§ House in Committee (according to order).
§ Clause 1:—
§ VISCOUNT HAMPDENThe Amendment which I now move is a very simple one, and provides that the money required for the construction of works under the Bill should be raised by the companies actually constructing the works. The whole of the companies are agreed as to the desirability of this Amendment, which will avoid administrative inconvenience. For instance, if one company should have to raise £5,000 for the construction of works under this Bill, it is desirable that that company should raise the capital itself amid not be required to go to the other companies to ask them to raise separately £600 or £700 apiece. It was simply owing to an oversight that this Amendment was not put in upstairs in Committee.
§ Amendment moved—
"In page 2, line 1, to leave out "and maintaining"—(Viscount Hampden).697
§ LORD JAMES OF HEREFORDI accept the Amendment of my noble friend.
§ Amendment agreed to.
§
Amendment moved—
In line 2, after 'borne' to insert 'and the money required for the construction of such works shall be raised by the issue of debenture stock under the powers of this Act by the company actually constructing the same, but the interest on such stock shall, subject as herein-after provided, be borne.'"—(Viscount Hampden).
§ Agreed to.
§ Clause, as amended, agreed to.
§ Clause 2:—
§ LORD JAMES OF HEREFORDMy Lords, the Amendment which I now move is rendered necessary by the subsequent Amendment which I have on the paper to strike out the whole of Clause 3. This Amendment raises a question which is certainly not without importance, and I think a few words from me are necessary to explain to your Lordships why these in charge of the Bill have thought it right to take exception to the finding of the Select Committee of your Lordships' House with regard to the sinking fund clause. The inter-communication of the systems of the water companies was proposed in order to avoid the recurrence of a water famine, and the water companies cheerfully undertook the obligation. But your Lordships must understand that the expenditure which they will have to make in order to effect this inter-communication never can produce them any return by way of profit. When this question of inter-communication came before Lord Llandaff's Commission, that Commission recommended that in respect of the capital raised for this purpose the usual sinking fund clause should be introduced. It is upon that recommendation that the Government introduced this Bill in the House of Commons without, any sinking fund clause. When the Bill came before the House of Commons the insertion of the sinking fund clause was not insisted upon, although the London County Council is strongly represented in that. House; but the Select Committee of your Lordships' House to which the Bill was referred have inserted the clause. The 698 responsibility must rest with this House in Committee, but the Government still adhere, and strenuously adhere, to the original decision of these who framed this Bill and conducted it through Parliament. It is clear that the sinking fund clause ought not to be inserted in this Bill. Consider for one moment the origin of this clause. Twelve or 13 years ago a Committee, presided over by Lord Claude Hamilton, recommended that if the water companies in the Metropolis borrowed capital money there should be a sinking fund clause inserted in any Bills giving them power to raise that further capital, but what was the object of the recommendation? The object of inserting the clause was that when the companies came to be purchased there would not be a large amount of capital to be paid for by the purchasers. But the capital to be raised by this Bill is not to be used to earn profit, and, therefore, the Government think that the justice of the case requires the omission of the sinking fund clause. The companies will have to perform this duty for the benefit of the consumers without profit or return, and therefore should not be made to contribute to the sinking fund. I know great respect ought to be paid to the decision of the Select Committee of your Lordships' House. I can only say that I have read every word of the argument that was used by the London County Council before that Committee, and I cannot find one suggestion to reply to the reasons that I have given why this sinking fund clause should not be inserted, except the repeated phrase, "You ought to follow precedent." The precedents cannot affect this case, which springs from another and different condition of things.
§
Amendment moved—
On page 3, after line 7 insert 'Provided that a company shall not be required to carry to a sinking fund a percentage on the amount of money for the time being raised by the issue of debenture stock created under the powers of this Act.'"—(Lord James of Hereford.)
