Lords Sitting of 18 April 1934

Preamble
The House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
MINISTRY OF HEALTH PROVISIONAL ORDER (ACCRINGTON) BILL.
Read 2a (according to Order), and committed.
MINISTRY OF HEALTH PROVISIONAL ORDER (WATFORD) BILL.
Read 2a (according to Order), and committed.

HOUSING: COMPENSATION FOR COMPULSORY ACQUISITION.
LORD BALFOUR OF BURLEIGHhad the following Notice on the Paper:—To call attention to the advantages of the refund basis of compensation for compulsory acquisition of working-class houses for reconditioning by local authorities or public utility societies as set out in the Report of the Departmental Committee on Housing, presided over by Lord Moyne; and to move for Papers.
The noble Lord said: My Lords, the Motion which I have put upon the Paper does not require, I think, any apology. The debate which we had in your Lordships' House only a week or two ago on the subject of housing revealed the consensus of opinion as to the necessity for large and rapid measures being taken, and we have before us the statement of the Minister of Health as to the next stage in the Government's proposals. The Minister has said that the Government contemplate wide powers for housing authorities compulsorily to acquire overcrowded and other properties as a preliminary to development. My noble friend Viscount Gage, in the course of the debate only the other day, in referring to the Report of Lord Moyne's Committee, said that the Government had decided to follow those suggestions which deal with the compulsory acquisition of property for the purpose of reconditioning. The Minister of Health in his speech went on to state that for such

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compulsory acquisition it went without saying that the basis of compensation must be safeguarded to ensure a fair price to both sides of the bargain.
That statement needs only to be repeated in order to receive universal agreement. While the basis of compensation for the acquisition of property is in its essence a legal matter, and I feel that it is possibly rather rash for a layman to enter upon this domain of the lawyers, nevertheless this compensation question is one of such importance that it is essential for it to be brought into such a condition that it can be understood by the man in the street; because if your basis of compensation is not one which appeals to the man in the street as being fair, then public opinion will not accept it and you will find great difficulty in proceeding with your schemes. The noble Viscount, Lord Gage, on the last occasion mentioned this refund basis of compensation, but he said:
"The Government … are not satisfied at present that their specific proposals"—
that is, the proposals of the Committee—
"regarding the refund method of compensation are really practical."
From that I conclude that the Government are still in the position of considering the refund basis and that the question is not yet decided. I do not understand from that that the Government have definitely turned down this basis of compensation, and for that reason it seemed to me that a discussion of it to-day, and a possible elucidation of its advantages and disadvantages, might not be disadvantageous.
Let me remind your Lordships of the class of property which the Government are contemplating acquiring; and there can be no better evidence of that than I find in the Report of the Moyne Committee, which we understand to be the basis of these proposals. Paragraph 21 of the Moyne Committee's Report reads as follows:
"We believe in the principle of private property and private ownership, but we feel strongly that private ownership, if it is to be retained in the class of property which we are considering, must be efficient and conscientious and cease to be, what it too often is, an illegitimate gamble on the inactivity of the local authority. Many private owners keep their property in excellent repair and discharge fully the modern obligations of ownership. On the
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other hand there are, as we have pointed out, many who for a variety of reasons do not. We think that the time has come when this latter class of owner should be replaced by a public or quasi-public authority."
That is the point from which we start. That is the character of the property which the Government contemplate acquiring—property which has ceased to be owned in a manner which is efficient and conscientious.
That leads me to consider for one moment what we mean when we talk about a bad landlord. In discussions of the housing question there is a great deal of talk of bad landlords, and I think it is important to try to realise the kind of landlord in whose hands property is inclined to fall into the condition which the Moyne Committee have described. In the first instance, of course, we have to reckon that there are certain landlords who can be described only as sharks. That is the kind of landlord who very often receives attention in political connections. All landlords are sharks to some people, but there is a class of landlord who can be described only as conscienceless sharks. I am not attempting to say to your Lordships that it is a large class or a representative class, but it does exist, and that is a fact with which we have to deal.
It has come to my notice quite recently that there is no doubt about the existence of such people, because I find that there is a definite class of landlord who makes a practice of purchasing property already marked out by the local authority for demolition. That struck me when I first heard it as being a most remarkable thing. The explanation of it is this: there may be overcrowded and insanitary property which is yielding quite a substantial return, the ownership of which is, in the words of the Moyne Committee, a gamble with the local authority. Even though a local authority may have marked down such property for demolition, the delays are very great, and there is always a chance of a change of policy. I believe it to be the fact that the time which elapses between the declaration of a clearance area and the rehousing of new people on the spot can hardly be less than two-and-a-half years, and frequently the delays are greater. I mention that only to establish an example of a class of landlord who is not concerned with anything except getting money out of his investment, regardless of the result

