§ Debate again resumed (according to Order) on the Motion for the Second Reading, made on Tuesday by the Earl of Munster.
THE MARQUESS OF LOTHIAN
My Lords, I do not think that anybody who has listened to the debate on this Bill which has taken place in this House so far, can fail to be impressed by the fact that many of the speeches have been based on practical experience of the working of the coal industry and not upon theoretic considerations, adduced in advance and having no actual experience of it. My only regret is that there is not a solid phalanx of members of the Miners' Federation on the Benches to my left, in order that they may bring before your Lordships in an equally practical way and equally based on experience, their views of this Bill. The noble Lord who leads the Opposition said yesterday, on behalf of the Labour Party, that he disliked the Bill. I think it is tree to say that there is nobody enthusiastic for it, except possibly those bureaucratic draftsmen who drafted it in the purlieus of Whitehall. The real argument for the Bill, as I see it, is fundamentally political—that the Government became committed to this principle without a great deal of thought at the time of the General Election, and they now feel that they must honour their pledges.
The plain fact is that the conditions in the coal industry to-day, on which I do not claim to be in any way an expert, but with which I have some little familiarity, are enormously different from those which obtained in the years when my noble friend the noble Viscount, Lord Samuel, presided over the Coal Commission, and the earlier days when the Sankey Commission sat. Then the industry may not have been very well organised. It was suffering from the consequences of war and of revolutionary 904 movements among the Miners' Federation, and was clearly in a very bad condition. To-day, despite the depression, and perhaps in some degree as a result of the pressure caused by the depression, the industry is not working at all badly, and for two reasons. First, because it has adopted the principle of profit sharing, and secondly, because of the vital principle adopted when the selling schemes were brought into operation. These really vitally changed the industry, and the issue to-day is the question whether better steps should not be taken to protect the consumer against the quasi-monopoly which has been set up for mineowners on the one side and the miners on the other.
Let me deal as briefly as I can with the two main principles of the Bill, and firstly with the proposal for unification. I have long thought that there was a strong case for the unification of mining royalties. It is a system which applies in most other countries, and nobody can say it would produce disaster in this country; but my objection to the Bill is that it does not carry out the real advantages which are involved in the unification of mining royalties. It involves a very big change in practice, because instead of, as at present, any mining company, broadly speaking, being able to buy coal at an ordinary market price, for the price of royalties is more or less settled by custom, ownership of coal will be a monopoly and we shall have a group of people, the Coal Commissioners, who will have to determine on quite other grounds—though price, no doubt, will play its part—the principles upon which they are going to lease coal to the coal-mining companies.
In the ordinary way the theory of the State ownership of coal implies that the State can use its powers to revise leases, or at any rate to make conditions in leases, and that the revenue from the asset, the coal, will enure to the profit of the State. In this Bill, quite rightly, I think, there is no power to cancel or alter leases, and therefore one of the main arguments which have always been put forward for the unification or the nationalisation of coal measures does not in this case apply. The Bill does not give the Coal Commissioners any such powers as those who originally advocated it thought it ought to give them. So far from the profits from the coal asset, now 905 to be nationalised, passing to the benefit of the taxpayer, they are simply going to be transferred to the pocket of somebody else—namely, those who are actually engaged in the industry. Therefore one of the main reasons for the State purchase of the coal royalties is not given effect to at all in this Bill. On the other hand, the reason which has been given by the noble Earl who introduced the Bill and which has been mentioned by many other speakers—namely, that there are difficulties because of the surface boundaries being introduced clown to the bottom of the earth—has, as almost every coal-owner or miners' representative has said in this House, been got rid of by the recent legislation which gives the Railway and Canal Commissioners power to intervene and settle these matters. Therefore the argument for the Bill is invalid or is enormously weakened, and the consequences which are usually regarded as following from the public ownership of coal will not begin to come into operation in this country until the major part of the existing leases has disappeared.
Now may I come to the question of the price which is going to be given for what are called the royalties? I admit that in theory the ownership of coal may be a questionable form of property. But, as the noble Earl admitted, it is a form of property which has been recognised in this country for three hundred years. It has changed hands from time to time, and nobody seriously questions that it is as valid a form of property to-day as any other. Moreover, all the three Parties in the State, for somewhat different reasons, are agreed that, in the event of any private property being acquired for any purposes by the State, fair compensation shall be paid for it.