§ LORD RIBBLESDALEMy Lords, as Chairman of the Select Committee whose action you have just been asked to override, I should like to say a few words on the question of the sinking fund clause, and give to your Lordships the reasons which influenced the Committee to put 699 the sinking fund clause into the Bill. The noble Lord who has just moved the rejection of the clause lays great stress on the fact that this Bill is in a different category as regards the sinking fund clause to all other Metropolitan Water Bills. To a certain length I am in agreement with him. It is different because it proposes to transfer powers which have been most jealously guarded and exercised by Parliament to a Government Department, but the noble Lord advises you to further intensify the difference between this and other Metropolitan Water Bills in a most important and far-reaching way. He invites you to cut out the sinking fund clause which has been inserted by the Select Committee, and which, upon grounds of public policy and public in-interest, Parliament has inserted since 1886 into every London Water Bill, and which now applies, I believe, to something over nine millions of capital. Who were the parties to the suit who came before the Select Committee? The parties were the Government and the water companies, and, taking the opposite view of the case, the London County Council and the Corporation of London. The question I asked myself, and which I still ask myself, is, which of these authorities are most likely to understand all the bearings of this great problem of the water supply of London in the interests, and the just interests, of the public of London? Is it the Government and the water companies who tell you that you are to omit this sinking fund clause, or is it the London County Council and the Corporation of London who strongly urge, and as far as they can, insist upon the clause being inserted? With all respect to Her Majesty's Government, it seems to me that the London County Council and the Corporation of London are the bodies most directly responsible, and, further than that, the bodies most directly informed, conversant with, and alive to, all the conditions of this great question. The London County Council came into existence in 1889, and I believe the London water question at once began to absorb its most strenuous industry and investigation. They tried to master it in every possible way. In 1891, they came to Parliament with Bills dealing with the whole question. The Committee presided over by Sir Matthew White Ridley reported that as the representative municipal authority of London 700 the London County Council should examine and deal with the whole question of the water supply of the Metropolis, and recommend a policy which, for financial and other reasons, it was desirable to adopt. Over and over again I believe that has been affirmed by other Committees and Commissions, and it has been recognised that this water question is the peculiar province of the representative municipal body—namely, the London County Council. What was the view of the London County Council? Acting in most close and notable concert with the Corporation of London—notable because it is very unusual— the London County Council came to Parliament and told us in the strongest possible way that the capital proposed to be raised by this Hill should be treated as all other capital has invariably been treated by the wisdom and by the foresight of Parliament, and that, in the interest of the consumers, and especially having regard to the fact that a Royal Commission, presided over by Lord Llandaff, is just about to report on the whole question of the London water supply, a sinking fund clause should be put into this Bill. I will now come to the other point made by the noble Lord, which is the main ground upon which he says the sinking fund clause should not be inserted—namely, that the capital proposed to be raised under the Bill is dead money, and that the companies will not get a shilling out of it. He relies for that statement upon two or three sentences in the Interim Report of the Royal Commission, which, of course, I refer to with the greatest possible respect, but which I venture to think are exceedingly ambiguous. I confess that the argument put forward that the capital to be raised under this Bill should be exempted from the sinking fund clause on the ground of not making a profit does not appear to me to hold water even in a Water Bill. I think you might just as well say that the large sums of money which Messrs. Pears and Lipton spend annually on advertising are not profit-earning capital, as to pretend that the money to be raised under this Bill will not be profit-earning capital. What are the conditions that have brought this Bill into being? The default of the East London Water Company. I am not using the word in an offensive way; it constantly occurs in the Report of the Commission. The default of the East London Water Company to carry out its 701 obligations naturally caused a great deal of feeling, and brought the whole question of the London water supply, as it were, to a head. That default other companies felt threatened their existence, and they very naturally, in self-preservation, decided to take joint action. They are most ready and most willing to meet the Government's view, recognising that this Bill would enable them to raise additional capital which would be a most valuable insurance against risk, and would enable them to carry on their business and continue to earn their profits. In this connection I should like to quote the learned counsel for the water companies—Mr. Pember. Speaking with all the cogency of which he is a master, he said, when he was urging us not to put in this clause, that if the clause was inserted it would—
seriously amend the Bill against the water companies, for whose benefit, in a very great degree, the Bill was conceived.I was so surprised at this statement that I gave him an opportunity of correcting himself by saying that I thought the Bill was introduced for the benefit of the public, but he did not avail himself of the opportunity.
§ LORD JAMES OF HEREFORDHe did correct himself. He said it was for the benefit of the public.
§ LORD RIBBLESDALEI quite agree with Mr. Pember that this Bill will prove of enormous benefit to the water companies, and will give them a new and unlimited lease of power and authority. The Select Committee were unanimous in the course they took, and I have a letter here from Lord Newton in which he says he is unfortunately obliged to go away owing to his Yeomanry inspection, otherwise he would be very glad to corroborate my statement as to the unanimity of the Committee with regard to the insertion of this clause. I defend the Committee's action on three main grounds—namely, (1) that the London County Council and the Corporation of London are better judges of the just interests of the people of London, present and future, than Her Majesty's Government and the water companies; (2) that the capital to be raised under this Bill, inasmuch as it adds to the dividend-earning and paying capacity of the water companies and to the stability of their undertakings, should be 702 treated as these issues of capital have invariably been treated since 1886; and (3) that no good economic or financial reasons can lie shown for interrupting the practice of Parliament and the continuity of legislation by omitting the sinking fund clauses which have now been applied by Parliament to nine millions of capital.