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on the unfortunate people who happen to be tenants in that property. It is quite clear that there is nothing either efficient or conscientious about that class of ownership.
But I am far from saying that that is the class of property with which we are mainly concerned. There is a much larger range of property which I think would fall under the description given by Lord Moyne's Committee. I should say that it is in the main property managed by agents. It is very easy to see that agents may have a conflict of duty. They have a primary duty to the owner for whom the collect the rent; their duty to the tenant may be on quite a different plane. I am satisfied that there is a large amount of property the beneficial ownership of which is vested in people who have no practical knowledge of, and deem it not to be their duty to have any practical concern with, the nature of the property and the condition of the people who are in fact their tenants and who are providing them with their income. There are, of course, also people—and this is a common form of ownership—who are holding working-class property as an investment, with a view to a commercial profit on the site value at some future date when the time is ripe for sale of the property. I do not think you can fairly describe the ignorant owner who simply draws rent through an agent or perhaps as trustee for somebody else, as efficient and conscientious, and clearly the owner who buys for an increment in site value falls outside that definition. You cannot class landlords as bad and good. There is a wide range, and this is admirably stated in the Moyne Committee's Report.
There is the question also of what creates slums. What the Moyne Committee say is this:
"It has often been said that a bad landlord makes a bad tenant, and the converse is not less true. The basic principle of Miss Octavia Hill's work is the mutual obligation and responsibility which must exist between landlord and tenant if good results are to be obtained. In her view, which we share, management lies at the root of the problem. A good standard of repair without good management is not enough, but in practice the two things normally go together. A good landlord does not wait for a complaint before he orders repairs, still less does he wait for a notice from the local authority. Such a policy of management is short-sighted from the landlord's
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own point of view, and, in a time of housing shortage, inflicts an iniquitous degree of hardship on tenants who can find nowhere else to go. At the present time there are still too many private landlords who allow their properties to be mismanaged in this way, and too many local authorities who fail to enforce the law against them."
It is the result, the natural result, of that state of affairs, which covers an enormous range of property, that the Moyne Committee came to the conclusion, stated in Paragraph 21, that there was a great deal of property which should be acquired and managed by public authorities. That is developed in the Moyne Report in a way which must carry conviction to everybody, however little he knows about housing, who has read the Report.
I must, with your Lordships' permission, read one more extract from the Report. I apologise for doing so, but the case has never been so admirably stated as it is here, and much credit is due to Lord Moyne and his Committee for their work. The Report, in Paragraph 22, says:
"Since Miss Octavia Hill started her work in 1864 a certain number of public utility and other such societies, not working for profit, have been formed and provide striking examples of the practical advantage which can be obtained from the transfer of working-class property from a number of small private landlords to responsible public or quasi-public ownership and management on what has come to be known as the Octavia Hill system.
"There are large numbers of deteriorating working-class houses all over the country. not only in the large centres of population but also in the smaller and older towns; these properties would afford a most fruitful field for a large extension of the work of the public utility societies, whose operations are at present on a comparatively small scale…. We do not find that there is any marked difference between the standard of repairs which can be required under the Housing Acts and that which is secured by housing societies as landlords; the important difference lies in the improved management of the houses when they are vested in the societies and their subsequent maintenance in good repair…."
That does really describe the property of owners whose ownership is not conscientious and efficient, and it is perfectly clear that the Government are only going to find the solution of their problem by securing the transfer, as they now propose, of large quantities of such property to authorities who will have management on a large scale.
It will give a pool of reconditioned houses, which will be of the greatest possible service in connection with the new buildings that are being put up. It will enable such authorities to deal with the education, as tenants, of former slum dwellers, and by a process of education to bring them once more into a capacity to live in a new house; but one must emphasise that such a system is only possible where the return on the capital invested is very small. I am afraid that the difference between those owners to whom I have referred and the public utility societies lies mainly in the fact that the former are working for a higher return on their investments, whereas the public utility societies are content with a small return. That is the sort of property which the Government are going to take over and the question before us is what is the most suitable basis of compensation for that purpose. The Moyne Committee, after fully considering this question, suggested this refund basis. In order fully to understand the basis of it I think I must refer to one matter, and that is the question which has been raised in some quarters as to whether or not the refund basis should be applicable to property in clearance areas. I think that proposition only requires to be stated in order to be refuted. It is perfectly clear, I think, that the owner of clearance property which has been the subject of condemnation and in respect of which the owner is at present only able to get site value, is net entitled to anything in the nature of a refund basis for that. The property has been bled to the utmost and if you were to give refund basis for that you would be giving the owner a guarantee that however much he bled the property he would always be able to get his money back.
I think that for the purpose we are considering, the acquisition of this property from different classes of owners in different states of repair, we have to make two assumptions. One is that the owner is not entitled to draw any advantage from any illegal user in the property—and in that I include overcrowding. Secondly, the Rent Restrictions Acts are necessary in the public interest and any consequences which follow from that must be taken into account in the basis of compensation. In order to try to define the basis of compensation which seems
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fair I would like to mention one or two of the common grievances of which we hear in respect to the basis of compensation which at present exists. Perhaps the commonest is what is called the reduction factor—the reduction factor derived from Section 46 of the 1925 Act. It is the provision which lays down that where a local authority acquires a site of a clearance area for rehousing purposes the owner should get, not the commercial value of the cleared site, but the commercial value of the site based on rehousing of the working classes on that area.
At first sight it seems rather hard that the amount of compensation should depend on what is to happen to the site, and the grievance that we hear is not so much that they are only to get site value—it is recognised that the property as a rule is So rotten and so worn out that site value is all that is fair—the grievance lies in the fact that where a compulsory purchase order is made the compensation is less, and therefore you get the case of adjoining owners, perhaps in areas near-by, one of which is to be re-developed for housing and the other not, one owner apparently getting better treatment than the other. The justification, I think, lies in the fact that where the site is to be re-developed for rehousing the local authority is accepting the financial burden of rehousing the tenant. If the owner were to get immediately the commercial site value you would be conferring upon him the benefit of decontrolling his property, and the Moyne Committee point out that nowadays that obligation of rehousing the tenants must be accepted as being a part of the proper obligation of ownership of that class of property if the Rent Restrictions Acts are to be done away with for the benefit of the owner.
There is another grievance that we very often hear about, the grievance that an owner's property may be condemned on account of the bad arrangement, which may, and frequently does, consist in overshadowing by neighbouring buildings. I do not think that is the only cause for condemnation, but it frequently is a contributory cause. The answer to that is that such property has either been acquired subject to that disadvantage, and therefore at a low price, or a lower price than it would have been if that disadvantage had been absent; or else, if the building has been put up during the

