HC Deb 28 June 1965 vol 715 cc144-94

1. Every such scheme as is mentioned in subsection (5) of section 3 of this Act shall be subject to the sanctions of the Companies Court (in this Schedule called "the Court") and shall not take effect unless and until sanctioned by the Court and then only subject to any modifications or conditions which the Court may approve or impose.

2. Every application to the Court shall be made at the cost of the Board and in accordance with rules determined by the Board by statutory instrument.

3. Notice of every such scheme shall be served on every person whose rights are affected by the scheme, including (without prejudice to the generality of the foregoing) any company mentioned therein and the shareholders and creditors of any such company.

4. Such notice shall be accompanied by a print of the scheme together with an explanatory statement showing the effect of the scheme and shall state the date, time and place when and where the Court is to hear the petition for approving the scheme.

5. The company and any other person whose rights are affected may appear at the hearing of the petition to support, oppose or propose modifications to the scheme or conditions to be imposed by the Court and may present evidence to the Court in such form as the Court shall direct. The costs of any company or person so appearing shall be at the discretion of the Court.

6. The Court shall not sanction any scheme unless it is satisfied—

  1. (i) that it contains proper provisions, whether of any nature specified in subsection (5) of this section or otherwise as the Court shall think fit, to safeguard rights of companies and persons affected by the said scheme, including shareholders, creditors, landlords, employees, suppliers and customers and, in so far as any such rights are interfered with, altered or abrogated, to compensate therefor, and
  2. (ii) that the scheme is fair.

7. Nothing in any order made under subsection (5) of section 3 of this Act or in any scheme published under that subsection and confirmed with or without modifications or conditions under this schedule shall have the effect of subjecting any person to the payment of any tax of any nature whatsoever or of any stamp duty which would not have been payable if such order had not been made or such scheme had not been published and confirmed.

and the two Amendments to Amendment No. 31.

Sir Eric Fletcher

In dealing with the Amendments to Amendment No. 31, I imagine that it would be necessary to refer to Amendment No. 31.

Mr. Deputy-Speaker

I would say. If Amendment No. 21 falls the Amendments to Amendment No. 31 fall and therefore they should be discussed now.

Mr. Patrick Jenkin

I beg to move Amendment No. 21, in page 6, line 15, after "may", to insert "by order".

The Minister of State was unwise enough to say earlier that he had not heard as much from me on Report as he had heard in Committee. I hastened to assure him that I would be on my feet and thereupon he hurried out of the Chamber, but he has now returned. I have become a creature of nocturnal habits recently and I find that I produce the most effective results during the hours of darkness, and as the sun is now setting I rise to my feet.

The Amendment deals with the problem of the machinery of divesting. I use the word "divesting" to cover all those powers which the Board of Trade is taking in subsection (5) to break up a monopoly if those powers appear to be the right remedy in relation to the facts found by the Commission. I was glad to hear reiterated the view from the Government that on the whole the divesting procedure will be preferable, where it is possible, to the price control procedure; but it is important that the divesting procedure should be, as I told the Committee, not only effective but fair. To quote briefly from a speech made in the Committee: The fundamental fact upon which everyone is agreed is that the Government must have the right to decide whether a divestment shall take place. What is in question is to ensure that the arrangements by which the divestment takes place shall be seen to be fair."—[OFFICIAL REPORT, Standing Committee E, 6th May, 1965, c. 301.] That is a speech which the Minister without Portfolio will recognise came not from this side but from his hon. Friend the Member for Birkenhead (Mr. Dell) and it states succinctly exactly what this Amendment tries to achieve.

It will be remembered that in Committee I moved two Amendments to deal with these points which were in the alternative. One was to adopt the procedure of Section 206 of the Companies Act, 1948, and to invoke the Companies Court as the machinery whereby the divesting should take place. The other was to set up a special tribunal along the lines of the tribunal set up under the Coal Industry Nationalisation Act, 1946, to apportion compensation paid under that Act. In the event, the opinion, at any rate on this side, seemed to favour the use of the Companies Court and this is what the Amendment seeks to do.

In reply to a long and useful debate in Committee on this subject the Minister without Portfolio indicated the Government's thinking, which will require an Amendment to the Bill and we shall he coming to that Amendment later tonight. Although, as the Minister recognised in his brief intervention a moment ago, I shall have to refer to one or two points in the Government's Amendment they are alternative to the Amendment which we are now seeking to put forward.

9.15 p.m.

The short point is that it must be for the Government to decide, having received a Report from the Monopolies Commission, that an order should be made for splitting up a monopoly, that a divesting order should be made. The question is: how should that order be implemented? As was recognised on both sides of the Committee, very difficult and complex problems arise, involving the rights of, perhaps, a large number of parties, some of them members of the companies, some of them employees, some of them creditors, some of them persons with whom contracts have been made, and so on. A large number of rights have to be dealt with, and the purpose of the Amendment is to establish a procedure whereby these complex questions can be settled in a way which is fair to all the parties concerned and which is manifestly seen to be fair.

We propose adopting the procedure under Section 206 of the Companies Act whereby schemes of arrangement affecting the rights of participants in companies can be brought before the court and the court, if satisfied that they are fair and equitable, may sanction them. We felt that there was a sufficient degree of similarity between the schemes which often come before the Companies Court under Section 206 and the orders which would have to be made by the Board of Trade under this legislation to justify the use of that procedure or something akin to it in this case.

The advantages, briefly, are these. The judge in the Companies Court is someone who stands right apart from the parties. He is clearly impartial. He is in a position not to be concerned with the political question, which is bound to arise, of whether an order should be made, the broad lines on which it should be made, what should be divested, how the company should be split up, and so on. He will be in a position to adjust the rights and powers of all the parties so as effectively to carry into operation the order which the Board of Trade will have made, and at the same time, to do justice to all concerned.

The suggestion made by the Minister without Portfolio in Committee, which is embodied in the Government Amendment, does not use the Companies Court and it does not use an independent tribunal. It treats the whole question as an administrative one, and the matter is to be decided by the Board of Trade, although, I hasten to add, the Minister without Portfolio went on to say that he would envisage that, in certain circumstances, it might be right for the Department to employ the services of an expert in this subject, a member of the companies Bar or, perhaps, a senior accountant, who could be employed to advise the Department on the best method of carrying its intentions into effect. But, basically, the difference between the two sides of the House on this issue is that we favour a more formal procedure using the courts whereas the Government favour the more administrative procedure within the Board of Trade.

In reply to the Amendment which I moved in Committee, the Minister without Portfolio—I hope that I am not misleading the House or distorting his attitude—made five objections which he regarded as the major objections to our proposal. First, he said that the procedure under Section 206 of the Companies Act was not really analogous to the requirements under Clause 3(5); the two situations were really different in kind and, for that reason, it would not be right to import the Companies Act procedure for use in these circumstances.

Obviously, the situations are not exactly the same. Under the Companies Act, for the most part, schemes of arrangement are brought forward by the companies or by participants in the companies themselves, whereas under this legislation the schemes would need to be promoted by the Board of Trade in implementation of a decision to carry out the recommendations of the Monopolies Commission. To that extent there is a difference.

On the other hand, the nature of the operations that will have to be carried out dealing with the rights—this is the matter which engaged the attention of the Committee; it involves, to some extent, the right of debenture holders who have a floating charge on the assets of the company, the problem of dealing with different classes of shareholders who may have different rights either when the company is in operation or when it winds up, the problem of dealing with creditors who may have money secured on the assets of the company, the problem of dealing with people with contracts, employees and so on—these are all very similar to the problems which the Companies Court deals with under Section 206.

Therefore, if one looks at how the matter reaches the court, there is a difference. If one looks at the matters with which the court would be expected to deal, I suggest that they are very similar and that the judge in the Companies Court would find himself on very familiar ground. Therefore, I cannot accept the first objection which the Minister without Portfolio made to the suggestion.

The Minister's second point was one with which one is familiar in this legislation—namely, that the issues raised are not justiciable. That was argued out ad nauseam on the 1956 Restrictive Trade Practices Act. The hon. Gentleman argued that this is really an administrative matter. Is this so? Even if it were entirely an administrative matter, is not the nature of the Companies Court judge's jurisdiction more analogous to an administrative procedure than to something which is strictly justiciable? The judge has to make up his mind on the points of detail that arise when the scheme of arrangement is under consideration by the court, but the jurisdiction of the Companies Court is of the nature of an administrative procedure and smacks more of that than of a purely judicial procedure involving the normal processes of the courts.

The point about this, however, is that at some stage, and it may be at many stages, during the working out of the divesting order someone "will have to decide" The Minister without Portfolio will, no doubt, recognise those words for he uttered them three times during the debate in Committee. It is our contention that if someone has to decide, this is exactly the sort of matter which ought to be decided by one of Her Majesty's judges sitting in one of the ordinary courts of the land and not inside the Administration or one of the Departments of Government. Therefore, I submit that, so far as this is a justiciable issue, so far as it is a point which someone will have to decide, it is the courts and not the Government which ought to decide.

The third point made by the Minister without Portfolio was that the right place for this matter to be considered was the Floor of the House when the order is brought in, and that the court is the wrong place. We envisage two stages in this procedure. One is the decision that an order shall be made and the broad lines upon which the Board of Trade will expect the order to be carried into effect. That is clearly one for the Government and should require the approval of this House. The second stage, the detailed stage of implementing the order, is quite different. I submit that it is quite unsuitable for consideration on the Floor of the House.

One's imagination boggles at the suggestion that individual hon. Members, briefed, perhaps, by constituents who represent different interests in the company which is the subject matter of the order—some perhaps speaking for the preferential shareholder, others for the debenture shareholder and others for the creditors—should argue all the details of this on the Floor of the House when the order is brought up for approval. It would really be a fantastic procedure and I cannot imagine how it could possibly be an effective check upon the power of the Government to carry the order through.

In any event, I believe that I am right in saying that this House has no power to amend an order which comes before it for approval. It has power only to accept it or reject it. Presumably, if the order were so shot full of holes that the Government felt it required to be rewritten, the Minister in charge could withdraw it and we would have a second go at it but that would be a very unsatisfactory procedure. I cannot believe that this matter has been properly thought out by the Board of Trade and that it has seriously envisaged the problems that could arise on the Floor of the House in the event of an order of that kind coming before it in all its details.

Fourthly, I have collected a number of epithets that the Minister without Portfolio applied to the procedure we suggest. He said that it would be unnecessary, anomalous, expensive and undesirable and would cause delay and inconvenience. But it would be just, fair and open. It would give the opportunity to the company concerned, if it had serious points to raise, to put its case in open court and to be heard in public. It would be able to cross-examine and put arguments. In a matter of this sort, where substantial matters of private rights are affected, that is a better procedure than an inevitably somewhat secret administrative machine working behind closed doors.

Finally, the hon. Gentleman argued that there would be no equity in the Statute—I use the word "equity" in its technical sense—since the Government or somebody would have to tell the court, having imposed this duty upon it, how it would resolve that duty. I am quoting as nearly as I can from his words. But, with respect, he has now answered his own question. Without straying beyond the rules of order, I refer the hon. Gentleman to the Government Amendment No. 71, the new Schedule, which is entitled: Procedure preliminary to laying drafts of Orders referred to in section 3(10)(a) of this Act. This is the Government's solution to the problem and the concluding words seem to me to express exactly the duty that should quite properly be placed upon the court in these circumstances when implementing the order which the Board of Trade has seen fit to introduce. The court should ensure, to use the words of the Schedule, … that the rights and interests of persons likely to be affected by the provisions of the order are so adjusted as to secure an equitable distribution of any burden or benefit ensuing from any provision of the order. I cannot see the difficulty. If that duty were placed on the court, it would be perfectly clear.

I think that I have now listed all five of the major grounds upon which the Government sought to resist this Amendment in Committee. I hope that I have convinced the House that some of them have no foundation but that, where there are some grounds, those grounds are not sufficient to lead the House to reject the Amendment. The choice is clear. We on this side clearly prefer to see the matter, the detailed implementation of the order, brought before the court and argued out in open court where all the parties can put their point of view and where justice can be seen to be done. The Government's solution is to do it behind closed doors within the Department as part of the administrative machine. That, in our view, is unacceptable.