§ * VISCOUNT KNUTSFORDMy Lords, in my opinion the Committee have taken up a false position in regarding the money to be raised under this Bill as dividend-earning money. The money is to be raised for the special purpose of saving the water consumers from the very painful and distressing evils from which they suffered last year. I am not going to defend the East London Water Company or to attack them, but I would point out that the other companies have not failed in any way to supply their customers with water. They felt, however, that for the benefit of the water consumers of East London inter-communication should be made between the various companies. This inter-communication will benefit the company which fails to give water and the consumers, but it does not in any way benefit the large majority of the companies. If the companies were raising money for the purpose of earning more dividend, then certainly the sinking fund clause ought to be put in. But this money is to be raised for a special purpose; no profit can be made on it, but interest will have to be paid upon it. I fail to see any ambiguity in the Report of the Royal Commission, who distinctly expressed the opinion that capital raised for works of intercommunication might fairly be raised without the imposition of the sinking fund clause. Not only has the Royal Commission decided in this way, but a Special Committee of the House of Commons decided against the insertion of the sinking fund clause in this Bill, and an attempt to reopen the same question on the third reading of the Bill was negatived without a Division. The House of Commons itself has practically decided against the insertion of this Clause three times, and I hope your Lordships will have regard to that fact and accept the Amendment of the Government.
§ LORD TWEEDMOUTHMy Lords, I will not go at length into the general question, but I should like to address my- 703 self straightly and frankly to the points raised—first, that the particular capital referred to in this Bill is not dividend-earning capital; and, secondly, that any contribution to the sinking fund that is paid in respect of such capital would come, not out of that particular capital, but out of other dividend-earning capital. I hold, and I think I shall gain your Lordships' assent, that in taking a mass of capital applied to a particular enterprise it is impossible to differentiate between the dividend-earning power of one sovereign and another sovereign. The fact of the matter is the whole of the capital is applied for the benefit of the particular enterprise, and that in a larger or smaller degree the whole of the capital earns interest. This is particularly the case with regard to the capital under this Bill, because it is not to be applied to any particular works. It is not even laid down that it shall be applied to works of inter-communication. It is laid down that it may be applied to any works whatever which may receive the sanction of the Local Government Board.
§ LORD JAMES OF HEREFORDFor that purpose.
§ LORD TWEEDMOUTHI contend, in the strongest possible manner, that there is no limitation whatever to the works which may be performed under this Bill, with the exception that they are not to be works for the purpose of obtaining water from new sources, and that the works are to receive the sanction of the Local Government Board. Under this Bill (and I challenge a denial) it is perfectly possible for the companies to make new reservoirs, new filter beds, and new service mains out of the capital authorised by its provisions if they only get the sanction of the Local Government Board. They can spend £5,000,000 or £10,000,000 during the next ten years on the various works to which I have alluded. I now come to the question whether this particular capital ought to be liable to a charge for the sinking fund or not. I contend that it should, because the new capital and the old capital must be added together in one lump. If the interest on capital at present issued amounts to 8 or 9 per cent. and the interest on the new capital amounts to only 3 per cent., the dividend on the capital as a whole is diminished. 704 The new capital must come into the reckoning in a perfectly fair and straightforward manner. I must say that the circumstances of this Bill are such as to create no little surprise. The noble Lord rather put it that the water companies were, being hardly treated by the insertion of this clause. You have given to these water companies a monopoly over one of the greatest necessities to human life, and especially to human life in this great city; and if you give these companies a monopoly you require from them certain duties, and I will put it to noble Lords in this House whether they can honestly say that they consider these companies have rightly discharged their duties in the past. I quite admit that you may differentiate between the different companies, but it is impossible to say they have fulfilled their duty of supplying the people of London with water either in sufficient quantities or of sufficiently good quality. The water companies themselves admitted the desirability and the necessity of the inter-communication which is proposed in this Bill, and at the beginning of the session they introduced a Bill which would have gone before the Private Bills Committee and passed through Parliament in the ordinary course, and which, I have no doubt, would have contained the Sinking Fund Clause. The Government came forward and said this was a matter they would deal with themselves, and in framing the Bill they have violated the practice of Parliament for the last thirteen years in regard to the sinking fund clause, and have taken out of the hands of Parliament the power of saying what amount of capital should be issued and to what works it should be applied. That is not a fair way to deal with London or with this House, and I hope your Lordships will at any rate so far mitigate the harm which may be done by this Bill by rejecting the proposal of the noble Lord the Chancellor of the Duchy.