The noble Lords who represent the Conservative Party opposite naturally take that view, because I suppose one of the first principles of the Conservative Party is to protect the rights of property, whatever they may be. The Party to which I have the honour of belonging also respects the rights of property, but is much more concerned to see that property shall be owned by everybody and not that it shall be concentrated excessively in the hands of the few under a system from which all sorts of privileges have sprung in the past and will doubtless spring in the future. Therefore our policy accepts 906 the principle that compensation should be paid for property, though the Liberal Party has practised the method by which the excessive riches of the rich are heavily taxed in order in some degree to level wealth so that the rate of taxation shall fall most heavily on the shoulders of those who are best able to bear it. But it is also the principle which is accepted by the Labour Party, whose eloquent representative in this House is Lord Snell. He, with his accustomed sense of justice, said he thought that the principle which ought to be applied to the acquisition of the coal measures should be that of complete justice. Even the more advanced members of that Party recommend compensation, because they know quite well, even if they do not accept the validity of the rights of property, that any attempt to take property without compensation in this country would inevitably have the same effect as in every other country, which is to lead towards that Fascism of which they are, quite rightly, afraid.
Therefore the principle agreed by everybody—by the noble Earl who introduced this Bill, by those who spoke on behalf of the Government in another place, by all the three Parties, and by the Lord Chancellor when he spoke yesterday—was that the compensation for the asset should be fair and equitable. Those, I think, were the words which were used. The noble Earl, Lord Munster, introducing the Bill, said:… We would never be parties to the abolition of the system of royalties except on the basis of the payment of fair compensation.That is quite right, because the principle on which this country largely rests is that, in so far as people may think that the distribution of wealth is unsatisfactory and unbalanced, that should be remedied by the incidence of taxation. Therefore you have the principle of graduated taxation. It is quite clear, and I think most people would agree with me, that nothing like half the revenues derived from coal royalties—of which, fortunately or unfortunately, I am a small owner—comes back to the fortunate, or unfortunate, owner. The State is already, in some form or other, the beneficiary of at least half the value which comes from that source of income.
Why, then, is there the sense of bitterness? There is no doubt, if you read the 907 speeches that have been made about the proposals embodied in the Bill for the basis upon which the coal measures are to be acquired by the State, that it is because, while the Government go on saying over and over again that the terms are fair and equitable and that their intentions are to be honest and fair, everybody who has anything to do with the matter knows that, so far as practical experience is concerned, they are both unjust and inequitable. They have, in point of fact, taken away half the value of the property concerned. Now, if the Government will come and say: "We think this is a form of property which ought to be subjected to a very special form of taxation, and we are going to appropriate that taxation in order to pay the armaments bill"—or for whatever public purpose you may like—I think noble Lords would say "Well, we must grin and bear it." But if they come along and say that they are giving justice when they are quite clearly not, that is the root of the trouble.
I am going to refer, if I may, briefly and with the utmost courtesy, to a section of the speech made by the noble and learned Lord Chancellor yesterday, in which he said—I think with perfect propriety—that any noble Lords who are actively interested in this matter ought to weigh very carefully whether they should cast a vote in any matter which directly affects their pockets, on the ground that long experience has proved to him, as it has proved to most of us, that everybody should recognise the very uncertain validity of his own judgment in matters of this kind, where his own personal interests are involved. I propose to follow the course which was proclaimed by the noble Lord, Lord Balfour of Burleigh, last night: in this matter which directly affects my pocket and in which I am directly engaged, I do not propose to cast a vote. But I think that this throws a certain responsibility upon the Government. It means that noble Lords who lead this House and are responsible for the measure have a very special responsibility for determining themselves whether in practice this proposal is fair and equitable.