9.30 p.m.

Sir Eric Fletcher

I have listened very carefully to what the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) has had to say about the Amendment, and I also listened very carefully, as the whole Committee did, to what he had to say at even greater length in Committee. I am bound to say that he has not added much by way of argument to what he said in Committee.

In his introductory remarks, quoting my hon. Friend the Member for Birkenhead (Mr. Dell), he posed what we all agree to be the question when he said that what was at issue was to ensure that the arrangements by which the divestment took place should be seen to be fair. The difference between the situation in Committee, and as it now appears, is that since the Committee stage, and very largely as a result of the protracted debate which we had then, my right hon. Friend the President of the Board of Trade has put forward a whole series of Amendments which go a very long way to meet the substance, though not the form, of the criticisms which were made in Committee.

I then gave a series of undertakings, all of which are implemented by the Government's Amendments, which we shall reach in a few moments. Those undertakings in effect were that the Government would put forward Amendments to this Clause which would, first, create a statutory obligation to publish a preliminary draft Order; secondly, to require the Board of Trade to give interested parties an opportunity to make representations before preparing the final draft of the Order to be made before Parliament; thirdly, requiring the Board of Trade to take account of those representations before preparing the final draft Order; finally, after further debate in Committee, I went further and gave the undertaking that we would also introduce an obligation that in the making of any Order for divestment regard should be had to the need for equitable adjustment of the rights of the parties. Those undertakings are now incorporated in Amendment No. 31 which is the paving Amendment for the new Schedule in Amendment No. 71.

As the hon. Gentleman has said, the simple issue between us is whether the detailed arrangements which will flow from any divestment Order should be left for adjudication in a court of law by some procedure similar to that which obtains under Section 206 of the Companies Act when a company is wound up, or when there is an amalgamation; or whether those details and complex arrangements, including not only the respective rights as between the various classes of shareholders, debenture holders, creditors and other contracting parties, should be left for settlement either by the Board of Trade itself, or by the Board of Trade in consultation with some eminent lawyer, chartered accountant or other expert qualified to deal with these matters, as will frequently be the case.

The hon. Gentleman keeps repeating that he would be happier if these matters were dealt with by a court of law and he says how important it is that there should be impartiality. I must remind the House that it is not only the courts which are capable of handling matters of this kind with impartiality, and that it is not the function of the courts to deal with complicated solutions on the basis of what is fair, as the Amendment would require. That is not the function of the court of law. Judges have repeatedly complained that it is not what they ought to be asked to do. There was an instance only the other day in the House of Lords when a Law Lord and an ex-Lord Chancellor pointed this out. It must be repeated in this House in answer to the Amendment of the hon. Gentleman the Member for Wanstead and Woodford The duty of Her Majesty's Judges is not merely to administer justice, but to administer justice according to the law. Those of us who have taken the judicial Oath will remember it; it for ever rings in our ears. It is to do right to all manner of men according to the laws and usages of this Realm, without fear or favour, affection or ill-will'—and that is what Her Majesty's Judges try to do."—[OFFICIAL REPORT, 11th May, 1965; House of Lords, Vol. 266, c. 21.] It follows from that that this House ought not to impose upon Her Majesty's judges the obligation of resolving matters in dispute between citizens on the basis of what is fair without first laying down the principles which should apply. It is for Parliament to make laws and it is for the judges to administer those laws. If circumstances arise in monopoly legislation in which, as a result of a divestment order having to be made, somewhat complicated assessments have to be made between the respective interests of various parties, in a situation in which Parliament has not and cannot lay down any canon or yardstick which the judges should apply, it is not fair to ask those judges to discharge that function. It is placing upon them a burden which is unreasonable and contrary to the high judicial office which they serve. I have tried to make it plain in the Committee stage, and I repeat with emphasis that in my view it would be contrary to all principle and constitutional understanding and relationship between Parliament and the judiciary if that Amendment were accepted.

There is the necessity of making arrangements that are fair and equitable between the parties. That is what the Amendment of my right hon. Friend the President of the Board of Trade seeks to do. It goes far beyond the definition in the Opposition Amendment which is merely an injunction to Her Majesty's judges to do what is fair. That is something which I do not think ought to be imposed upon them. We have examined this matter at great length, and I thought that by putting down this series of Amendments we had ensured that the interested parties would not, as the Bill originally proposed, be faced with a draft order but that they would have ample opportunity of seeing a preliminary draft order advertised in the London Gazette and brought to their notice, followed by the opportunity of having consultations with the Board of Trade in which they could make representations. Over and above that there is the assurance that wherever necessary some expert on this subject will be called on to settle disputes. I would have thought that solution would have been more than enough to satisfy the Opposition that we wanted to meet their legitimate objections in the best possible way.

The hon. Member referred to five points which were dealt with in Committee. I have attempted to deal with all of them. For the reasons which I have given, I hope that these Amendments will be rejected.

Mr. Fletcher-Cooke

I reject entirely the Minister's suggestion that the judges could not do this job. They have frequently to apply the principles of equity, which are fairly clear and are laid down in a very good book called Snell with which the Minister is undoubtedly familiar.

Mr. Patrick Jenkin

If the Minister cannot read the whole of Snell, I can refer him to Rivington's Epitome of Snell, of which the fifth edition was edited by the hon. Member for Wanstead and Woodford.

Mr. Fletcher-Cooke

What is fair and equitable is not the length of the Chancellor's foot. It is laid down in various principles going back over hundreds of years. If we cannot find one of those principles, we are driven to such fundamental principles as equity is equality and all the other maxims which illustrate the good sense of the courts of equity since the days of Lord Chancellor Nottingham and before. I have no doubt that these principles will also be applied by the Board of Trade if the Minister has his way, because they are not something dreamt up and artificial but are fundamental to our ideas of justice.

The judges of the Companies Court are accustomed to applying these principles in matters dealing with a conflict of interest between different classes of contractors and different debtors, some of whom may have floating charges over the whole assets of a company to be divested and the question of where the floating charge shall fall in the case of divestment. I am sure that the Board of Trade will be obliged to apply these principles, subject to the advice of a distinguished lawyer or accountant, whoever it is the Minister wishes to bring in. The only question between us is whether it is to be done openly so that people can see and hear how it is done, or whether it is to be done secretly.

It seems to me far better that it should be done openly, because if somebody does not get his way, or if his submission is turned down, he will not go away with that sense of grievance which people always have, rightly or wrongly, and usually wrongly. If it is done secretly and by administrative order, people always think that they have been "got at" and that they have been unfairly treated, whereas if it is done in open court, where they can hear what the other parties say and meet it in public, they go away with a far less sense of grievance. The Minister knows this perfectly well. That is the point of administering justice in open court before a person who is totally independent of political pressure.

The principles which will be administered by the Board of Trade will be those which the judges administer. I am sure that it will do its best to be impartial and that most of the time, if not all of the time, it will succeed. The only residual complaint will be that people will not believe that it happens because they want to have their day in court. This is not one of those cases about which we often hear where people say, "But the courts are so expensive", because, ex hypothesi, a good deal of money will be at stake. They will not be cases in which there is a dispute under the National Health Act or the National Insurance Act on the part of people who cannot afford legal fees. A good deal of money will be in dispute, and therefore the expense of the proceedings before the Companies Court are not an issue.

The only issue is whether it is to be done openly and whether justice is not only done but seen to be done, because, as I say, the principles on which the Board of Trade acts will be exactly the same as the age-long principles on which the Companies Court acts and on which any court of law administering a system of equity has acted on for centuries.

9.45 p.m.

Sir D. Glover

The argument which I have heard on the Amendment seems to be very much the argument that was put many centuries ago over the Star Chamber Court, through which many of us pass when we come into the House every day. The Star Chamber Court probably dispensed as good justice as was carried out in the ordinary courts of the Realm, but it was carried out in secret and, therefore, the public had no confidence in it.

When we in this House pass legislation, we are not able to find whether it works in a just manner unless the cases that come before the court as a result of that legislation are dealt with in public so that we as Members of Parliament and people throughout the country can form a view of what is happening. For the Board of Trade to deal with these problems in secret—

Sir Eric Fletcher

The hon. Member is under a misapprehension. There is no question of secrecy. A draft scheme must be produced and published in the London Gazette. In the second stage, it must be laid before the House. There is no question of secrecy. All this will be done in broadest daylight.

Sir D. Glover

With respect, it will not be done in daylight, because most of the arguments and submissions will be put before a body appointed by the Board of Trade. They will not take place in public. The only basis on which we get justice done is when all the submissions and counter-arguments on both sides are made in open court.

Judges are just as able to deal with these problems as anybody in the Board of Trade. I am certain that the House is taking a retrograde step in producing legislation which will not be operated in the full blaze of publicity of the realm. Therefore, because of these arguments, I support the Amendment.

Mr. John Hall

The House will be glad to know that I intend to be short, as all my hon. Friends have been in our many debates on the Amendments today. I shall be short because there is still enough left for us to debate by the many hon. Members who have yet to follow to take us to the early hours—or perhaps I should say the late hours—of the morning and I do not want to keep the House too long. Furthermore, I realise that debates on what are sometimes rather technical matters which may take place in the small hours, even though relieved from time to time by Divisions, can be a little tedious and trying for the patience of hon. Members.

Thirdly, I intend to be short because the case has been deployed fully by my hon. Fr end the Member for Wanstead and Woodford (Mr. Patrick Jenkin), who deployed it with his usual brevity, cogency and eloquence. In Committee upstairs, he deployed the case at considerable and greater length, ably assisted by my hon. Friend the Member for Wokingham (Mr. van Straubenzee) to whom, with others of my hon. Friends, tribute was paid by the Minister without Portfolio. There is no doubt that in Committee my hon. Friends did a great service to the House by highlighting the problem that would arise if an Amendment such as we suggested was not incorporated in the Bill.

I agree that the Minister has done exactly as he promised to do. He has introduced an Amendment making it a statutory obligation to publish a preliminary

draft order. We said that we would consider whatever proposal the Minister put forward and that in the meantime we would table our own Amendments to safeguard our position. Having considered the Minister's Amendment, my hon. Friends and I do not consider that it goes far enough.

The point at issue, which has been stressed on several occasions from both sides, is whether the matter should be dealt with administratively or judicially. It has been argued time and time again that some aspects of a proposed scheme or order would not be judiciable. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) answered that point extremely well and demolished that argument.

It has been said by the Minister without Portfolio that the courts are not the only impartial bodies, and I accept that. It is true that a Department of State can, in certain circumstances at least, be equally impartial. The point is whether those who have to appear before the Department of State believe that it is likely to be as impartial as a court of law. It is a platitude to say that justice must not only be done but be seen to be done, but a platitude, after all, is only a truth of which we are tired of hearing: it does not get any less true by repetition. This is a case where justice has to be seen to be done, and I think it has been shown by my hon. Friends, time and time again, by their arguments skilfully deployed, that the courts would be able to deal with these questions.

For these reasons, and because we are not at all satisfied that the alternative way proposed by the Government is the right way of doing it, and because we believe our Amendment is the right way, I would advise my hon. Friends to divide the House.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 154, Noes 162.