§ Viscount HAMPDENMy Lords, the noble Lord who presided over the Select Committee has marshalled together before your Lordships a number of authorities. He named the Government, the water companies, the County Council, and the City Corporation, and he then asked which of these authorities was the I most deserving of consideration. He replied himself to this question by stating that the London County Council knew 705 more about the subject than any of the other authorities. I admire the courage of that argument, because, as a matter of fact, when the Committee gave their decision that the sinking fund clause should be put in, they had heard the counsel for the County Council, but had not heard the case for the water companies. I disagree with the statement of the noble Lord who has just spoken that the money raised under this Bill can be applied to other than works necessary for inter-communication. When he charges the water companies with not having fulfilled their trust, my answer to him is that the Lambeth Water Company, of which I am a shareholder and a director, have always fulfilled their duty to the public, and that they only come into this Bill because they think it is necessary to act on the invitation of Her Majesty's Government and take measures for insuring against such a state of things as occurred in East London a few years ago. I can quite understand the opposition id the County Council to the existence of the London water companies. This opposition has been so often expressed that really no Hew development could have taken one by surprise; but I should have thought the County Council would have come to the conclusion that it was almost time to stop spending the ratepayers' money on litigation and leave the issue to be decided by Her Majesty's Government and Parliament, now that the question is before a Royal Commission. I should have thought that they would have treated with equity and consideration the great interests they are attacking. The Royal Commission has reported that it would be undesirable that this sinking fund clause should be applied to expenditure on inter-communication. The Government have introduced a Bill without that clause, and a Special Committee in the other House have endorsed the action of the Government. Under these circumstances, I should say there was a considerable amount of authority demanding and justifying the exclusion of the sinking fund clause, and that when the matter came before a Committee of your Lordships' House, that Committee should have been very careful not to come to any decision without hearing both sides and every argument that could he addressed to them. I have the shorthand writer's notes here, and what happened was this: the noble 706 Lord the Chairman of the Committee was asked whether the Sinking Fund question could be treated as a matter to be discussed on the preamble stage or the clause stage, and it was pointed out to him that if it was treated on the chaise stage the counsel for the water companies could be heard. The noble Chairman said the question should be treated on the clause stage, and the counsel for the water companies made no speech on the preamble stage. When the counsel for the London County Council had finished, I the Committee deliberated, and then they gave their decision that the preamble was proved subject to the condition of the sinking fund clause being put in. I do not charge the noble lord with anything more than an error of judgment, and, indeed, he saw himself afterwards that an error of judgment had been made, because when his attention was called to the fact that the other side had not been heard, he said it would be best that they should treat the thing with an open mind. But that was impossible when fettered by a decision given in open court. What made it more unpleasant for us was that the noble Lord who has just spoken, who is an active member of the London County Council, was present in the room. He was perfectly within his right in being there, but he went further and instructed one member of the Committee as to the character of the sinking fund. I certainly think this was an imprudent act on his part. What would he have said if I, as a shareholder in a London water company, and a member of your Lordships' House, had been present in the committee room and given advice as to the sinking fund.
LORD TWEKDMOUTHI absolutely gave no information whatever. It is true that I did give to one member of the Committee who was in doubt as to what the sinking fund clauses were a very short statement as to the way the fund worked.
§ VISCOUNT HAMPDENThat is my point.
§ LORD TWEEDMOUTHDoes the noble Viscount impute to me a desire to influence the Committee unfairly?
A NOBLE LORDYou were certainly 707 not the proper person to describe the clause.
§ LORD TWEEDMOUTHI am sorry if I have offended in any way, but I assure the House that I did not express any opinion one way or the other. Anything I said might probably more likely have been taken an argument against my own view than otherwise.
§ VISCOUNT HAMPDENI accept the noble Lord's explanation, but I am sure he took a course which was open to misconstruction. In conclusion, I would urge that the principle of the sinking fund is not applicable to the expenditure contemplated under this particular Bill and which is incurred entirely as an insurance against the recurrence of certain emergencies which may perhaps never have to be encountered. To apply the sinking fund clause to this expenditure would be to inflict very great injustice on the shareholders of these companies.
