§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(The Earl of Lucan.)
§ House in Committee accordingly:
§ [The EARL OF DONOUGHMORE in the Chair.]
§ Clause 1:
§ Power of Board of Trade to make orders increasing authorised amount of share capital or of loans.
§ 1.—(1) Notwithstanding anything in any enactment (including this Act) imposing a limit on the amount of share capital which 432 may be raised or of money which may be borrowed by undertakers, not being a local authority, for the purposes of their undertaking, the Board of Trade may, on the application of any such undertakers and subject to the provisions of this section, by order authorise the undertakers on such conditions as may be specified in the order—
- (a) for the purposes of their undertaking to raise, at any time during the period of three years after the date on which the order comes into operation, any such amount of share capital as may be specified in the order; and
- (b) to borrow on mortgage of their undertaking or by the creation and issue of debenture stock any amount not exceeding the aggregate amount of the paid up share capital of the undertaking for the time being and of any premiums paid in respect thereof.
§ (2) An order shall not be made under this section except with the consent of the local authority:
§ Provided that if, in the opinion of the Board of Trade, the consent of the local authority is unreasonably withheld, the Board may, in the case of applicants who have within the period of fifteen years preceding the date of the application obtained in relation to their undertaking either a special Act or a provisional order confirmed by an Act, make the order not-wthstanding that such consent has not been given.
§ (3) An order under this section may contain such modifications of any enactment applying to the undertakers in respect of whom the order is made as, in the opinion of the Board, are necessary in order to give full effect to the order.
§ THE EARL OF HALSBURY moved, in subsection (1), to leave out (a) at the beginning of paragraph (a). The noble Earl said: This is a very small Amendment which really amounts to a drafting Amendment. If your Lordships will look at subsection (1) you will see that there are two paragraphs, (a) and (b), and that the words "for the purposes of their undertaking" apply, as the Bill is at present drafted, only to paragraph (a). I suggest that these words should immediately follow the words "as may be specified in the order" and that (a) should then follow, so that the words that have been transferred shall apply to both paragraphs. I rather gather front what I have heard that this is a proposal to which the Government raise no objection.
§
Amendment moved—
Page 1, line 15, leave out ("(a)").—(The Earl of Halsbury.)
§ THE EARL OF LUCANI agree to that.
§
Amendment moved—
Page 1, line 15, after ("undertaking") insert ("(a)").—(The Earl of Halsbury.)
§
LORD BANBURY OF SOUTHAM moved to add to subsection (1): "Provided that any such mortgage or any debenture stock so created and issued shall rank both for principal and interest after any existing mortgage or debenture stock." The noble Lord said: This is, I think, a very important Amendment, which touches the security on which millions of money in various undertakings have been lent by trustees and others. If your Lordships will look at this clause you will see that it says:
Notwithstanding anything in any enactment (including this Act) imposing a limit on the amount of share capital which may be raised or of money which may be borrowed by undertakers, not being a local authority, for the purposes of their undertaking, the Board of Trade may, on the application of any such undertakers and subject to the provisions of this section,"—
and this clause differs from the next—
by order authorise the undertakers on such conditions as may be specified in the order"—
to do certain things.
§
That is to say, they may increase their capital, of which I say nothing, and they may increase the amount that they have borrowed by way of debentures or mortgage on some security. The result would be something like this. I have lent a certain sum of money, or have invested money in a debenture stock which has been authorised by a Department, and the amount of which has been limited to a certain fixed sum, and I may now find myself, not with the security which I thought I had, but with that security pledged for double this amount to other people. The extraordinary part of this is that under Clause 2 of this Bill:—
… undertakers, not being a local authority, may borrow on mortgage of their undertaking or by the creation and issue of debenture stock, any amount not exceeding one half of the aggregate amount of the paid up share capital for the time being …
That is the proportion which is generally considered by the best judges in the City to be a right proportion—namely, one-
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third debentures or mortgage and two-thirds share capital. That is contradicted by Clause 1, which gives power to raise an equal amount of mortgage or debentures to the amount of the share capital; that is to say, it doubles the amount that may be raised. In those circumstances I hope the Government will accept my Amendment.