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ownership, then compensation has been paid for the purpose. I do not think there is any substance in that grievance at all.
Thirdly—and this is a matter which I think does cause some difficulty—we often hear of people who have not sufficient money to comply with the orders of the local authority about repairs, and therefore in substance they have to suffer what can be described as confiscation of their property. That is, in a word, what may be described as the "widow and orphan" type of case, which is often quoted as proof of the injustice of the Housing Acts. I do not deny that there is hardship on individuals, but what we have to remember is that hardship on an individual is quite another thing from injustice. The hardship in such cases arises from the fact that there has been improvidence or lack of foresight very often in the predecessor of the existing owner. I frequently hear of such a case as this. A man, say with a capital of £1,000, buys a property which costs £2,000. He raises the other £1,000 on a mortgage. He may pay 5 per cent. on the mortgage. We may assume that the rents of property, after payment of rates, are £200. He pays £50 a year on his mortgage, and all too often he buys that property under the impression that it will give him £150 a year to live on. He forgets all about repairs and also about sinking fund.
I do not suggest that it is common that anyone should do that in the case of a leasehold, without thinking about sinking fund, but precisely the same principle applies in the case of freehold property. I wonder how many people really do realise the necessity of amortising freehold property. How many people really think, when they are buying a freehold house, that they are buying a home for ever? I think most of us do. What we do not realise is that all we are buying is a freehold bit of ground with a house on it, which sooner or later will tumble down. That point is one which does give rise to this hardship. The man in question who has the mortgaged property dies. His widow is left with the income, and the income shrinks. The local authority, disliking to make an order against small persons, say: "They have not got the money," and finally the property falls into complete disrepair and is condemned. Then we hear that the widow has been deprived of her all and great injustice has been done. That ownership is neither
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efficient nor conscientious, and, while there may be hardship to individuals, it does not mean that there is injustice in the basis of compensation.
I now return to my point: what is to be the basis of the compensation for the acquisition of this property, which the Government have rightly decided in the public interest has got to be bought? We have postulated that the ownership is not efficient or conscientious. The Moyne Report has considered as a basis the basis defined in Part II of the Third Schedule to the 1930 Housing Act. That is the basis which is applied to what is known as "blue area"—the blue land in a clearance area; and what it provides is simply that a number of estimates are to be made. First of all, you have to estimate the market value. That is easy. You estimate the market value on the basis of rentals and so on. Then you have to estimate how much of that is due to illegal user, including overcrowding. Then you have to estimate what the cost of putting the property in repair would be. The final value for the purposes of compensation is the value after getting rid of those factors and is what the property would fetch in the repaired, decrowded, legally-occupied condition.
The Moyne Committee, after considering the whole position, came to the conclusion that that basis was open to some very grave objections. They say that
"where so much is left to estimation, the general tendency is to excessive compensation;"
and that
"in spite of this general tendency hardship might be inflicted on small owners, who in some cases might receive little or no compensation and in others would receive insufficient to enable them to pay off mortgages or other charges on the property."
Thirdly, they stated that "the procedure is slow and relatively expensive," and for that reason they reject this basis of compensation. Alternatively they suggest it would be possible to amend that basis by substituting fact for estimation. That means that the local authority would be given powers to take possession of the property and do the work. They rightly point out that there are very great difficulties there, and I am quite certain that would not be workable. I agree with the Committee that that would certainly give rise to the suggestion of confiscation.
The constructive suggestion of the Moyne Committee, after considering all alternatives, is what is known as the refund basis. This refund basis of compensation is something quite new. It was suggested to the Committee by the Chief Valuer of the Valuation Department, and the suggestion is briefly that the acquiring authority should be authorised to take possession of the premises on payment of an amount equal to the purchase price paid by the owner or, if the owner inherited the premises, their principal value accepted for Death Duties when they passed to him, or, if the owner acquired the property by deed of gift, the value adopted for Stamp Duty purposes. There is provision, of course, for a proportionate amount in the case of leaseholds. Superficially it is a very attractive basis. As the Committee pointed out, the compensation payable would be certain in amount, and disputes and litigation would be avoided. The only cost which would normally be involved would be the legal costs of transfer.
It is estimated that the owners would, over the whole field, receive approximately the same as on the market value basis as amended by Part II of the Third Schedule to the 1930 Act. All interests would receive some payment, and both they and the acquiring authority would be saved unnecessary expense in litigation and other such costs. The position of mortgagees would be more or less protected, and acquisition would be simple, direct and expeditious. It has the advantage that the widow-and-orphan case would receive some help. While have explained that it is hardship and not injustice which operates in these cases, nevertheless no one wants to see unnecesary hardship inflicted, and if this basis can be adopted whereby the public purse has not to pay any more and the poor person who is hard hit receives more, it is a plan worthy of serious consideration from every point of view.
That is the basis in favour of which the Committee unanimously, as I gather, recommended. That is the basis which I understand to be still under the consideration of the Government. I am free to admit to your Lordships that there are difficulties. What I understand the Committee to say is that the difficulties under this basis are less than under any other possible basis of compensation, and that,
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after all, is the most we can expect. From a practical point of view I think there are dangers, but I am attracted by the advantages, particularly that of getting rid of these inquiries. I do not know if any of your Lordships have attended inquiries such as those held by the Ministry of Health in the case of clearance orders. I say without hesitation that that procedure, which has been devised avowedly to protect owners, is capable of very great abuse. The proceedings are not subject to the rules of law, because it is not a law court; they are greatly protracted; and my own observation has led me to the conviction that sometimes the course of justice is obscured. I should be glad to get rid of them, but I recognise that we must have some safeguard for the property owner.
What I want to say to the Government is this: If they have decided against the refund basis, then some other basis must be found. It must be more expeditious and less liable to abuse than the existing system. The experience we have had in the case of inquiries into clearance orders is that if you attempt inquiries of that sort, in connection with the acquisition of this kind of property which the Moyne Committee recommends acquiring, then you will never get to the end. Inquiries will be so laborious that we shall never get on, the whole scheme will peter out, and the Government will find at the end of a couple of years that their progress has been very much less than they hoped for.
An alternative basis occurs to me. I would like to see a basis which gets rid of the stigma on the owner. If you have a clearance order on your property, it is quite obvious that you are under the stigma of having rotten property which you have neglected, and therefore you have been guilty of bad citizenship. The Government have said that this sort of property of the working-classes would be better in the hands of a quasi-public body. Why not, then, say that this property is to be acquired, not necessarily because the owner has failed, but because it is in the public interest that some semi-public body should own it? Let the value be settled by some panel of valuers. There are district valuers all over the country, and let the Government set up a panel of valuers who will look at the property and say: "This is what we

