree.

Mr. Spearman

I would not try to teach the right hon. Gentleman economics: we know he is an expert in them; but I think that is a simple economic proposition which he cannot deny. Third—and, perhaps, this proposition is questionable, but I think the right hon. Gentleman will find that nearly all the authorities agree—at the present time demand is greater than savings. Therefore, we are facing here the fact that there is likely to be on those premises a fall in the gilt-edged market.

If the right hon. Gentleman will get up and say that the Government are going to make such drastic cuts in Government expenditure before the election—that straight away they are going to do it—that savings and demand will be at balance, then I should not be so unhappy about those wretched people. Secondly, if he will say that the Government—and I doubt if he will be prepared to say this before the election—are going to bring in a vast increase in physical controls, vastly greater rationing—that is, cutting down supplies all round—then, I agree again, the gilt-edged market may not fall.

Unless, however, one of those two things is done sooner or later, the price of Government stocks is bound to come down, and, therefore, the liability on this, 8 per cent. is a quite unknown one. Therefore, I ask the right hon. Gentleman to see whether he cannot limit the loss that they will suffer by saying that, at any rate, those people whose claims are not settled, whatever may happen to the gilt-edged market, will get either cash, or short-dated Government stock that cannot fall, on terms which will make them no worse off than that shareholder who has, so far, come off worst of all the others.

4.23 p.m.

Sir John Mellor (Sutton Coldfield)

I think the Minister will agree that, in the case of those Gas Stocks which have been valued since vesting date, the holders would get something much closer to their values as determined under the statute if they got a shorter dated stock. I think he will agree with that. I think he will also agree that it is practicable that they should be issued with a shorter dated stock. Even if the right hon. Gentleman has reason to say he is not prepared to bring that about, even if he is prepared to argue that such a course would be erroneous, I think he will agree still that it would be practicable.

Whether he would consider this, under Section 7 of the Act, a proper matter for directions to the Gas Council—that they should issue a shorter dated stock—I do not know, though I should imagine from his previous form, that he would say that the rate of interest payable and redemption date would be a day to day matter for the Gas Council. That has been the sort of line taken by the right hon. Gentleman and his colleagues concerned with nationalised industries in the past. They have interpreted the day to day functions very widely indeed—so widely that they have denied to themselves, so far as I can see, the right to give directions to the nationalised boards on matters for which they are generally responsible.

However, be that as it may, suppose for the purpose of the argument the Minister says that he does not consider this to be a proper matter in which he should give directions to the Gas Council. At any rate, there are several other ways in which he can do it. Under the Act regulations have been made by the Minister with regard to the issue of Gas Stock, and the Gas Stock Regulations of 1949, which are contained in Statutory Regulation 751, provide that The Gas Council may issue such class or classes of stock as it may determine … and, subject to the provisions of the Act, the stock may be issued on such date by such method for such amount at such price at such a rate of interest and subject to redemption on such conditions as the Gas Council with the consent of the Minister and' the approval of the Treasury may determine. Therefore, it is impossible for the Gas Council to issue stock without the assent of both the Minister and the Treasury to all the terms attaching, and certainly the Minister has considerable authority in this matter. However, I think that in his own confession in answer to a supplementary question which I put to him on 28th November he made it clear that, in practice, he, as Minister, can arrange the terms of the stock to be issued, because he said this: There would be no statutory barrier for my arranging for the issue of short-dated stock, but I explained in my original answer why we chose not to do so. Therefore, I think the right hon. Gentleman will admit that he has control over this question as to the rate of interest and terms of issue attaching—and, particularly, to the date of redemption attaching—to any stock which may be issued by the Gas Council.

Now I think it only right that I should refer to the original answer in which the right hon. Gentleman explained why he chose not to require the Gas Council to issue shorter dated stock in compensation for these Gas Stocks which had been valued since the vesting date. This was what the right hon. Gentleman said: It is a principle of sound finance that public utilities should borrow as long as possible for capital works. Adherence to this principle was particularly desirable in the case of British Gas Stock 1990–95 which was issued as compensation and in replacement of long term or even irredeemable securities of the old undertakings."—[OFFICIAL REPORT, 28th November, 1949; Vol. 470, c. 769.] It is perfectly true that a number of stocks of the old undertakings were long-term, and even irredeemable; but a great many were not; there were a great many stocks which were medium or short-dated. Now, I picked out at random Statutory Instrument 1285 of 1949, which provided that the conversion date for a number of stocks should be 11th July of this year. Looking at those on the first page, on which there are detailed 14 of the old gas stocks, I find that five are either short or medium date. Out of 14 stocks, some of which may well have been irredeemable or long term, the first stock mentioned is redeemable in 1950, the second in 1960, the third in 1951, the fourth in 1953, and the fifth in 1955. Some of the others may also have been of medium date. I do not know, because their dates are not given.

The Minister is trying to justify giving long term stock—it is the longest term stock in the gilt-edged market, apart from the irredeemables—in all cases, regardless of the date of redemption of the stock for which it is given in compensation, because he says it is a good principle of finance for public utilities that they should borrow as long as possible for capital works. I quite agree that it is, but at the same time I do not think it right that he should abandon all principles of justice in order to adhere to that principle, as he clearly is doing—and doing so on the very assumption contained in his answer—if he proposes giving to medium and short-dated stockholders of the old gas companies this Gas Stock redeemable 1990–95. Indeed, my hon. and gallant Friend mentioned one security as an example of many others, where a loan which was repayable in a couple of years was treated as a security and compensated with Gas Stock 1990–95. I feel that the whole treatment of this matter has been singularly unsatisfactory.

If one looks at the course of Stock Exchange prices—and it has been the same story every time we have had a vesting date—the gilt-edged market has been held fairly steady and fairly strong for some time before vesting date, and the moment vesting date is over it has been let go because it no longer matters to the Government. I looked at the price of British Transport Stock 1978–88—during the months preceding the Gas Act vesting date, which was 1st May. Taking the price from the end of October, 1948, down to the end of April, 1949, I found that the price of British Transport Stock 1978–88 had been pretty steady, between 100 and 102. I have taken that stock because it was the longest-dated stock then in existence which one could consider as comparable with the Gas Stock 1990–95. As soon as the vesting date had passed, all long-dated gilt-edged stocks slumped; Transport Stock went down to 96, and Gas Stock down to 95; and, of course, they have accompanied each other downwards, the Gas Stock always being a bit below the Transport Stock because the date of redemption is somewhat longer.

I think that shows that the method of manipulation—which I have debated on previous occasions with the Financial Secretary, who I am sorry has now left us—has been singularly unfair: all in favour of the Government and all against the stockholder. I should have forgiven the Government if they had done a little manipulating after vesting date; if they had said "Well, in fairness to the gas stockholders who wish to realise, we must sustain the gilt-edged price for a time after vesting date, so as to give them a chance of getting out if they want to." While I strongly disapprove of the Government doing anything to manipulate the stock market, that would at least have been inspired by a sense of justice. But they have no sense of fairness in this matter; they just let prices take their course after vesting date, although they hold them up before it.

I think that my hon. and gallant Friend has put forward a very fair remedy: that the Minister should instruct the Gas Council to issue a short-dated stock, because if they give a really short-dated stock there would be virtually no loss on the take over price for the stockholders. I think that that is the correct course to adopt, and that conversion rights should be given to those gas stockholders who have already passed their conversion date, I very much hope that the Minister will today give us an answer which will enable us to see that he has some sense of justice in this matter.

4.37 p.m.

Mr. Drayson (Skipton)

I am afraid that I can only regard this matter as another Socialist swindle, because although it is possible that the Minister's intentions might have been good on vesting date, on 1st May, since then he has come up to our expectations. A point we must consider is: If it was agreed that stocks should be issued at par on vesting date, why was it not also agreed that that should be done so that the various companies which had not yet been valued, or which had unquoted securities, should also receive a stock that would be valued at par on the day on which it was allotted to them? Since vesting date there have been issued a number of schedules of companies for whom a valuation had been fixed.

I have a particular case in my constituency, that of the Settle Gas Company. The compensation price was fixed on 16th September, four and a half months after vesting date, and the stock would not be available for sale till 21st November, some considerable date later. From the moment of knowing what stock is to be allotted it is possible that stockholders might be able to sell their new Gas Stock in the market, on an understanding that they would not be able to deliver that stock for some weeks to come. That would, of course, mean being a bear of the stock, or a protected bear, because they would get their stock back at the time it was issued to them some weeks later. I understand that is a practice the Government do not like. The Chancellor now tells them that it is his object in life to "squeeze bears." We often wondered what he did in his leisure moments. Now we know. The Settle Gas Company had £10 shares which had paid a maximum dividend of 5 per cent. for many years. They were bought out at £10 5s., which gives a return of about £4 19s.

Another instance, in Yorkshire, is that of the Thirsk Gas Company. Here the valuation was fixed for the £10 share not at £10 5s. but at £11, giving a return of £4 15s. Why cannot the Government fix a definite rate that would apply to all companies. I should have thought that in any case the 4½ per cent. yield basis would have been more reasonable than paying out to these companies at £4 15s. and £4 19s. respectively. I do not know why Thirsk should have been more favourably treated than Settle. It is quite obvious that, now that these holders are to get 3 per cent. Gas Stock in its place, that they will suffer a loss of income of something like 35s. per £100 of capital per year.

The reason that the Government intended to issue stock that would be at par with other securities on the vesting date was, of course, that the holders, if they were going to suffer a loss of income—and practically every one of them did—would have an opportunity of selling their securities forthwith and finding an alternative investment. That is a proposition which has been denied to these other companies whose compensation value has been held up for four or five months, and no doubt to many companies for whom a valuation has not yet been fixed. These people have not been able to make an alternative investment, and if they get compensation stock, they will find that it stands in the market, as we have already been told, at 10 points discount.

It is significant that no hon. Member on the Government Benches has spoken today on this subject. From that we can assume that very few of them understand it, or, perhaps, that they are not concerned with people who have built up a little capital and have lent their money to local gas undertakings so that they could provide the public with a suitable service. Perhaps they think that they should not in any way receive fair compensation for their thrift and enterprise in helping to establish these public services over the past decades.

I hope that the Minister will be able to inform us on what basis these valuations are fixed. What rules have the Commission set on which they base their figures? Now that we see the violent movements that are taking place in the gilt edge market, if some possible valuation could be arrived at for the stockholders of non-quoted companies, they would at least be in a position to sell a portion of their Gas Stock even at 90, and finally complete the transaction when their compensation figure was fixed.

The point has been made that it would be quite possible to issue stock at varying dates other than that of the original Gas Stock. I wonder what possible objection the Minister could have to doing that. It may be said that it would be inconvenient to issue a series of stock all carrying different dates, perhaps a new Gas Stock every month, but it should be possible to wait until one had valued companies to the value of several million pounds and then publish a schedule of the compensation fixed on all these companies so that the number of the different dated Gas Stocks which would have to be issued could be limited as much as possible. I cannot see what objection the Minister can have to doing something in that way.

It is the intention to issue stock which could be sold for cash at par on the date the compensation was fixed. Surely, if compensation was fixed at a date other than the vesting date, it should be possible to issue stock which would realise cash at the value at which it was then fixed. Now, as has been said, we are getting stock 10 per cent. less in value than that received by those who knew the value of their holdings on the vesting day. I think that the Government are making a great mistake. This take-over in many instances has been a matter of considerable hardship to a number of small holders in these local companies which had not much market on the Stock Exchange, if any market at all. It is the small local companies where the money has invariably been subscribed by people of modest means in the locality, who are now suffering most. I hope that it is not too late for the Government to do something to remedy this defect.

4.48 p.m.