Division No. 212.] AYES [9.51 p.m.
Allan, Robert (Paddington, S.) Berkeley, Humphry Boyle, Rt. Hn. Sir Edward
Atkins, Humphrey Biff en, John Brinton, Sir Tatton
Baker, W. H. K. Biggs-Davison, John Brooke, Rt. Hn. Henry
Barber, Rt. Hn. Anthony Bingham, R. M. Brown, Sir Edward (Bath)
Barlow, Sir John Birch, Rt. Hn. Nigel Buchanan-Smith, Alick
Batsford, Brian Black, Sir Cyril Bullus, Sir Eric
Beamish, Col. Sir Tufton Bossom, Hn. Clive Burden, F. A.
Bell, Ronald Box, Donald Butcher, Sir Herbert
Buxton, Ronald Harvie Anderson, Miss Page, John (Harrow, W.)
Carlisle, Mark Hawkins, Paul Page, R. Graham (Crosby)
Cary, Sir Robert Heald, Rt. Hn. Sir Lionel Pearson, Sir Frank (Clitheroe)
Channon, H. P. G. Higgins, Terence L. Peel, John
Chataway, Christopher Hill, J. E. B. (S. Norfolk) Pitt, Dame Edith
Clark, Henry (Antrim, N.) Hobson, Rt. Hn. Sir John Pounder, Rafton
Clark, William (Nottingham, S.) Hogg, Rt. Hn. Quintin Powell, Rt. Hn. J. Enoch
Cole, Norman Hooson, H. E. Price, David (Eastleigh)
Cooke, Robert Hopkins, Alan Quennell, Miss J. M.
Cooper-Key, Sir Neill Hordern, Peter Ramsden, Rt. Hn. James
Corfield, F. V. Hornsby-Smith, Rt. Hn. Dame P. Redmayne, Rt. Hn. Sir Martin
Costain, A. P Hutchison, Michael Clark Rees-Davies, W. R.
Craddock, Sir Beresford (Spelthorne) Iremonger, T. L. Renton, Rt. Hn. Sir David
Crosthwaite-Eyre, Col. Sir Oliver Jenkin, Patrick (Woodford) Ridsdale, Julian
Curran, Charles Johnson Smith, G. (East Grinstead) Roberts, sir Peter (Heeley)
Currie, G. B. H. Johnston, Russell (Inverness) Robson Brown, Sir William
Davies, Dr. Wyndham (Perry Barr) Kerr, Sir Hamilton (Cambridge) Sharpies, Richard
d'Avigdor-Goldsmid, Sir Henry Kilfedder, James A. Sinclair, Sir George
Dean, Paul King, Evelyn (Dorset, S.) Smith, Dudley (Br'ntf'd & Chiswick)
Deedes, Rt. Hn. W. F. Kirk, Peter Soames, Rt. Hn. Christopher
Digby, Simon Wingfield Langford-Holt, Sir John Stainton, Keith
Eden, Sir John Legge-Bourke, Sir Harry Stanley, Hn. Richard
Elliot, Capt. Walter (Carshalton) Lewis, Kenneth (Rutland) Steel, David (Roxburgh)
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Litchfield, Capt. John Studholme, Sir Henry
Emery, Peter Loveys, Walter H. Taylor, Sir Charles (Eastbourne)
Errington, Sir Eric Lubbock, Eric Taylor, Frank (Moss Side)
Eyre, Reginald McAdden, Sir Stephen Thomas, Sir Leslie (Canterbury)
Fletcher-Cooke, Charles (Darwen) MacArthur, Ian Thompson, Sir Richard (Croydon, S.)
Foster, Sir John Maclean, Sir Fitzroy Tiley, Arthur (Bradford, W.)
Fraser, Ian (Plymouth, Sutton) van Straubenzee, W. R.
Gardner, Edward Macleod, Rt. Hn. Iain Walker, Peter (Worcester)
Glover, Sir Douglas McMaster, Stanley Walker-Smith, Rt. Hn. Sir Derek
Godber, Rt. Hn. J. B. Maitland, Sir John Walters, Dennis
Goodhew, Victor Maude, Angus Ward, Dame Irene
Grant, Anthony Mawby, Ray Webster, David
Grant-Ferris, R. Maydon, Lt.-Cmdr. S. L. C. Wells, John (Maidstone)
Gresham Cooke, R. Meyer, Sir Anthony Whitelaw, William
Griffiths, Peter (Smethwick) Mills, Peter (Torrington) Wilson, Geoffrey (Truro)
Grimond, Rt. Hn. J. Mills, Stratton (Belfast, N.) Wise, A. R.
Gurden, Harold Mitchell, David Wood, Rt. Hn. Richard
Hall, John (Wycombe) Mott-Radclyffe, Sir Charles Woodhouse, Hon. Christopher
Hall-Davis, A. G. F. Munro-Lucas-Tooth, Sir Hugh
Hamilton, M. (Salisbury) Neave, Airey TELLERS FOR THE AYES:
Harris, Frederic (Croydon, N. W.) Nugent, Rt. Hn. Sir Richard Mr. Francis Pym and
Harvey, John (Walthamstow, E.) Osborne, Sir Cyril (Louth) Mr. Jasper More.
Albu, Austen Evans, Albert (Islington, S. W.) Jeger, George (Goole)
Alldritt, Walter Evans, Ioan (Birmingham, Yardley) Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)
Bacon, Miss Alice Fernyhough, E. Jenkins, Hugh (Putney)
Barnett, Joel Fitch, Alan (Wigan) Jenkins, Rt. Hn. (Stechford)
Beaney, Alan Fletcher, Sir Eric (Islington, E.) Jones, Dan (Burnley)
Blackburn, F. Foley, Maurice Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Boston, T. G. Foot, Sir Dingle (Ipswich) Kenyon, Clifford
Bottomley, Rt. Hn. Arthur Foot, Michael (Ebbw Vale) Kerr, Mrs. Anne (R'ter & Chatham)
Bowden, Rt. Hn. H. W. (Leics S. W.) Ginsburg, David Kerr, Dr. David (W'worth. Central)
Boyden, James Gregory, Arnold Leadbitter, Ted
Braddock, Mrs. E. M. Grey, Charles Lee, Rt. Hn. Frederick (Newton)
Bradley, Tom Griffiths, David (Rother Valley) Lever, Harold (Cheetham)
Broughton, Dr. A. D. D. Griffiths, Will (M'chester, Exchange) Lewis, Arthur (West Ham, N.)
Brown, Hugh D. (Glasgow, Provan) Gunter, Rt. Hn. R. J. Lewis, Ron (Carlisle)
Butler, Herbert (Hackney, C.) Hamilton, William (West Fife) Lomas, Kenneth
Carter-Jones, Lewis Hamling, William (Woolwich, W.) Loughlin, Charles
Castle, Rt. Hn. Barbara Hannan, William McBride, Neil
Chapman, Donald Harper, Joseph McCann, J.
Corbet, Mrs. Freda Hart, Mrs. Judith MacColl, James
Craddock, George (Bradford, S.) Hazell, Bert MacDermot, Niall
Cronin, John Healey, Rt. Hn. Denis McGuire, Michael
Crosland, Rt. Hn. Anthony Herbison, Rt. Hn. Margaret Mackie, John (Enfield, E.)
Dalyell, Tam Hill, J. (Midlothian) McLeavy, Frank
Darling, George Hobden, Dennis (Brighton, K'town) Manuel, Archie
Davies, G. Elfed (Rhondda, E.) Holman, Percy Mapp, Charles
Davies, Harold (Leek) Homer, John Marsh, Richard
Davies, Ifor (Gower) Howarth, Harry (Wellingborough) Mason, Roy
de Freitas, Sir Geoffrey Howarth, Robert L. (Bolton, E.) Molloy, William
Delargy, Hugh Howell, Denis (Small Heath) Morris, Alfred (Wythenshawe)
Dodds, Norman Howie, W. Murray, Albert
Donnelly, Desmond Hoy, James Newens, Stan
Driberg, Tom Hughes, Hector (Aberdeen, N.) Noel-Baker, Francis (Swindon)
Dunn, James A. Hunter, A. E. (Feltham) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Dunnett, Jack Irving, Sydney (Dartford) Norwood, Christopher
English, Michael Janner, Sir Barnett Oakes, Gordon
Ensor, David Jay, Rt. Hn. Douglas Ogden, Eric
O'Malley, Brian Rose, Paul B. Tomney, Frank
Oram, Albert E. (E. Ham, S.) Rowland, Christopher Tuck, Raphael
Orbach, Maurice Sheldon, Robert Urwln, T. W.
Orme, Stanley Shore, Peter (Stepney) Walden, Brian (All Saints)
Owen, Will Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.) Walker, Harold (Doncaster)
Palmer, Arthur Silkin, John (Deptford) Wallace, George
Park, Trevor (Derbyshire, S. E.) Silkin, S. C. (Camberwell, Dulwich) Wells, William (Walsall, N.)
Parker, John Silverman, Julius (Aston) Whitlock, William
Parkin, B. T. Silverman, Sydney (Nelson) Wigg, Rt. Hn. George
Pavitt, Laurence Skeffington, Arthur Wilkins, W. A.
Pentland, Norman Slater, Mrs. Harriet (Stoke, N.) Williams, Mrs. Shirley (Hitchin)
Perry, Ernest G. Slater, Joseph (Sedgefield) Willis, George (Edinburgh, E.)
Popplewell, Ernest Snow, Julian Wilson, William (Coventry, S.)
Price, J. T. (Westhoughton) Stones, William Winterbottom, R, E.
Probert, Arthur Summerskill, Hn, Dr. Shirley Woodburn, Rt. Hn. A.
Pursey, Cmdr. Harry Swain, Thomas Zilliacus, K.
Redhead, Edward Swingler, Stephen
Reynolds, G. W. Taylor, Bernard (Mansfield) TELLERS FOR THE NOES:
Rogers, George (Kensington, N.) Thomas, George (Cardiff, W.) Mr. George Lawson and
Mr. Harry Gourlay.

It being after Ten o'clock, further consideration of the Bill, as amended, stood adjourned.

Ordered, That the Proceedings on the Monopolies and Mergers Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. O'Malley.]

Bill, as amended (in the Standing Committee), further considered.

Mr. Channon

I beg to move, Amendment No. 23, in page 6, line 17, to leave out "or otherwise".

Mr. Speaker

I suggest that with this Amendment the House should consider Amendment No. 52, in page 13, line 17 at the end to insert— () Section 3 of the principal Act, as applied by section 6, shall have effect as if, in subsection (4), the reference to bodies corporate becoming interconnected bodies corporate included a reference to enterprises being brought under common control otherwise than by reason of their becoming enterprises of interconnected bodies corporate, and to enterprises ceasing to be carried on as mentioned in subsection (1) above, and, in subsection (5), the reference to the division of a trade or business as therein mentioned included a reference to the separation, by the sale of any part of any undertaking or assets concerned or other means, of enterprises which are under common control otherwise than by reason of their being enterprises of interconnected bodies corporate.

Mr. Channon

I am sure that it will be convenient to take the two Amendments together.

This is a short but not unimportant point which, owing to some muddle on both sides of the Committee, we were unfortunately unable to take in Committee. Clause 3(5) states that The Board may provide for the division of any trade or business by the sale of any part of the undertaking or assets or otherwise … The Board of Trade are therefore taking very wide powers. What have they in mind by the inclusion of the words "or otherwise"? Under which circumstances would it be necessary to provide for the division of any trade or business in any circumstances apart from the sale of any part of the undertaking or assets"? Have the Board of Trade any examples in mind for which this sort of procedure, whatever it may be, would be appropriate?

I can imagine that under the subsection it would be possible for the Board of Trade—although I hope improbable—to divide any assets arbitrarily, alloting some assets to some and some to others. But I do not see how that could be done with the assets of a company. Presumably they would have to liquidate the company to sell the assets and split the proceeds among the people among whom they wished to divide the assets, in which case they would have provided for a division of the trade or business by the sale of any part of the undertaking.

I hope that the Minister of State will tell us under which circumstances he proposes to use the words "or otherwise", which are in a sense repeated in the Government's Amendment No. 52, which includes the words the division of a trade or business as therein mentioned included a reference to the separation, by the sale of any part of any undertaking or assets concerned or other means … That covers the same point.

The Clause as drafted gives the Government practically carte blanche as to how they treat assets in a company. No one should ever give any Government carte blanche, and certainly not this Government, and certainly not without finding out exactly what they have in mind. I can envisage no circumstances in which it would be possible to provide for the division of any such trade or business unless there were a sale of some part of the undertaking at some stage. I hope that the Minister of State will tell us why the words are in the Bill. Is it just a precaution for the remote future to deal with some obscure situation? What is the reason for the inclusion of these words?