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consider a fair value." If the owner does not like it give him a right of appeal, only not to the Minister. If the proposal is worth considering, the right of appeal might be to the County Court, as it is in the case of Section 17 of the 1930 Act. There is no public inquiry there, although Section 17 notices may require a large expenditure. The owner, if aggrieved, can go to the County Court. I am only throwing out the suggestion that this might be worth considering.
I think this compensation question is not generally understood, but it is vital to any real solution of this problem that we should get a basis which will be accepted by public opinion. That would be your safeguard. Public opinion would stop it if it worked out unfairly. Public utility societies will have to buy a lot of this property if the Government's proposals are carried out, and the market value will go heavily against them. Market value will be quite impossible as a basis. Perhaps I have not been so enthusiastic in support of this refund basis as I might have been three weeks ago. I can tell your Lordships I am impressed by some of the practical difficulties, but I have really initiated this discussion in the hope that it may be of some assistance to the Government in their deliberations and in their programme, because we all want to see this programme successful and got on with as soon as possible. It is everybody's object to facilitate that as much as possible. I have included a Motion for Papers; that is not a formality. The Papers I want to ask for are the evidence of the Government Valuer before the Moyne Committee. I apologise to the noble Viscount for not having given him private notice, and I hope it is not a disadvantage to him. I beg to move for Papers.
LORD MOYNE: My Lords, the noble Lord, Lord Balfour of Burleigh, has drawn attention to one of the most difficult problems in connection with the attack on bad houses. On the Departmental Committee we realised that there is no one better qualified than the noble Lord to give a sound opinion on this matter, because we went to Kensington and we discussed with the Kensington officials the work which, under the noble Lord's leadership, has been done in Kensington. I attach the very greatest importance to the noble Lord's view that without compulsory powers and a new and more satisfactory
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basis of compensation the work of these public utility societies will be made almost impossible. The present methods of compensation, which vary with the varying conditions of property under different Statutes, have in many cases proved to be difficult of application, and in some cases undoubtedly they have caused a feeling of very great hardship. It is difficult to form any opinion as to what basis might be found an improvement until we are aware of the exact scope of the new Government proposals.
It is quite evident that the Minister of Health contemplates a far wider attack on bad housing conditions than was in his mind when he drew up the terms of reference to the recent Departmental Committee. We realised that overcrowding often tends to structures falling into bad repair, but these overcrowded conditions are in many cases in no way the fault of the owner, owing to the operation of the Rent Restrictions Acts and the fixity of tenure which those Acts brought about. For that reason, and because of our terms of reference, which prevented us going in detail into this larger problem, we did not contemplate the public acquisition and ownership of premises merely on the ground that they were overcrowded. I am not going to discuss the refund basis this afternoon. We recommended it mainly because of its simplicity and its speed. We did not suggest that it should be applied to houses which were in all respects fit for habitation, and we made that perfectly clear in paragraph 49 and also, I think, in paragraph 51. It may be that the refund basis should be given as an option to secure quick action in clearance areas, but one condition must be insisted on, and it is that the negligent and deliberate slum owner should not be given the benefit of this procedure. The difficulty in this connection is that the quality of premises shades off insensibly, and the responsibility of owners shades off in the same way, from those who are most culpable to those who are entirely blameless.
The difficulty of getting a system of compensation which shall apply justice in each case is very great. That is why for a large number of cases we believe that this rough-and-ready method of refund would be found on careful examination to be the most satisfactory. The

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noble Lord has asked for the evidence of the Government Valuer. I think that that evidence was very valuable. It is, as a matter of fact, pretty well summarised in the Report, but, as far as I remember, the actual proof of evidence gave rather more detail of the working of the existing methods and the difficulties which had arisen in practice than we gave in our Report. I do not think very much is added to our information by the examination which then took place, but if the Government feel disposed to give any further information on this matter, and are still considering the basis one can possibly adopt, I think that Report of the Government Valuer on the various alternatives and on this possible new system of refund would repay the careful examination of those members of this House who interest themselves in this particularly difficult problem.
VISCOUNT GAGE: My Lords, the object of this debate, I think, is to try to persuade the Government to revise the opinion—the somewhat unfavourable opinion—which I hinted that they held towards these proposals the last time we discussed housing in this House. I cannot, of course, complain that the noble Lord who initiated the debate should try to persuade the Government to change their minds. Perhaps it is a mistake to hint at anything in these matters. But I think that the noble Lord is going considerably beyond the terms of his Motion, because what he asks is, in effect: "If you do not accept these proposals what do you accept? "That sounds quite logical, but from the Government point of view it is not quite such a simple matter. The Bill that we shall introduce, arising out of the Report of my noble friend Lord Moyne, will be an important Bill, and not the least important clause of it will be that dealing with compensation. I think the noble Lord suggested that we should here and now discuss our compensation clause in advance of the Bill without the context of the Bill, without the clause itself being before the House. That would be a bad precedent, if nothing else, because it is really impossible to discuss in advance clauses of forthcoming Bills in the way the noble Lord suggests. Therefore I must ask to be excused if such criticisms as I have to make are purely destructive criticisms.
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I quite agree that the importance of the Moyne Committee alone demands that if we are going to reject that particular part of the recommendation, the reasons should be stated more fully than I was able to state them the other day. The principal reason why we do not consider these recommendations about the refund basis to be acceptable is that they would, in our judgment, constitute yet another anomaly. The housing problem is already confused by a large number of anomalies and it does not seem right to us that we should now embark on a system of compensation whereby entirely different amounts will be payable for exactly similar houses in exactly similar condition. That is what we believe would happen if this idea was adopted. The amount payable would depend on entirely fortuitous or largely fortuitous circumstances and I will give your Lordships some examples of what I have in mind. A man may have bought a house at a period when all house property stood at a much higher value than it does to-day, and although that property may be in worse condition than the house next door to it, that man may receive more compensation than his neighbour who perhaps acquired his house either before the War or during the last few years. Your Lordships are aware that there have been very considerable fluctuations in the value of house property during the last fifteen or twenty years.
Even if the purchase had been effected with the utmost discrimination this different valuation would be inevitable, and, of course, there are different degrees of discrimination in the case of different purchasers. One buyer may exercise more shrewdness than another. Yet the man who exercised shrewdness might be penalised in comparison with the man who had bought at a somewhat exaggerated price. I know that when this point was put by my noble friend Viscount Halifax in the last debate the noble Lord, Lord Moyne, said that there was in the Report of his Committee a recommendation which would give the Minister in practice a right of declaring an option—that is to say, as I understand it, a right to decide whether the market value should be used as the basis for compensation or whether the refund value should be used as the basis. I must confess that I cannot find that