§ This is not the first time a proposal of this sort has been introduced. All impecunious companies are desirous of borrowing as cheaply as they can, and on what security they have got, and they are not always careful not to borrow on security which they have already pledged to someone else. Many years ago, when I was a member of the House of Commons, late one night a Bill embodying a provision of this sort was introduced by an Irish railway. That Bill did exactly as this Bill does. It empowered the Irish railway to increase the amount it had borrowed on debenture stock. I objected strongly, and was told that they could not raise money unless they did this, and that they would be able to borrow more cheaply. I said that that did not touch the point, which was that where a person had borrowed money on security he must not borrow fresh money from somebody else on the same security. I went to a Division, but it was late, and probably I explained the matter badly, and I was beaten.
§
I came to this House and I saw Sir John Lubbock, the well-known banker, who had just been made Lord Avebury. He said that he thoroughly agreed with me that it was a most pernicious principle, which would be quoted as a precedent and might lead to the diminution of security on which hundreds of thousands of pounds had been lent by trustees; and he promised to do his best to get the matter put right in your Lordships' House. And he did. It was rejected in this House and the House of Commons accepted the rejection. Now the same thing is brought forward again. I object for other reasons to Clause 1, but the chief point of my objection is the taking away of security which has been already pledged to somebody else. Therefore my Amendment is to add the words:—
Provided that any such mortgage or any debenture stock so created and issued shall rank both for principal and interest after any existing mortgage or debenture stock.
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It is a simple provision. It does not prevent these people, if they get the share capital increased, from borrowing money, but it says that if they borrow money it must rank after the security which they have already pledged to somebody else. No doubt it is a dry proposal, and I am sorry that more of your Lordships are not present, but it is really an important matter and I hope that you will accept the Amendment which I now move.
§
Amendment moved—
Page 1, line 25, at end, insert the said proviso.—(Lord Banbury of Southam.)
§ THE EARL OF LUCANThe noble Lord's Amendment, I am advised, is really at the present moment covered to the extent of about nine-tenths of the companies by the Bill as it now stands. It has been ruled that lenders under a former Act of a company will have priority over lenders who lend under the present Bill. The only exceptions to that are some companies where the enactment was made under the Companies Clauses Act, which was modified by Clause 14 of the Model Act passed by your Lordships' House, which enacted that money borrowed on a subsequent occasion should rank pari passu with that of lenders on a former occasion; but I must remind the noble Lord that even in that case the original lenders knew perfectly well what was their liability with regard to any further money that might be raised for the purpose of the gas company. I do not know whether the noble Lord quite realised that. With regard to all others, who, I am told, will be the large majority of the gas undertakings in the country, I am informed that the conditions upon which money is borrowed would remain exactly the same even if the noble Lord's Amendments were put in. They would have priority over anybody who lent money under this Act. In that case also I would remind the noble Lord that nothing can happen in the way of borrowing money except with the consent of the shareholders themselves. Nobody can go above the shareholders and borrow.
§ LORD BANBURY OF SOUTHAMIt is not the shareholders but the debenture holders.
§ THE EARL OF LUCANI do not think the Government can accept the Amendment, because it would add nothing to the existing law, and I am advised that 436 full security is given to the lenders up to now. I hope the noble Lord will not press his Amendment.
§ LORD BANBURY OF SOUTHAMI am afraid I must press my Amendment. May I ask my noble friend this very simple question. He says nine-tenths of the cases are met by the Bill and that the other tenth is a special case which does not arise because it was under certain model clauses, and that the people who took money on mortgage knew perfectly well what they were doing. With regard to the others, if my Amendment meets a case which is already met why not put it in? It makes the matter quite clear, and it does not do anything except what my noble friend says is already done.