Mr. Darling

As the hon. Member for Southend, West (Mr. Channon) said, this is a small point, although it could be important if one read into it the misgivings he appears to have. This is a cautionary suggestion, because if the Amendment were accepted the effect would be that the Board of Trade could provide for a trade or business to be divided only by the sale of its undertaking or its assets. This might operate, in certain circumstances, to the disadvantage of the parties concerned.

As the hon. Member knows, these are hypothetical matters at the moment, although we have looked back at previous monopoly examinations to see whether we are on firm ground. The probability we have in mind is where, for example, it might be more convenient for part of the undertaking or assets of a company to be transferred to another company in return for shares issued either to the first-named company or to its shareholders. Technically, this would not be a sale, but it would be excluded. It would be an arrangement which might be of great advantage to the parties concerned, because this would be better than selling off the assets. Therefore, to exclude the possibility from the Bill would, we think, be rather a mistake.

In most cases, where divestment is called for on a report from the Commission it would be obtained by a sale of the undertaking or part of the undertaking, or whatever it may be. But circumstances may arise where the example I have given would be of greater advantage to the persons concerned.

Mr. Patrick Jenkin

I find that a most puzzling reply, and I say that with respect to the Minister of State. What is the example which he gives of the transfer of assets in exchange for the issue of shares if it is not a sale? How does the nature of the consideration affect the basis of the transaction? However this matter is dealt with, at some stage there must be a sale. It might be possible, as my hon. Friend said, to envisage a case, to take a silly example, where a company is running two buses and it has been found to be monopolising a particular corner of the country. It has two shareholders, and the buses are to be divided between the two shareholders. Even that would have to be a sale. The company would be liquidated and the liquidator would sell the buses one to each shareholder. The authorities I have consulted on this matter cannot envisage any circumstances whereby a divesting under this subsection can take place without there being technically a sale; hence the Amendment to remove the words "or otherwise", and I remain utterly unconvinced by what the Minister of State has said in his reply.

Mr. Emlyn Hooson (Montgomery)

I echo the misgivings which have been voiced by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin). The example quoted by the Minister of State was a transfer for consideration. It is true that it was a transfer for shares, but for the valuable consideration which those shares represent. Surely that is nothing less than a sale. These words are surplusage, because the disposal of that part of the company which has been divested can be obtained eventually only through a sale. The Minister of State's reply was puzzling. I should like to be reassured.

Mr. Darling

I am glad that at last, since Second Reading, we have had some words from the Liberal Party.

Mr. Hooson

There have been none before simply because no Liberal Member was put on the Standing Committee.

Mr. Darling

We have been discussing the Bill since 3.30 this afternoon. Subsection (5) says this: The Board may provide for the division of any trade or business by the sale of any part of the undertaking or assets or otherwise. We have taken this to mean that the arrangement is for a straightforward sale. The situation I was describing would be more correctly described as an exchange of shares, which is not the same as a sale. Therefore the words "or otherwise" have been put in to cover that situation.

Mr. Channon

When I moved the Amendment my hon. Friends and I had imagined that there would be some simple explanation for the inclusion of these words. I find the Minister of State's explanation incomprehensible. I am fortified in this view by the support of the Liberal Party, which I did not expect to have. I cannot understand why the transfer of assets for shares should not be a sale, whereas the transfer of assets for money is a sale. I am no lawyer, but I am supported by two Queen's Counsel. My hon. Friends must have found the Minister of State's reply extremely unsatisfactory, one which has made them have worries about this part

of the Bill which they did not have before this short debate took place.

In view of the Minister of State's reply, the best thing for us to do is to test the matter in the Lobbies. This is most unsatisfactory. I cannot believe that any hon. Member opposite could have understood the Minister of State's explanation. If there is any doubt whatsoever, it is far better for the Government's powers to be restricted to provide for the division of any trade or business by the sale …

That is clear. It is comprehensible. What the Government have put into the Bill is neither clear nor comprehensible. Therefore, I advise my hon. Friends to support the Amendment in the Lobby.

Question put, That "or otherwise" stand part of the Bill:—

The House divided: Ayes 160, Noes 151.

Division No. 213.] AYES [10.13 p.m.
Albu, Austen Gregory, Arnold Marsh, Richard
Alldritt, Walter Grey, Charles Mason, Roy
Atkinson, Norman Griffiths, David (Rother Valley) Maxwell, Robert
Bacon, Miss Alice Griffiths, Will (M'chester, Exchange) Mayhew, Christopher
Barnett, Joel Gunter, Rt. Hn. R. J. Molloy, William
Beaney, Alan Hamling, William (Woolwich, W.) Morris, Alfred (Wythenshawe)
Blackburn, F. Hannan, William Murray, Albert
Boston, T. G. Harper, Joseph Newens, Stan
Bottomley, Rt. Hn. Arthur Hart, Mrs. Judith Noel-Baker, Francis (Swindon)
Bowden, Rt. Hn. H. W. (Leics S. W.) Hazell, Bert Noel-Baker, Rt. Hn. Philip (Derby, S.)
Boyden, James Healey, Rt. Hn. Denis Norwood, Christopher
Braddock, Mrs. E. M. Herbison, Rt. Hn. Margaret Oakes, Gordon
Bradley, Tom Hill, J. (Midlothian) Ogden, Eric
Broughton, Dr. A. D. D. Hobden, Dennis (Brighton, K'town) O'Malley, Brian
Brown, Hugh D. (Glasgow, Provan) Holman, Percy Oram, Albert E. (E. Ham, S.)
Brown, R. W. (Shoreditch & Fbury) Homer, John Orbach, Maurice
Carter-Jones, Lewis Howarth, Harry (Wellingborough) Orme, Stanley
Castle, Rt. Hn. Barbara Howarth, Robert L. (Bolton, E.) Owen, Will
Chapman, Donald Howell, Denis (Small Heath) Palmer, Arthur
Corbet, Mrs. Freda Howie, W. Park, Trevor (Derbyshire, S. E.)
Craddock, George (Bradford, S.) Hoy, James Parker, John
Crawshaw, Richard Irving, Sydney (Dartford) Parkin, B. T.
Cronin, John Janner, Sir Barnett Pavitt, Laurence
Crosland, Rt. Hn. Anthony Jay, Rt. Hn. Douglas Pentland, Norman
Dalyell, Tam Jeger, George (Goole) Perry, Ernest G.
Darling, George Jeger, Mrs. Lena (H'b'n & St. P'cras, S.) Popplewell, Ernest
Davies, Harold (Leek) Jenkins, Hugh (Putney) Price, J. T. (Westhoughton)
de Freitas, Sir Geoffrey Jenkins, Rt. Hn. (Stechford) Probert, Arthur
Delargy, Hugh Johnson, Carol (Lewisham, S.) Pursey, Cmdr. Harry
Dodds, Norman Jones, Dan (Burnley) Redhead, Edward
Donnelly, Desmond Kenyon, Clifford Reynolds, G. W.
Driberg, Tom Kerr, Mrs. Anne (R'ter & Chatham) Richard, Ivor
Dunn, James A. Kerr, Dr. David (W'worth, Central) Rogers, George (Kensington, N.)
Dunnett, Jack Leadbitter, Ted Rose, Paul B.
English, Michael Lee, Rt. Hn. Frederick (Newton) Rowland, Christopher
Ensor, David Lever, Harold (Cheetham) Sheldon, Robert
Evans, Albert (Islington, S. W.) Lewis, Arthur (West Ham, N.) Shore, Peter (Stepney)
Evans, Ioan (Birmingham, Yardley) Lewis, Ron (Carlisle) Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Fernyhough, E. Lomas, Kenneth Silkin, John (Deptford)
Fitch, Alan (Wigan) Loughlin, Charles Silkin, S. C. (Camberwell, Dulwich)
Fletcher, Sir Eric (Islington, E.) McBride, Neil Silverman, Julius (Aston)
Floud, Bernard McCann, J. Skeffington, Arthur
Foley, Maurice MacColl, James Slater, Mrs. Harriet (Stoke, N.)
Foot, Sir Dingle (Ipswich) MacDermot, Niall Slater, Joseph (Sedgefield)
Foot, Michael (Ebbw Vale) McGuire, Michael Snow, Julian
Ginsburg, David Mackie, John (Enfield, E.) Stones, William
Gourlay, Harry Manuel, Archie Summerskill, Hn Dr. Shirley
Swain, Thomas Walker, Harold (Doncaster) Wilson, William (Coventry, S.)
Swingler, Stephen Wallace, George Winter-bottom, R. E.
Taylor, Bernard (Mansfield) Wells, William (Walsall. N.) Zilliacus, K.
Thomas, George (Cardiff, W.) Whitlock, William
Tomney, Frank Wigg, Rt. Hn. George TELLERS FOR THE AYES:
Tuck, Raphael Wilkins, W. A. Mr. George Lawson and
Urwin, T. W. Williams, Mrs. Shirley (Hitchin) Mr. Ifor Davies.
Walden, Brian (All Saints) Willis, George (Edinburgh, E.)
Alison, Michael (Barkston Ash) Foster, Sir John Meyer, Sir Anthony
Allan, Robert (Paddington, S.) Fraser, Ian (Plymouth, Sutton) Mills, Peter (Torrington)
Atkins, Humphrey Gardner, Edward Mills, Stratton (Belfast, N.)
Baker, W. H. K. Glover, Sir Douglas Mitchell, David
Barber, Rt. Hn. Anthony Godber, Rt. Hn. J. B. Mott-Radclyffe, Sir Charles
Barlow, Sir John Goodhew, Victor Munro-Lucas-Tooth, Sir Hugh
Batsford, Brian Grant, Anthony Neave, Airey
Beamish, Col. Sir Tufton Grant-Ferris, R. Osborne, Sir Cyril (Louth)
Bell, Ronald Gresham Cooke, R. Page, John (Harrow, W.)
Berkeley, Humphry Grieve, Percy Page, R. Graham (Crosby)
Biffen, John Griffiths, Peter (Smethwick) Pearson, Sir Frank (Clitheroe)
Biggs-Davison, John Grimond, Rt. Hn. J. Peel, John
Bingham, R. M. Gurden, Harold Pitt, Dame Edith
Black, Sir Cyril Hall, John (Wycombe) Pounder, Rafton
Bossom, Hn. Clive Hall-Davis, A. G. F. Powell, Rt. Hn. J. Enoch
Box, Donald Harris, Frederic (Croydon, N. W.) Price, David (Eastleigh)
Boyle, Rt. Hn. Sir Edward Harris, Reader (Heston) Pym, Francis
Brinton, Sir Tatton Harvey, John (Walthamstow, E.) Quennell, Miss J. M.
Brooke, Rt. Hn. Henry Harvie, Anderson, Miss Ramsden, Rt. Hn. James
Brown, Sir Edward (Bath) Hawkins, Paul Redmayne, Rt. Hn. Sir Martin
Buchanan-Smith, Alick Heald, Rt. Hn. Sir Lionel Renton, Rt. Hn. Sir David
Bullus, Sir Eric Higgins, Terence L. Ridsdale, Julian
Buxton, Ronald Hill, J. E. B. (S. Norfolk) Roberts, Sir Peter (Heeley)
Carlisle, Mark Hobson, Rt. Hn. Sir John Robson Brown, Sir William
Carr, Rt. Hn. Robert Hogg, Rt. Hn. Quintin Sharpies, Richard
Channon, H. P. G. Hooson, H. E. Shepherd, William
Chataway, Christopher Hopkins, Alan Sinclair, Sir George
Clark, Henry (Antrim, N.) Hordern, Peter Smith, Dudley (Br'ntf'd & Chiswick)
Clark, William (Nottingham, S.) Hornsby-Smith, Rt. Hn. Dame P. Soames, Rt. Hn. Christopher
Cole, Norman Hutchison, Michael Clark Stainton, Keith
Cooke, Robert Iremonger, T. L. Stanley, Hn. Richard
Cooper-Key, Sir Neill Jenkin, Patrick (Woodford) Steel, David (Roxburgh)
Corfield, F. V. Johnston, Russell (Inverness) Studholme, Sir Henry
Costain, A. P. Kerr, Sir Hamilton (Cambridge) Taylor, Sir Charles (Eastbourne)
Crawley, Aidan Kilfedder, James A. Taylor, Frank (Moss Side)
Crosthwaite-Eyre, Col. Sir Oliver King, Evelyn (Dorset, S.) Thompson, Sir Richard (Croydon, S.)
Curran, Charles Kirk, Peter Tiley, Arthur (Bradford, W.)
Currie, G. B. H. Langford-Holt, Sir John van Straubenzee, W, R.
Dance, James Legge-Bourke, Sir Harry Walker, Peter (Worcester)
Davies, Dr. Wyndham (Perry Barr) Lewis, Kenneth (Rutland) Walters, Dennis
d'Avigdor-Goldsmid, Sir Henry Litchfield, Capt. John Ward, Dame Irene
Dean, Paul Loveys, Walter H. Webster, David
Deedes, Rt. Hn. W. F. Lubbock, Eric Wells, John (Maidstone)
Digby, Simon Wingfield McAdden, Sir Stephen Whitelaw, William
Dodds-Parker, Douglas MacArthur, Ian Wilson, Geoffrey (Truro)
Eden, Sir John Maclean, Sir Fitzroy Wise, A. R.
Elliot, Capt. Walter (Carshalton) Macleod, Rt. Hn. Iain Wood, Rt. Hn. Richard
Elliott, R. W. (N'c'tle-upon-Tyne, N.) McMaster, Stanley
Emery, Peter Marten, Neil TELLERS FOR THE NOES:
Errington, Sir Eric Maude, Angus Mr. Jasper More and
Eyre, Reginald Mawby, Ray Mr. Geoffrey Johnson Smith.
Fletcher-Cooke, Charles (Darwen) Maydon, Lt.-Cmdr. S. L. C.
Mr. John Hall