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recommendation in the Report. Paragraph 48 of the Report says that the Minister might have an option, as I read it, of excluding houses altogether from the operation of the Act.
LORD MOYNE: May I say that that was certainly not the intention of the Committee? I cannot put my hand at the moment on the exact paragraph in the Report. We did not define all the cases where the refund basis would not be suitable, but it was in our minds, by the indications which we gave, to suggest that where the refund basis was too favourable to the owner the local authority should have the option of applying harsher measures.
LORD BALFOUR OF BURLEIGH: May I read Paragraph 48 of the Moyne Report? The paragraph says:
"The Minister should also consider whether any individual property should be excluded on the ground either (a) that it is too bad for anything except demolition, or (b) that the price to be paid for it is excessive, having regard to its probable useful life, the cost of repairs, and the loss of income resulting from the abatement of overcrowding."
That seems to me to meet the case precisely.
VISCOUNT GAGE: I may be entirely wrong in my reading of the paragraph—if so, I apologise—but I took that to mean exclusion from the working of the Act. Let us, however, argue it on the basis of what my noble friend has just said. That argument, I think, can be without great difficulty turned into meaning that the Minister can exercise his option to use the refund basis or the market value basis, whichever is the lower. I think perhaps owners might have a great deal to say on that matter. If we turn to a different method of acquisition of property by an owner—that of inheritance—we shall find that in that case the date of the death of the owner's predecessor might play a very large part in determining the amount of compensation. I ask your Lordships, for instance, to consider the houses covered by the Rent Restrictions Acts some of which have been decontrolled and some of which remain controlled. We have been told by Lord Marley's Committee that rents in the case of decontrolled houses have gone up by as much as 80 per cent. If the Death Duty valuation is to be
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taken as a basis for the amount to be refunded that amount would vary up to something like the same figure. We should find it very difficult to convince the public that it was right or fair for a man to receive a sum which might be nearly doubled according to whether a house was controlled or decontrolled at the time when his predecessor died.
There is already a considerable amount of public opinion agitating with a good deal of effect against various anomalies in all kinds of laws. Deliberately to add to those anomalies would be somewhat unstatesmanlike. But apart from the question of anomalies, we think that the suggestion would have unfortunate effects from the point of view of the public interest. The properties which we imagine will be taken over under this new Act will be properties in a border-line condition. They will not be bad enough for demolition, but they will not be fit to live in in their present condition. Below the border line there will be obviously slum houses which the owners will try to make a little better in order to try to escape from the site value basis of compensation. There will be other houses which, if they were repaired, would be taken out of the new category of borderline houses altogether. To a certain extent this legislation will have an indirect effect in making owners improve property whatever the basis of compensation.
Outside the two classes of houses I have mentioned there will be another class which, I think, will constitute the bulk of the houses—that is to say, houses which have sound walls and roofs, and these will be assured of avoiding the site value basis of compensation. But as the basis of compensation in their case will already have been fixed, what we are afraid of is that the owners will have no incentive to do anything to repair their properties, as whatever they do they will receive no compensation whatever for it. We are very much obliged to the noble Lord who introduced this debate and to the noble Lord, Lord Moyne, for giving us the benefit of their views. I do not know what effect they will have on my right honourable friend the Minister of Health, but my instructions are that for the reasons I have given the Government are not prepared to incorporate these recommendations in their legislation.

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I must of course admit that what is termed the present basis of compensation is not in all respects satisfactory, but as I have explained, I cannot go on to tell your Lordships in detail what amendments, if any, we propose to make in that basis, because, as I have said, the Government cannot take an academic part in the debate, and whatever we said might immediately have an effect on values. But summarising very broadly the reasons which we have for rejecting those recommendations, I would say that, although we agree that they would do rough justice between the owner and the State, they would cause rough injustice as between owner and owner, and therefore would not command that degree of popular support which is, as my noble friend Lord Balfour of Burleigh said perfectly correctly, really essential if you are going to make headway with your scheme. The noble Lord asked for the evidence of the Government Valuer. As he said, he did not give me notice of that. I understand that there are objections to laying those Papers, but if I may I will see whether there is any information which he requires personally which he may be given.
LORD BALFOUR OF BURLEIGH: My Lords, in view of what my noble friend has said I will not press my Motion for Papers. I did intend to give him private notice, and if I had done so the matter might perhaps have been more considered. There is another reason for not pressing it in that the noble Viscount has now told us definitely that the Government are not prepared to accept this basis of compensation. If that is so, it is no use flogging a dead horse, and in that case it is no use pressing the Motion. To be quite fair to the noble Viscount, I do feel impressed with the last objection which he mentioned, that if this basis were adopted there would be a lack of incentive to the good owner to continue to repair his property. That is the very reason which has to some extent diminished my enthusiasm for the scheme since I put this Motion on the Paper. I recognise the very great force of that objection. One thing which I do welcome from my noble friend is his admission that the present basis of compensation would not be satisfactory for the acquisition of the property of which Lord Moyne's Committee has suggested
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the acquisition and which the Government propose to acquire.
I do not, of course, expect the noble Viscount to tell us what is going to be in the Government Bill, and I recognise the difficulty in which he finds himself in discussing academically a matter which is coming up later on in the form of legislation. Nevertheless, I think it may be that the debate to-day may have served a useful purpose, because my desire is to emphasise the fact that some other basis has got to be found. I can only impress upon the Government my hope that they will really try to find something. Lord Moyne's Committee tried, and made this suggestion which has been turned down. Those of us who are in close touch with the practical difficulties of this problem know that unless a basis is found which will be fair and quick, then this part—not the least important part—of the Government's housing policy is doomed to failure. It will be sterilised unless you have a basis of compensation acceptable to public opinion, and one which will be speedy in its operation and will enable you quickly to get on with this extremely important measure which the Government have proposed. I beg leave to withdraw my Motion.
VISCOUNT GAGE: My Lords, I feel that I must add one word, because an assumption which appears to be made by my noble friend is that the Government, although not accepting this basis of compensation, are likely to adopt some new and entirely revolutionary system. I can only say that I can give absolutely no undertaking whatever about what amendments, if any, we are going to propose by our Bill.
Motion for Papers, by leave, withdrawn.