If I may very briefly—I cannot be too brief because the point which I am going to raise is not only important from the 908 point of view of this Bill but goes very deep into the question of the basis of the future acquisition of property by the State—let me explain the reason why there is, let us say, real discontent on this matter on the side of the royalty owners. It is because whereas the revenue, as determined by the Government, derived from royalties is £4,430,000 a year, though I have no clear idea how that figure was arrived at, those who will get finally the sums which the Government will pay for the coal measures will in practice only get a revenue of about £2,000,000 a year less. They will lose £2,000,000 a year as a result of the transaction. They will lose 5o per cent. of their income. I do not think there can be any dispute about these facts. There is also the fact that whereas the owners of tithe, another form of property, obtained twenty-seven years' purchase, the owners of coal measures, which are at least as valuable a form of property, are only given fifteen years' purchase. I do not think there can be any dispute about the fact that it involves a loss of 50 per cent. of income. The Government answer is perfectly valid as far as it goes. They say "What could be fairer? You have had a tribunal constituted, an agreed tribunal, with agreed terms of reference. Those who spoke for the royalty owners"—I have no particular knowledge how they were appointed or whom they represented—"agreed to accept the result." Therefore, from that point of view, the Government have a perfect answer to that, and I do not disagree with the way in which the noble and learned Lord the Lord Chancellor dealt with the matter.
Why, then, is there this unfair result? That is what I want to analyse, because it goes to the root of the matter. The reason is that we have mixed up a judicial procedure and a valuation procedure. I think the Lord Chancellor will agree with me that Judges and other eminent lawyers are not necessarily experts in valuation. They are experts in the law. In the statement made by the then Chancellor of the Exchequer in the House of Commons as to the basis upon which these properties were to be valued, he said that the Government were going to "appoint a tribunal to determine the value of the whole property concerned on the basis of a sale in the open market 909 by a willing seller." The terms of reference to the Greene tribunal were to determine the amount which the fee simple of all unworked coal and all mines of coal might be expected to realise if sold in the open market by a willing seller. That was the matter committed to them for decision, and they were instructed to express their decision as to the value of the fee simple of all unworked coal and of mines of coal which might be expected to be realised by sale in the open market in the form of stating the appropriate number of years purchase to be applied to the figure £4,430,000. That was the instruction which was given to the Committee.
If you want to see how this divergence has happened you can see it exactly from the speech made by the noble and learned Lord, the Lord Chancellor, yesterday. What he said was:A tribunal was instituted to determine the value of all the coal royalties in this country.That is not what its instructions were. It was to determine the value which the fee simple of all unworked coal and mines of coal might be expected to realise if sold in the open market by a willing seller. In so far as I am correctly informed of what happened before the tribunal the main evidence led was evidence as to the value for Estate Duty of the leases of coal. When you speak of valuing royalties what you mean is valuing those leases. I personally think fifteen years a perfectly fair valuation of the leases which are granted to mine coal for a certain specific period. But having determined that fifteen years' purchase was a fair price to be paid for the existing leases the Government have then taken the asset upon which these leases are based for nothing. It is exactly as if you proposed to expropriate War Loan in fifteen years and paid the owners fifteen years' purchase of the annual revenue, whatever it was, and then thought you were entitled to cancel the principal for nothing. If you take the fee simple of all unworked coal you have there an asset on which the owners could certainly be able to count on an income of some £4,500,000 a year for probably three or four hundred years. Until the coal disappears from use it is one of the best gilt-edged assets in the world.
In the ordinary way when a lease comes to an end the royalty owners collectively have an asset upon which they will 910 be able to grant fresh leases indefinitely. That element has not been valued either by the Committee or by the Lord Chancellor, and that is the reason why coal measures are valued at fifteen years' purchase and tithe at twenty-five or twenty-seven years' purchase. The Government are valuing the leases fairly and then taking the coal for nothing. That is the explanation why there is a sense on the Government side that they are treating the royalty owners fairly and a sense on the royalty owners' side that they are not being fairly treated. That is a matter which I think the Lord Chancellor and the noble Earl the Leader of the House may fairly be asked to weigh. I think there is also a feeling that this expropriation is not enuring to the benefit of the State. It is enuring to the benefit of somebody else. The State is not getting the benefit of it; it is some other element in the coal mining industry which is getting it. That is all I want to say on that point, but I think it is worth saying because unless my judgment is wrong it does explain why there is so much feeling in this House, and it is a matter which the Government might weigh before coming to a final conclusion.