§ LORD DANESFORTMay I appeal to the noble Earl or to the Lord Chancellor on this point If the intention of the clause as it stands is that no money is to be raised on mortgage or debenture under it, except subject to existing mortgage or debenture, what is the real objection to putting in the Amendment? If it is doubtful, and looking at it, somewhat hastily perhaps, it seems to be doubtful, it would be very unfortunate if the question should have to be settled by expensive litigation. May I appeal to the Lord Chancellor or to the noble Earl to tell us whether they would be prepared to consider this matter before Report, so that if there is any doubt in the matter it can be made clear?
§ THE LORD CHANCELLOR (LORD HAILSHAM)As I understand the position, it is this. There are two cases—one is Harrison and the Cornwall Minerals Company in 18 Chancery Division, and the other is in re Mersey Railway Company [1895] 2 Chancery. Both have decided that where there is a limit of borrowing powers, and where subsequently an Act passes enabling further borrowing powers to be created, those subsequent powers rank behind the debentures already created under the earlier powers, and therefore, so far as the ordinary company is concerned, the provision suggested by the noble Lord in moving the Amendment is unnecessary, because it is only re-enacting the existing law. Then, says my noble friend, "If that is so, why not put it 437 in and make it clear?" The answer is that there is a certain number of companies which have in their special Acts what is known as the model clause, which is a clause put in in this House in Private Bills, under which it is provided that mortgages shall rank pari passu with any mortgages created under the Act in question or any subsequent Act. In those cases the lenders have lent with the express notice that there will be subsequent Acts which will extend the mortgage clause and in such case the money so issued under that subsequent Act will rank pari passu.
If the Amendment of the noble Lord, Lord Banbury, were passed, its effect would be to destroy the position created in all those Private Acts, and to take away from those companies the rights which they have in their model Clause, and to confer upon the existing mortgages or debenture holders in the companies a right which they have not bargained for, and which they have not got. Therefore the Government thought it was better to leave the matter as it stands, thinking it clear that in the great majority of cases where there is no special Act containing the model clause the provision is unnecessary, and in the cases where there is in existence the model clause the provision would be unjust. That is the reason why the Amendment does not, at present at any rate, commend itself to the Government.
§ LORD PARMOORJudging from what the Lord Chancellor has said, which I have no doubt is quite accurate in law, what Lord Banbury desires is already within the Bill, that is to say, there is no power here to place new mortgages or new debentures beyond those which are already in existence, except so far as, under the model clause, that can be done. I sympathise very much with Lord Banbury, but I think that what the Lord Chancellor said meets his point.
§ LORD BANBURY OF SOUTHAMI am much obliged to the Lord Chancellor for his very clear statement. May I put this question to him? As I understand from the Lord Chancellor, what has taken place is that under two decisions given in the Courts of Law any money borrowed after the existing amount ranks after that which has been borrowed 438 before. If that is so, I have no objection. But I want to put this to the Lord Chancellor. Clause (1) says:—
Notwithstanding anything in any enactment (including this Act) imposing a limit …and so on. Does not that do away with the decisions which have already been given in the Courts of Law? If a decision is given in a Court of Law on a certain point, and afterwards an Act is passed altering that point, will not the people affected say: "Well, that may have been so in those days, but now you have passed a new Act which says Notwithstanding anything in any enactment' certain things may arise." I should like to have an answer to that. I would put this further point. I quite agree that any question relating to the model clause should be left as it is now. But I do desire to prevent this: as I read this clause people who have borrowed money on a certain security let that security to somebody else. What I suggest to the Lord Chancellor is that he should give me an undertaking that he would, between now and Report, consider an Amendment which would have the effect of my Amendment, while leaving the model clause as it is now.