SHIPPING.
LORD STRABOLGIasked His Majesty's Government what steps are proposed to be taken to assist the mercantile marine in its present depressed situation, and particularly to assist in the scrapping of obsolescent cargo vessels and their replacement by modern ships. The noble Lord said: My Lords, the object of the Notice which stands in my name on the Order Paper is, as it states, to ask for information, and the reason for putting it down, as your Lordships I am sure will

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appreciate, is that this question of the state of the British mercantile marine is extremely urgent. It is true that there has been a slight improvement in shipbuilding; the figures published this morning show that there are in round numbers 480,000 tons of shipbuilding in hand in British yards, including the new Cunarder; but in spite of that, British shipping has never in the whole of its history been so depressed. Your Lordships, I know, will not dispute that statement. One-third of the seamen are unemployed—the highest proportion of unemployment amongst seamen that we have ever had—and 2,000,000 tons of British shipping are laid up.
Whatever opinions your Lordships may have of the statement of the Chancellor of the Exchequer in another place yesterday in opening his Budget, it is the fact that, so far as I could find, nothing was said or hinted at of anything being done to assist this very important industry, or its allied industry of ship-building. We have had a number of promises, and statements of things to be done, as for example at the end of last year, when in another place Mr. Runciman said that the Government ware considering some form of retaliation against unfair competition by foreign shipowners, assisted in many cases by their own Governments. That was, as I said, at the end of last year. In your Lordships' House on February 7 last, the noble Lord, Lord Kinnaird, raised a similar Motion though not quite the same as the Question in my name and there was a very interesting debate in your Lordships' House. The noble Earl, Lord Stanhope, said then that the matters were under consideration and that the Government were waiting for the shipowners to propose a policy. Now, the shipowners have very varied interests according to the class of vessel which they are engaged in managing, and although it is natural that the views of shipowners should carry great weight, I do submit to your Lordships that it is an altogether new doctrine that the Government should have to wait for the shipowners themselves to produce a policy, which must be a national policy.
It may be asked: What do I suggest? I want to make it clear immediately that I am not suggesting that there should be direct subsidies to shipping. I believe that direct subsidies to the various classes of vessels engaged in the carrying
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and passenger trade are uncalled for and would be definitely harmful. What I do suggest are two things definitely and one thing hypothetically. Definitely I do suggest the following: There should be assistance given to shipowners to scrap the great mass of old tonnage which is lying in our waterways and sheltered harbours round the coasts, idle, but ready to be sent to sea again, again to depress freights as soon as there is a revival of international trade. As long as those old ships, to the extent of nearly 2,000,000 tons, remain there will be no real revival of new construction. I suggest that we assist shipowners who will scrap their old vessels and replace them by new up-to-date modern ships; that they be assisted by being granted loans of money at a low rate of interest, the money of course being secured on the hulls of the ships—a very good security. The President of the Board of Trade has advised shipowners to build vessels of the latest, types, which, in spite of the depressed state of the world's markets, do pay their way to-day. The most modern vessels with modern Diesel engines, for example, and of modern hull construction, can be made to pay their way to-day even in spite of the abnormally low freights which have been ruling. The trouble is that owing to uncertainty and owing to this great mass of idle old ships, shipowners have been unable themselves to raise the necessary capital to do this sufficiently quickly.
That is my first suggestion. There is ample money available. The other day there was a public loan at a comparatively low rate of interest; £1:50,000,000 was asked for from the public and £250,000,000 was subscribed in a very few minutes. The lists were closed in a quarter of an hour. That was not so much confidence in His Majesty's Government as the fact that a great deal of money is lying idle waiting for investment. Viscount Halifax apparently thinks it is a mark of trust in the Government, but it is not a sign of good government to have a great deal of money lying idle that ought to be invested or employed. At the same time the noble Viscount will agree with me that the facts that there are a great many workmen forced to be idle, that our ships are idle and unable to obtain freights, and that trade is depressed, are not matters for the Government to congratulate

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themselves upon. The real reason, as I have said, is that there is an immense amount of money waiting for investment, and a Government-guaranteed loan will immediately be a success. I suggest that money should be lent to our shipowners, who will be able to scrap their old ships and build new ones and in so doing provide an immense amount of work for our shipyards and the other industries concerned. The other suggestion I would make, and it is one which I think is very practical and long overdue, is that you should forbid the sale of our old ships to foreign owners, to be run by them to death under sweated conditions to the further depression of freights.
My third suggestion is hypothetical at the moment, but it is that if unfair discrimination by certain foreign countries against merchant ships under our flag is to continue we certainly should retaliate. It is for those reasons that I have put down my Question to ask for information and, if possible, to elicit a declaration of policy. I would submit that it is of no use saying that other nations are suffering more than we are and that other merchant navies are depressed. We are far more vitally concerned with the sea than any other nation except possibly Japan, another island Power. It is of the utmost necessity for us that we should have a prosperous mercantile marine and we cannot look with composure on this continued slump and depression in the shipping industry. With regard to shipbuilding, although there is this slight revival and no doubt there will be a further revival if trade revives, I suggest that we should stimulate shipbuilding in the way that I have proposed and so ante-date a possible revival. There is a terrible tragedy in the idleness of the shipyard workers. When a shipyard worker resumes work after enforced idleness it takes him some months to recover his tone, his working skill and endurance: every engineering employer knows that. Our shipyard workers have been a great asset to us in the past and long periods of idleness mean a loss of human capital far more important than the possible risk to the money which is at present idle and which I suggest in my proposition now before your Lordships should be used in the way I have explained. For these reasons I beg to ask for information.
LORD TEMPLEMORE: My Lords, I am sure we are all very grateful to the noble Lord opposite for introducing this Motion in the very brief and businesslike speech with which he has done so. This question is a very serious one, and it is serious both on account of the financial loss and also, as the noble Lord has said in the final portion of his speech, still more on account of the human loss, in the loss of efficiency by those unfortunate men who are kept out of employment for so long a time. On the other hand, the problem is one which bristles with difficulties, and I am sure the noble Lord opposite, with his great knowledge of the sea and seafaring matters, and his intimate knowledge of the port of Hull, will realise how difficult that question is.
It was very fully debated in this House on February 7 last, when the Under-Secretary for Foreign Affairs replied for the Government and pointed out—I make no apology for referring to this—that the crisis was mainly due to the fall in world trade and to the increase in the mercantile marines of practically every country, with the exception of our own. I should like to give certain figures. For instance, the mercantile marine of the United States has increased from 2,027,000 tons to 10,880,000 tons, an increase of 388 per cent., and Japan has increased her tonnage from 1,700,000 tons to 4,250,000 tons, an increase of 150 per cent. I merely repeat those figures in order to emphasise one of the reasons for this slump. Of course, the policy of foreign Governments in increasing their mercantile marines in this way is also rendered easy for them by the immense subsidies that they grant, amounting, I believe, to about £30,000,000 per annum.
It has become almost a commonplace, I know—and I am afraid my noble friend may smile—to say that any matter is engaging the consideration of the Government, but I can assure him that this important matter is engaging the attention of the Government very seriously indeed, and has been so for some months. This was emphasised, I think, not only in the debate which took place in this House on February 7 last, but in two debates in the House of Commons, one on December 13 last on a Motion on shipping by the member for West Newcastle, and the other on the 22nd of last month, on the occasion of the Second