Now one word about amalgamations. Of course the coal mining industry is in no sense like an engineering or a manufacturing industry, where amalgamation almost invariably shows immense advantages of reduction of costs by concentrating output in enlarged and modernised factories. Every coal mine is a unit by itself. Its underground conditions are fixed and unalterable. By amalgamation you do not change in any respect the way in which coal is won and brought to the surface. The only practical working advantage you may sometimes get, but that is very small, is in the collective purchase of stores. The real argument for amalgamation, the argument which has always been used in the past—and it is a good theoretical argument—is that it ought to enable you to concentrate all production in the best producing mines and to close down the less good mines. That is the real argument for it. But in point of fact there are only two ways of achieving this result. There is on the one hand the method of cut-throat competition, in which the better equipped mines gradually force the less good mines out of existence. That is the method which was adopted in the early 911 days of the industrial revolution, and which is sometimes all right when you have got a rising market. But the penalty of it is that it invariably drives down wages to subsistence level and leads to unemployment. That was the bitter experience of the coal industry before the selling schemes were introduced, and it is the reason why the Mineworkers' Federation is not in favour of it.
The other method is compulsory amalgamation, the method which is outlined in this Bill. But compulsory amalgamation either means that you have a large additional capitalisation added to the good mines because of the cost of acquiring the bad ones, and therefore the good mines have to earn so much more profit; and it means that by concentrating production in the good mines only you throw a lot of miners out of work. That is why the Mineworkers' Federation is against it. It would be exactly the same under a system of Socialism. If you nationalise at a reasonable price the mines have to pay interest on the total cost of acquisition. They have to concentrate production on the good mines, and it means smaller employment. If they went on distributing production in the way they do at present, then it means no reduction in the cost of coal. Therefore the advantages of amalgamation when you come to analyse them do in point of fact tend to disappear. Moreover, the real case for amalgamation, which was very strong at one time, has been partly removed by the voluntary amalgamations which have already taken place in the industry, partly by the profit-sharing arrangements, and partly by the selling schemes, which are I think by far the most important thing which has happened in the coal industry in the last twenty years. It has transformed the whole face of the industry though it has introduced a new element and a new problem, which is referred to in the Eighth Schedule of this Bill, as to whether the monopoly or quasi-monopoly which is thereby created, both of the mineowners and of the miners, may not lead to an undue price of coal to the consumer.
The only advantage of compulsory amalgamation to-day, therefore, is in those very few cases in which a voluntary amalgamation by all the principal parties is held up by one or two factious persons. 912 There may be certain advantages in that case in bringing the power of the State to bear to get rid of factious and irresponsible opposition. But if anybody believes that there is going to be any considerable advantage to the coal industry—several noble Lords have mentioned the factor of safety—by any large-scale amalgamations, I think they are going to be disappointed by this Bill, as they have been disappointed in one form of legislation after another for remedying the problems of the coal industry.
Therefore I cannot say that I view this Bill with great enthusiasm. It is fairly good in parts, but it is too ambitious. I think it is not really wanted by any of the three parties engaged in the industry. It is possible that it may be improved in Committee in certain respects, but I personally believe that you would get better results if the Government honestly went to the three parties and said: "What is really the best thing to do? What are the things which would make the industry better and more efficient?" I think you would get better results in that way than by going on with the Bill, which partly deals with conditions which have ceased to exist and which are to some extent the imagination of bureaucrats, and is partly the necessary fulfilment of Election pledges. I shall vote for the Second Reading of the Bill, and I hope that the Government will give some consideration to the remarks I have made to-day.
§ THE MARQUESS OF LONDONDERRY
My Lords, I ask your Lordships' indulgence for a few moments in order to make certain observations on this Bill which deals with the industry with which I have been connected for a great number of years. I am not certain that the speech which we have just heard from the noble Marquess has not really disposed of any reasons for passing this Bill at all, and has not in fact shown that the same results which the Government may have in their minds would have been quite well achieved in another way. But notwithstanding that, this Bill is receiving a three-days' debate in your Lordships' House, which places it on the level of a first-class measure. I am quite sure your Lordships will agree with me that the debate has been maintained on the high level to which we are accustomed in your Lordships' House and will be read in all parts of the country and probably abroad.