§ THE LORD CHANCELLORMost certainly. Any suggestion of that kind will be carefully considered, and I should be the last person to suggest that even those who do claim to be learned in the law can speak with absolute confidence on intricate effects as to Statutes. But I think the answer to my noble friend's first question is this, that the subsection does not over-ride the previous decision, or indeed affect it. The decision to which I have called your Lordship's attention was that where there is authority to lend a certain amount of money, and where there is subsequently created further power to borrow, then the further borrowing ranks behind the original loan. This clause does not interfere with that at all. This clause merely allows an increase in the borrowing powers, hut it says nothing about the borrowing powers so created ranking pari passu with the existing ones, and it is that which the existing decision says does not result. And therefore this is merely a Bill saying that, although there are existing limits to borrowing powers, those borrowing powers may be 439 increased. It does not say that the further loan shall rank pari passu with the existing one. But most certainly I can assure the noble Lord that the points shall be re-examined, and if there be any risk no doubt it can be dealt with. I do not think there is any.
§ LORD BANBURY OF SOUTHAMOn that understanding I will not press the Amendment. I would point out that the point could be met by saying that it shall not rank pari passu. I think it is necessary that something of that sort should be put in, because any ordinary person reading this would come to the same conclusion as I did, and I would venture to say that a clause of this sort would create a very bad impression in the City and would tend to depress stock if this gets about. It is far better to have it quite clear.
§ Amendment, by leave, withdrawn.
§
LORD BANBURY OF SOUTHAM moved to leave out Clause 1. The noble Lord said: I object to the clause because it is contradicted by Clause 2. Clause 1 says certain things, and Clause 2 says something quite different. The drafts-man of the Bill knew this, because Clause 1 says:—
Notwithstanding anything in any enactment (including this Act) …
Having in No. 2 contradicted No. 1, they put that right by putting in No. 1: "including this Act." As a humble layman I think that is very careless drafting, and we ought to have some explanation of it, and, if possible, the drafting should be improved. I beg to move.
§ Amendment moved—
§ Leave out Clause 1.—(Lord Banbury of Southam.)
§ THE EARL OF CRANBROOKI should like to support this Amendment of the noble Lord, Lord Banbury, for another reason. As your Lordships are aware, before 1920 gas undertakings that wished to raise new capital had to promote a Private Bill in Parliament. Since 1920, under the Gas Regulation Act of that year, they have been able to obtain new capital by a Special Order requiring the assent of Parliament. Apparently, under this clause, the Ministry can authorise new capital to be raised without any assent of Parliament. I object to this from the point of view of the local authorities, and particularly from the point 440 of view of the London County Council. Before 1920, in Acts affecting London, the London County Council could raise questions of public interest before Parliament, and, since 1920, it has been able to raise those questions before the Board of Trade and also before Parliament. Now, apparently, the Council is not to have any chance of putting its point of view before Parliament, and the Board of Trade is alone to have the last say. It is on those grounds that I would like to support the Amendment of the noble Lord.
§ THE EARL OF LUCANI am afraid I cannot enlighten the noble Lord as to why Clause 2 is apparently contradicted by Clause 1, but. I will find out and let him know at a later stage. It is a question of drafting which I had not gone into. As regards what the noble Earl, Lord Cranbrook, said, this clause, no doubt, does away to a certain extent with Parliamentary control, but this was strongly recommended by the National Gas Council to the Committee to whom it, was referred. The reason it was strongly recommended was in order to save the gas companies expense. I did not have an opportunity on Second Reading of explaining that this Bill is being promoted now by the Board of Trade on the representations and the strong recommendation of the National Gas Council which, I understand, represents 90 per cent. of the gas sold in the country. It would be very much more expensive for the companies, especially the smaller companies, to obtain power to raise their capital by a Bill or Special Order, and, therefore, this form of procedure by means of Departmental Order was recommended.
Although Parliamentary control is lost to a certain extent your Lordships must remember that these companies cannot get facilities for raising their capital without going to Parliament, and one of the objects which the National Gas Council have had is to compel the companies to come to Parliament periodically. As your Lordships will have seen no Order is made by the Board of Trade unless the company does come to Parliament, and if they have not been to Parliament for fifteen years it is not given at all. By an Order relating to share capital an increase in the authorised amount may be given sufficient for a 441 period of three years. Although Parliamentary control is lost in one way, you do get more control of the companies in another way. The increase in the borrowing powers of undertakings is the full amount of paid-up capital. This was recommended by the Public Control Committee of the London County Council when reporting to the Council in May, 1928, and it was suggested with regard to the Metropolitan companies that it would be a good thing to give the companies power to increase their capital to that extent.