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Reading of the Consolidated Fund Bill, when the President of the Board of Trade made a fairly long statement about the position of shipping, and the attention which was being given to it by the Government
I must say this, that since the debate took place in this House in February several things have happened. The first was indeed referred to by my noble friend opposite, and I make no apology for referring to it, because I think it was an important action on the part of the Government, showing that they were out to assist shipping. It was the passing of the North Atlantic Shipping Act, which became law on the 28th of last month. That, at all events, whatever certain noble Lords may have thought of all the clauses of the Bill, was concrete action, showing that the Government were not going to sleep in this matter. The second thing was of an international character. There are indications that consideration of this matter is exercising the minds of foreign countries, and there has recently been held at Hamburg a meeting by shipowners of a number of important maritime countries, to consider the possibility of agreeing to a scheme for the laying up of a proportion of tonnage by each country, with a view to raising freights to a remunerative level. Such a proposal may be difficult to carry out in practice, but I think it has clearly much to recommend it.
The third thing is that last month four Governments—and they happen to be the Governments which specially backed us up in the World Conference last year, the Governments of Denmark, Norway, Sweden and the Netherlands—addressed a Note to His Majesty's Government in the United Kingdom expressing their willingness to co-operate with His Majesty's Government in any attempt to find remedies against the evils from which the shipping industry was suffering. They added that if the British Government convened a meeting they would be only too pleased to attend it to consider specially the following points: first, the abolition or limitation of subsidies; secondly, the restoration of equilibrium in the shipping trade by adjusting the supply of tonnage to actual world requirements; and, thirdly, any other measure that might be submitted to the conference which would help to combat depression,
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and having for its ultimate aim the restoration of this important international industry to its former conditions of sound economic competition. His Majesty's Government welcomed this communication, but while they consider that the best way out of this difficulty is along the lines of international co-operation, they are rather doubtful whether any good could come from such a conference unless they could also get the good will of the larger seafaring countries, such as France, Germany, Italy, the United States and Japan, which, I am afraid, have not so far shown much desire to co-operate. However, the Government are considering very seriously this communication from the countries that I first named, together with other aspects of this problem.
The noble Lord made three very interesting suggestions. He first suggested that shipowners should get a Government loan at a low rate for scrapping their old tonnage as much as possible and building new ships. As regards that, I would like to refer again to the debate of February 7 in which my noble friend Lord Stanhope stated that
"… nations have at last begun to scrap their surplus tonnage. Last year some 2,000,000 tons of shipping was scrapped, and it is estimated a further 3,000,000 tons will go this year. I am afraid a good deal of it will be British, but there is at any rate some decrease in foreign countries as well."
We see from that that the shipping of the world is gradually being reduced, and in time I suppose the situation would right itself. But the Government, of course, are not going to wait for that. That would be much too slow a process. I quoted those figures to show that at all events the policy which the noble Lord advocates is to a certain extent being carried out. Still, I will see that his suggestion is conveyed to my right honourable friend, because I think it possibly may be a very useful suggestion.
The second thing he suggests is to forbid the sale of ships to foreign owners That suggestion I will also have conveyed. A third suggestion he makes is. that of retaliation. That is in the minds of His Majesty's Government. I was reading yesterday the debate in another place last December, to which I referred at the beginning of my speech, and I think that on that occasion the President

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of the Board of Trade made some such suggestion as that, showing that the possibility of retaliation was also in his mind. I repeat that His Majesty's Government consider it a most important question, one of the most important questions they have to grapple with, although trade and industry are improving and, I think, will improve still further. The noble Lord was so studiously uncontroversial that I will not for a moment suggest that too much credit is due to the Government for this—he and I would not agree about that. But, to whomsoever the credit is due, we think that trade and industry are improving, but there are one or two very black spots still, including coal-mining and shipping and ship-building.
I am authorised to say that, while it is not possible to make any specific statement to-night, my right honourable friend hopes to be in a position to make a statement in another place at a relatively early date. When that statement has been made, if the noble Lord wishes for any further information and will bring forward another Question in this House, I shall be only too ready to give such answer as I can on behalf of His Majesty's Government.
LORD STRABOLGI: My Lords, I desire to thank the noble Lord for his very full and very courteous reply and for promising to convey the suggestions that I put forward to the head of the Department. I hope that when the statement to which he refers is made it will be so satisfactory that it will not be necessary to raise the matter again for a very long time to come.