§ * LORD DAVEYI am not going to follow my noble friend in discussing the conduct of the London County Council in opposing this Bill and in seeking to have this clause inserted, nor am I going to follow my noble friend in his criticisms of the conduct of the Select Committee. I desire for a few minutes to recall to the House what is really the issue before us. As I understand, it is admitted on all sides, and it cannot be denied, that for a long number of years it has been the custom to insert a sinking fund clause into all Water Bills which come before Parliament seeking to raise further capital. Nor is it denied that it would be proper to insert it at this Bill, except for one circumstance. The noble Lord who moved the Amendment said this capital will not be dividend-bearing or profit-producing capital—that it is expenditure which will not increase the income-producing capacity of the undertaking, and will not result in any financial benefit to the shareholders. I venture to say, my Lords, that that is a most astounding fallacy. In the first place, I would point out the utter impossibility, when you are calculating the dividend which is paid by a company on its capital, to distinguish one part of its capital from another. You do not pay a dividend on one part of the capital, but on the whole, and for the purpose of ascertaining the dividend you 708 must take into consideration the whole expenditure. What is this expenditure for? It is for the purpose of improving the water supply of London, and enabling the water companies the better to serve their customers; and it is new to me to be told that because a shopkeeper, a tradesman, or a merchant, provides greater facilities for the supply of a superior class of article and with greater permanence and regularity to Ins customers that then, the money he expended with tins object is not to be treated as dividend-bearing expenditure. I should have thought it was the very essence of dividend-bearing expenditure, spent for the purpose of producing that which would in turn produce the income. This expenditure is in the nature of a mutual insurance by the companies of each other against a deficiency of supply, and it would be certainly strange if anyone were to say that money spent by a shipowner on premiums for insuring his vessel is not part of his dividend-bearing expenditure. If that is the only argument for striking out this clause, I venture to think it is an entire fallacy, and I hope the Amendment will not be accepted.
§ * LORD JAMES OF HEREFORDThe noble and learned Lord who has just spoken is under a total misapprehension as to the obligations which are cast upon the companies by this Bill. He has spoken of the impossibility of separating capital, and has said that you will be unable to discover whether money spent is earning capital or not; but the effect of this Bill is far different from such hypothesis. By this Bill, if, in the East of London, a water famine is anticipated, then the Local Government Board calls, not upon the East London Water Company, but upon all the companies to contribute a fund for the purpose of bringing water to East London to meet the needs of that district. The primary object of the measure is to enable relief to be given to the East London Water Company in the event of drought or other emergency. Such companies as the Southwark and Vauxhall Company may be called upon to pay something like £50,000 under the Bill, but may not benefit by it. How is the interest on that sum found?
§ * LORD DAVEYIf the Vauxhall Company's supply falls short, it will have the benefit of the Act.
§ * LORD JAMES OF HEREFORDYes, but the Vauxhall Company never has run short, but certainly will have to pay if any company runs short, and why then should yon anticipate that it will receive benefit? It never can, in any reasonably probable event, receive money from any customer in return for that £50,000, and inasmuch as it will not benefit it should not be subject to the sinking fund clause. Strange language has been used I think, and misapprehension shown by the noble Lord the Chairman of the Committee, He has spoken of this as a water Bill and has referred to precedents. A Water Bill is a measure promoted and introduced by a water company asking for further powers in order that it may supply a greater area and thereby obtain larger returns. This Bill, on the other hand, is not promoted by a. water company, but is a Bill introduced by the Government to compel the water companies to connect their mains and to come to the relief of a company whose supply is not adequate to meet the needs of the district. There is no precedent between former Bills of the water companies and this Bill. The noble Lord the Chairman of the Committee said the Committee asked themselves who were likely to know more about this question—the County Council and the Corporation of the City of London, or the Government and the water companies? The Committee listened to the counsel of the London County Conned, but they did not hear the counsel on behalf of the Government. Why? Because they said "the Government know nothing about it, and the County Council know everything." What an amount of trouble the adoption of this procedure would save my noble friend the Lord Chancellor! All he would have to do would be to ask himself which of the suitors who appeared before him would be more likely to tell the truth. He would say "A is likely to know more about this than B. I will decide in favour of A, which will save me the trouble of considering the arguments of B." This was the method by which the Committee arrived at their decision. The Committee received a visit during one of its sittings from the noble Lord (Lord Tweedmouth), whose presence must have been of great moral assistance to the Chairman of the Committee.