913 The most reverend Primate gave two reasons why he was not disposed to vote against this Bill. The most reverend Primate showed a very militant spirit and he gave us the impression that but for two reasons, which he mentioned, he would have strongly opposed the Bill in every way sanctioned by Parliamentary custom of which we all have some experience. He told us first of all that he considered he was in honour bound by the decision taken by his representatives in reference to the arbitration on royalties, and that on that ground he could not vote against the Government. The second reason was that he felt sure that with the knowledge which the Government had in their possession, and the bearing which the coal industry has on all other industries in the country, they were likely to be right, and therefore they should receive our support. I regret to say that I do not feel myself in agreement with the most reverend Primate in either of those two reasons. But I am not going to vote against this Bill, and I am not proposing to employ the ordinary Parliamentary methods for opposing Bills with which we do not agree, for another reason which is uppermost in my mind at the present time.
While saying that I regret that the Government have brought in this Bill because I think it wholly unnecessary, I feel that the position of the Government at the present moment is one in which they require all our support, and I should not like a debate of an acrimonious character to be published in the newspapers here or abroad and so give an entirely false impression of the real situation in this country, which is that we are prepared to support the Prime Minister whatever may happen. I feel that in the difficult position which we are in at the present time that is the impression which we want to go out abroad.
We enjoy, however, this advantage in your Lordships' House, that when we discuss measures of this kind our objections will be listened to, and they will receive the proper attention to which they are entitled. The Bill seems to me to centre round the Commissioners, and I believe shortly it will be a question as to whether the coal trade is for the Commissioners or the Commissioners are for the coal trade. I feel that this is an excrescence which cannot have the results 914 which the Government anticipate. I am sure that any extension of bureaucracy is a step in the wrong direction. I should like the Government to realise that, after all, the coal trade is worked by men who have been in that trade for a great number of years, and they do know something about their business. The Government would receive better information from those who are closely connected with the industry than from a body of Commissioners who work in Whitehall and cannot have that connection or that sympathy with the industry which they should have if they are to be more successful in controlling the industry than those who are conducting it at present.
I have had a very long experience of coal legislation, and I am not sure that the noble Marquess did not put his finger on the spot when he said that the introduction of this Bill was really for political purposes. The Government desire to be able to say, when they are called upon to give an account of their stewardship, that after all they did bring in some legislation in connection with the coal trade. That has been the cry of Governments for a very long period, and the noble Viscount, Lord Samuel, who spoke on Tuesday, was brought up in that atmosphere. I have recollections of bygone years when he took part in discussions on Bills of the same description which I thought were brought forward not really for the amelioration of the industry but for the purpose of saying that the Government were interested in the coal trade and had done their best by means of legislation to benefit all those occupied in the coal industry. The Government, and I think the Lord Chancellor, have been the victims of what I would call the ceaseless propaganda of the Miners' Federation, with which I have been associated for a great many years and for whose individual membership I have the highest respect. Your Lordships should remember that the Federation, while ostensibly a body for the benefit of the coal industry and for that side of the industry which they represent, are really the right wing of the Socialist Party in this country, and through their propaganda and the manner in which they operate and through their representatives in the other place, they are really pushing forward the policy in which the Socialist Party believe. There 915 is no more fertile ground for the arguments put forward for the promotion of this policy than the coal industry.
I was very surprised when I listened to Mr. Greenwood's speech in another place. It was a long speech, but it was really an attack on coalowners, saying they did not know their business, that they had no regard for the safety of their men, and that therefore this was an industry which should be taken over by the Government and nationalised. That was really the substance of all the speeches that came from the Labour Benches. If I quote Lord Addison, we can see that the Bill which the Government have brought in has encouraged the Socialist Party in that direction. He said on Tuesday:After all, however we examine this Bill, from start to finish it is a limitation, or a control, or an alteration of the operation of private enterprise and, as such, we on our side, represented by so tiny a section in this House … receive the proposals of the Bill in an entirely friendly spirit.….That shows that the meaning of the Bill has not been lost on Lord Addison and that he looks upon it as a stepping-stone to the policy for which the Miners' Federation have been pressing for many years past.