§ THE LORD CHANCELLORPerhaps I can help my noble friend Lord Banbury; not that I am in any way concerned with the drafting, but I am familiar with the history of this matter. He asks why Clause 1 seems to contradict Clause 2? I do not know, but I think it is probably for this reason. A good many years after I was first honoured by your Lordships by being elected Chairman of Committees, and, therefore, having to criticise Private Bills, it was the custom of Parliament to authorise gas companies to raise, either by debenture stock or on mortgage, an amount equal to one-third of their capital, but, at a later date, Parliament was persuaded, after consulting a certain number people—I am afraid my noble friend Lord Banbury cannot have been one of them—to increase that amount of one-third to one-half. Of late years quite a number of clauses have been passed for certain authorities substitutiing a half for a third, lint they have not all been to Parliament, and, therefore, my suspicion would be that Clause 2 had been put into this Bill so as to bring all the companies on a level—that is to say, allowing gas companies to borrow up to a half. But then Clause 1 comes in. If they want to exceed the half I presume they will have to follow the procedure laid down under Clause 1, and, for that reason, Clause I has been drafted to contradict Clause 2. What I am saying to the noble Lord is only based on suspicion, but I expect that is the explanation.
§ THE EARL OF CRANBROOKI do not want to detain your Lordships, but the noble Earl, Lord Lucan, said that the County Council had reported in favour. I have here the Report of the Public Control Committee to which he referred, in which it is definitely stated that the 442 proposal that the Board of Trade should be empowered to authorise the raising of capital or the borrowing of money by gas companies would reduce the opportunity of reviewing the working and management of the companies, and that such proposal would be opposed. For those reasons I am opposing the clause.
§ THE EARL OF LUCANWhat is the date of that Report?
§ THE EARL OF CRANBROOKMay 22, 1928.
§ THE EARL OF LUCANMay I read what the Public Control Committee of the London County Council said when reporting to the council in May, 1928, on this matter? They said:—
The practice of the London gas companies in recent years had been to apply for authority to borrow up to one-half of the amount of their ordinary and preference capital, and this proportion has been allowed by Parliament when asked for. The Council has not objected to this as a general principle, seeing that it is to the interest of the consumers that capital should be raised as cheaply as possible. For the same reason it does not seem necessary to object to the proposal of the National Gas Council to raise still further the proportion of loans to capital. In our opinion, the question of the ratio of borrowed money to the capital issued may be safely left to the shareholders, whose interests, in the ease of sliding scale companies, are identical in this matter with those of the consumers.That is what I went on.
§ On Question, Amendment negatived.
§ Clause 1 agreed to.
§ Clause 2:
§ Authorised amount of loans.
§ 2. Notwithstanding anything in any enactment, undertakers, not being a local authority, may borrow on mortgage of their undertaking or by the creation and issue of debenture stock, any amount not exceeding one-half of the aggregate amount of the paid up share capital for the time being of the undertaking and of any premiums paid in respect thereof.
§ THE EARL OF IDDESLEIGH moved, after "borrow," to insert "for the purposes of their undertaking." The noble Earl said: I move this Amendment on behalf of my noble friend the Earl of Halsbury. I understand that the Amendment may almost be described as consequential upon other Amendments in Clause I which have been accepted by the Government.
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§
Amendment moved—
Page 2, line 17, after ("borrow") insert ("for the purposes of their undertaking").—(The Earl of Iddesleigh.)
§ Clause 2, as amended, agreed to.
§ Clause 3:
§ Increase of authorised amount of reserved fund or of special purposes fund.