I beg to move, Amendment No. 26, in page 6, line 43, to leave out from "above" to "the" in line 44.

The purpose of the Amendment is quite clear, like that of all our Amendments. It deletes the words or have the making of such an order under consideration". We feel that it is wrong that the Board of Trade, only having the making of an order in mind, should be able to bring the activities of a company to a halt and to impose all the restrictions empowered under the Clause, including the power to control and supervise the company until such time as the Board decided whether or not it wished to make an order.

It is generally realised that it could be the cause of serious damage to a concern in that if the Board eventually decided not to proceed the concern would be unable to claim any compensation. We might have had a different view of the Clause if the Government had included a provision for compensation but they have not seen fit so to do. The reason for the insertion of the Clause, as I understand it and as the Minister of State confirmed in Committee, was to cover the possibility of a company, being subject to an adverse report by the Commission, attempting to forestall what it foresaw might be appropriate Board of Trade action. That, as I understand it, is really the reason why these words have been put in.

I suggested in Committee, and I suggest again now, that a Clause on the lines of Section 24 of the Iron and Steel Act, 1949, which dealt with the dissipation of assets by transactions involving payments, distributions and so forth to members of the company, might have met the point which the Minister had in mind, and I still think that a Clause on those lines might deal with the worry which the Government have. The Minister of State promised in Committee, … we will look at the matter again to make sure that action will be taken only on receipt of an adverse report from the Monopolies Commission. The Board of Trade will not lay art order to prohibit or restrict the doing of things which might impede the operations of a company".—[OFFICIAL REPORT, Standing Committee E, 6th May, 1965; c. 318.] The Government have tabled Amendment No. 27, which we are discussing with this one, to insert the words: with a view to the achievement of that purpose". That does not seem to make very much change.

Mr. Deputy-Speaker

Order. We are not discussing Amendment No. 27 at the moment.

Mr. Hall

I am sorry, Mr. Deputy-Speaker. I thought for a moment that we were debating the two together. However, it appears to me that the one relates to the other, and I am sure that the Minister takes the point I make.

Perhaps I may again use the analogy of matrimonial intention which I used in Committee. As the Clause now stands, if the Minister had marriage under consideration, he could under the powers given by the Clause not only prevent the lady of his choice from marrying anyone else but he could also anticipate all the things he might do if, in fact, he did enter into marriage. That is the position under the Clause as it stands before the Amendment which we shall come to later. If I may just mention that later proposal again without going out of order, it would enable the Minister to say to his intended bride, "Everything I do is with a view to the achievement of my purpose, which at the moment is matrimony".

The analogy is perfect but for one thing. If, having done his worst, the Minister did not marry, he could be sued for damages. Unfortunately, if the Board of Trade has done its worst to a company, has threatened an order and has taken action because it had the issuing of an order under consideration, and if the company is damaged thereby, there will be no claim to compensation of any kind. We do not regard the Government's Amendment as satisfactory. We consider that our Amendment No. 26, which I have moved, does precisely what we want to do. It removes the offending words, which we do not think should be there because they are inserted to provide against a possible contingency which can be covered in other ways.

For these reasons I hope that, even at this stage and after tabling their own Amendment, the Government will relent and be prepared to accept our Amendment in place of their own.

10.30 p.m.

Mr. Darling

The hon. Member for Wycombe (Mr. John Hall) has reminded us that we discussed this matter at some length in Committee and I gave an undertaking that we would try to find a form of words to meet the legitimate concern then expressed. In a moment, I shall explain the difficulty we have had in seeking suitable words.

The hon. Member tried to use, both in Committee and today, the analogy of marriage to explain the point of view that he had in mind. But I think that a more accurate analogy would be divorce. The measures that the Board of Trade may well take will be to divest—to break up—rather than to amalgamate. As the subsection is drafted, it provides for the Board of Trade to make orders to prevent the frustration of an order breaking up the business or other appropriate action, not only where such a break-up order under subsection (5) has been made but also where the Board of Trade has the making of such an order under consideration, which I suggest is very different from saying "a break-up order which the Board of Trade has in mind". It is actively under consideration.

If these words were removed, the Board of Trade would not be able to act in anticipation of the breaking up order. We think it is important that the Board should have the power conferred by these words. First, the preparation of a breakup order under subsection (5), as I am sure the hon. Member for Reading (Mr. Peter Emery) would agree, might in certain circumstances take a considerable time. The proposed scheme might be complicated. As I am sure that both the hon. Member for Reading and the hon. Member for Wycombe would like us to express again the purpose here, lengthy discussions with the firms concerned will probably be necessary because one does not want to take arbitrary action where arbitrary action is not needed. If one can get agreement between the firms, so much the better. Again, the draft order would then be required to be laid before each House of Parliament and approved by Resolution. All this will take time. If the Board of Trade could not use the powers that are conferred by subsection (6) before an order for the purposes of subsection (5) was actually made, it might be possible for the persons concerned so to arrange their affairs as to render the operation of the expected break-up order unnecessarily difficult, if not impossible.

The matter, as I say, was discussed fully in Committee, and I undertook to see whether a form of words could be found which would make it quite clear that the Board would not use the power unless there had been an adverse report and the Board was bona fide contemplating the making of an order exercising the powers that are conferred by subsection (5). It is already clear that the power conferred by Clause 3(6) cannot be exercised unless there has been an adverse report. We have considered various ways of expressing this condition so as to indicate that the Board must be seriously and honestly considering the making of an order exercising the powers under subsection (5), and, short of imposing conditions which would, we think, deprive the power of most of its value, we cannot think of any words which express this intention better than the words which it is now proposed to delete.

The hon. Member for Wycombe both in Committee and a few moments ago suggested that the Board's position could be protected by a provision on the lines of Section 24 of the Iron and Steel Act, 1949. We think that there is not a true parallel here. That Section was aimed against the dissipation of assets by companies due to be nationalised, and prohibited the return of capital to members and similar transactions except with the approval of the Minister. We think that this is quite a different situation, where the Board of Trade on an adverse report from the Monopolies Commission is quite clearly contemplating a break-up order, but before the order is made all the circumstances that I have referred to—the discussions with the firms concerned, the laying of the order before both Houses of Parliament—inevitably lead to delay before the appropriate action is taken. I think that one has to ensure that the Board of Trade has powers to deal with any action that would frustrate the purposes which the Board has in mind on the recommendations of the Monopolies Commission.

Of course, we cannot foresee all the ways in which a company may set out to frustrate a divestment order once it suspects that one is to be made and therefore we cannot accept a limited power such as that suggested by the hon. Gentleman. But I make it clear again—and this is implicit in the Clause—that the Board of Trade could not possibly take action, using the power that the hon. Gentleman wants to omit, unless there had been an adverse report from the Monopolies Commission, because such an order could not be brought before Parliament unless there was clear justification for it.

I think that, on reflection, the hon. Gentleman will agree that, if the Board of Trade has to bring an order forward because of an adverse report of the Monopolies Commission, we should not allow anyone to take action that would frustrate the purpose of that order to their own advantage and against the public interest.

Mr. John Hall

The hon. Gentleman will understand when I say that his argument is familiar and that it is really the one he deployed in Committee. I agree that my argument also, with some slight additions, is familiar. But the

hon. Gentleman has not met the point that worries us.

If we leave the Clause as it stands, the Board—even accepting the fact that it would only be on an adverse report—could, if it had an order under consideration, do all the things laid down in the Clause—prohibit or restrict the doing of things which might restrict or frustrate the order, for instance, and appoint a person to conduct or supervise the activities of the company.

All these things could seriously affect the conduct of a business. But if, at the end of the day, the Board decided not to make the order it might have done very considerable harm in the meantime to the operation of the company concerned. It is this point which worries us and it was in acknowledgment of that worry that the hon. Gentleman agreed to search for some alternative form of words which would meet our point of view. However, we do not believe that the Government have succeded in doing so. We must press our point of view and I therefore advise my hon. Friends to divide the House on this matter.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes, 166; Noes 145.