Mr. Gallacher (Fife, West)

I think that the hon. Member for Skipton (Mr. Drayson) showed a peculiar type of courage when he used the term "swindle." That is a very suspicious term in the minds of the workers of this country because they have long been accustomed to swindles in this particular matter of handling stock and paying out compensation. Personally, I am against compensation in ordinary terms—but we are not discussing that today—and I am against this Motion. If the hon. Gentleman or any of his Friends can get up and give me a particular case of a stockholder in any of these gas companies who is in the unfortunate position of having to go to the Assistance Board for supplementary assistance, it might be possible to give some consideration to their plea.

The Stock Exchange is a gamble and all the transactions on it are gambles. Here we have a situation in which we are told that the stocks were issued and by the time of the vesting date they had fallen very considerably. If there had been a decision to issue the stock, and the stock had begun to rise before the vesting date, would there have been any suggestion from the other side that the compensation should be cut?

Mr. Drayson

It is quite obvious from what I said during my remarks that the hon. Gentleman has no idea of what this is all about.

Mr. Gallacher

The hon. Gentleman said that these stockholders would lose about 35s. on £100 capital.

Mr. Drayson

Income per annum.

Mr. Gallacher

The hon. Gentleman said that all the nationalised industries had been affected in the same way. He said that the gas companies should be put in the same relation, so far as the stock is concerned, as the others, although the others, all of them, have lost. The fact is that the stockholders in the mining industry have not lost anything. They are getting more today than they would be receiving if they still owned the industry. If the industry had not been nationalised, the mines would be completely bankrupt. The railway stockholders received compensation at a rate of interest of 2½ per cent., which the Chancellor of the Exchequer raised to 3 per cent., but no one suggested that the railway shareholders should have their compensation reduced in view of that rise in the rate of interest. We did not hear any such suggestions.

I would remind Members opposite of the exhortation made by the Chancellor of the Exchequer. It was directed to the workers, not to Members opposite, because I am certain the Chancellor of the Exchequer knows what they are made of, just as I do. His exhortation was to think of spiritual things and not of material things. Just now we are hearing a lot about preparing for the festivities of Christmas, but all we get from Members opposite is "Money, money, money." They can think of nothing else. All they think about is compensation for those who own stock in the gas industry, rather than running the industry in the interests of the people.

These gas companies were run for profit and for "soaking" the people, particularly in some of the small places. Members opposite come here and talk about these people running the gas companies in the national interest, but the fact is that it has been necessary, in the public interest, to take over this industry and reorganise it.

Mr. Spearman

The hon. Member has told us he does not agree with compensation, and on that we can agree to differ, but what does he think about this? If there is to be compensation, does he not think it should be the same for everyone?

Mr. Gallacher

No, Sir. I would make it progressively less. I would suggest giving the owners of these undertakings the same allowance as they are now getting, for the rest of their natural lives, and for the allowance then to finish. That is how it should work. According to what we have been told, these companies have been giving service to the community, but they have been doing it at a profit.

But, look at the workers and the service they have given for 50 years in the mines, mills and shipyards. What about the working-class mothers who have run their homes for 50 years to keep industry going? All their life and capital has been invested in serving the nation. Why are we not discussing them today, and the question of 42s. a week for a man and wife? Why are we not discussing the old age pensioners, who are more deserving than any of these stockholders? If this House were doing its duty, it would not be wasting time on a Motion of this kind, but considering what money is available in the country and using it for the veterans of industry who deserve a proper and decent living. I ask the Minister to repudiate this Motion and the mercenary instincts responsible for it, represented by Members opposite.

4.55 p.m.

Mr. Emrys Hughes (South Ayrshire)

I wish to emphasise some of the points which have been made by the hon. Member for West Fife (Mr. Gallacher), although I would not go so far as to suggest immediate confiscation. I agree with much of the philosophy he has put before the House. I am quite prepared to accept the principle of compensation for shareholders in gas companies, provided it is deferred. I am in favour of paying a good deal of this compensation in post-crisis credits. At Question Time the other day the Chancellor of the Exchequer agreed to give very careful consideration to a point of view I put forward, which I hope to explain in a memorandum.

Mr. Gallacher

I want to endorse that sentiment and the proposal. From that point of view, the longer the crisis lasts the better.

Mr. Hughes

I have already converted the hon. Member for West Fife, and I hope that I shall now be able to gain the support of the Opposition.

Mr. Spearman

Is the hon. Member suggesting there should be repudiation of payments on all Government stocks until after the crisis ends, or is he singling out gas stockholders for this discrimination?

Mr. Hughes

If the hon. Member will have a little patience, I shall explain in detail just what I mean, and he will then agree that there is an element of common sense and justice in the proposal. I am sure the proposal will commend itself to the Financial Secretary to the Treasury, who has just arrived, because it will help to ease his burden. I do not suggest repudiating Government stocks, but that the wealthy owners of Government stocks should be asked to have their payments of compensation deferred until the nation is out of this economic and financial crisis.

Members of the Opposition are always arguing, and we agree with them, that we should review national expenditure, and, like the hon. Member for West Fife, I am alarmed at the progressive increase in national expenditure by way of compensation to these different industries. I agree that widows and poor people who have put their savings into gas companies should not be treated with the same lack of generosity that has been shown to the employees in the industry, but I do not think for one moment that the majority of people who are likely to receive these sums of compensation come under this category. I have in mind the various small companies that used to own gas works in the West of Scotland.

I can remember when I first went on a town council in the West of Scotland. It was a small town where the gas works were owned by a gentleman who was the part-time town clerk. When I went on this town council, I began to look into the ramifications of the gas company. There was a move afoot to get electricity into the town, and I moved a motion that we should attempt to get electricity laid on to bring our town into line with other progressive communities. When we went to the Electricity Board, we were told: "Oh, we have been told by the town clerk, who is chairman of the gas company, that the people do not want electricity." I mention this to show that gas shareholders are not always the most enlightened and progressive members of the community. The gentleman concerned is now deceased, but his descendants are presumably drawing compensation. The wealth of this country's shareholders is concentrated in the hands of very few people. To argue that the big shareholders should receive compensation when there are very many less prosperous members of the community is intolerable.

The bill for compensation is steadily mounting, and I would like the Minister to inquire into this matter with a view to finding out how many coal industry shareholders were also shareholders in gas, electricity and iron and steel companies. At this time, when we hear so much talk about inflation, the Opposition are asking for money for those who could wait until we had got out of the present crisis. We have already established the principle of post-war credits, and in this matter the wealthier shareholders should be asked to be patriotic. We should say to them, "Until the nation is out of this crisis, will you be generous enough to accept a large or the entire proportion of your compensation in post-crisis credits?" The date of the end of the crisis could be fixed later by the Government. If we did that I believe that the position of the Treasury would be greatly eased. If compensation increases, costs will be added to industry. When the accounts of the gas industry are placed before the public the Opposition will cry "Look at the losses." What they are asking us to agree to today is a thoughtless and shortsighted policy which is not in the interests of the community.

I remember reading a report of an eloquent speech made at the Conservative Party conference by a gas worker. It was the sensation of that conference. This man, who said he had eight children, went on to the platform to say how much gas workers objected to nationalisation of the gas industry. He should not have been at that conference; he should have been at the British Museum. This worker had a tumultuous reception, even more tumultuous than that given to the Leader of the Opposition, because it was thought that the conference had before them a genuine member of the working class who was expressing the working class view. It was, of course, all eyewash. So is this talk about injustice to widows and orphans. The Opposition's case is nothing but a demand for more loot for vested interests, and I hope the Government will not yield. I hope they will say that there are other far more important liabilities, such as holidays with pay for gas workers and miners, and will adopt my suggestion of post-crisis credits as an alternative to the extortionate demands which have been put before the House today from the Conservative benches.

Colonel Clarke

If the hon. Gentleman had listened to my speech in opening the Debate he would remember that I asked for another form of gas stock with a shorter date and, therefore, a lower rate of interest, to be issued in future as compensation and to be interchangeable with the old stock. I do not know how that can cost the country more.

Mr. Hughes

I proposed long-dated gas stock, which would cost the country less.

5.5 p.m.

Mr. Enroll (Altrincham and Sale)

There is little doubt that the hon. Member for South Ayrshire (Mr. Emrys Hughes) is one of the biggest gas producers in the House and that it is laughing gas which he produces, so it is not to be taken too seriously. I will turn, therefore, to the question of the shareholders themselves. I wish hon. Members opposite would disabuse their minds of the notion that there is something wrong in being a shareholder in a company, whether a gas company or any other company. It is surely right and proper to put one's money into a productive enterprise. The hon. Member for West Fife (Mr. Gallacher) may vituperate about shareholders, and say that we on this side always talk about money, but the fact is that the business of this country is conducted by means of money and that the Government are constantly urging that money should be put into business so that it may function efficiently.

Mr. Gallacher

Will not the hon. Gentleman admit that workers who have given 50 years of their lives in industry are responsible for the country's prosperity? Will he tell me how much money they get when their term of service is over?

Mr. Erroll

They got 50 years' wages, and without capital and managers there would have been little work for the gas workers to do. It is a partnership; one is not much good without the other.

While the subject today may be money—and we need not apologise for that—the real theme is the spirit of fair play. We are debating fair play for those who invested their money in the gas industry. I do not think that the Government deliberately planned anything so unfair as what has occurred. In connection with previous nationalisation Bills the vast bulk of the securities could be taken over on the vesting date, and thus a clean transfer could be made. I know there have been some exceptions, and that under the Iron and Steel Act there wilt probably be some more if that Act is implemented, but what was not fully realised, I think, was how long the delay would be in paying out compensation in respect of a number of small undertakings.

The Bill which nationalised the gas industry was planned in the days of expanding credits, when it seemed that everything would rise or remain stationary. I do not think that anyone considered fully enough at the time the continued and steady fall there would be in the value of securities. I know it may be argued by the Government that even if the capital value of the compensation has fallen it matters little because the holder is still able to get his interest, unimpaired. But that point serves only to demonstrate the fallacy of the hon. Member for South Ayrshire, that by asking for more loot, as he politely described it, we would increase the overheads of the gas industry. In fact, of course, the interest to be paid remains exactly the same no matter what is the market value of the gas stock at any particular time.

The real point is with the marginal case of those who wish to sell their stock. The argument has been put forward by a number of Members this afternoon that to provide all this money would be an inflationary feature of our economy, and it ought to be stopped or deferred. The device adopted by the Government in issuing compensation stock was not to issue money, so that there has been no inflationary factor at all. However, it was recognised in the early days of the Coal Industry (Nationalisation) Act that it should be permissible for recipients of compensation stock to cash or transfer it if they so wished. What is so patently unfair today is that no stockholder, who may wish to realise his compensation stock, can, in fact, get the value for it to which he is really entitled, although it is plainly laid down in the Act.

It is unfair to the stockholder, but it is even more unfair to the creditor. We must not think of this compensation stock being issued only to stockholders. It has been issued to a number of short-term creditors. They lent money to gas companies when they were unable to raise capital in the normal way, either because of the threat of nationalisation or because of the post-war uncertainty. In many cases the companies were able to get short-term loans from individuals or organisations specialising in such loans for perhaps four or five years at a very reasonable rate of interest, 3½ or 4 per cent. These loans it was understood both by the creditor and the borrower would be repaid in cash at the end of the period. However, it has been decreed otherwise. It has been decided that these loans are to rank as securities, and they are to be paid for in gas compensation stock.

We have the position that a creditor who has perhaps loaned £10,000 as a short-term loan to a small gas company is only, in fact, going to receive back gas compensation stock to the present value of £9,000 if he is, in fact, able to realise it at that value. There can be no question of that being loot or of grasping share- holders. How would hon. Members opposite like if they loaned money to someone

Mr. Fernyhough (Jarrow)

Nine thousand pounds?

Mr. Erroll

It is not the sum but the principle which counts. A loan of a few shillings is as important as a loan of thousands of pounds. There are plenty of hon. Members opposite who could easily loan £9,000.

Mr. Gallacher

Introduce to me one of them.

Lieut.-Colonel Elliot (Scottish Universities)

Meet Mr. Strauss.

