Clause 20.—(POWER TO ACQUIRE SECURI- TIES OF CERTAIN ADDITIONAL COM- PANIES.) (Hansard, 2 May 1949)

§ The Solicitor-General (Sir Frank Soskice)
I beg to move, in page 23, line 10, after "owns," to insert: the whole, or a substantial or essential part of. This Amendment goes with the Amendment in line 17. These two Amendments are designed to improve the drafting and to remove some ambiguity in the Clause to which hon. Members opposite drew attention during the Committee stage. They re-arrange and re-group the words which describe the part of the works taken over by a company from a third Schedule company, the result of which proceeding gives rise to the right which has been given to the Minister under Clause 20, subsection (1). It is simply a matter of drafting. It is designed to clarify the wording used in the original form and to remove certain rather ambiguous language which was then in the Clause.

§ Mr. Oliver Lyttelton (Aldershot)
I am much obliged to the Government.

§ The Minister of Supply (Mr. G. R. Strauss)
I beg to move, in page 23, line 26, to leave out from "time," to "serve," in line 27, and to insert: before the general date of transfer or within the period of three months beginning with that date. This is one of a series of drafting Amendments which have been put down to meet the views expressed in Committee by hon. Members opposite. We think that this Amendment, with other Amendments which follow, on balance improve the drafting.

§ Mr. Lyttelton
On balance!

§ Mr. Strauss
I shall explain what I mean by "on balance." Quite frankly, we think that in one or two cases it is very doubtful whether the Amendments are necessary. They certainly do no harm and, as hon. Members opposite think they are necessary and that they do improve the Bill, we are perfectly happy to accept them, in case they may be right. This Amendment without doubt does clarify the wording and we recommend its acceptance.

§ Mr. Lyttelton
I am much obliged to the Government.

§ The Solicitor-General
I beg to move, in page 23, line 36, to leave out from "transactions," to "any," in line 37, and to insert: entered into after the said day resulting directly or indirectly in the transfer or grant to the first-mentioned company of rights of ownership in, or rights in respect of the user of. This is another Amendment which is designed to improve the drafting, but it also has a further object. It was pointed out by the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) that it was possible that the wording originally used might include certain types of change which we did not intend to include. For example, as the proviso was originally worded, it could be argued with some possible degree of plausibility—although we thought it could not be sustained—that a mere change in the managerial personnel might come within the wording used. The hon. and learned Member pointed that out and, in an endeavour to meet the point he made, we have chosen this amended wording which we think removes any possible room for doubt.

§ Mr. Selwyn Lloyd (Wirral)
I agree with the right hon. and learned Gentleman that he has resolved the difficulty which I tried to point out in Committee. With respect however, I think that as a result he has got himself into further trouble, because the first two Amendments on the Order Paper today were designed to clear up the muddle which the Opposition pointed out in this Clause with regard to works and parts of works. This Amendment will mean that the proviso will read: Provided that this subsection shall not apply in a case where the Minister has 657 approved in writing for the purposes of this subsection, either before or after they were effected, all transactions entered into after the said day resulting directly or indirectly in the transfer or grant to the first-mentioned company of rights of ownership in, or rights in respect of the user of any of the said works… I should have thought that the Solicitor-General ought to have had in the Clause "works or parts of works." Without that, he might find himself in certain difficulties.

§ The Solicitor-General
I must ask the permission of the House to speak again. The word "works" is a plural word and it includes any individual part of a works. I do not think it is necessary to use the additional words suggested by the hon. and learned Member for Wirral.

§ Mr. Selwyn Lloyd
May I ask a question on that? If that is the view, why was it necessary to include earlier the words, "substantial or essential part of" the works?

§ The Solicitor-General
That was a simple matter of artistic re-arrangement. We doubted whether the Amendment was really necessary at all, but because of the very exacting test applied by hon. Members opposite we thought we would defer to their views.

§ The Solicitor-General
I beg to move, in page 24, line 38, to leave out "or," and to insert: and not being earlier than. This, again, is purely drafting. It makes clearer the wording which we used previously, and can leave in no doubt whatever what is intended.

§ Mr. Lyttelton
I beg to move, in page 25, line 6, to leave out: and is not withdrawn or revoked. I think it may be for the convenience of 658 the House if we discuss with this Amendment the next three Amendments: In page 25, line 7, leave out from "apply," to second "to," in line 8.
In page 25, In line 8, after "company," insert: with respect to transactions entered into after receipt by the company of the notice of acquisition. In page 25, In line 10, at end, insert: Provided that, if the notice of acquisition is withdrawn or revoked, those provisions shall be deemed never to have applied to the company.