§ LORD TWEEDMOUTHI was in the 710 Committee room for half an hour or twenty minutes while counsel was making a speech for the County Council, and then I left the room.
§ * LORD JAMES OF HEREFORDThe noble Lord gave the Chairman his moral support.
§ LORD TWEEDMOUTHNot at all; that is a most unworthy suggestion.
§ LORD RIBBLESDALEI saw present Lord Tweedmouth and the noble Lord opposite—[Earl COWPER.— "I was there to give evidence"]—but I did not ask Lord Tweedmouth to give evidence.
§ LORD JAMES OF HEREFORDAt any rate my noble friend Lord Tweed-mouth himself says that he explained to a member of the Committee, while he was acting as a member of the Committee, what was the effect of the sinking fund clause. My noble friend (Lord Tweed-mouth) may take one view of what is the effect of the sinking fund clause, and another noble Lord may take another view. May I ask my noble friend, would it not have been better for him to have gone into the witness-box?
§ LORD TWEEDMOUTHI should have gone into the witness-box if I had been asked.
§ * LORD JAMES OF HEREFORDWhy should the explanation not have been given before the public rather than to one member of the Committee. I think the House ought to understand that whilst this matter was discussed the counsel for the London County council very forcibly and at great length argued in favour of the insertion of the sinking fund clause, and that the counsel for the Water Companies was given to understand than he could reply to these arguments the Clause stage. The opponents to the sinking fund clause, therefore, did not say one word in answer to the arguments of the County Council on the preamble, and it was to the astonishment of everybody that the Committee announced that the preamble was proved subject to the insertion of a sinking fund clause. Lord Tweedmouth said it was impossible to tell the dividend-earning capacity of one sovereign as compared with another, but under certain conditions it is easy to 711 tell. If you have a fund paid in for a specific purpose you ought not to apply it to another. You can well separate one fund from another, and a Government auditor would require this money to be kept separate. You would be able to determine then what each portion of the capital raised under different conditions is earning.
§ LORD RUSSELL OF KILLOWENMy Lords, my reason for intervening is that I have received a communication from the chairman of the Surrey County Council, whose interests he apprehends may be affected by this Bill. I must say my noble and learned friend in charge of the Bill seemed in his observations to have lost the faith he originally professed in the merits of his proposal, and to have resorted to a contrivance to divert the judgment of the House from fair consideration of the merits by appeals to prejudice not conspicuous for good taste. My noble and learned friend suggested, in fact, that the Chairman of the Committee was in some way under the mesmeric influence of my noble friend Lord Tweedmouth, and that under the influence so exerted upon him he did not exercise that judicial faculty which his position required. The question, however, is not one to get excited about. A vital point has been put when it is shown that in water Bills for thirteen years the sinking fund clause has been invariably introduced. The onus, therefore, lies upon my noble and learned friend to justify the making of this Bill an exception on special grounds. The special grounds are that the expenditure which is involved or may be involved under the operation of this Bill does not come within the category of dividend-earning expenditure. I agree with my noble and learned friend (Lord Davey) that that is an entire misconception of the position and a complete fallacy. This is a Bill which enables the London water companies, which for this purpose are to be treated as one, with certain differentiations, to do what they have not legal power to do at present. I am not a water company director, nor even a water company shareholder. I approach the matter, therefore, entirely unbiassed, and I will take the illustration that has been given. The Vauxhall Company, for example, want no additional supply, but they may supply a company which wants water. Is the company to 712 be paid for that supply or not? What is the answer to that question? If they are to he paid, how can it be said that it is not part of an operation involving their earning power? The East London Company, on the other hand, want to Increase their supply because they know that they cannot get their water rates unless they supply water. Accordingly, the Vauxhall Company supply them with water in order to satisfy their customers and to earn the water rate, and it is paid for such supply. Is not that increasing the earning power of the company?