Mr. Erroll

It is surely the principle that is important. How would any hon. Member opposite like to make a short loan on the definite understanding that it was to be repaid in full at the end of an agreed period, and then find that, instead of getting his money back, he was being paid in compensation stock, which could not be sold on the free market at a price sufficient to repay the original loan. That is the position today and it is very unfair. There is another class of aggrieved person—the gas worker who took part in the co-partnership scheme. I should like to reassure the hon. Member for South Ayrshire that while we gave great applause to the gas worker at our conference, we reserved the greatest applause for the Leader of our party when he came to Earls Court.

Mr. Emrys Hughes

To which gas worker is the hon. Member referring?

Mr. Erroll

As that was my joke previously, the hon. Gentleman might try to be original.

I do not intend to go over the case again of the gas workers who invested in co-partnership schemes, except to say that they suffer from the same sense of injustice. They may still get their interest at the nominal rate, but the marginal seller is at a severe disadvantage, because should he need to realise his money—and there are many reasons for realising money in this country in these days—he is unable to get the full amount to which he is entitled. It may be argued by the Government that one must take the rough with the smooth and the downs with the ups, that had gas stock risen to above par in the intervening months there would have been no complaints. It is quite likely there would have been no complaints from the recipients, but it would have been equally unreasonable because the important thing is to ensure that the compensation should be fair.

Mr. Palmer

When the hon. Gentleman the Member for Altrincham and Sale (Mr. Erroll) was out, I put a question to his hon. Friend. I should like to put it to him now. Would he be in favour of back payments to the authority?

Mr. Erroll

That would, of course, have to be gone into.

Mr. Fernyhongh

It is the principle.

Mr. Erroll

If the Government were to concede the one, I for one would be prepared to concede the other. I have not had an opportunity of consulting with my colleagues.

Mr. Palmer

It will be put on the record.

Lieut.-Colonel Elliot

There is no difficulty about putting it on the record. Speaking on behalf of the Opposition, I say if the Government would pay it in cash obviously there would be no objection, and then the question of a rise and fall would not arise.

Mr. Gallacher

That is not the point at all.

Mr. Erroll

Hon. Members opposite will see that we on this side think along the same lines without having to be coerced.

Mr. Daines (East Ham, North)

How many hon. Members opposite?

Mr. Erroll

The Minister may plead that it is not in his power to alter the present arrangements. It seems strange for him to make such a plea because, in fact, the Socialist Government have been able to do anything they liked during the last four years, and surely they would like the opportunity of introducing another little Bill in the New Year. A short amending Bill could put this matter right. Alternatively, the Gas Council, after consultation with the Minister and the Treasury, could prescribe the issue of short-dated stock for these late transfer payments. It was left to the Gas Council to take the initiative in regard to the device of stock which was issued as compensation stock, and it could, if it chose, issue a short-dated stock, ensuring that it would not be liable to deteriorate as the existing Gas Stock has already done. In that way justice would be done.

If the Gas Council has not approached the Minister, surely the Minister is not insensitive to our demand, and he could make the approach to the Gas Council. Of course, another way out of the dilemma for those stockholders who have yet to be repaid would be to wait and risk the possibility of further deterioration in the price of Gas Stock in the hope that after the next Election there will be a more reasonable Minister in the place of the present one. That would seem to me to be the wisest course to pursue, for we would certainly put into such an office a Minister who would ensure fair play in matters of money as well as in the spirit.

5.20 p.m.

Brigadier Prior-Palmer (Worthing)

I will only speak for a very few moments in order to put to the Minister a point of view which has not, so far as I know, been put to him already. I would ask the question: Who is affected by this arrangement? Hon. Members opposite appear to think that it affects the very rich people, but I can assure them that it affects people who have very little money indeed, and far more severely than it affects any others. There are such people as the old and retired civil servants and their wives, and business men in a small way. [HON. MEMBERS: "Oh."] I am telling the House the truth, because I happen to have many thousands of such people in my constituency. They are people who have contributed in their life-time to no contributory pension scheme. They have saved up out of their salaries and earnings throughout the years and have invested their small amounts against their old age.

Mr. W. R. Williams (Heston and Isleworth)

Does the hon. and gallant Gentleman really put the civil servants among the people who have never contributed to a pension scheme?

Brigadier Prior-Palmer

If I did so, I was wrong, because I know that civil servants have a pension scheme. Nevertheless, there are many thousands of people, who, owing to the high cost of living and high taxation, suffer very great hardships indeed. Particularly, there are old ladies living by themselves—of whom there are thousands—who have a very small dribble of income from some small investment such as a gas holding. They are endeavouring to realise on some of these investments in order to continue to live. They have to live on capital in many cases because they are no longer able to live on the income from their capital. Their capital is running out and therefore in a very large number of cases it means a race between death and starvation. It is for these people that I put in a plea today. A large number of well meaning hon. Gentlemen on the other side of the House do not realise that it is only the small people who are seriously affected in this matter.

Mr. Mitchison (Kettering)

rose —

Brigadier Prior-Palmer

I cannot give way to the hon. and learned Member because I said I would speak only for a very few moments.

Mr. Mitchison

I question the starvation.

Brigadier Prior-Palmer

It is so, indeed, and if the hon. and learned Member would care to come to my constituency I would take him round and show him old ladies who are unable to exist on their present incomes and are selling their capital in order to go on living. Sometimes they have the burden Of a house round their necks, a detached house which is far too expensive to continue to live in, but these old people can-hot get rid of them because there would be nowhere else for them to live. In a very small number of cases they are, I regret to say, moving into council houses and thereby depriving of accommodation those who should be living in council houses.

This position is becoming very serious indeed for a large section of the lower middle-class people all over the country. I would therefore ask the Minister to consider the hardship that the present proposal will cause to people who have done no harm to the Socialist Party, but have worked hard all their lives for a small salary from which they have saved up for their old age. Those are the people who will have to suffer, and I therefore ask the Minister to consider this matter from a humanitarian point of view with a view to helping those people.

5.24 p.m.

Mr. Fernyhough (Jarrow)

I can hardly believe that the hon. and gallant Member for Worthing (Brigadier Prior-Palmer) would hope to convince the House that thousands of people are living on the borders of starvation as a result of the nationalisation of the gas industry, and, in consequence, are likely to die in the near future. If it is so, there are two suggestions I would make. The first is that it is a reflection upon the hon. and gallant Member, as their Member of Parliament, that he has not told them of the National Assistance Board, which deals with cases of starvation. It is also a reflection upon him that he has not told them that the National Assistance Board will help towards paying the rent of their houses, which some of them are having to vacate in order to go to council houses, and that the board will, generally, provide them with a minimum of assistance to maintain bodily health.

Mr. Erroll

Is the hon. Member aware of the discontent within his own party because of the inadequate scales of national assistance benefits and of the deputations of his own party to the National Assistance Board and to the Minister only last week?

Mr. Fernyhough

I am quite aware of it, but we have never said that people are suffering from starvation and are likely to die. If the hon. and gallant Member for Worthing were to talk to my constituents in Jarrow and try to convince them that what he has been saying this afternoon is good, sound argument, what would their answer be? The hon. and gallant Gentleman is pleading for people who have invested their savings in a particular industry which has now been taken over and nationalised. There were thousands of men in my Division who had nothing to invest except their skill and ability to work. They worked for 20, 30 or 40 years, and, when it suited some people, they were no longer wanted. What compensation did they get? They were employed by the friends of hon. Gentlemen opposite.

Can I go to the shipyard workers, the miners, the transport workers or the labourers and say: "Boys, you ought to be in favour of giving these stockholders more, although it will put a bit more expense on the industry, because it is reasonable and just that that should be done." Are they not likely to turn round and say: "What kind of compensation have we had?" Let me give a personal illustration. In 1939, one of my brothers—all of them are colliers—was working in the pit in Burslem when he was badly injured. He was brought up more dead than alive. He lay in hospital for months. The coalowners' compensation, passed by a Tory Government to him, to keep himself, wife, and five children, was 30s. per week.

I am quite prepared to do something for those widows and very poor people who were mentioned by the hon. and gallant Member, and who are living near to the borderline of starvation^* If I thought it was those people, in the main, who had been done an injustice by this proposal nobody would be more ready than I to press the Minister to assist them. By and large, what do we know? We know that, whether we look at the gas, the transport, the coal, or any other industry, we find that from 75 per cent. to 90 per cent. of the shares are concentrated in a very few hands.

Hon. Members on the other side know that they are not pleading for the little people but for the big people who have thousands of pounds invested, for the people who can live without anything else and just on the interest from these investments. It is very strange that whether it be the transport, the coal, the steel, the gas, or the electricity industry, or whatever other industry it may be, never once have the Government, in the opinion of the Opposition, been fair in their compensation. We look at the total amount of compensation paid, and we realise that many hon. Members have never had a single complaint from our constituencies.

Nobody has ever written to me from my Division, of dissatisfaction with compensation so far as electricity, the Bank of England, the gas industry, the railways or coal are concerned; none of them. Not one worker or widow has written to me to say that this compensation is bad or unjust. Many who have given a lifetime of service to industry have told me that far too much compensation has been paid. I agree with my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes); I think that it is nauseating that the party opposite should plaster the hoardings from one end of the country to another with posters showing how much the nationalised industries have lost and then day after day come to this House and plead that a bigger burden should be put on the nationalised industries. It is not fair. It is hypocritical.

I should be quite prepared to deal with cases of poor struggling widows who, according to hon. Gentlemen opposite, are on the borderline of starvation. If cases of that kind can be brought forward, we shall press the Minister to deal with them sympathetically, but as far as the rest are concerned, the point which, has to be taken into consideration is that all those who deal in stocks and shares are essentially gamblers. Having seen what happened the day after devaluation, in Throgmorton Street and realising what was made on that occasion, my view is that the sooner the Stock Exchange is done away with the better it will be for the real workers in this country.

Sir John Barlow (Eddisbury)

The hon. Member has said that 75–90 per cent. of the shareholdings in the nationalised industries are in the hands of very large holders. Can he substantiate that statement or give any other information about it?

Mr. Fernyhough

I can only substantiate it on the basis which I have indicated. Nobody has ever written to me about it. I know thousands of workers, but I have never met one of these people who are supposed to have shares in the natonalised industries. Therefore, I take it, by and large, that it is a fair case to say that 75–90 per cent. is concentrated in the hands of comparatively few people.

Sir J. Barlow

Has the hon. Member no actual figures whatever?

Mr. Fernyhough

I could give the hon. Member some eventually.

5.33 p.m.

Mr. John Foster (Northwich)

The hon. Member for Jarrow (Mr. Fernyhough) said that if he was convinced that any widows or children were in danger of starvation or in financial straits he would press the Minister on this point. From what he said it is clear that he admits that the principle is unfair. We can start on the basis that the hon. Member is saying that in the case of a poor person it would be unfair, and that he would press the Minister, but that if it is someone who is moderately well off or very well off, he does not care whether it is unfair or not and believes that they jolly well ought to pay. That is a moral principle with which we on this side cannot agree. This is a question of morals and ethics. I do not take the low view of hon. Gentlemen opposite, including the hon. Member for South Ayrshire (Mr. Emrys Hughes), about the attitude of the ordinary working man. I do not believe that ordinary working men—

Mr. Gallacher

The hon. Member ought to hear them sometimes.

Mr. Foster

I do. I represent an industrial constituency. They are all working men; there is nobody else in the constituency.

Mr. Emrys Hughes

The hon. Member says that he represents a constituency of working men. Has he had any serious demands from those working men for increased compensation for gas stock holders?

Mr. Foster

I am not on that point. I can quite understand the hon. Member for South Ayrshire wanting to deflate my very moral argument. A moral argument is the most powerful argument because it touches the conscience. As the moral argument develops, hon. Gentlemen opposite should ask themselves whether they really believe that they are doing justice to themselves.