The first Part of the Bill deals with royalties. I can take a somewhat dispassionate attitude on this question, which I am sure will encourage the Lord Chancellor in listening to me. I say "dispassionate" because, for years past, I have worked the coal which belongs to the Government—that is, the coal under the sea. I have considered the question of the unification of royalties for many years past. I have no actual objection to the State owning minerals. We know quite well that the State does own gold and silver, but by a decision of the Court in the sixteenth century coal was not added to the list. It might be said that it would have obviated difficulty if coal had been added to that list, but it is no good discussing that particular point now. The point is that by custom and usage coal has developed into a property and has the rights of property which should be acknowledged in the manner of equity by all concerned. But I am not quite sure that I agree with Lord Munster, to whom I should like, if I may, to pay a high compliment for the speech he made on Tuesday. It was a speech in the best 916 traditions of your Lordships' House, and I am sure that all those who are his friends will hope that he will continue his success and go forward in the path on which he seems to be so properly at home in making speeches in this House.
I listened with interest to the noble Earl when he said:I have long realised that the ownership of this raw material in private hands is not conducive to the better economical working and organisation of the industry.I am not sure if I agree with him. I am inclined to think that after the Act of 1933 the manner of dealing with royalties is best carried out by the people on the spot amongst the people they know, by people with a community of interest and with an expedition which one cannot ex-pect from Commissioners situated in Whitehall. I may be wrong on that point, but I am inclined to think, having made a close study of this question, that if there is an advantage that advantage is best expressed by all the questions which concern leases and royalties being conducted by people on the spot who are fully aware of all the matters connected with these things. But I do not want to dwell on that point. I only wish to say a few words in connection with what is called the unification of royalties and the compensation payable. I consider it from a simple point of view. The Government have bought an interest in coal from the private owner and have transferred it to the Commissioners, which means that they have transferred it to the State. Whilst I, like the noble Marquess, do not wish to quarrel with the fifteen years' purchase, still I do feel that by the selection of some of the leanest years, and through the Arbitration Committee multiplying the average of these years by fifteen, we cannot say that a proper decision has been arrived at in regard to this matter.
As to the procedure I do not want to say very much, but I do not feel myself bound like the most reverend Primate. To my mind, it is the most amazing transaction I have ever heard of. A deputation visits the Treasury, states its case, and consents to an arbitration, but I never knew of an arbitration being agreed upon in which, while one side can loyally say they are prepared to abide by it, the other side can say that if it does not suit them, they will 917 not consider it. Moreover, if there is a transaction by a willing seller—I do not want to argue the question of a willing buyer which was mentioned on Tuesday—one would feel that something like the price asked for was in the neighbourhood of what would be the correct price, and one would feel that in an arrangement of that sort a decision could not be arrived at which brought about so great a change in the value of the property to the seller. While I have said a few words on that point, what I particularly want to emphasize is that I am indeed surprised that the Government should shelter themselves behind an award of this description. It does not satisfy me that the Government of the country should say that as three eminent gentlemen in an arbitration have awarded a certain price to be paid, they will accept that price, because, at the same time, they are laying down for a long period of time the value of property acquired by the State from a private individual. I do feel that on this particular occasion, when we are making a tremendous step in the direction of acquiring property from the private individual, the Government should consider it a test case, and lay down what they consider should be the lines on which private property should be acquired. I am not certain that, the friends of noble Lords who sit on the Front Bench do own property, but if they do and those individuals were appealed to, it would be found that they would be very surprised indeed if these particular rules were to be laid down for acquiring all their property in the interest of the State.
In regard to the value which has been arrived at, I have said that the arbitration was based on some of the leanest years which the coal trade has experienced, and I am inclined to think that the Government have made a very good bargain indeed. If one puts it in broad figures, the Government have bought a seven per cent. investment, which is one of the ambitions of a great many people. But I do not see any reason why the price of coal should go down in the future. We know quite well that there is coal in this country which will last, it has been estimated, for another five hundred years. It is the sole source of power which we really possess in this country, and, therefore, it contains 918 a value peculiar to itself. I think that we must realise that some of those in this country best qualified to form an opinion on the subject—I think I can quote the I.C.I. in this connection—believe that oil will come to an end in a comparatively short space of time. But that is a matter of argument which I do not propose to go into now. We should realise, however, that coal is the sole source of power which we possess, and that it can be available at the present rate of output for another five hundred years. The Government, therefore, have really made an excellent bargain for themselves by paying this niggardly price to the owners of the coal royalty property in this country.