§ 3.—(1) Section thirty-one of the Gasworks Clauses Act, 1847, (which provides for the formation of a reserved fund of a limited amount) shall, in the case of undertakers not being a local authority, have effect as if for the reference therein to a sum equal to one-tenth of the nominal capital of the undertakers there were substituted a reference to a sum equal to one-tenth of the aggregate amount of the paid up share capital of the undertakers and of any outstanding loans raised by the undertakers on mortgage or by the creation and issue of debenture stock.
§ THE EARL OF LUCAN moved, in subsection (1), after the first "amount," to insert "and Section thirty-three of that Act (which provides for the case where that fund amounts to the prescribed sum)." The noble Earl said: This Amendment is really consequential on the proposal to increase the limit of the maximum amount of the reserved fund and Section thirty-three has to be added as well as Section thirty-one. I beg to move.
§
Amendment moved—
Page 2, line 25, after ("amount") insert ("and Section thirty-three of that Act (which provides for the case where that fund amounts to the prescribed sum)").—The Earl of Lucan.)
§ Amendments moved—
§ Page 2, line 26, leave out ("reference") and insert ("references").
§ Page 2, lines 28 and 29, leave out ("a reference") and insert ("references").—(The Earl of Lucan.)
§ THE EARL OF LUCANThe next Amendment is to insert in subsection (1), after the last "undertakers" but one, words which by inadvertence were omitted from the Bill as introduced. The amount of share capital which a gas company is authorised by its Private Act to raise is stated to include any premiums, and consequently such premiums are part of the authorised capital of the company 444 and must be carried to capital account and used for capital expenditure. It is therefore logical to base the reserved fund on premiums as well as on share capital.
§
Amendment moved—
Page 2, line 30, at end insert ("of any premiums paid in respect thereof").(The Earl of Lucan.)
§
Amendment moved—
Page 2, line 41, after ("undertaking") insert ("of any premiums paid in respect thereof").—(The Earl of Lucan.)
§ Clause 3, as amended, agreed to.
§ Clause 4 agreed to.
§ Clause 5:
§ Undertakers supplying more than a certain quantity of gas to charge on basis of British thermal units.
§ (4) So much of any special Act or provisional order applying to any such undertakers as makes provision with respect to the quality, pressure, or purity of gas supplied by them shall, as from the appointed day, cease to have effect.
§
LORD BANBURY OF SOUTHAM moved to leave out subsection (4). The noble Lord said: My noble friend Viscount Bertie of Thame is not well and has asked me to move this Amendment for him. This subsection says:—
So much of any special Act or provisional order applying to any such undertakers as makes provision with respect to the quality, pressure, or purity of gas supplied by them shall, as from the appointed day, cease to have effect.
My noble friend fears, and it rather looks as if his fear is correct, that the result of this subsection would be to remove any liability on the part of the gas company to supply gas of a certain pressure, quality or purity. I can hardly think that that was intended, and I move the Amendment in order to get a reply from the Government on this point.
§
Amendment moved—
Page 4, line 22, leave out subsection (4).—(Lord, Banbury of Southam.)
§ THE EARL OF LUCANThe noble Viscount is wrong in his fear. This clause brings companies which have not hitherto supplied gas on the therm basis—there are very few left—into line with those who are already supplying on that 445 basis and puts all companies in the same position. This subsection does repeal certain safeguards but it only repeals safeguards which were necessary under the now obsolete form of producing gas for candle power. If the noble Lord looks at Clauses 5, 6 and 9, subsection (3) in each case, of the principal Act, he will see that that includes safeguards as to purity and pressure. Safeguards as to candle power are no longer necessary owing to incandescent mantles being used.
§ LORD BANBURY OF SOUTHAMAfter the noble Earl's explanation I beg leave to withdraw.
§ Amendment, by leave, withdrawn.
§ Clause 5 agreed to.
§ Clause 6:
§ Extension of Board of Trade's power to make special orders under principal Act.