Mr. Fernyhough

These people have been given or will be given stock. My point was that we should disregard all normal practice or precedent in the case of widows and children, and deal with them. As to all the others, they are being treated exactly as everybody was treated before.

Mr. Foster

That is not so. This is not the way the matter was treated under the Coal Industry Nationalisation Act. The matter was then dealt with in the way in which we ask the Government to deal with it in this Motion. The Act laid down that the compensation should be based on the value on the date of issue. That is the point of this Debate, and so what the hon. Member says is wrong. Let us analyse what he says about widows and children. He says that he will disregard all precedent. If we are to assist widows and children there is no need to disregard all precedent because we help them under the National Assistance Act. They are only to be helped in this case if they have suffered an injustice. I come back to the point, which is a moral argument, that by what he has said in the case of widows and children, the hon. Gentleman has recognised the injustice of the position.

The hon. Member for Jarrow, the hon. Member for South Ayrshire and the hon. Member for West Fife (Mr. Gallacher) have said that those who can afford it have to suffer and that they do not mind if they are unfair to those people. I do not believe that hon. Members opposite really believe that. Neither do their constituents, whether they are Socialists, Conservatives or Liberals. The country is united behind certain moral principles, although we are divided into parties and sometimes have very extreme divisions in the House. We think that hon. Members opposite do not always advocate principles which are moral, but that, on the whole, their constituents do. Their constituents believe that it is not right to be unfair to people.

What is the principle here? It is that we think it unfair that when a man has lent £100 and has been promised repayment, he should be repaid with £85. Whether the principle applies to a few shillings or to a few pounds it is unfair. I can quite understand the indignation of the hon. Member for South Ayrshire that any working man voted Conservative. It always annoys the Socialist Party that a large number of trade unionists and working men vote Conservative. It always gets under their skins. I can understand the hon. Member for South Ayrshire being annoyed at that—

Mr. Emrys Hughes

I was amused.

Mr. Gallacher

Talking about gas, if I invested £100 in a gas company and over a period of years drew £500 out of the company in interest and then got £85 for my original investment, should I not be very lucky?

Mr. Pickthorn (Cambridge University)

The hon. Member would be a fairy prince.

Mr. Foster

This is a case where certain people have lent companies some money. Under the Gas Act the money is being turned into stock. This concerns not only shareholders but also people who lent money.

Mr. Gallacher

It is a gamble.

Mr. Foster

From one point of view it is a gamble for a widow with £10 who lends it to a gas company, but the lady may be too old to work and may be doing this with some savings. I do not think that hon. Gentlemen opposite are against savings as such; I always believed they were in favour of them. Perhaps she saves £10 and lends it to a gas company. First of all, along comes "Let us Face the Future," which says that compensation will be on a fair basis. Now "fair" is a well-understood moral principle, and that is what I am talking about, the moral principle. She lends the money and instead of getting back £10, she gets £8 10s.

Mr. Fernyhough

Does the hon. Member believe that to be true?

Mr. Foster

Of course, it is true. The hon. Gentleman knows where I sit for because he was the candidate there at one time and then went to Jarrow. I can assure him that the people in my division would not have selected him as Socialist candidate unless he had been actuated by moral principles. It is quite true that money was lent to gas companies and turned into loans. One instance was in 1949 when the Mossley and Saddleworth Gas Company needed money to extend their works. Nationalisation made people unwilling to lend money so the company borrowed a total of £75,000.

Sir William Darling (Edinburgh, South)

It did not make any impression on the hon. Gentleman.

Mr. Foster

No, apparently it did not; that is why I am repeating it. Now that money is repaid in depreciated stock. Is that fair? Ask any elector, any worker, any housewife if that is fair and they will say that it is not. I do not believe they go in for that revolutionary jargon, that it is a good thing to be unfair to those who are better off. That people who are rich have done injustices in the past, we all acknowledge. The Government commit injustices today. Unfortunately, it is part of human nature that injustices are committed, but it is no answer for the other side to do the same thing in return. That cannot be right morally, and I do not believe that the hon. Member for South Ayrshire is really in favour of committing injustice. The hon. Member said that the shareholders wanted some more loot. Can he tell me, if it is loot, why the Socialist Government put a Clause in the Coal Nationalisation Bill recognising the principle that compensation should be fair?

Mr. Emrys Hughes

As the hon. Member asks me a question, I believe the Government has learned by experience and, as a result of realising the amount of loot that has been paid in compensation for coalmines, they have decided on a more economical method.

Mr. Foster

Look what that means. It means that the Government learned by experience that to be fair they had to pay out more compensation than they want to pay.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

May I interrupt the hon. Gentleman to inform him that Saddleworth is in my division and that I have not had a single letter or complaint from any resident within that area.

Mr. Foster

Obviously the reason why they have not complained to the hon. Member for Jarrow or to the Financial Secretary is that it would do no good. If now the Socialists are to count by the number of letters of complaint, everybody would have to complain to every Socialist hon. Member every time so that they would not be able to say in the House, "I sit for such and such a division and I did not get a letter of complaint from anyone." That seems to me to be ridiculous.

Mr. Glenvil Hall

I only intervened because not only the hon. Member for Northwich (Mr. J. Foster) but the hon. and gallant Member who spoke earlier quoted that case, and only that case, as an instance of the injustice that is being done. All I said was that although most of the area covered is in my division, I have not had a single complaint.

Mr. Foster

We are quite capable of judging whether a thing is fair or unfair with our intellects and consciences and hearts; are we to judge it by the number of letters of complaint that come in? Does the right hon. Gentleman really believe that when one says a thing is fair, it is proved by saying that there has been no letter of complaint? He cannot mean that. I appeal to hon. Gentlemen opposite: Is a thing fair because no letter of complaint has been received? Obviously not. I can see why there are all these interruptions, because people do not like a moral argument. [Laughter.] It is true. Hon. Gentlemen opposite laugh at a moral argument but they are laughing out of nervousness, because their consciences are pricking them. When a thing is unfair, it is unfair to everybody, and it is just as unfair to somebody who is well off. Hon. Members said that people who lent the gasworks £100 could well afford it; they said that if somebody was rich, they would screw him, and so on.

Dr. Morgan (Rochdale)

Screwing the worker—Tate sugar.

Mr. Foster

The hon. Gentleman was not doing justice to himself. He was saying that because workers had received injustice, he was justified in returning it. That is not a sound moral principle.

Dr. Morgan

It is your system.

Mr. Foster

It is a system he may defend but I think his electors will not like it when they see that in the House of Commons he said that it was justifiable to commit an injustice against somebody, because one had been done to them. That is not right morally.

What has happened in this case? Hon. Gentlemen opposite, speaking on the nationalised industries when they were taken over, said there would be fair compensation. Obviously fair compensation is only fair at the time it is given. One cannot give a man fair compensation for taking away his house, or his stock or his ass, or anything that is his, and say it is fair compensation because at the date it is paid it is at the rate of 80 per cent., 50 per cent. or 1 per cent. of the value. If this is reduced to an absurdity it means that if on the date of issue, Gas Stock was worth nothing, that would be fair compensation and, going up the scale, it would be equally fair compensation if on the date of issue something worth £100 was worth only £85.

Mr. Gallacher

What if it were worth £150?

Mr. Foster

I rather agree that if it is fair one way, it is fair the other. I agree that if the Treasury had issued it at a lower price to give 100 at the date of issue, that would seem to me to be quite fair. I am only speaking for myself, and stating it as a moral principle, when I say that. What the hon. Member for Wimbledon said was quite true as a sound moral principle. That is what I liked about the interruption of the hon. Member for Wimbledon, that he was applying the right moral criteria. I would be interested to know how he could justify giving to a man who had lost £100 something worth £85 at the date of issue. It is no good the Minister going on about income, because some people, when they have lost an asset which produced a certain income, have to realise it if they are in financial straits. Therefore we have to be fair in two ways. We must give them an equivalent income and also a capital asset worth the same amount. It is no good giving a capital asset which is worth nothing in order to produce the same income. That is not fair.

Let us test this by what would happen in the criminal courts. The Prevention of Fraud Act, 1939, makes it a crime for somebody to give a misleading promise or a false hope with a view to a person acquiring stock. If these statements had been made not in a privileged position in the capacity as spokesman for the Government, one would have had a case to say that a man who promises somebody £100, takes over the asset and then gives him something else worth £85, has committed a fraud. That is what we meant on this side by saying it was a fraud.

Let me say why it is a fraud. A fraud is something which is contrary to the moral law, by which, when somebody is compensated, he must be compensated fairly. I appeal to hon. Gentlemen opposite to examine their consciences to see whether they believe that. It does not matter whether it is a widow or a rich person who is being given something which is worth less than the thing which is taken away from them.

Mr. Gallacher

The hon. Member has raised an important point about the position regarding the courts and the issue of stock. He must know that a Bill was passed some time ago giving the subject the right to take a case against the King and, therefore, against the King's Ministers. Would the hon. and learned Member not consider taking a case into court against a Minister to see how he gets on?

Mr. Foster

Unfortunately, there are some frauds by the Government which are protected by law and in respect of which the Crown Proceedings Act is of no avail. The answer to the hon. Member is that that case would fail. But the fact that such a case would fail does not make this any less a fraud. This is not a case where fraud by the Government can be sued under the Crown Proceedings Act, which is hedged in by a lot of qualifications and limitations.

I come back to the Coal Industry Nationalisation Act, the terms of which hon. Members opposite have, I think, forgotten. That Act says that the amount of Government stock to be issued has to be of a value equal at the date of issue to the amount to be satisfied. That was fair, and was accepted as fair in the Debates and in Standing Committee; and if it was fair for the coal shareholders and creditors, it is fair in the case of gas. The fact that hon. Gentlemen opposite realise it is unfair is shown by their speeches, for when something is unfair their policy is to attack the other side. Instead of saying, "I regard it as fair, for the following reasons," it is very natural for the hon. Members for Jarrow and for South Ayrshire to say, "Ah, but look at what has happened in the past. Look how unfairly we have been treated. Because you have been unfair, we can be unfair." That is their argument. Hon. Gentlemen opposite cannot really subscribe to these moral principles. In the face of the principles for which we all stand, on both sides of the House, they cannot say that it is right to be unfair to somebody because the other side has been unfair to them.

I come to my last point: that the Minister, when pressed about this procedure, said that it was in accordance with the Gas Act. That is true only up to a point. The Gas Act, it is true, uses the words "at the vesting date" which is the unfair part, but if the Minister thinks it is unfair he can correct it; he can issue a short-term dated stock. In his answer to a Question by the hon. Baronet the Member for Sutton Coldfield (Sir J. Mellor) he said that he could give a short-term dated stock if he wanted to. Let us test what would happen if he did so. Instead of losing £15 out of £100 in a short-term dated stock, the loss would perhaps be £1 or £2 or even nothing at all. If the Minister wanted to make certain that there would be no unjustified profit, he could put in a Clause giving the Government the right to buy back the stock at par. Surely, he has it in his power to redress the unfairness. He cannot merely fall back upon the Gas Act and say, "I cannot do anything. This has been fully ventilated before." He has a remedy in his own hands if he thinks the compensation is unfair.

I hope that subsequent speeches of hon. Members opposite do not start by saying, "The rich have ground down the faces of the poor: therefore, we shall do the same thing back again." That is not right morally. Let hon. Gentlemen opposite keep in front of them the principle as to what is fair. Let them direct their arguments to saying why they think that these proposals are fair in the sense of what is morally fair.

5.55 p.m.

Mr. Pargiter (Spelthorne)

It is peculiar to hear arguments of morality introduced into this Debate. I was interested also to hear the questions of gas and coal compensation being compared, for the methods of dealing with the two industries are entirely different. That being so it is not possible to arrive at a basis of comparison. In the case of Gas Stock it was clearly established that a person is entitled at a given date to £100 for £100 worth of stock. If before it is paid to them those concerned want to follow the normal machinations of the money market and the price of the stock goes up or down they must accept what the money market provides.