Division No. 214.] AYES [10.38 p.m.
Albu, Austen Ensor, David Hoy, James
Alldritt, Walter Evans, Albert (Islington, S. W.) Hynd, H. (Accrington)
Atkinson, Norman Evans, Ioan (Birmingham, Yardley) Irving, Sydney (Dartford)
Bacon, Miss Alice Fernyhough, E. Janner, Sir Barnett
Barnett, Joel Fitch, Alan (Wigan) Jay, Rt. Hn. Douglas
Blackburn, F. Fletcher, Sir Eric (Islington, E.) Jeger, George (Goole)
Boston, T. G. Floud, Bernard Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)
Bottomley, Rt. Hn. Arthur Foley, Maurice Jenkins, Hugh (Putney)
Bowden, Rt. Hn. H. W. (Leics S. W.) Foot, Sir Dingle (Ipswich) Jenkins, Rt. Hn. Roy (Stechford)
Boyden, James Foot, Michael (Ebbw Vale) Johnson, Carol (Lewisham, S.)
Braddock, Mrs. E. M. Ginsburg, David Johnston, Russell (Inverness)
Bradley, Tom Gourlay, Harry Jones, Dan (Burnley)
Brown, Hugh D. (Glasgow, Provan) Gregory, Arnold Kenyon, Clifford
Brown, R. W. (Shoreditch & Fbury) Grey, Charles Kerr, Mrs. Anne (R'ter & Chatham)
Carter-Jones, Lewis Griffiths, David (Rother Valley) Kerr, Dr. David (W'worth, Central)
Castle, Rt. Hn. Barbara Griffiths, Will (M'chester, Exchange)
Chapman, Donald Grimond, Rt. Hn. J. Lawson, George
Corbet, Mrs. Freda Gunter, Rt. Hn. R. J. Leadbitter, Ted
Craddock, George (Bradford, S.) Hamling, William (Woolwich, W.) Lever, Harold (Cheetham)
Crawshaw, Richard Hannan, William Lewis, Arthur (West Ham, N.)
Cronin, John Hart, Mrs. Judith Lewis, Ron (Carlisle)
Crosland, Rt. Hn. Anthony Hazell, Bert Lomas, Kenneth
Dalyell, Tam Healey, Rt. Hn. Denis Loughlin, Charles
Darling, George Herbison, Rt. Hn. Margaret Lubbock, Eric
Davies, Harold (Leek) Hill, J. (Midlothian) McBride, Neil
de Freitas, Sir Geoffrey Hobden, Dennis (Brighton, K'town) McCann, J.
Delargy, Hugh Holman, Percy MacColl, James
Dodds, Norman Hooson, H. E. MacDermot, Niall
Donnelly, Desmond Horner, John McGuire, Michael
Driberg, Tom Howarth, Harry (Wellingborough) Mackie, John (Enfield, E.)
Dunn, James A. Howarth, Robert L. (Bolton, E.) Manuel, Archie
Dunnett, Jack Howell, Denis (Small Heath) Marsh, Richard
English, Michael Howie, W. Mason, Roy
Maxwell, Robert Price, J. T. (Westhoughton) Swain, Thomas
Mayhew, Christopher Probert, Arthur Swingler, Stephen
Molloy, William Pursey, Cmdr. Harry Taylor, Bernard (Mansfleld)
Morris, Alfred (Wythenshawe) Ramsden, Rt. Hn. James Thomas, George (Cardiff, W.)
Murray, Albert Redhead, Edward Thorpe, Jeremy
Newens, Stan Reynolds, G. W. Tomney, Frank
Noel-Baker, Francis (Swindon) Richard, Ivor Tuck, Raphael
Noel-Baker, Rt. Hn. Philip (Derby, S.) Rogers, George (Kensington, N.) Urwin, T. W.
Norwood, Christopher Rose, Paul B. Walden, Brian (All Saints)
Oakes, Gordon Rowland, Christopher Walker, Harold (Doncaster)
Ogden, Eric Sheldon, Robert Wallace, George
O'Malley, Brian Shore, Peter (Stepney) Wells, William (Walsall, N.)
Oram, Albert E. (E. Ham, S.) Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.) White, Mrs. Eirene
Orbach, Maurice Silkin, John (Deptford) Whitlock, William
Orme, Stanley Silkin, S. C. (Camberwell, Dulwich) Wigg, Rt. Hn. George
Owen, Will Silverman, Julius (Aston) Wilkins, W. A.
Palmer, Arthur Skeffington, Arthur Williams, Mrs. Shirley (Hitchin)
Park, Trevor (Derbyshire, S. E.) Slater, Mrs. Harriet (Stoke, N.) Willis, George (Ebinburgh, E.)
Parker, John Slater, Joseph (Sedgefield) Wilson, William (Coventry, S.)
Parkin, B. T. Snow, Julian Zilliacus, K.
Pavitt, Laurence Steel, David (Roxburgh)
Pentland, Norman Stonehouse, John TELLERS FOR THE AYES:
Perry, Ernest G. Strauss, Rt. Hn. G. R. (Vauxhall) Mr. Ifor Danes, and
Popplewell, Ernest Summershill, Hn. Dr. Shirley Mr. Joseph Harper.
Alison, Michael (Barkston Ash) Foster, Sir John Meyer, Sir Anthony
Allan, Robert (Paddington, S.) Fraser, Ian (Plymouth, Button) Mills, Peter (Torrington)
Atkins, Humphrey Gardner, Edward Mills, Stratton (Belfast, N.)
Baker, W. H. K. Glover, Sir Douglas Mitchell, David
Barber, Rt. Hn. Anthony Godber, Rt. Hn. J. B. Mott-Radclyffe, Sir Charles
Barlow, Sir John Goodhew, Victor Munro-Lucas-Tooth, Sir Hugh
Batsford, Brian Grant, Anthony Neave, Airey
Beamish, Col. Sir Tufton Grant-Ferris, R. Osborne, Sir Cyril (Louth)
Bell, Ronald Gresham Cooke, R. Page, John (Harrow, W.)
Blffen, John Grieve, Percy Page, R. Graham (Crosby)
Biggs-Davison, John Griffiths, Peter (Smethwick) Pearson, Sir Frank (Clitheroe)
Bingham, R. M. Gurden, Harold Peel, John
Black, Sir Cyril Hall, John (Wycombe) Pitt, Dame Edith
Bossom, Hn. Clive Hall-Davies, A. G. F. Pounder, Rafton
Box, Donald Harris, Frederic (Croydon, N. W.) Powell, Rt. Hn. J. Enoch
Boyle, Rt. Hn. Sir Edward Harris, Reader (Heston) Price, David (Eastleigh)
Brinton, Sir Tatton Harvey, John (Walthamstow, E.) Prior, J. M. L.
Brooke, Rt. Hn. Henry Harvie Anderson, Miss Pym, Francis
Brown, Sir Edward (Bath) Hawkins, Paul Quennell, Miss J. M.
Buchanan-Smith, Alick Heald, Rt. Hn. Sir Lionel Ramsden, Rt. Hn. James
Bullus, Sir Eric Higgins, Terence L. Redmayne, Rt. Hn. Sir Martin
Buxton, Ronald Hill, J. E. B. (S. Norfolk) Ridsdale, Julian
Carlisle, Mark Hobson, Rt. Hn. Sir John Roberts, Sir Peter (Heeley)
Channon, H. P. G. Hogg, Rt. Hn. Quintin Sharpies, Richard
Chataway, Christopher Hopkins, Alan Shepherd, William
Clark, Henry (Antrim, N.) Hordern, Peter Sinclair, Sir George
Clark, William (Nottingham, S.) Hornsby-Smith, Rt. Hn Dame P. Smith, Dudley (Br'ntf'd & Chiswick)
Cole, Norman Hutchison, Michael Clark Soames, Rt. Hn. Christopher
Cooke, Robert Iremonger, T. L. Stainton, Keith
Cooper-Key, Sir Neill Jenkin, Patrick (Woodford) Stanley, Hn. Richard
Corfield, F. V. Kerr, Sir Hamilton (Cambridge) Studholme, Sir Henry
Costain, A. P. Kilfedder, James A. Taylor, Sir Charles (Eastbourne)
Crawley, Aidan King, Evelyn (Dorset, S.) Thompson, Sir Richard (Croydon, S.)
Crosthwaite-Eyre, Col. Sir Oliver Kirk, Peter Tiley, Arthur (Bradford, W.)
Curran, Charles Langford-Holt, Sir John Tilney, John (Wavertree)
Currie, G. B. H. Legge-Bourke, Sir Harry van Straubenzee, W. R.
Dance, James Lewis, Kenneth (Rutland) Walker, Peter (Worcester)
Davies, Dr. Wyndham (Perry Barr) Litchfield, Capt. John Walters, Dennis
d'Avigdor-Goldsmid, Sir Henry Longden, Gilbert Ward, Dame Irene
Dean, Paul Loveys, Walter H. Webster, David
Deedes, Rt. Hn. W. F. McAdden, Sir Stephen Wells, John (Maidstone)
Digby, Simon Wingfield MacArthur, Ian Whitelaw, William
Dodds-Parker, Douglas Maclean, Sir Fitzroy Wilson, Geoffrey (Truro)
Eden, Sir John Macleod, Rt. Hn. Iain Wise, A. R.
Elliot, Capt. Walter (Carshalton) McMaster, Stanley Wood, Rt. Hn. Richard
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Marples, Rt. Hn. Ernest
Emery, Peter Marten, Neil TELLERS FOR THE NOES:
Errington, Sir Eric Maude, Angus Mr. Jasper More and
Eyre, Reginald Mawby, Ray Mr. Geoffrey Johnson Smith.
Fletcher-Cooke, Charles (Darwen) Maydon, Lt.-Cmdr. S. L. C.
Mr. Jay

I beg to move Amendment No. 27, in page 6, line 44, after "Board", to insert: with a view to the achievement of that purpose This is a clarifying Amendment. I am the first to admit that some legislation introduced into this House is capable of clarification. In this case, it was suggested in Committee that after the Board of Trade had made a divestment order, its powers of control over the companies concerned might, in accordance with the Bill, although this was not intended, have been totally unrestricted.

We never wished that they should be so unrestricted. They were merely intended to go as far as the control that was necessary for the proper carrying out of the order. The words which I now propose to introduce make that perfectly clear and beyond doubt, as, I think, the House would wish.

Mr. John Hall

The Minister's explanation of the Amendment does nothing to remove my previous uneasiness in his refusing to accept our Amendment No. 26. As, however, one-eighth of a loaf is better than no bread, we do not propose to oppose the Amendment.

Amendment agreed to.

Mr. Fletcher-Cooke

I beg to move, Amendment No. 28, in page 7, line 25, to leave out the second "directions" and to insert "order".

Mr. Deputy-Speaker (Sir Samuel Storey)

We can also discuss Amendments No. 29 and No. 30, in page 7, line 29, leave out "directions" and insert "order", and in line 35, leave out "vary or".

Mr. Fletcher-Cooke

These three Amendments are, I am afraid, an exercise in biting the hand that feeds one, because in Committee the Minister without Portfolio drew attention to a matter which nobody had drawn attention to, and with characteristic candour and frankness he said that the powers contained in subsection (8) of the Clause were very unusual. He said they were. unusually wide powers which are not subject to Parliamentary control … I think it should be pointed out that if Parliament passes an order under subsection (10) containing those directions to individuals, those directions will not have to come before Parliament. He gave one of the reasons: It may be undesirable that they should do so because it might give publicity to individuals who, in their own interest, would not wish their names to be mentioned."—[OFFICIAL REPORT, Standing Committee E, 11th May, 1965; c. 343–4.] I see the reason he gave for a very remarkable example of sub-delegated legislation. As subsection (8) now stands, the Board of Trade may be authorised by an order which is subject to Parliamentary control to give directions to a person specified in the directions to take certain steps "within his competence" or to do or refrain from doing anything … specified or described which he might be required to do or refrain from doing". In general, the directions which may be given and the persons who may be named are in very wide terms, and subject, as the Minister said, to no sort of Parliamentary control or indeed other control at all. On reflection, we have come to the conclusion that the reason he gave for this remarkable power is really insufficient, namely, that the person concerned would rather have these Draconian powers done secretly without publicity because otherwise publicity might be damaging. It might be damaging, but that is not sufficient reason to outweigh the usual constitutional arrangements which we have, which are that these things should be done quite openly and should be subject to some sort of Parliamentary control.

Therefore, what we suggest is that instead of a person being named only in the directions which are sub-delegated legislation he must be named and specified in the order, and also that the steps which the person named has to take must also be specified or described in the order. That is the effect of our Amendments, including the consequential one, the third, about varying the direction. We wish to delete the power to vary by direction. It is to be my means of revoking the order and making a new order which, again, would be under Parliamentary control.

I think the point is fairly clear. It is a constitutional matter. It is to try to remove the extraordinary nature of this sub-delegated legislation. Whatever the good intentions of the Minister without Portfolio—and I certainly see them and honour them—I do not think it right that these secret directions should be made with such little foundation as a general order not specifying the person to whom it is directed, not specifying the steps which that person has to take, in the only instrument which has Parliamentary control upon it. That is not a point which requires any elaboration.

Sir Eric Fletcher

I think that the House is grateful to the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) for having put down these Amendments although, as he was kind enough to acknowledge, the Opposition cannot on this occasion claim any credit for the initiative. I am glad that the hon. and learned Gentleman has tabled them, because they give us an opportunity for a short while to discuss exactly what the subsection does. I think that before accepting it, and, as I hope, rejecting the Amendment for the reasons that I shall give, it is important to understand what is intended by the subsection.

I have considered whether the Amendments could be accepted, and I have come to the conclusion that they do not really either take away from the Board of Trade the power which the subsection is intended to give to it, or have the effect which the hon. and learned Gentleman contemplates they should have, or at any rate only in part.