§ Mr. Speaker
That would be convenient.

§ Mr. Lyttelton
These are more than an "artistic rearrangement," which were the words of the right hon. and learned Gentleman. They are designed in order to try to prevent the infliction of what we consider to be an injustice. At present, as the Bill is drafted, it is possible for a company, or the directors of a company, to commit actions which afterwards turn out to be subject to penalties or, even if not subject to penalties, to be undesirable—yet they may commit them before they know the company is to be acquired It seems to us to be very vicious if the retro-active provisions of the Bill apply to transactions entered into before the service of the notice of acquisition.
It seems to us to be quite unfair that any Third Schedule company, unaware that they could be included, should have their transactions called into question before the service of the notice. The Minister in Standing Committee said that the new owner ought to be fully aware of the situation. That is not really the point at all. There is a considerable matter of principle involved, and the area of uncertainty which is spread by the Bill will be widened considerably if companies are to remain in anxiety lest what they are now doing, before any notice of acquisition is served on them, may be called into question after that notice is served.

§ Mr. G. R. Strauss
I hope that the House will not accept this Amendment. The position is not unfair or unreasonable in any way. The Clause applies only to works which are making at least the amount of iron and steel products stated in the Second Schedule, or to wholly owned subsidiaries of the Third 659 Schedule companies. Therefore, it is ridiculous to say that a company that acquires such works producing more than 20,000 tons of pig iron or steel, or a company that acquires a wholly owned subsidiary of a Third Schedule company, could be ignorant of the situation, or unaware that the works which have been acquired will be brought back into the possession of the Corporation, unless the Minister has previously given an undertaking that that will not happen. Therefore, it is perfectly right that an acquiring company should be put in the same position as a Third Schedule company. If, having acquired iron and steel works producing more than 20,000 tons of pig iron or steel or hot re-rolled products they should then proceed to dissipate the assets of the company, or enter into what I call funny contracts—

§ Viscount Hinchingbrooke (Dorset, Southern)
"Funny, ha, ha."

§ Mr. Strauss
—which can be challenged and reversed under Clause 13, the company should be liable for all the penalties that may arise if they proceed to dissipate those assets. There can be no possible argument that the acquiring company is unaware of the situation, nor that it does not know that these big steel works are likely to come under the Corporation, because all big steel works producing over 20,000 tons are coming under the Corporation, and all the subsidiaries—the wholly owned subsidiaries —of the Third Schedule companies are also coming under the Corporation.
This would apply only where, for some peculiar reason, the present owning company, whose name is stated in the Third Schedule, parts with these works to some outside company. It is perfectly right that such penalties or retro-active action should apply as from the date of the publication of the Bill —because everybody had notice then—and not from the date when the Minister issues to that company a special notice of acquisition. Otherwise there would be a serious risk of a leakage. It may be that during that long period a company which, quite plainly, is to be acquired under the Bill may have its assets dissipated, and may be put into a weakened position, and neither the Corporation or anybody else, would be able to take any action to put the matter right 660 or to protect the Corporation. For these reasons I suggest it would be wholly unreasonable to accept the Amendment.

§ Mr. Lyttelton
The arguments advanced by the Minister seem to me to be very extraordinary. If it is quite certain that a company is being acquired, why is that not stated? Of course, it is just the cases on the borderline which are exactly the ones called into question. It is not at all certain, in some cases, whether a company is to be acquired or not, because it depends on the hiving-off provisions. Where it was quite certain I should be prepared to agree with the Minister; but it is not certain. The fact that it is not is proved by the insertion of these words in order to protect the Minister. The Bill is drafted throughout so that the onus shall be put on to other people. If it is certain that a particular company is to be acquired it ought to be stated.

§ Mr. Strauss
By leave of the House, I shall answer that question. There is no uncertainty here. This applies only to iron and steel works whose products are greater than those set out in the Second Schedule—as stated in subsection (1, a)—unless the hiving-off provisions have been agreed to by the Minister, in which case he states his reasons in writing. There can be no possible uncertainty.

§ Mr. Hugh Fraser (Stone)
Surely, this refers only to firms specified in the Third Schedule or the Second Schedule? It does seem to us that this is just an escape Clause, so to speak, so that the Minister can put right any error he may commit. It must be clear to him which firms he proposes to acquire. I cannot understand his point.
Amendment negatived.