Had there been collusion between hon. Members opposite and the City, the Debate would have fitted very conveniently. No doubt a number of people in the City who have been busily engaged in depressing Government stocks would have said immediately afterwards, "Look how unfair this is: a person can get only £85 or £95 for £100 worth of stock." If the Government were to give way on such a point, it would be a very good precedent for people in the City to continue to depress Government stock on the basis that all the time they were doing so, the Government must alter their terms of compensation. If that is the argument that is being used we may as well know that that is the sort of argument that hon. Members opposite want; that they can rig the money market from time to time in order to squeeze more compensation out of the nationalised industries.

Sir W. Darling

The hon. Member said that the City had depressed stocks. Would I be correct in saying that the Chancellor of the Exchequer had also depressed stocks?

Mr. Pargiter

No. The Chancellor has no object in depressing stocks.

Sir W. Darling

But he does.

Mr. Pargiter

The Chancellor goes into the market and the nation borrows money and undertakes to repay it in dated stocks at a certain time. People know precisely the terms upon which they accept the stock. Operators in the market concerned with depressing stocks hope to make a profit as a result of their speculations.

I am sorry that any Government stock is subject to City manipulation. I feel quite frankly that a person who lends £100 to the Government at any time should get £100 back—

Sir W. Darling

Not from the Socialist Government.

Mr. Pargiter

—and not £105, as might somebody who had gambled to make money out of it. By having accepted the principles of the money market, which hon. Members opposite so strongly support, they must take the good with the bad. In this particular case, it happens that at present things are not too good. Had they been good there would have been no cries from the other side about the price of issue of Gas Stock.

Then there is the question of how badly the workers fare. I have not heard any complaints about the large number of workers who have been invited to invest in various undertakings from time to time. Hon. Members opposite will probably remember the case of Vickers in the immediate post-war period of 1918 to 1920, when people were invited to invest in that company at very inflated prices. Those prices came down by half. The same workers fell out of work and, having nothing on which to exist, had to sell their stocks at the price they could get. Now, of course, the money is back where it originally belonged and Vickers are very properly compensating the new owners for what the other people lost, but I have heard no screams from the other side about what the workers lost in the intervening period. We need to be quite clear, therefore, on what happens when stock is invested. Anyone who invests takes the risk of that investment.

The hon. Member for Altrincham and Sale (Mr. Erroll) referred to the position of the creditor and people who supply new plant and equipment to a company merely out of goodness of heart, and who have been prepared to wait for their money. Very often the provision of machinery and so on, in this way is all part of the general scheme. Somebody says, "You take my equipment. That will be all right; I shall not want the money." The company, instead of going to the bank or elsewhere, borrow the money from the people who supply the equipment, as a result of which those suppliers eliminate the competition which they might otherwise face.

Very often when it gets to the stage of the money being due, the company will say, "Do you want this money back, or can it continue?" And often they do not want it back and it continues and it is usually a question of negotiation as to when and where it shall be paid back. There is always the possibility of the' undertaking "going broke," in which case something much more depreciated than the present value of Gas Stock will be paid.

I cannot see that the Government can concede anything on this. It was decided that 3 per cent. was a fair rate of interest and, in spite of what hon. Members opposite think, hon. Members on this side of the House still think 3 per cent. a fair and good rate of interest to pay. The money ought still to be worth £100 at 3 per cent. interest and every effort ought to be made by the Government to maintain the 3 per cent. rate, or a lower rate and not to be bamboozled into recognising higher rates of interest than they have agreed give a fair and equitable return.

I hope my right hon. Friend will resist the Motion and accept the position which has been very fairly stated. The Government undertook to pay at a given time a given sum and, obviously, the Government will pay that sum. The terms have been settled. The City do not like it and are gambling in stocks which ought not to be gambled in. There is no particular reason why Gas Stock should be depressed, except as a concerted move generally to depress stocks of the Government in order to create as much trouble as possible.

6.3 p.m.

Lieut.-Colonel Elliot (Scottish Universities)

The Debate has been rather interesting in that all hon. Members opposite waited until they were given the lead by the Communist Party and then, of course, fell in behind him because, of course—

Mr. Pargiter

I must say that I am unable to agree with the right hon. and gallant Gentleman that I follow the Communist Party. I thought the Communist Party lead was confiscation without compensation.

Lieut.-Colonel Elliot

The point is that the hon. Member for Spelthorne (Mr. Pargiter) was careful not to intervene until the Communist Party led off. It was interesting to note, and, of course, he was followed by the hon. Member for South Ayrshire (Mr. Emrys Hughes), who took almost as strong a line. That is where hon. Members opposite find themselves in great difficulty. Their natural instincts are for payment of no compensation at all—[HON. MEMBERS: "No."]—for payment of no compensation at all—and where they are in a dilemma is whether any compensation should be paid and, if so, how much?

The hon. Member for West Fife (Mr. Gallacher)—and I respect him for it—comes out frankly and says no compensation should be paid and the hon. Member for South Ayrshire says that if it is paid it should be paid in bonds which cannot be cashed until after the emergency and asks whether the Government would subscribe to that or whether we on this side of the House would subscribe to it. If the Government would accept such bonds in payment of the demands they make on the individual, I think everyone on this side of the House would accept it. Does the hon. Member also suggest that the Government should accept those bonds when they make demands on individuals in respect of Death Duties and the like? It would be interesting to know if he has worked it out as far as that.

Hon. Members opposite are in the difficulty of defending a flagrant injustice—the payment of a sum less than they said was just in an Act of Parliament. That is a very interesting proposal and there are a good many riddles in it. The hon. Member for Spelthorne went as far as to say that he did not think that Government stocks should be dealt with on the Stock Exchange at all and other hon. Members have said the same. They cannot have listened to the lyrical eulogies of the Stock Exchange, poured out in the Gas Committee day after day, week after week and month after month, by the Minister, the Financial Secretary to the Treasury and every hon. Member who spoke on the Government side. They were the people who held up the Stock Exchange as a high and shining example of fairness and justice. I have dozens of quotations here, but I do not wish to detain the House with them. I could read a great many of them. The Minister will not deny that they said the Stock Exchange was the body to make valuations and they described it as a great, a staggering, example of fair dealings. Now some hon. Members say that in their view it is a great pity that the Stock Exchange should ever be allowed to tamper with Government stocks at all.

We are in fact debating something a little wider than compensation to individual members of the community who may or may not have suffered injustice in this particular case. We are debating a principle, as my hon. Friend the Member for Northwich (Mr. J. Foster) said in a brilliant speech. The difficulty was seen by newspapers such as "The Times," which is certainly willing to give the utmost latitude to hon. and right hon. Gentlemen opposite.

Mr. Harrison (Nottingham, East)

We have not noticed it.

Lieut.-Colonel Elliot

The utmost latitude. They said that the present state of affairs, as everybody admits, is anomalous. The anomaly is not merely that payment now is lower than the payment which hon. Members thought right when they, not we, passed this Act, but it is capriciously unjust in that in certain places certain people coming in for compensation at certain periods got higher payments than other people coming in at other periods. "The Times" said: This state of affairs has been defended from the Government's point of view on two grounds. First, it is argued that the actual income and redemption rights attaching to the Gas Stock are unchanged. This would be an admirable argument if compensation had in fact been assessed in terms of income. But it was not; it was assessed in terms of capital value. Secondly, the Government say, if market prices had risen instead of falling, and compensation had been reduced in each case proportionately to the higher price of Gas Stock at the date of valuation, there would have been bitter complaint. When arguing this in Committee we put before the Minister that we were perfectly prepared to take the position in which there would be neither a rise or fall. We should certainly stand by that position because that was the offer we made to the Minister at the time. But he showed no signs of accepting it. "The Times" says: There would be no complaint if the Government adjusted compensation each way, upwards or downwards, to the value of the compensation stock at the date of valuation. "The Times" goes on to say: Payment of compensation in stock instead of in cash was always a mistake. And it ends: When the system reaches the point of giving expropriated holders something which is worth less than nine-tenths of their assessed compensation at the time of valuation (which is also the first opportunity for sale), it is time that something was done to recognise the mistake and rectify it. That brings out the point, which is the answer to the hon. Member for Spelthorne when he quoted the case of certain persons who he said had been invited to subscribe to Vickers. The people who get new Gas Stock are not invited to accept it; they are compelled to take it. There is a great difference. The Government do not say "We invite you to take this stock"; they say, "We compel you to take this stock." They remove from their owners the stocks which those owners were perfectly willing to retain without asking for any of these complicated financial transactions to which the hon. Member for South Ayrshire takes such great exception. It was the Govern- ment who entered upon these transtions; it is by the will of the Government and hon. Members opposite that they are taking place. They are the people who made these transactions. The hon. Member for South Ayrshire voted for these transactions; he made them; he is the man responsible.

Mr. Emrys Hughes

On all occasions whenever possible I have protested in this House against the over-generous treatment of colliery shareholders.

Lieut.-Colonel Elliot

The hon. Gentleman has protested but he has never divided against a single nationalisation Measure. I await the time when he will do so. These are his transactions. These are the transactions which have got him and the House into the difficulty in which the House is today.

As I say, the matter was discussed at some length in the Committee, and there the Financial Secretary to the Treasury had the temerity to assert that it was a good and justifiable thing that payment should be made in this stock and should be made at a lower rate than securities which the owners held, because, he said, they were now being given a gilt edged security. The gilt on these securities has become a little tarnished since that time.

The Minister went even further. My hon. Friend the Member for Northwich quoted the Companies Act, under which anybody inducing people to subscribe by means of a misleading statement was liable to seven years' "hard." I will give the Minister an example of a statement which I think any court would regard as misleading had it not been made in a privileged place. I refer to his statement: In effect, the stockholders are getting, in Government stock, the cash value of their securities. If they wish, they can, of course, hold on to that Government guaranteed stock, but there is no obligation on them to do so. They can sell it if they wish, and certainly not at a large loss, and reinvest in something which has a higher yield."—[OFFICIAL REPORT, Standing Committee D, 22nd April, 1948; c. 834.] Of course, the right hon. Gentleman may say, "It depends what you mean by a large loss." I think that until the reign of the Chancellor of the Duchy of Lancaster at the Treasury a loss of 10 points in gilt-edged securities would have been regarded anywhere in the world as a pretty large loss.

Mr. Glenvil Hall

Look at the price of local loans before the war under Tory Governments.

Lieut.-Colonel Elliot

Let us say then the fall in a matter of months, in a matter of weeks or in a matter of days. Or perhaps the Financial Secretary would like to claim the credit for the present Chancellor of the Exchequer. I do not think that there is any parallel anywhere for the slide which has taken place in gilt-edged securities during the period of the issuing of this stock. That is what has led to these difficulties.

Mr. Glenvil Hall

The right hon. and gallant Gentleman is not really asking the House and the country to believe that my right hon. and learned Friend is responsible for that? He talked about the gilt coming off these securities. The gilt is off the patriotism of hon. and right hon. Gentlemen and their friends in the City, who will stop at nothing in order to discredit this Government.

Lieut.-Colonel Elliot

It is easy to see two things. The first is that the Financial Secretary to the Treasury is very rattled. The second is that the General Election is getting very close indeed. Of course, the Financial Secretary and the Minister suffer greatly because they continually take wrong advice. They are proffered advice by the former Chancellor of the Exchequer, and so foolish are they, so blind to all considerations of probability, that they continue to accept this advice.