It is the case that if an Order has to be made under subsection (5), that is to say a divesting order, it will, as a consequence of that, be necessary to ensure that it is properly enforced, otherwise it could be evaded and nullified. Therefore, if a divesting Order has to be made, it will become necessary for the Board of Trade to give directions to individuals to take certain steps. For example, if a divesting Order involves a company in selling its shares to another company, at some stage the directors and secretary of the company which is going to sell its shares will have to execute share transfers. If there is any difficulty about enforcing a divesting Order which, ex hypothesi at that time would have had the approval of Parliament, it follows that effect must be given to the wishes of Parliament. That may involve the Board of Trade giving directions to A, B and C that they shall execute certain documents, in the same way as the court has to have residual powers to see that its decrees are carried out.

Having reflected on this matter, I can see no escape from letting the Board of Trade have power by an Order, if approved by both Houses of Parliament, to direct unspecified and unnamed individuals, that is to say unspecified and unnamed in the Order, to do certain things. The reason why it is not possible, or perhaps desirable, to name the individuals in the order is not exclusively the reason that I gave in Committee. It may well be that it will not be possible, when the order is made, to identify the individuals to whom the directions have to be given. It may also be the case that if certain individuals are specified and given directions to do things evasive action could be taken, either by a company forming a subsidiary, or adopting one or other of the several devices which hon. Members know are open to those who manipulate companies, subsidiary companies, and associated companies, and such evasive action could defeat the intentions of Parliament.

Therefore, although, as I concede, and as I have pointed out, this is an unusual form of sub-delegated legislation, I can see no escape from it. My advice to the House is that, its attention having been drawn, with its eyes open, to what it is being asked to do, it is the only logical way of carrying out the intentions of Parliament.

11.0 p.m.

It might be said that that is all very well, but there must be some safeguard for seeing what the Board of Trade does. I have considered how that kind of objection can be met. There are two ways. It would always be open to any hon. Member to ask the President of the Board of Trade what directions had been given following an order made and approved by Parliament, and he could, I suppose, also be asked if he would place copies of any such directions in the Library. Although I cannot commit any President of the Board of Trade either now or in future as to what he might do, I indicate that as showing that there are methods whereby action taken in the way contemplated by this subsection could be made available to Members of Parliament. For these reasons and with this explanation I hope the hon. Member will feel satisfied that it would be impracticable to accept his Amendment.

Mr. Jeremy Thorpe (Devon, North)

Although we have had certain strictures from the hon. Member for Sheffield, Hillsborough (Mr. Darling), the House will appreciate that there was no Liberal on the Committee. Therefore, I crave the indulgence of the House if I should raise a point which might have been dealt with in Committee. From a constitutional point of view, is not what the Minister is saying that he can see the force of the argument of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), that Parliament should be able to question any particular order, but that it is difficult to make an order with any precision and with any certainty by naming the parties involved for the simple reason that it might not be all-embracing, that there might be certain persons who were operating certain practices to which the Board of Trade took objections but who might be omitted from the terms of an order specifically designating certain people?

But surely the contrary is of equal importance, namely, that when a Department of State makes an order specifying that certain practices shall or shall not be stopped, prevented or desisted from, there should be some measure of certainty and finality. What the right hon. and learned Gentleman is saying is that the net must be so wide that it may not only catch the fishes whom he wishes to catch but it may also pull in certain other sprats of whose existence at the time he is not fully cognisant. This seems a strange constitutional doctrine. Persons must know what the law is, and there must be finality and certainty. After all, this is one of the basic principles of the rule of law—that there is certainty and people know where they stand on a particular issue. This, as I see it, is the great argument against retrospective legislation, that a man may do something in good faith on the basis that it is intra vires only subsequently to find it has been retrospectively made ultra vires.

While one can appreciate the intricacy of this matter, and anyone who has seen the Monopolies Commission or the Restrictive Practices Court in action will know that complexity of these various company arrangements and various trade matters which are the subject of stricture and indeed of examination, I would urge on the Minister strongly that it is surely a bad principle to say that we must define offences so widely and vaguely that not only do we catch those whom we know are operating them, but also those who are operating but whose existence we do not know of at the moment, but whom we hope to get, notwithstanding that, in the net at the same time. I would have thought that was a novel constitutional doctrine which is certainly new as far as Ministerial directions are concerned.

Mr. Channon

I think the House is grateful to my hon. and learned friend for bringing this point to its attention and also to the hon. Member for Devon, North (Mr. Thorpe) for raising so many pertinent points. We have been twitted for not having raised that point on the Committee stage, but my hon. Friend the Member for Wycombe (Mr. John Hall) pointed out that the implication of this had not escaped us. I am glad that we have had an opportunity on Report of raising these important issues. The situation has not been left in a wholly satisfactory manner by the answers which we have obtained so far, and there are one or two further questions which I should like to put to the Minister without Portfolio.

First, is the power which he is taking in subsection (8) unprecedented or can he refer us to precedents of such action in the past? Our Amendment does not modify the powers which the Board of Trade would be able to take, but it gives some safeguards to persons who might be affected by such directions. The Board can pass an Order through the House empowering them to give directions to unspecified persons—to be specified only in the directions and not in the Order. What remedy lies open to the person specified in such a direction? My hon. and learned Friend earlier pointed out that someone might be specified in the directions in error or there might be a genuine mistake. What power does that person have to make representations and to have that obvious injustice remedied? The Board have enormous powers under the Clause. The House is right to examine the matter carefully before granting such powers to the Board of Trade and also right to question keenly the decision to use not only delegated legislation but sub-delegated legislation.

In Clause 3 the Board of Trade have power to regulate prices, to stop the acquisition or disposal of assets, to deal with the winding up of companies and the formation of companies, to declare certain practices illegal and to discriminate in any manner specified. The Board are taking a number of very important powers. We do not object; on the whole, they are excellent powers for the Board of Trade to take. But we consider that there should be some safeguards, and all that the Amendment does is to say that the Board of Trade should specify not in the direction but in the Order to which persons they are giving instructions or to the holder of which office.

The Minister told us that it was not always possible to identify certain individuals, and that it might be possible to evade such an Order. If it is impossible to identify them, will he explain how it is possible to bring them into the net by direction when it is not possible to bring them into the net by the Order?

In Committee he based his case largely on the ground that often it would not be in the interests of the people concerned to have these matters brought out into the open. A few moments ago he said that it would be open to any hon. Member to put down a Question to the Board of Trade asking which directions they had given, and he said that he might be asked to put copies of such directions in the Library. If that is so, very little secrecy is left. If hon. Members, and the public, can get this information any way, there is little safeguard for the people concerned if it is secrecy that they want. It is far more frank for the House to have this information laid down in the Order than to have it in a direction later, especially—unless the President of the Board of Trade refuses to do so—when any hon. Member may at any time ask the right hon. Gentleman to place the directions in the Library. If any President of the Board of Trade refused to place any directions in the Library which he had given based on an Order of the House, he would be open to wide criticism. Indeed, I hope that such a refusal would not occur.

For many years the Minister without Portfolio was a member of the Statutory Instruments Committee, and he knows full well what can be done by delegated legislation. At a time when the House has been criticised from both the Labour and the Liberal benches for not having sufficient control over the executive, this is one small battle in which we are entitled to ask the members of the executive to look again at what they propose. We are not asking for very much. We are asking that the Board of Trade should not wield wide powers and issue instructions which may affect many people and involve large sums of money, without the House knowing what the instructions are. At a time when we are told that the prestige of the House has never been lower, that the Executive rides rough-shod over us and that we have not the ability to control it, it is the duty of the Government to make sure that they do nothing further to increase this process if they believe it to exist.

We were told in Committee that it would be impossible to reveal people's names in certain conditions, but the Board of Trade takes powers to name the holders of offices. That is all the Board has to do, whether it does it by order or by direction. The Board can give directions not only to a named person but to a holder of an office for the time being in a company or association. The Minister without Portfolio raised a point along these lines. He said that it might be necessary in certain circumstances to give directions to directors of companies or secretaries to execute share transfers if it was necessary to sell certain shares. There is power in subsection (8) to make an order authorising the giving of directions to the holder of an office to do that, and I do not see what harm there would be for an order directing the secretary of a company to execute a share transfer to be laid before the House. That would be quite a proper matter to bring before the House in the ordinary way, subject to a Prayer if necessary. In most cases it would be unlikely that it would be prayed against. It would be a far greater safeguard than the safeguard of secrecy to which the Minister referred earlier.

We ought to allow this subsection to remain in its present form only if two conditions are satisfied; first, if it can definitely be shown that it must be in the public interest for such directions to be made, not subject to the scrutiny of this House; and secondly, if it is shown to be in the interest of the people concerned. However, I cannot see from the examples which the Minister has so far given that it would be in the public interest or in the interest of the people concerned.

I agree with the hon. Member for Devon, North about the necessity for certainty and finality. Our Amendment adequately meets that point. An order would have to be made. It would be certain and final. The Board of Trade would be able to make another Order if the first one proved insufficient, but that also would be subject to the scrutiny of this House. It would be far more satisfactory to all concerned if these matters could be brought out into the light of day rather than that wide powers should be taken by the Board of Trade.

I hope the Minister will be able to satisfy the House that these matters are in the public interest and in the interest of the people concerned. Without that assurance the Minister's case falls to the ground. If this subsection goes into the Bill in the terms in which it is drafted, it will be very necessary to watch this legislation extremely closely. I have no doubt that the Board of Trade will administer any such provision with the greatest possible care and with the greatest incentive to minimise injustice. Nevertheless, in a number of important particulars in this and other legislation we have been enlarging the powers of the Board of Trade considerably. The Board of Trade has enormous powers which are not subject to the scrutiny of this House. The House of Commons should assert its traditional right of being allowed to control the Executive and ensure that Orders that affect people, as Orders which are made under subsection (8) do, are subject to the scrutiny of the House.

I hope the Minister will realise that we on this side of the House support these Amendments in no party spirit but in a probing spirit, to discover the purpose of the subsection and to ascertain whether or not it is vital to the Bill that it should remain in its present form. I ask him, if there is any doubt whatsoever in his mind about the necessity of this provision, that he should give the benefit of the doubt to the House of Commons and not to the Executive. If there is any doubt whatsoever he should allow the House of Commons to scrutinise the orders in the ordinary way. I hope that we can be satisfied before we part from the Clause that the intention of the Government will be to protect the interests of the House of Commons in this.

11.15 p.m.

Far too often the House of Commons comes last as far as the Executive is concerned, and not first. The Minister without Portfolio is well known as a good House of Commons man, and this is a chance for him to show us this evening that he will take into account the genuine and legitimate interests of the House of Commons in considering this subsection of the Bill.

Sir D. Glover

I am sure that everyone who has the interests of the House of Commons at heart must be very worried about the present situation under this Bill and will support the Amendment moved by my hon. Friend. The Minister has been Chairman of the Statutory Instruments Committee. I know that we ought to take a great deal of interest in Statutory Instruments. I am one of the few hon. Members who are here late at night when we are debating them. There are very few occasions when we divide the House on Statutory Instruments. Nevertheless, it is the last occasion when this House of Commons has any control over the Executive.

I do not understand how an Order can be produced, which the House of Commons can genuinely debate, when there is an instruction which is not part of the Order and which puts in information that is not being given to the House of Commons. If the Order is going to be put in the Library, there is not going to be much secrecy. If there is no secrecy, surely it is a far better system that the information given in the direction should be included in the Order. Taking the House of Commons to be a slightly lazy body, if these Orders are going to be properly debated, it is necessary that hon. Members should know from the Order what they are arguing about on the Order.

Whatever instruction there may be in the Library, the legislative effect is given by way of the Order before the House of Commons. The fact that there may be some instruction or further information in the Library or some other place does not really affect the problem of that sovereignty of this House.

How are we to agree to an Order, or disagree with it, if we have not got the information in the Order that will allow us to come to a proper conclusion? Is it going to say in the Order that secretary A will be ordered to do such and such thing, or director B to do such an such a thing? How is the House of Commons going to decide what hon. Members are being asked to do? The fact that we have this in some directive somewhere else is not, I think, relevant to the argument. If we are going to debate this in the House of Commons—and I do not agree with the view that all these Orders will be debated—this is an argument on a slack House of Commons.