§ 6. The power of the Board of Trade to make special orders under section ten of the principal Act shall include power to make a special order—
- (a) authorising the applicants therefor to construct gasworks or manufacture or supply gas in any area within the limits of supply of any existing undertakers who have failed to lay down or provide mains for the supply of gas in the area, and prohibiting the existing undertakers from exercising in the area any of the powers conferred on them in respect of their undertaking;
- (b) providing, where the applicants for the order are a company authorised by any enactment to supply water or electricity as well as gas, that any loan lawfully raised by the company for the purposes of so much of their undertaking as relates to gas may be secured by a charge upon the whole of their undertaking;
- (c) Making provision for modifying any enactment regulating the gas undertaking to which the order relates by inserting therein provisions corresponding to provisions contained in any special Acts or provisional orders regulating other gas undertakings:
§ Provided that no order shall be made under paragraph (a) of this section in relation to any area within the limits of supply of existing undertakers unless five years have elapsed since the date on which those undertakers first obtained their powers to lay down or provide mains for the supply of gas in that area.
§ THE EARL OF CRANBROOK moved to leave out paragraph (c). The noble Earl said: I beg to move this Amendment on behalf of my noble friend Viscount Falmouth. Under this paragraph the Board 446 of Trade will have power to insert in any enactment governing any gas undertaking provisions contained in the enactment governing some other gas undertaking. This Amendment was put down at the instance of the London County Council who were rather afraid that possibly when they had succeeded in inducing some undertaking to reduce its prices, that undertaking might, through the opportunity given to it by this paragraphs, get the Board of Trade to insert in its governing enactment provisions contained in the Act of some small gas company in the country which would enable it to raise its price. It seems that the power given to the Board of Trade is very much wider than the Board possesses at the present moment, and I hope your Lordships will agree that it is very much too wide.
§
Amendment moved—
Page 5, line 20, leave out paragraph (c).—(The Earl of Cranbrook.)
§ THE EARL OF LUCANI am afraid the Government cannot accept this Amendment. I am advised that the powers which the Board of Trade will be given by this paragraph will not be stronger than those they possessed before. In this case the Board of Trade cannot proceed by Departmental Order but will have to proceed by Special Order. All Special Orders have to come before both Houses of Parliament and in the case of your Lordships' House before the Special Orders Committee as well. I am advised that all the safeguards which the London County Council have now are continued undiminished, and I hope therefore the noble Earl will not press the Amendment.
§ Amendment, by leave, withdrawn.
§
LORD BANBURY OF SOUTHAM moved to leave out Clause 6. The noble Lord said: I move this Amendment for the reason that the clause says:
The power of the Board of Trade to make special orders under section ten of the principal Act shall include power to make a special order—
I leave out a few words—
(a) authorising the applicants therefor to construct gas works"—
in any area within the limits of supply of any existing undertakers …
That is to say, Company A having received power from Parliament to construct gas works and supply gas in a cer-
447
tain area, the Board of Trade may come down and authorise somebody else to supply gas in the area already allotted to Company A if Company A has failed to lay down or provide mains for the supply of gas in the area. It then may prohibit Company A from exercising in the area any of the powers conferred on them in respect of their undertaking.
§ At the end is a proviso that no Order shall be made under paragraph (a) in relation to any area unless five years have elapsed from the date when the undertakers first obtained their powers. What it means is that if Company A, having obtained powers to do certain things in an area, have not within five years completed their work of supplying gas in the whole of that area the Minister may then come down anti order somebody else to go into the area already allotted by Parliament to Company A and begin work on their own account. If it is argued that Company A have neglected their duty, then the Courts of Law should be the people to interpret that. Why should the Minister have power to say: "You have not done this, you ought to have done it, and so I will let someone else go into your area"? Surely, if Company A have been granted certain powers by Parliament and they abuse those powers are not a Court of Law and the Judges of the realm the people to decide how an Act of Parliament is to be interpreted?