The right hon. Gentleman was no doubt influenced by an article which the ex-Chancellor of the Exchequer contributed to the popular Press. He made exactly the same accusation as the Financial Secretary has done, that this fall in Government securities was due not to Government extravagance, not to lack of any international confidence; no, it was entirely due to Tories and to the Stock Exchange, the same Stock Exchange which he was holding up a few speeches previously as the paragon of all the virtues. The ex-Chancellor of the Exchequer said that the boys in the City have been at it again. My aim while Chancellor of the Exchequer was to establish 2½ per cent. … as the maximum long-term rate of all Government securities. This shocked large sections of the City, … who carried out a great propaganda against this policy. The right hon. Gentleman neglected entirely the statement which was made by my hon. Friend the Member for Scarborough and Whitby (Mr. Spearman), who pointed out that under present conditions interest rates were almost bound to rise. That was pointed out at the time by people such as the Federal Reserve authorities of the United States, who said that the forces responsible for the rise would probably continue, certainly if demand and production should continue "at the past year's high levels." Of course, that does not matter in the least to the Financial Secretary to the Treasury so long as he can get up and make a few wild accusations against "people in the City who would stop at nothing to lower the credit of this Government." He considers that up to the Election he is getting away with it all right.

Dr. Morgan

It is quite true.

Lieut.-Colonel Elliot

In that case the right hon. Gentleman ought to stop his right hon. Friend and others of the party opposite from praising these gentlemen in the City when they wish to take a particular judgment of the value of Gas Stock on the day of vesting. I could quote many speeches in praise of the Stock Exchange which I should hesitate to make myself. I have not the same slavish adulation for the Stock Exchange as has the right hon. Gentleman.

We are here dealing with this particular question of Gas Stock compensation. The compensatory rights of proprietors of one kind or another was discussed in the Committee. The definite pledge was made by the Minister that anyone getting this stock would be able to realise it at no great loss and re-invest the proceeds if he wished in some other security. I say that that pledge has been broken. This is a matter of the Minister's personal honour. He gave a pledge which he has broken, and this appears to be justified by him in practice and to be justified this evening to the House in debate.

The capricious results of the breaking of this pledge have been very severe indeed. Some slices of Gas Stock were issued when that stock was standing at par, and certain areas got away with the compensation then. Instances include Harrogate, Cheltenham, and Bristol. Let us now consider some of the places which have been compensated at a very much lower rate—Barnet, Swindon, Hartlepool and Blyth. We shall tell these places that the Minister thinks that it is perfectly just to compensate Harrogate, Cheltenham and Bristol at £100 and to compensate Swindon, Hartlepool, Blyth, Taunton, Swansea, Cannock and Spenny-moor at £88⅛. The Government will have some difficulty in explaining that away—especially when we point out, let us say, that though Houghton-le-Spring was compensated when the price was 90, Brighton, Eastbourne, and Exeter were compensated at 94⅛. And the Gas Light and Coke, the greatest of them all, was compensated when compensation was down to 88⅛.

The Financial Secretary says that people will stop at nothing to talk down the credit of this Government. It is he who is stopping at nothing to talk down the credit of this Government. Deeds speak louder than words. If that had been done by a South American Republic, his criticism would have been loud. No-one would have been more bitter in his complaint against it than the right hon. Gentleman. Nobody would have denounced the "rumba" finance of South America more vehemently than the right hon. Gentleman who is sitting there and carrying out the same thing here. That is what brings the pound down. That is the sort of thing that lowers the international credit of this country. While hon. Members are doing their utmost to induce capitalists from across the Atlantic to invest in this country, they are saying, "Invest, and then we shall take over these companies in which you have invested, and then we shall pay you at a rate which may vary from 100 to 88 according to the whim of the market in gilt-edged at the time." That, I think, is a poor inducement to anybody. And then they have the insolence to say that we are the people who are running down the pound.

The Chancellor of the Exchequer: s hawking pounds on Broadway at a cut rate to his own pegged sterling; and he did not know whether he was doing so or not, until he was challenged from this side of the House. What more could anyone do to talk down the pound than to take an office on Broadway and hawk pounds at a depreciated rate there? This is the man who accuses us of depreciating the pound. If somebody in the City had done that, if some of those magnates whom he speaks about had done that, who then so eloquent as the Financial Secretary to the Treasury—aye, and the Chancellor of the Exchequer? To take an office on Broadway and hawk English pound notes at a discount is a patriotic deed when done by Socialists and by the nationalised transport system, but a scandalous offence if tried by anybody engaged in private enterprise. We can leave the talking down of the pound to those who are talking it down, because they are talking it down all too often just now, by their deeds as well as by their words.

We say that the proposals which have been brought forward by the Government are not satisfactory. For the House to vote compensation at 100 and for the Government then to issue compensation for £50 million of gas securities when the market for the compensation stocks was £90, and to say, "I am giving you £100 for this "—when anybody can walk down the street and buy the same compensation stock for £90—is neither common sense nor decency. I say very definitely that unless the Government can put up a much better case than they have so far, they will lie under the very great stigma of having gravely depreciated the credit of this country.

Mr. Gallacher

In whose eyes?

Lieut.-Colonel Elliot

In the eyes of the men from whom they are trying to borrow money, in the eyes of the rest of the world. I will not object to them being criminals, but I do object to them also being fools. To depreciate the credit of this country and then try to borrow money as well seems to me a combination of both. I do not blame the hon. Member for West Fife. He would away with all these things. He wishes to transfer his whole allegiance from across the Atlantic to the great open spaces of the Soviet Union. He is at least consistent. But hon. Members opposite are the people who are wishing for investments here from the United States, who are wishing for the support of the capitalist of other countries, but who are doing their utmost to make sure that the credit on which they rely at home will be very shaky indeed.

As I say, the arguments brought forward today were led by the hon. Member for West Fife, and led by him along lines which were simple and comprehensive; that is to say, that compensation should not be paid. The arguments brought by the Government supporters are that compensation should be paid, but paid partially at least in false money. I do not think that is either decent or respectable. Unless the Minister can give stronger reasons than he has given so far, it will certainly be necessary for us to divide the House. If we fail, as we are likely to fail, we shall carry the appeal to a higher court, to the country, and we have no doubt of the answer we shall get from there.

Mr. Gallacher

They will laugh at the right hon. and gallant Gentleman.

6.26 p.m.

The Minister of Fuel and Power (Mr. Gaitskell)

The hon. and gallant Member for East Grinstead (Colonel Clarke), who opened this Debate, emphasised that he was putting forward the case for the Opposition in the most moderate and restrained language. He urged me to respond in the same manner. Unfortunately, he does not seem able to carry with him the right hon. and gallant Member for the Scottish Universities (Lieut.-Colonel Elliot) for I have seldom heard such an outburst of indignation and fury. It seemed to me a little synthetic on an occasion when I should have thought it would have been better for us to have rather cool heads.

However much we may disagree on this issue I should have thought we could agree at least that it is rather complicated and perhaps a little technical. There may be moral issues which underlie it. I may be unduly simple about this, but I cannot agree that it is a very straightforward and simple matter. Indeed, we have been accused of being unable to understand a word of it, so there is a reason perhaps for hon. Members opposite to think that it was rather a difficult matter.

The Opposition Motion criticises the arrangements for compensating certain shareholders in gas undertakings. The first question which arises is how this arrangement came to be made. To some extent the criticisms have been directed to the way in which the nationalisation Act has been carried out, and I shall deal with those in a moment or two. I think the House will agree that the main burden of the criticism has really been directed against the Gas Act itself.

I do not think it is necessary for me to go over at great length exactly what is laid down, but for the sake of clarity I should like briefly to review what were the arrangements for compensation. They were these: that the holders of securities in gas undertakings should receive compensation in British Gas Stock; that the amount of British Gas Stock they received should depend, in the first place, on the value of the securities in the old undertakings on certain dates laid down in the Act, on which incidentally they have an option; and that the amount of British Gas Stock which they received for the value of the shares in 'the old undertaking would depend on the value on vesting date of gilt-edged securities. In other words, the nominal amount of stock to be issued would have to be equal in value on vesting day to the value of the company shares.

The case of unquoted shares has been mentioned several times. The provision in the Act was that the value should be settled in accordance with the same principles, and by negotiation or arbitration. But again the nominal amount of British Gas Stock issued was to be equal to the value of the unquoted shares on vesting date. I shall come in a moment to whether or not that was a good plan, but I wish to emphasise that, it having been laid down in the Act, it followed automatically that if gilt-edged were to rise after vesting, or before the value of some of these unquoted stocks had been settled, then the holders would have a capital gain.

It followed equally that if gilt-edged were to fall, they would have a capital loss. I think we can agree on that. That was perfectly well known. It was plain to everybody who read the Act. Presumably at least the advisers of the shareholders had read the Act so that they were aware of the position.

Mr. Pickthorn

Is it not true that the Gas Council could at once have altered the conditions of issue of their stock? If the thing had run the other way, there was no moment at which the Gas Council could not have stopped that by altering the terms of issue.

Mr. Gaitskell

I shall come to that later. I think that it will be agreed that, given what was laid down in the Act, then clearly the position was that if gilt-edged went up the shareholders gained and if gilt edged went down they lost. Clearly, that was to be expected because it had also happened in the case of electricity and transport; but in this case the amount of unquoted shares was more so that gas was in a slightly different position. However, there was this risk that gilt-edged might have gone either way.

I should like to make it plain without going into the question of what the future prospects of gilt-edged might be—that would be quite outside my sphere to consider that, of course, the Government had no responsibility for the course of gilt-edged prices since that date. [Interruption.] I am surprised that hon. Members question that. Do they suggest that the Government must be fully responsible for the level of prices in gilt-edged markets? They certainly have not taken that view up to now.

Mr. Drayson

The Minister will agree that gilt-edged prices reflect the confidence which the holders have in the Government?

Mr. Gaitskell

If that is the case, then they did not have very much confidence in Conservative Governments between the wars.

Before I turn to the main issue, I wish to refer to one or two criticisms of the way in which the Act has been administered. The hon. and gallant Member for East Grinstead (Colonel Clarke) criticised the delay. I really do not think that that is a fair criticism. In point of fact, up to now, as the hon. Member for Scarborough and Whitby (Mr. Spearman) mentioned, we have, practically speaking, completed the whole of the valuation of the shares. There are, I think, £15 million left to be valued out of £180 million. The time taken does not seem to me to have been very excessive. I know that the financial Press said when the British Gas Stock issue was made on 1st May, that it would take another year to get the values settled. In so far as we have not gone faster, I must say that it is not due to any failure on the part of the Ministry. We have found that the representatives of the stockholders have not displayed any particular eagerness to open negotiations. In fact, there has been a certain tendency to wait and see what the other man got. Again and again we have had to take the initiative in order to get the matter settled.

There was also a reference by the hon. and gallant Member for East Grinstead to the regulations regarding arbitration. It so happens that no single case has yet been referred to arbitration. There we certainly have not lost any speed.

Colonel Clarke

Because they were rather afraid of further delay.

Mr. Gaitskell

No, I do not think that is the case. The hon. and gallant Gentleman was good enough to say that my two officials concerned were particularly able. I think that it would also be said by those who have dealings with them that they were also fair-minded. In the main, it has not been necessary to go to arbitration for that reason, just as it was not necessary—except I think in one case—with electricity stocks.

There was another point about the position of creditors. I am a little surprised that the Opposition should lay so much emphasis on this matter. I suppose they know that the issue here is that when a person has a loan, which may be a mortgage or a debenture, there is liable to be some dispute as to the category in which it should be placed. Obviously, as it has turned out, it is more attractive for the insurance companies—and I think they are mostly insurance companies—and their creditors to have their loan treated as a mortgage rather than as a debenture. But this is a question of the interpretation of the Act. In the one case the hon. and gallant Member mentioned—I think it was Mossley and Saddleworth—I understand that the matter has not yet been settled and that the question whether it is a debenture or a mortgage is under discussion.