Mr. Channon

If Orders are made that should not be made they obviously will be scrutinised, but I hope that some Orders will be made that are so obviously proper and just that the House of Commons will not feel it necessary to spend its time in debating them.

Sir D. Glover

If my hon. Friend does not mind my saying so, my experience of Governments is that the cloudiest Order is the one which we should be debating and the Order which no one minds will be the soul of clarity. If we are not given the information on which to debate these Orders, the Executive is taking more powers and is reducing the power of the House of Commons. I ask that this matter should be looked at again. I am not now speaking as a Conservative but simply as a House of Commons man. The House is far too slack about Orders, but we cannot debate them unless we have the information on which to reach a conclusion. The Amendment would provide that information and it should be accepted. A very disrespectful attitude to the House is being shown.

Mr. John Harvey

I would echo the appeal of my hon. Friends the Members for Southend, West (Mr. Channon) and Ormskirk (Sir D. Glover) on behalf of the House and against the Executive. It is one thing for the Executive to take powers when we understand clearly what they are, but in the last Government Amendment powers were taken over matters which they have "under consideration". What those can be deemed to be could provide a great deal of room for legal argument. This time the words in the Clause are … to give directions to a person specified in the directions … I certainly could be fooled on what that means.

If the Executive proposes to take powers over all sorts of things which will be increasingly difficult to comprehend, the Executive must think again. The legal profession would be a great deal less lucrative if we saw to it that things put on the Statute Book were clearly indicated. It is unforgivable that with our eyes wide open we should put words of this kind in the Statute Book. They may be clear enough to legal luminaries, though I doubt whether they are clear even to them. The Minister without Portfolio must be more forthcoming in this matter.

Sir Eric Fletcher

I should like to clear up some of the points raised, with the leave of the House. I do not complain about the degree of attention given to this matter. It is not a party matter but, as has been said, a House of Commons question. I share the sentiments of hon. Members opposite that the House should be clear about what it is doing. I agree with them that it would be wrong for Parliament to give uncontrolled powers to the Board of Trade unless it is clear that they are necessary and in the public interest. Nobody wants the Board to have power to act arbitrarily or without full Parliamentary control. The only question here is whether it is necessary that the Clause should remain as at present drafted.

The hon. Member for Devon, North (Mr. Thorpe) will forgive me for saying that I do not think that he has fully appreciated what is involved in this matter. He did not have the advantage—it was not his fault—of taking part in the debates in Standing Committee. There is no question here of infringing the rule about finality or the rule against uncertainty. Both are not involved. Some of the sentences uttered by hon. Members opposite have magnified the danger which all of us think may be inherent here unless the matter is fully explained in the subsection.

The House should be clear as to the limited effect of the subsection. We are dealing simply and solely with the question of enforcement. There is no question of giving wide and diverse powers in a field in which there is not absolute certainty. We are dealing here with a situation in which there has been a report by the Monopolies Commission recommending the breaking up of a monopoly, the divesting by a monopoly of part of its assets. It is a situation in which Parliament has decided that a divestment—to use an unfortunate word—is necessary, and, therefore, an order has been brought to the House and approved by the House recommending that, in the public interest, a monopoly concern should part with some of its assets.

Pausing there, that means a disposal either to a purchaser or a competitor or to somebody who is prepared to take them over. All that must be assumed. We are dealing now with something quite novel and unprecedented in this country. There has never been the compulsory divesting of a monopoly interest. If such a situation arises, it will have been approved and have the blessing of Parliament.

Then comes the question of enforcement, and this is all we are concerned with here. How does Parliament give effect to its wish that a monopoly concern should transfer some of its assets? What is the practical method of doing it? It is no use just saying, "Please divest". Unless the wishes of Parliament are observed voluntarily, somebody must say to the directors and shareholders concerned, "You must sign such-and-such transfers of your shares", or "You must deal with such-and-such assets by transferring certain factories to somebody who will buy them". It is purely a question of enforcement. In order to give effect at that stage to the wishes of Parliament, directions have to be given to some individuals to do certain things. That is the whole object of the subsection.

All we are concerned with here is whether the Order containing those directions will have no effect unless it is approved by this House. The issue is whether an Order should give the Board of Trade power to say that A, B, C and D should do certain things or whether the order approved by Parliament should give a blanket authority to the Board of Trade to tell the people who are in the effective position to dispose of the assets that they should do so.

11.30 p.m.

The argument for giving the Board of Trade that power to give blanket directions to unspecified persons is merely this. It may not at that stage be possible to identify with precision the people to whom the directions must be given. They may, for example, be the directors of a company, in which case they may have resigned and, so far as shareholders in a company are concerned, they can transfer their shares to other persons. What one cannot face is a situation where the wishes of Parliament may be frustrated because, by various devices, steps are taken to prevent Parliament from giving effect to its wishes. That is the answer to the point that Parliament should give directions to the persons who are found to be the appropriate persons for carrying out the wishes of Parliament.

I assure hon. Members opposite that I have given a great deal of thought to this matter, and that I should not recommend what is here recommended were I not satisfied that there is no real invasion of the rights of the House of Commons or that it might be necessary, in certain contingencies, that the Order should contain the power to give blanket directions. The hon. Member for Southend, West (Mr. Channon) asked if an Order in these terms was unprecedented. It is not. I have straight away to admit that I cannot recall a specific instance, but as Chairman for some time of the Statutory Instruments Committee I can recall other cases where Parliament has conferred on the Executive powers not merely of delegated legislation, but also of sub-delegated legislation which did not require Parliamentary scrutiny.

The view has been expressed on both sides of the House that Parliament is very jealous of conferring those powers, and that they should not be conferred unless such a course is absolutely necessary. But there is the further safeguard that this debate, so far as it affects the relationship between Parliament and the Executive, will have had a salutary effect. Secondly, I assure the House that no order will be presented which contains this power of sub-delegated legislation unless, in any specific instance, it is required to be justified. Every time there is such an Order the circumstances will have to be specified, but unless subsection (8) is contained in the Bill it will be impossible for any Order under the earlier sections to contain this power of sub-delegation of legislation because, unless the Bill does so provide it, any such acts would always be ultra vires.

I have done my best, if I may say so with respect, to allay some of the exaggerated fears which have been expressed on this matter. I have given as complete an explanation as possible of why it is in the public interest that we should have this power and of how, in the last resort, the rights of this House are protected.

Mr. Channon

Could the Minister explain this point in order that the situation may be absolutely clear? Why must there be power for the Board of Trade to give a direction to the directors or the shareholders of a certain company so that action shall be taken by directive rather than by an Order under subsection (8)? Does the Minister not agree that he has power to give orders to holders of offices specified in this subsection?

Sir Eric Fletcher

Yes, but if my right hon. Friend is to rely on an Order each time for getting Parliamentary approval, then there is opportunity for evasion, because if the order specifies individuals it may well be found, as I have already pointed out, that they are no longer holders of offices and are, therefore, without the powers. Another Order would have to be made. Unless there is the power to give directions to unspecified persons, then the Order must specify the persons to whom the directions have to be given. There might very well then be frustration of the will of Parliament.

Mr. Channon

I am sorry to press the hon. Gentleman again. He can give directions not only to persons but to holders of offices. If his argument is that one may make an Order concerning a Mr. Jones, a director or a company, but he may resign and a Mr. Brown may become a director, the hon. Gentleman can make an Order directing the directors of a company. No matter if they change, they are still bound by the Order. So why is it so necessary to do it by direction and not by Order?

Sir Eric Fletcher

To give one example, the company might form a subsidiary and transfer all its assets to it, and so it would be the directors of another subsidiary.

Mr. Fletcher-Cooke

From what the Minister without Portfolio has said, I am slightly less unhappy than I was at the beginning of the debate. He has admitted one thing, that there is a possibility that these directions will not be secret. This is very important. He drew a parallel with the enforcement powers of the courts—for example, the giving of injunctions or the making of decrees for specific defaults. I accept that. But these orders are public and people dealing with injuncted persons do so at their peril. Indeed, it adds to the force of the enforcement that it should be public. I should like the Board of Trade directions to be public for the same reason.

We now know that they are to be public to the extent that they may be placed in the Library. This is some advance. We feared that the directions would be directed secretly so that the public would not know about them and there would be no way of complaining about them. I still do not quite understand why a subsequent Order in the proper sense of the word cannot be made and laid. Nevertheless, we have got somewhere. As the Minister said, the debate itself will have done some good. Furthermore, it would be most ungracious to divide the House when the whole debate was, in fact, provoked by the Minister without Portfolio originally. For this, among other reasons, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made In page 8, line 7, after "House", insert: and the provisions of Schedule [Procedure preliminary to laying draft of orders referred to in section 3(10)(a) of this Act] to this Act shall have effect with respect to the procedure to be followed before laying a draft of such an order".—[Sir Eric Fletcher.]

Mr. John Hall

I beg to move, That further consideration of the Bill, as amended, be now adjourned.

I move this Motion largely to ascertain the Government's intentions. The House will agree that we have made good progress up to now. The speeches from this side have been short and to the point. [Laughter.] Hon. Gentlemen seem to treat that remark with levity. But it is true. A perusal of HANSARD will show that the speeches from this side have been short and to the point, have been most constructive in character and have added a great deal to the development of the Bill. The speeches from the Government side have been even shorter both in time and in number. We have had two interesting but short interventions from the Liberal benches.

It is unfortunate that the burden of improving the Bill has fallen largely on the shoulders of my hon. Friends here and in Committee. But I stress that we have not wasted any time throughout the debates in our consideration of the Bill, and that is generally acknowledged. Nevertheless, there are some very important Amendments to follow, as Ministers will agree. If my Motion is not accepted, we shall debate some important Amendments to Clause 4 which cover matters of considerable substance, and, what is even more important, as we get towards the end of the Bill, to Clause 8, which at the present rate of progress is likely to be between four and five o'clock in the morning, we shall debate matters affecting the press, matters of very considerable importance indeed about which there is considerable feeling. I merely ask whether it is wise to deal with these very important matters in the early hours when none of us are at our best, when perhaps we cannot give the attention that we should to them and when, unfortunately, fatigue tends to make us go on much longer in saying things that we could say more shortly if we were fresher.

For these reasons, amongst others, there is a Motion on the Order Paper signed by about 50 hon. Members opposite deploring all-night sittings and pointing out that it is not easy to give proper attention to matters of importance in the early hours. One may have different views on this, but that is the strong opinion on the benches opposite.

In these circumstances, if my Motion cannot be accepted, perhaps the President of the Board of Trade will at least let us know his intentions. Are we to go on until we have completed consideration of the Bill, including Third Reading, which might take us to a very late hour tomorrow?

Mr. Jay

I agree that we made excellent progress in a constructive spirit—indeed, such good progress that we should continue. So far as I can see, hon. Members not merely on this side but opposite are still in full possession of their faculties and will continue to be for a long time yet. Everybody is awake, and we even have the Liberal Party with us.

We all believe in higher productivity and the full use of productive assets all round the clock in industry. Since we are doing so well in such a co-operative spirit, and as there are expressions of alertness on all our faces, we clearly should continue.

Mr. John Hall

I must confess that I did not expect any other answer, but I would point out that we have been in debate now for eight hours. During that time, we have disposed of 31 Amendments at the rate of about one every 15 minutes, which is quite good progress. At that rate of progress, however, the remaining Amendments will take another ten or eleven hours to discuss. Then we are to have Third Reading.

We on this side have always been prepared to sit here all night and during tomorrow as well. As the right hon. Gentleman has pointed out, all the vigour is on this side. We are all alert and all our faculties are alive. We are full of eagerness and vim and are likely to maintain our energy until any hour he cares to mention.

It was the expressions of dismay by hon. Members opposite in their Motion that led me to move my Motion. However, if the right hon. Gentleman is determined to push on we are quite prepared to do so. But I warn him that this will be a long night. I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

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