THE PRIME MINISTER AND SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of SA LISBURY)My Lords, I think the noble and learned Lord has omitted a contingency in respect of which no dividend-earning power can avail—namely, that there is no use whatever of this machinery which is to he put up. This machinery has been put up, perhaps rather in alarm, in consequence of the very unusual drought which occur red two years ago, and as far as we can judge of the future by the past the same difficulty may never occur again. The machinery has been put up, because the East London Company failed then to do its duty; and therefore it is undoubtedly to that extent an addition to the resources of the East London Company annul to tire remedy of their defects. But it will neither cause the company nor any other companies to give more water or to receive more water; and therefore neither of the two sides which constitute the alternative which the noble Lord has conceived to be irrefragable can prevail, nor will the Vauxhall Company derive any dividend whatever from the money which you force them to spend. Of the East London Company alone can it be inferred—and only in an indirect fashion—that this money is in addition to their dividend-earning power. For the rest the money has been spent, not by the desire of the companies, not at their request, but by the obligation imposed upon them by the Government; and there is no pretence for saying that it adds to their dividend-earning power. There is, therefore, no reason or justice in adding to the exaction imposed upon them by requiring them to provide a sinking fund as well. That seems to me the whole state of the case. I agree with the noble and learned Lord that there 713 have been sundry personal matters which have inevitably found their way into this Debate in consequence of the manner in which matters were conducted before the Committee. I do not think, however, that they have added to the clearness with which we can come to a decision. We heard of something being said to one of the judges secretly when the decision was in question. I confess it reminded me very much of the secret dossier; and I am almost inclined to regard the noble Lord opposite (Lord Tweedmouth) as part of the "General Staff" of the London County Council. I think, however, we may dismiss all these circumstances from our minds. What is meant by a water Bill is a Bill asking for power to raise capital to provide water; but this is not a water Bill, and therefore it is not touched by the 14 years' precedent cited.
THE EARL or KIMBERLEYI wish to say one word which bears on what was said by the noble Lord in charge of this Bill. I understood, the noble Lord to say that this obligation was imposed on the companies, and that the companies had not taken any step ill the matter. I have been informed that the companies themselves brought in a Bill containing to a very large extent the provisions of the measure before your lordships. The Government, however, took the Bill out of the measure is the result. The companies themselves had, therefore, felt the want of a Bill, and they were ready to come to Parliament for powers. Why? Because the companies perfectly well knew the danger and insecurity of their position when these water famines occurred, and when they could not supply water, and they felt that they would add to the security of their position by means of a Bill of this kind. Is it not a fact that this provision is in the nature of insurance for all these companies, whether they have to supply water or not to another company? Does anybody believe that the companies would not add to the safety and security of their capital, and to the probability of their long being allowed to continue in their present position, by obtaining the powers given wider this Bill? After all, I suppose we have to consider first the interests of the public, and I contend that the interests of the public loudly require that these companies, which undoubtedly have failed— 714 some to a very considerable extent—in supplying water, should be put in a position to adequately perform the duty which they originally undertook to perform when they were given this monopoly. To me it seems mere justice that when the time comes for these companies to be bought out at the expense of the London ratepayers the capital which has been raised under this Bill to enable them to properly perform their duty should not he treated as capital on which they are to receive compensation.
§ On Question, their Lordships divided:—Contents, 51; Not-contents, 20.
| CONTENTS. | |
| Halsbury, E. (Lord Chancellor) | St. Albans, L. Bp. |
| Devonshire, D. (Lord President) | Aldenham, L. |
| Ashbourne, L. | |
| Cross, V. (Lord Privy seal) | Brampton, L. |
| Brougham and Vaux, L. | |
| Bedford, D. | Calthorpe L. |
| Northumberland, D. | Churchill, L. [Teller] |
| Westminster, D. | Cottesloe, L. |
| Farquhar, L. | |
| Abergavenny, M. | Forester, L. |
| Lansdowne, M. | Glanusk, L. |
| Salisbury, M. | Harris, L. |
| Heneage, L. | |
| Bradford, E. | Herries, L. |
| Brownlow, E. | James, L. |
| Cowper, E. | Kelvin, L. |
| Dartmouth, E. | Lawrence, L. [Teller] |
| Ducie, E. | Mendip, L. (V. Clifden) |
| Dudley, E. | |
| Lichfield, E. | Mount Stephen, L. |
| Onslow, E. | Penrhyn, L |
| Romney, E. | Rosmead, L. |
| Rosse, E | Rothschild, L. |
| Selborne, E. | Saltoun, L. |
| Stanhope, E. | Shute, L. (V. Barrington |
| Strange, E. (D. Atholl) | |
| Yarborough, E. | Ventry, L. |
| Wemyss, L. (E. Wemyss) | |
| Hampden, V. | |
| Knutsford, V. |
On Question, agreed to.