There was also reference to the position of co-partners. We have always taken the view that on the question of compensation there was no case for making any distinction between co-partners and other holders of securities. Unlike the normal stockholder, as a rule copartners have not been able to dispose of their holdings when they wished. Generally speaking, co-partners did not obtain full control over their holdings until they retired or left the company. The second point is that, as co-partnership schemes have been extended and may go on until 1951, the restrictions on the old gas stocks attach to the compensation stock so long as the schemes continue in their present form. Therefore, by reason of the fact that the co-partnership schemes are going on, they are bound inevitably to hold on to the compensation stock. As a matter of fact, I would say that they were primarily interested in income which is not affected by the change in gilt-edged prices, and therefore I do not think there is any special grievance there.

Having disposed of these points of criticism of the way in which the Act has been administered, I now turn to the main issue. I think we can agree that the real basis of the complaint of the Opposition is simply that the gilt-edged market has fallen. That is the reason, they argue, for making a change now. I am bound to put this point to them. Granted that the 1948 Gas Act had been passed and gilt-edged had risen, would the Opposition have come down to the House with a Motion proposing that the stockholders should pay something back to the Government?

Colonel Clarke

The right hon. Gentleman will remember that in the Standing Committee we suggested machinery whereby the market should be stabilised for six months. The method suggested was that the shares should be repayable at the end of six months at par. The Minister should realise that we made a contribution which would have met the position had there been a rise or a fall.

Mr. Gaitskell

What the Opposition proposed, either in Standing Committee or on re-committal, was that the holders should have an option of cash which, of course, they would have taken if gilt-edged had fallen but which they would not have taken if gilt-edged had risen. That was the case of "Heads I win; tails you lose" which the Government were not prepared to accept. What the Opposition did not propose in Standing Committee, and what has been suggested in several speeches today, is that the same procedure should have been applied as was applied under the Coal Act. I do not want to go any further into what might have been suggested during the Committee stage of the Gas Bill.

My point is that granted that gilt-edged had risen, what would the Opposition have done? I presume that they are serious in asking me to make some changes, and one must face the issue of what the Opposition would have done if gilt-edged had risen. I cannot believe that they would have come down here and made any such proposal as that I have suggested. Indeed, had the Government come to the House because of a rise in gilt-edged and made a proposal that we should take away some of the compensation due to these people, one can imagine the kind of language which the right hon. and gallant Gentleman the Member for Scottish Universities would have used. "Socialist swindle," somebody described it, and that phrase would pale into insignificance compared with the words that would then be used

Mr. Spearman

The right hon. Gentleman is behaving rather like the judge who said that justice in his country was excellent, because, although it was true that 12 men were hanged who were not guilty, there were also 12 guilty men unhanged who ought to have been hanged. I cannot see what fairness there is in paying in certain cases 90 where in other cases the figure is 101.

Mr. Gaitskell

I want to explain it to the hon. Gentleman, and I regard this as a serious matter and not a debating point. When the Gas Act was passed, as we have agreed, there was this possibility; either that gilt-edged prices would rise or that they would fall. It was a possibility well known to the holders of the shares. It is a most dangerous principle to come down to the House and ask that, because gilt-edged had moved in a particular direction, there should therefore be some change of a retrospective character so far as the Act is concerned, when everybody had been behaving in the expectation that the Act had laid down the basis for compensation.

Indeed, it is a rather dangerous proposal that we should make particular adjustments when gilt-edged changes. I think some of my hon. Friends might suggest that, in view of the fact that receipts on British Railways, for example, are very much below what was anticipated in 1947, therefore we should take something away from the shareholders of transport. I do not share that view. I think that, having laid it down in that way in the Act, we must stick to it. We really cannot have it working both ways, and even if it does appear to be slightly against the interests of the shareholders in the one case, it would have been very much more in their interests in the other.

Mr. Gallacher

Is it not the case that the railway shareholders got a substantial rise when the interest rates went up to 3 per cent.?

Mr. Gaitskell

I would prefer not to go further into a discussion of what the railway shareholders got.

Let us examine the further details in this particular case. The total compensation, in round figures, is £180 million, and that will have to be paid. As the hon. Member for Scarborough and Whitby (Mr. Spearman) said, £77 million was paid on or about vesting day, and therefore I can presume that up, to now there has been no complaint so far as these stockholders are concerned. If a stockholder was paid in British Gas Stock on vesting date and he has held it, so far as he is concerned, he is in exactly the same position as a stockholder who was compensated at a later date. He is in the same position as everybody else, now that gilt-edged stocks are lower.

Lieut.-Colonel Elliot

We make no complaint about that, but we are concerned with those who were compensated at below 90.

Mr. Gaitskell

I am glad to have that assurance from the right hon. and gallant Gentleman, because it was not always clear from the other side which group they were concerned with.

Let us consider these other persons, the people who are supposed to have suffered. Nobody is complaining that, under the terms of the Act, the value placed upon their shares is unfair, and it is also clear that the nominal amount of British Gas Stock issue is correct, assuming that the value of the shares is fair. Moreover, their income is unaffected, as for each £100 of stock, the stockholder continues to receive his £3 per year. The only complaint, therefore, is that interest rates have risen. This is a complaint against the gilt-edged market, but is it not obvious that those stockholders who had no intention of selling their shares, because they had no cause for complaint at all, are in no different position from any other holder of gilt-edged? If they wanted to sell, on the other hand, why should they not sell? They did not have to wait for vesting day or conversion day. In fact, a very large number of them did sell. The hon. Member for Scarborough and Whitby has said that there are great difficulties in disposing of unquoted shares. That is true, because the market is a narrow one, but that always was the case, and anybody holding unquoted shares found that difficulty in selling, nationalisation or not.

Mr. Spearman

The holders of these shares were receiving a larger rate of interest. They may have better securities, but they were in fact moved away from a yield of 6, 7 or 8 per cent. towajds 3 per cent., and, whereas before, they did not want to sell at the high yield, when they, found themselves in something which meant a lower rate of interest, with a stock they had not wanted, many of them really did want to sell.

Mr. Gaitskell

I would not say that none wanted to sell in any circumstances, but I do say that the holder of these unquoted shares was the type of man who was not in the habit of selling. It is true that he gets a lower income, but it is a much more secure income, and I do not think there is very much argument there.

Finally, there is the point that, if they had sold, what would they have done? No doubt, for the most part, if we follow out the hon. Gentleman's argument, they would have realised the value of the shares and put it into some other industrials, which afforded a yield something like the stocks which they held before. Industrial equity stocks have also fallen by just about the same amount in the last six months.

Mr. Spearman

I gave the right hon. Gentleman two instances, one where shareholders sold their stock and bought Government stock of early redemption date, and the other where he repaid a bank loan. How would the hon. Gentleman deal with these particular cases in his proposals?

Mr. Gaitskell

Obviously, there are all sorts of permutations and combinations. I think we would agree that, by and large, they have not lost very much, if anything at all, because industrial shares have fallen to the same extent. If they now wish to sell, and I am taking the worst cases from my own point of view—the men who are to be compensated at 90 or 88—the man who buys industrials buys them at a lower price and he gels an advantage both in the price of those industrials and in the expectation of a higher yield.

It may have been said that we really ought to have had a different arrangement in the Act, that we should have arranged for the valuation of the shares to be based upon the value of the stock at the date of issue, instead of at the vesting day. There would have been risks involved even there. It would have given the stockholders a definite capital value but an uncertain income and an uncertain amount of nominal capital. I think they would sooner have a certain income and an uncertain capital value than have it the other way round.

Mr. Foster

Would not a short-dated security be the same as an uncertain income—a security relating to one year?

Mr. Gaitskell

It is a very low income. I have argued that taking the matter by and large, there is no strong case for any action. The position was perfectly clear and the stockholders were free to decide whether to sell or not as they wished. I mentioned that a number of them did sell. The estimate is that, since vesting day, there has been a turnover of one-third of all holdings of unquoted securities.

I want now to follow up the proposals of the Opposition in these circumstances and see where we get to. Let us suppose that we were to introduce legislation, as certain hon. Members suggested, to pay the recipients of Gas Stock the difference between the par value and the market value on the date of conversion—the 10 per cent. or 7 per cent. which was the difference between these two. What would it involve? It would mean paying not only those who held their securities throughout, and, precisely for that reason, have no great claim upon us, but it would also mean paying the others who bought gas securities before conversion and perhaps after vesting day. What conceivable reason could there be for paying additional money to people who happened, shall we say, in June or July, or even in August, to have purchased some of the stocks of these unquoted shares, or, if one likes, the Gas Light and Coke stock which, because of war damage provisions, was not valued until later, and then to have held it as a pure speculation? There can be no case at all for doing that

Meanwhile, what is the position of those who have sold the stock which they had earlier? Obviously, they are not going to get any benefit from a provision of that kind. I must say that if we were to attempt anything of this sort and try to do reasonable justice, we should literally have to examine every transaction to see whether the individual had really suffered any loss—if it be a loss, and, of course, I am not conceding that—and then decide whether he should be compensated. We should have the difficulty of deciding what attitude should be adopted towards the men who had bought gas stocks before the vesting date but after the publication of the Bill when it was perfectly clear what was going to happen. Should they get the extra amount or not? I frankly do not know. It is very doubtful indeed whether there would be any case whatever for that. Therefore, quite apart from anything else, the practicability of the proposals put forward by the Opposition, is really extremely doubtful.

I now come to the other proposal, that, instead of legislation, we should issue shorter dated securities. In answer to a question by the hon. Baronet the Member for Sutton Coldfield (Sir J. Mellor), I gave the reason why shorter dated securities had not been issued, and I do not think he really thought that was a very bad reason. He agreed that, on the whole, public utility stock should be longer dated. I am not asking him to agree to more than that, because I know that he is still anxious that we should issuer shorter dated stocks.

What would be the position if we were to adopt this proposal and discard those principles of sound finance, and say, "We will go in for shorter dated stocks"? In the first place, we should not be avoiding paying out extra money—I must make that clear to the hon. and gallant Member for East Grinstead—because the obvious purpose would be to have a shorter dated stock which would be later redeemed and replaced by longer dated stock at a higher rate of interest. But that is only by the way.

What should we find if we combined it. as in the Motion, with the provision that the existing gas stock should be exchanged for it at par? Exactly the same difficulties would arise. Any holder of British Gas Stock today would find himself automatically in possession of a stock worth six or seven points higher according to the length of the maturity of the new security. We should, of course, be helping a whole lot of people who happened to come into the market and who bought stock a few days or weeks before, and we would not be helping all those who had, in fact, sold out. Therefore, it seems to me that we come up against precisely the same difficulties.

On the other hand, if we were to adopt the proposal that we should have shorter dated securities just for the remaining issues—in the first place there are only about 7½ per cent. of the total left; £15 million out of £180 million—that would not deal with the problem which hon. Members think is so serious. In the second place, I must say that I think it would be quite wrong, when the market expectations generally have unquestionably been that British Gas Stock 1990–95 would be issued for all these shares as they were converted, to change over and make an issue of a different kind of stock.

Colonel Clarke

My suggestion to meet that difficulty was that it might be practicable to offer to the original allottees of British Gas Stock an option which they could sell if they passed on the stock. It could be sold if the original allotment were not retained.

Mr. Gaitskell

I am afraid that we come up against the same difficulty as before, the practical difficulty of sorting out all the transactions that have taken place and deciding whether anybody is entitled to anything at all. I must make it plain, however, that in following up these proposals—as I think the Opposition are entitled to expect me to do—and indicating how impracticable they are, I am not conceding that if they were practicable we should follow them, because, in my opinion, the criticisms that have been made of the treatment accorded to gas stock holders are extremely exaggerated.

There is no doubt at all that there is the strongest possible objection to trying to isolate one particular group who happen to be holders of a particular stock from the general movements of the stock markets, and for the Government to come along and do that would, in my opinion, be wholly wrong. I cannot think of a single case where retrospective action of this kind has been taken after an Act of Parliament had been put into force laying down what shareholders were to receive. I must say that I think it holds a most dangerous precedent for all of us, and for that reason, as well as on the grounds that I have explained, I do not think there is really any case of serious hardship here.