With regard to Part II I propose to say only a very few words. I may perhaps claim to have had certain experience in relation to amalgamations. Some sixteen or seventeen years ago I had it in my mind that we should very carefully consider the trustification of the whole of the coal in this country, but after a close study of the matter I came to the conclusion that this was neither suitable to the temperament of our people nor was it consistent with the policy which I think we want to carry out in this country. I circumscribed my ideas, and I returned to the County of Durham thinking that I should be able to amalgamate the coal industry in the County of Durham. I met with no opposition but with a great deal of disagreement. I compressed my ideas still further, and I did my best to bring about more amalgamations, because I felt that in the spirit of the age where great amalgamations were growing up around us it would be unfortunate if the coal industry was left in a disconnected position, if I might use that expression, left in complete chaos, while other industries were deriving advantages and benefits from closer co-operation. Again, I say, I did not meet with opposition, but after many conferences I came to the conclusion that the advantages which I had believed to be possible were not realisable. I definitely formed the opinion that amalgamation in the coal trade is a process of evolution, and that the coal trade is quite up to date enough and is manned by individuals who are sufficiently progressive not to retard the movement towards amalgamation so long as that 919 process Is for the benefit of the industry and for the benefit of the country.
I think that if we cast our minds back over the last few years we shall realise that these amalgamations have been continuing. They have been brought about, and I do not think the argument used by the noble Earl, Lord Munster, that the industry is in a state of chaos and wants reorganisation, is justified. I will quote what my noble friend Lord Munster said. He said:… "the industry has never availed itself sufficiently of the opportunity for voluntary reorganisation from within.The noble Earl in saying that is merely echoing the propaganda of the Miners' Federation. I think I can justifiably say in regard to the coal industry that there is no industry in the world that can claim a better organisation. We have had to meet with difficulties from the very beginning. We have had the Federation against us for political reasons on the main issues. We have had strikes, causing markets to be lost by reasons of those strikes. We have had, above all things, to withstand the chaotic administration which took place under the Government some sixteen or seventeen years ago, and I think those who are foremost in the coal industry and prominent in the administration of its affairs deserve the utmost credit for what they have done in the face of the tremendous difficulties with which they have been faced.
I now turn to Part III of the Bill. Part III is that portion which stabilises prices. I know that the superficial observer of this matter will think that this is all in favour of the coalowner. I am not sure that there are many of your Lordships who realise or understand the difficulty in which the mineowner is placed. He has to take a decision very often as to whether he will lay a pit idle or whether he will try to continue it at a loss in the hope that on reaching better times he may be able to recoup himself for the losses he has suffered in the past. That policy is a very understandable one, and I do not propose to develop it more fully this afternoon. That policy has been responsible for what is called the cutthroat competition amongst mineowners, and that policy is being pursued in other industries in this country.
Your Lordships may not agree with all that I have said, but I think that you 920 should realise that the consumer of coal in this country has for many years been receiving coal at under cost price. When I say that I am referring to the great utility companies and the railways. When the coal trade has been depressed they have been receiving coal at under cost price by reason of what has been spoken of as the cut-throat policy of the mineowners. As to the private consumer, that is another matter, which I do not propose to go into to-day. The pithead price of the coal which is delivered into his cellar is a matter which should be most carefully considered. But when I have said all this I think that the only important portion of the Bill is the continuance of the Act of 1930, which is carried out in Part III. The other two Parts of the Bill are matters which I hope will receive amendment in your Lordships' House, and which we could quite well dispense with at the present time.