| NOT-CONTENTS. | |
| Buckinghamshire, E. [Teller] | Aberdare, L. |
| Burghclere, L. | |
| Carrington, E. | Coleridge, L. |
| Chesterfield, E. [Teller] | Davey, L. |
| Kimberley, E. | Monkswell, L. |
| Russell, E. | Reay, L. |
| Spencer, E. | Ribblesdale, L. |
| Russell of Killowen, L. | |
| Gordon, V. (E. Aberdeen) | Stanley of Alderley, L. |
| Thring, L. | |
| Peel V. | Tweedmouth, L. |
| Portman, V. |
§ LORD TWEEDMOUTHThe next Amendment standing in my name I move because I think it is right that a limit 715 should be fixed as to the amount of capital to be issued under this Bill. I think the noble Lord will agree that the circumstances under which this Bill is brought in are exceptional and peculiar. Moreover, it is urged that it is only a temporary measure for a temporary purpose, and that it docs not pretend to be a final solution of the water question, and is only intended to tide over a temporay difficulty until a final settlement is arrived at. Therefore, I hope your Lordships will accept this Amendment.
§
Amendment moved, at the end of Clause 2, to add—
And provided that the total amount of such stock shall not exceed £500,000."—(Lord Tweedmouth.)
§ LORD JAMES OF HEREFORDI should be glad if I could meet the wishes of my noble friend, but the whole question is left to the discretion of the Local Government Board, who will see that no undue sum is expended. If my noble friend will put down his Amendment on the Report stage I will in the meantime consult my right honourable friend the President of the Local Government Board on this point, but I am afraid he will not give way.
§ Amendment, by leave of the House, withdrawn.
§ Other Amendments agreed to.
§ EARL COWPEROn the Second Reading of this Bill I pointed out that Subsection 2 of Section 1 went further than was at all necessary for the purpose of the Bill, and might have a very dangerous effect in enabling the companies to take water from places outside their present water limits. I also called attention to the immense harm which is being done owing to our springs and rivers being drained dry by these companies, and I expressed the desire which we all feel that this evil should not be increased. Lord James of Hereford received my remarks in the most courteous manner, assuring me that in his opinion there was no danger and that he did not interpret the clause in the way in which I had interpreted it. 716 The noble and learned Lord added that if there should be any doubt it would be removed, and stated that the promoters had no intention of allowing any more water to be extracted from Hertfordshire than was taken at the present time. When this Bill went into Committee a clause was agreed to by the promoters protecting Hertfordshire. Unfortunately Hertfordshire was mentioned by name, but there are other counties concerned. This clause was unexpectedly thrown out by the Committee at the instigation of the water companies. I cannot conceive that the water companies should have opposed this clause unless they took the same view as our legal adviser did—namely, that this Bill would give them extra powers. I think it is now generally admitted that there is a danger of what I have suggested happening if something is not done. We have never been heard in this matter. We have had no opportunity of saying anything either in the House of Commons or before a Committee of this House, and I am sure your Lordships will think with me that it would be most unjust that powers such as I have suggested should be conferred on the companies by a side wind against the intention of the promoters and without any argument whatever taking place on the subject. This seems to me so self-evident that I feel sure there can be no opposition to the new clause I now propose.
§
Moved, to insert the following new clause—
Nothing in this Act shall authorise the construction by any metropolitan water company of any works for die purpose of utilising any supplies of water drawn from wells outside the water limits of the metropolitan water companies not now utilised under the powers possessed by such companies."—(Earl Cowper.)
§ * EARL STANHOPEMy Lords, as Hertfordshire only has been alluded to, perhaps I may be allowed, on behalf of the County Council of Kent, to say how much importance we attach to this Amendment. We are somewhat alarmed that the water under our chalk hills may be extracted for the benefit of London, and I have every hope that my noble and learned friend the Chancellor of the Duchy will accept the noble Earl's Amendment.
§ LORD JAMES OF HEREFORDOn the Second Reading I was authorised to 717 state that the Government did not wish by the Bill to give the companies any further powers of taking water, and I therefore accept the clause, which was not inserted by the Select Committee owing to some misunderstanding. The clause proposed by the noble Earl carries out exactly what the Government intended, and therefore, as I have said, I gladly enough accept it.
§ Standing Committee negatived: The Report of the Amendments to be received on Thursday next, and Standing Order No. 39 to be considered in order to its being dispensed with; and Bill to be printed as amended. (No. 92.)