Holders have been taking risks in the ordinary way as everybody holding securities takes risks. Some may have sold out in time if they wished to avoid a capital loss, and others may have bought. On the other hand, I cannot see that there is any case for assuming that the present level of gilt edged securities, including British Gas Stock at 90, are going to remain so for ever. I am not going to enter into a discussion with the hon. Member for Scarborough and Whitby as to the possible developments in the gilt edged market. I do not really accept his analysis—it seemed to me far too simple—nor do I accept what some other hon. Member said about lack of confidence in the Government. We have had an interesting and useful Debate which, though rather heated at times, has I think served to clear the air very substantially, but now for all the reasons that I have given I must ask the House quite firmly to reject this Motion.

Question put, That this House views with deep concern the losses caused to creditors, co-partners and other holders of gas securities by the issue of British Gas Stock at a valuation that bears no relation to its true value at the date of issue, and urges on the Minister the necessity either to ensure the issue of a shorter-dated stock in satisfaction of compensation and making such stock convertible at par with Gas Stock already issued, or by some other method to rectify the present injustice.

The House divided: Ayes, 87; Noes, 234.

Division No. 302.]	AYES	[7.2 p.m.
Amory, D. Heathooar	Harris, H. Wilson (Cambridge Univ)	Prior-Palmer, Brig. O.
Baldwin, A. E	Hogg, Hon. Q.	Roberts, Emrys (Merioneth)
Barlow, Sir J.	Holmes, Sir J. Stanley (Harwich)	Roberts, W. (Cumberland, N.)
Bower, N.	Jeffreys, General Sir G.	Ropner, Col. L.
Braithwaite, Lt.-Cmdr. J. G.	Kendall, W. D.	Ross, Sir R. D. (Londonderry)
Bromley-Davenport, Lt.-Col. W.	Lambert, Hon. G.	Savory, Prof. D. L.
Butcher, H. W.	Langford-Holt, J.	Shepherd, W. S. (Bucklow)
Byers, Frank	Legge-Bourke, Maj. E. A. H	Smiles, Lt.-Col. Sir W
Challen, C	Linstead, H. N.	Spearman, A. C. M.
Clarke, Col. R. S.	Lipson, D. L.	Stanley, Rt. Hon. O.
Conant, Maj. R. J. E	Low, A. R. W.	Stewart, J. Henderson (File, E.)
Crookshank, Capt. Rt. Hon. H. F. C.	Lucas, Major Sir J	Strauss, Henry (English Universities)
Crowder, Capt. John E.	Lucas-Tooth, Sir H.	Studholme, H. G.
Darling, Sir W. Y.	McCorquodale, Rt. Hon. M. S.	Sutcliffe, H.
Dodds-Parker, A. D.	Mackeson, Brig. H. R.	Teeling, William
Donner, P. W.	Macpherson, N. (Dumfries)	Thorp, Brigadier R. A. F.
Dower, Col. A. V. G. (Penrith)	Manningham-Buller, R. E.	Touche, G. C.
Drayson, G. B	Marples, A. E.	Turton, R. H.
Drewe, C.	Marshall, D. (Bodmin)	Wakefield, Sir W. W
Elliot, Lieut.-Col. Rt. Hon. Walter	Medlicott, Brigadier F.	Walker-Smith, D.
Fleming, Sqn.-Ldr. E. L.	Mellor, Sir J.	Webbe, Sir H. (Abbey)
Fletcher, W. (Bury)	Molson, A. H. E.	Wheatley, Colonel M. J. (Dorset, E.)
Foster, J. G. (Northwich)	Mott-Radclyffe, C. E.	Williams, Gerald (Tonbridge)
Fraser, Sir I. (Lonsdale)	Nicholson, G.	Willoughby de Eresby, Lord
Galbraith, Cmdr. T. D. (Pollok)	Noble, Comdr. A. H. P	Winterton, Rt. Hon. Earl
Galbraith, T. G. D. (Hillhead)	Orr-Ewing, I. L.	York, C.
Gammans, L. D.	Pickthorn, K.	Young, Sir A. S. L. (Partick)
George, Lady M. Lloyd (Anglesey)	Pitman, I. J.
Granville, E. (Eye)	Ponsonby, Col. C. E	TELLERS FOR THE AYES:
Grimston, R. V	Prescott, Stanley	Commander Agnew and
		Mr. Wingfield Digby.

NOES
Albu, A. H.	Daines, P.	Holman, P.
Allen, A C. (Bosworth)	Dalton, Rt. Hon. H.	Holmes, H. E. (Hemsworrh)
Attewell, H. C.	Davies, Edward (Burslem)	Horabin, T. L.
Austin, H. Lewis	Davies, Haydn (St. Pancras, S. W.)	Houghton, Douglas
Awbery, S. S.	Deer, G.	Hoy, J.
Ayles, W. H.	de Freitas, Geoffrey	Hudson, J. H (Ealing, W)
Ayrton Gould, Mrs B.	Delargy, H. J	Hughes, Emrys (S. Ayr)
Bacon, Miss A	Diamond, J.	Hughes, Hector (Aberdeen, N.)
Balfour, A.	Dodds, N. N.	Hughes, H. D. (W'lverh'pton, W.)
Barstow, P. G.	Driberg, T. E. N.	Hynd, H. (Hackney, C)
Barton, C.	Dumpleton, C. W.	Irving, W. J. (Tottenham, N.)
Battley, J. R.	Ede, Rt. Hon. J. C.	Janner, B.
Bechervaise, A. E.	Edwards, John (Blackburn)	Jenkins, R. H.
Berry H.	Edwards, Rt. Hon. N. (Caerphilly)	Jones, D. T. (Hartlepool)
Beswick, F.	Evans, Albert (Islington, W)	Jones, Elwyn (Plaistow)
Bevan, Rt. Hon. A. (Ebbw Vale)	Evans, E. (Lowestoft)	Jones, P. Asterley (Hitchin)
Bing, G. H. C.	Evans, S. N. (Wednesbury)	Keenan, W.
Binns, J.	Ewart, R.	Kenyan, C.
Blackburn, A. R.	Farthing, W. J	Key, Rt. Hon. C. W
Blyton, W. R.	Fernyhough, E.	Kinghorn, Sqn.-Ldr. E
Bottomley, A. G	Field, Capt. W. J.	Kinley, J.
Bowden, H. W	Fletcher, E. G. M. (Islington, E)	Kirby, B. V
Braddock, Mrs. E. M. (L'pl. Exch'ge)	Foot, M. M.	Lavers, S.
Braddock, T. (Mitcham)	Freeman, J. (Watford)	Lawson, Rt. Hon. J. J.
Bramall, E. A.	Gaitskell, Rt. Hon. H. T. N.	Lee. F. (Hulme)
Brook, D. (Halifax)	Gallacher, W.	Lee, Miss J. (Cannock)
Broughton, Dr. A. D. D.	Ganley, Mrs. C. S.	Levy, B. W.
Brown, George (Belper)	Gibson, C. W.	Lindgren, G. S
Brown, T. J. (Ince)	Gilzean, A	Lipton, Lt.-Col. M
Burden, T. W.	Gordon-Walker, P. C	Logan, D. G.
Burke, W A.	Greenwood, Rt. Hon. A. (Wakefield)	Longden, F.
Butler, H. W. (Hackney, S)	Greenwood, A. W. J. (Heywood)	Lyne, A. W.
Callaghan, James	Grenfell, D. R.	McAdam, W.
Champion, A. J	Grey, C. F.	McEntee, V. La T
Chater, D.	Griffiths, D. (Rother Valley)	MoGhee, H. G.
Chetwynd, G. R.	Griffiths, Rt. Hon. J. (Llanelly)	Mack, J. D.
Cluse, W. S	Guest, Dr. L. Haden	McKay, J. (Wallsend)
Cobb, F. A.	Gunter, R. J.	McLeavy, F.
Collick, P.	Guy, W. H.	MacPherson, Malcolm (Stirling)
Collindridge, F.	Hall, Rt. Hon. Glenvil	Macpherson, T. (Romford)
Collins, V. J.	Hamilton, Lieut.-Col. R	Mallalieu, E. L. (Brigg)
Colman, Miss G. M	Hardman, D. R	Mallalieu, J. P. W. (Huddersfield)
Comyns, Dr. L.	Harrison, J.	Manning, Mrs. L. (Epping)
Corbet, Mrs F. K. (Camb'well, N W.)	Hastings, Dr. Somerville.	Marquand, Rt. Hon. H. A
Corlett, Dr. J.	Henderson, Rt. Hon. A. (Kingswinford)	Mathers, Rt. Hon. George
Cove, W. G.	Herbison, Miss M.	Mellish, R. J.
Crossman, R. H. S	Hewitson, Capt. M	Messer, F.
Daggar, G.	Hobson, C. R	Middleton, Mrs. L

Millington, Wing-Comdr. E. R.	Reeves, J.	Taylor, Dr. S. (Barnet)
Mitchison, G. R.	Reid, T. (Swindon)	Thomas, D. E. (Aberdare)
Monslow, W.	Rhodes, H.	Thomas, Ivor Owen (Wrekin)
Moody, A. S.	Ridealgh, Mrs. M.	Thorneycroft, Harry (Clayton)
Morgan, Dr. H. B	Robens, A.	Tolley, L.
Moyle, A.	Roberts, Goronwy (Caernarvonshire)	Tomlinson, Rt. Hon. G
Murray, J. D.	Robertson, J. J. (Berwick)	Turner-Samuels, M.
Naylor, T. E.	Robinson, Kenneth (St. Pancras, N.)	Vernon, Maj. W. F
Neal, H. (Claycross)	Rogers, G. H. R.	Viant, S. P.
Nichol, Mrs. M. E. (Bradford, N.)	Ross, William (Kilmarnock)	Walker, G. H.
Nicholls, H. R. (Stratford)	Royle, C.	Wallace, G. D. (Chislehurst)
Noel-Baker, Rt. Hon. P. J. (Derby)	Scott-Elliot, W.	Wallace, H. W. (Walthamstow, E.)
Noel-Buxton, Lady	Segal, Dr. S.	Warbey, W. N.
Oldfield, W. H	Shawcross, C. N. (Widnes)	Watkins, T. E.
Orbach, M.	Shawcross, Rt. Hon. Sir H. (St. Helens)	Weitzman, D.
Paling, Rt. Hon. Wilfred (Wentworth)	Silverman, S. S. (Nelson)	Wells, P. L. (Faversham)
Paling, Will T. (Dewsbury)	Simmons, C. J.	Wells, W. T. (Walsall)
Palmer, A. M. F.	Skeffington-Lodge, T. C.	White, H. (Derbyshire, N.E.)
Pannell, T. C.	Skinnard, F. W.	Whiteley, Rt. Hon. W.
Pargiter, G. A.	Smith, H. N. (Nottingham, S.)	Willey, F. T. (Sunderland)
Parker, J.	Smith, S. H. (Hull, S.W.)	Willey, O. G. (Cleveland)
Parkin, B. T.	Snow, J. W.	Williams, W. R. (Heston)
Paton, Mrs. F. (Rushcliffe)	Sorensen, R. W.	Wills, Mrs. E. A.
Paton, J. (Norwich)	Soskice, Rt. Hon. Sir Frank	Woodburn, Rt. Hon. A.
Pearson, A.	Sparks, J. A.	Woods, G. S.
Peart, T. F.	Stewart, Michael (Fulham, E.)	Younger, Hon. Kenneth
Popplewell, E.	Stokes, R. R.	Zilliacus, K.
Porter, E. (Warrington)	Sylvester, G. O.
Porter, G. (Leeds)	Symonds, A. L.	TELLERS FOR THE NOES:
Proctor, W. T.	Taylor, H. B. (Mansfield)	Mr. Hannan and
Pursey, Comdr H	Taylor, R. J. (Morpeth)	Mr. Richard Adams.
Ranger, J