§ Are we now going to start new ideas and say that, when an Act of Parliament is passed and people affected by it do not carry it out, instead of going to a Court of Law and having the judgment of impartial Judges, we are to go to a Minister, or rather to the people in his Department, who are probably not versed in legal phraseology and probably have not legal minds and may possibly be influenced by the getting of votes or the nearness of a General Election? Is our property to be affected by the action of these gentlemen and are we to do away with the old principle and watchword of an Englishman that in trouble he has a Court and a Judge for whom he has respect and admiration? Is a Department, of whom he knows nothing, to judge whether or not certain rights which have been assigned to him by Parliament are to be taken away?
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§
Amendment moved—
Page 5, leave out Clause 6.—(Lord Banbury of Southam.)
§ THE EARL OF LUCANThe answer to my noble friend's question is that a similar clause to this is inserted in nearly all Gas Bills, because the case sometimes arises where the undertakers, who have power over a certain area, are for some reason unable or unwilling to carry out the work and it is very desirable that residents in that district should not thereby be deprived of gas. This power is therefore given by Special Order, a draft of which has to be submitted to both Houses of Parliament and, in the case of the House of Lords, is examined by a Special Orders Committee. The noble Lord may rest assured that no injustice will be done to any company. This is only inserted for the sake of residents in certain districts and also for patriotic reasons because many people who cannot get gas use foreign oil in the many oil stoves that are sold to-day. I hope the noble Lord will be satisfied that this power is very carefully controlled.
§ LORD BANBURY OF SOUTHAMI cannot say I am satisfied because the noble Earl, Lord Lucan, has repeated an argument which has very little force in it. He says that this clause has already been in another Bill. I remember many years ago Sir Charles Dilke saying: "Mr. Speaker, do not quote a precedent. A bad precedent is not to be continued but should be abolished." That had a very great effect upon me and I have always held that the argument that such a thing has been done before, if such a thing is bad, is not a reason for perpetuating it but for cancelling it. If under certain Bills the right of an Englishman to trial by a Judge and jury is taken away and trial by a Department is put in its place, I say it is a bad precedent and ought not to be repeated. It is now past seven o'clock and there are not many of your Lordships present or I would be tempted to divide the House. In the circumstances I will only have the Amendment negatived.
THE LORD CHAIRMANI am sure that my noble friend realises that he is now dealing not with the orders of Departments but with the Special 449 Orders which are submitted to Parliament, and, therefore, I think that the watchword of an Englishman is this time saved because it is in the hands of Parliament. Thanks to the energies of the Leader of the House, this Special Orders procedure has been working in your Lordships' House for some time, and I would like to take this opportunity of saying how very helpful the Board of Trade and the other Departments concerned have been in bringing all the facts before the Special Orders Committee of your Lordships' House on every possible occasion. They have been meticulously careful in bringing every new point to the notice of the Special Orders Committee. There is only one thing wrong with the Special Orders Committee and that is that my noble friend is not a member of it. I shall bear that in mind.
§ On Question, Amendment negatived.
§ Clause 6 agreed to.
§ Clause 7 agreed to.
§ Clause 8 [Interpretation]:
§ Amendments moved—
§ Page 5, line 39, after the first ("stock") insert ("in relation to any undertakers").
§ Page 5, line 42, at end insert ("as applying to those undertakers").—(The Earl of Lucan.)
§ Clause 8, as amended, agreed to.
§ Remaining clause agreed to.
§ Schedule:
§ THE EARL OF LUCANThe Amendments to the Schedule are drafting.
§ Amendments moved—
§
Page 7, line 6, leave out from ("following") to the end of line 22, and insert ("provision:—
If at any time it appears to the Board of Trade, in relation to any undertakers, that there has since the thirtieth day of June, nineteen hundred and fourteen, been any increase or decrease in—
450
the Board may make an amending order under this section revising the powers of charging authorised by the original order with respect to the undertakers, in such manner as to secure that they are not prejudiced by any such increase or benefited by any such decrease").
§ Page 7, line 30, after ("themselves") insert ("the").—(The Earl of Lucan.)
§ Schedule, as amended, agreed to.