OVERSEAS TRADE BILL.
Order of the Day for the Second Reading read.
LORD TEMPLEMORE: My Lords, this Bill, to which I ask your Lordships to give a Second Reading, is a certified Money Bill of one operative clause. It is introduced for the purpose of extending the period during which guarantees may be given up to March 31, 1940, and also to extend the period during which guarantees, including renewed guarantees, may be valid, up to March 31, 1950. The original Overseas Trade Act empowered the Board of Trade to give guarantees in connection
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with goods wholly or partly manufactured in the United Kingdom. The amount of the guarantees outstanding was never to exceed £26,000,000, and I have to inform your Lordships that this limit has never been anything like approached. The sums for the operations of the Overseas Trade Department are voted annually by Parliament, and this year, for the fourth year in succession, a token vote only has been presented as an estimate. The receipts for premiums and fees are sufficient to cover expenses.
I may say that the Department during its existence has secured orders for £47,000,000 worth of British exports, and without loss to the taxpayer; leaving at the present moment a sum of about £1,300,000 in hand. The bulk of those orders, I am quite confident, would not have been obtained unless this Department had existed. There has been, I think, in the past, particularly among noble Lords who usually sit behind me, but who, I regret, are not in their places now, rather a feeling against this Department, and an idea that it is one that ought to be abolished. I think that would be a great mistake. His Majesty's Government consider that this Department more than justifies its existence. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Templemore.)
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MINES (WORKING FACILITIES) BILL. [H.L.]
Order of the Day for the Second Reading read.
THE EARL OF MUNSTER: My Lords, the Bill which I present for Second Reading is designed to give legislative effect to part of the recommendations of the Report of the Mines Department Advisory Committee for the metalliferous mining and quarrying industry. This Committee, which is a statutory body, set up under the Mining Industry Act, 1920, was invited in May, 1930, by the then Secretary for Mines to enquire into the possibilities of developing or reviving the work of metalliferous and associated deposits in Great Britain. The Report was published in May, 1932, and on page 7, paragraph (e) occur these words:

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"In some instances the rates of royalty charged constitute an undue burden on the industry. In addition the terms of some mining leases with regard to the restoration of the surface frequently impose on mine owners the necessity for expenditure considerably in excess of the value of the land for agricultural purposes. In order to provide a means of overcoming these disadvantages we recommend that Section 13 of the Mining Industry Act, 1926, which made important amendments, as regards coal and minerals worked with coal, to the Mines (Working Facilities and Support) Act, 1923, should be extended to apply to metalliferous minerals."
The principal Act is the Mines (Working Facilities and Support) Act, 1923, which was designed to facilitate the working of minerals by providing in certain cases for the compulsory acquisition of rights without which the minerals could not be worked. The granting of the necessary rights is vested in the Railway and Canal Commission, who mast satisfy themselves that it is in the national interest to do so. Very considerable use has been made of this Act, and its scope was appreciably widened by Section 13 of the Mining Industry Act of 1926, which of course dealt only with coal. It is these latter provisions which it is now proposed to extend to cover the case of metalliferous and certain other minerals. It is not possible to estimate with any precision the extent to which the additional powers given under the Act of 1926 have actually been used, because since that Act it has been the practice for all applications to the Court in the case of coal to be made under the Acts of 1923 and 1926 jointly; but it is clear that the 1926 Act has proved of real substantial value, and I think it is certainly safe to say that the mere existence of its powers has been enough to bring about the settlement of difficulties without recourse to the Court and with a minimum delay and expense.
The Bill itself is short. Clause 1 extends Section 13 of the Mining Industry Act of 1926 so as to give the Railway and Canal Commission power to grant facilities in the case of certain minerals. Subsection (2) makes the Bill apply to the various minerals as specified in the Schedule and any other minerals worked in conjunction with them, and Clause 2 is the short title of the Bill. It is hoped that the Bill will in no way prove contentious, but if there are any suggestions which any noble Lord may care to make concerning the Bill, or with
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the object of adding to the existing minerals set out in the Schedule, they will receive the very careful consideration of the Department which I have the honour to represent. I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Munster.)
LORD STRABOLGI: My Lords, my noble friends have asked me to express their support of this Bill. In doing so may I congratulate the noble Earl on the very clear explanation he has given to the House? The only other comment I have to make is that we have consulted our friends who represent the great mining unions in another place. They welcome the Bill also, and we all of us think it is not only a very useful measure but it might have gone a great deal further. For example, it would have been even simpler to have done something about the royalty question on the lines of the Bill which your Lordships will have before you to-morrow for the control and future ownership of petroleum. Your Lordships will notice that oil shale, the solid oil in a way, is within the scope of this Bill, and from that we produce oil, whereas the liquid oil will be dealt with in a different manner and very much more in accordance with the policy which my noble friends believe would be in the great interest of the country. However, as things are, we consider this is a very useful measure, and I wish to assure the House of our support of it.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MARRIAGE (EXTENSION OF HOURS) BILL.
Read 3a according to Order).
Extent of Act.
2. This Act shall not extend to Scotland or Northern Ireland.
VISCOUNT GAGE VISCOUNT GAGE moved, after "Act," to insert "except in so far as it amends the Foreign Marriage Act, 1892."The noble Viscount said: My Lords, on behalf of the Ministry of Health I have to move two minor technical Amendments—one to Clause 2 and one to Clause 3. The point about the first Amendment is that the Bill as a whole is not to extend to Scotland or Northern Ireland since in those countries the ceremony of marriage is different from that in England, and consequently

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the provisions of the Bill would be unnecessary and out of place. But the Foreign Marriage Act, 1892, provides a procedure by which British subjects may be validly married in foreign countries, and states in Section 8 that the marriage is to be solemnised "between the hours of eight in the forenoon and three in the afternoon." Clause 1 of the Bill substitutes six p.m. for three p.m. in this section. Consequently, assuming that the Bill becomes law, if a person domiciled in England marries, say, in France at five p.m. the ceremony would be valid. The framers of the Bill no doubt intended this to apply equally to a person who is domiciled in Scotland or Northern Ireland and married in France, but as the Bill is framed it is doubtful whether it has this effect. The Amendment is designed to remove this doubt.
Amendment moved—
Clause 2, line 15, after ("Act") insert ("except in so far as it amends the Foreign Marriage Act, 1892").—(Viscount Gage.)
On Question, Amendment agreed to.
clause 3:
Short Title.
3. This Act may be cited as the Marriage (Extension of Hours) Act, 1934.
VISCOUNT GAGE VISCOUNT GAGE moved at the end to insert "and this Act and the Marriage Acts, 1811 to 1932, may be cited together as the Marriage Acts, 1811 to 1934; and this Act and the Foreign Marriage Act, 1892, may be cited together as the Foreign Marriage Acts, 1892 and 1934." The noble Viscount said: My Lords, this Amendment is introduced merely for convenience of citation.
Amendment moved—
Clause 3, line 18, at end insert the said new wards.—(Viscount Gage.)
On Question, Amendment agreed to.
Bill passed, and returned to the Commons.
House adjourned at twenty minutes before six o'clock.