§ VISCOUNT HORNE OF SLAMANNAN
My Lords, in venturing to follow the two very powerful speeches to which we have just listened I feel I ought to apologise to the House for taking part in this debate because I have not been present during the previous discussion. But although I have been absent I can assure your Lordships that I have taken the pains to make myself acquainted with the opinions that have been expressed and with the full extent of the discussion that has taken place. Before venturing upon any opinion as to the Bill, and in view of certain remarks which fell from the noble and learned Lord on the Woolsack yesterday, I think I may be pardoned for any criticisms which I have to make if I say that never at any stage of my life have I been a royalty owner, that never have I owned a square yard of territory below which coal has been worked, and that never have I had a penny of interest in any colliery since forty, or nearly forty, years ago, when I made one of my first investments, rather disastrously, in a colliery undertaking. Therefore I think I may be regarded as a completely impartial witness in connection with this Bill.
At the same time I am not giving ignorant evidence, for I was born in a community which was encircled by coal pits, and all my life I have had a great interest in the coal industry. Twice I fought a constituency which was largely 921 a mining constituency, and in the three great offices of Government which I was privileged to occupy I was, unfortunately, through the exigencies of the coal industry at that time, kept in constant contact with all the troubles which affected it. I was the Minister who decontrolled it after the devastating experience of losses while under public control. I was also the Minister who was responsible for setting up the profit sharing scheme, to which the noble Marquess paid such generous tribute. Therefore I am not unaware of the problems connected with this industry.
At the outset I must say that the Government has made a valiant effort to provide a logical and coherent plan for the coal industry in this Bill. In order to facilitate working, and to equalise and ultimately reduce the rent charges, it proposes to set up a scheme by which a Government Commission shall buy all the coal royalties. In order to make working more efficient, and to reduce costs, it proposes to make amalgamations of the collieries compulsory. In order to sustain prices which will yield to the coal miner an adequate standard of living, and to the colliery proprietor at least a modest profit, it has set up, and proposes to continue, a system of price fixing; and, as an after-thought, it now, in order to protect the consumer from the rapacity of price-fixers, proposes to set up a Committee of Inspection which will lay a heavy hand upon the shoulders of those who offend.
That, at least, is a very comprehensive system, and is based upon a coherent plan. It is a system which would be received with complete incredulity by a pre-War Tory, and even an advanced Radical, before the War, would have regarded the measure with great suspicion. The noble Marquess has given some indication of what the Liberal attitude as a whole towards such legislation has been. May I say that in my view the Tory Party has never been a doctrinaire Party, or a Party ridden by shibboleths. Basing itself upon profound constitutional principles it has always been ready to meet the changing experiences of life, and to confront modern problems with new solutions. I, for my part, as a dyed-in-the-wool Tory, am not at all shocked by these proposals, provided they are necessary and that they answer the purpose to which they are to be put. So 922 far as the attitude of my noble friend Lord Hastings is concerned, I am not like him fearful that the proposals of this Bill, if enacted, will constitute a precedent for nationalisation of all wealth and property and the means of production. Not at all. On the other hand this scheme differentiates itself entirely from the process of nationalisation. The fact that the Government propose that the purchase of the coal shall be by a Commission entirely independent of the Government, and that the colliery proprietors will remain the operators of their undertakings, seems to set up a barrier against the real nationalisation which might come upon us at some other moment if other forces were in power. Accordingly it is not from that point of view that I would seek to make any criticism of the provisions of this Bill.
In the first place I shall deal with what it says in Part I—the acquisition by the Commission of the royalties. I entirely agree with the noble Marquess, Lord Crewe, in being sceptical of the beneficial effects which are supposed to follow upon this Bill. I notice that the noble Earl, Lord Munster, in introducing the Bill painted a very pleasing picture to follow upon these proposals. He first of all said that any profits which will accrue from the ownership of the coal will be devoted not to the State but to the relief of rent-charges at present imposed upon the production of coal, and at a later stage he described them as having the result of improving the financial position of the industry, raising wages and possibly reducing prices. Unquestionably the noble Earl on Tuesday last added to the laurels he had already gained in this House, and I am sure he was happy in dispensing rosy benevolence over the whole industry, and in disseminating an eleemosynary generosity around the colliery proprietors.
But the colliery proprietors must know best whether they are going to have increased facilities and better profits under the unification of royalties. They must know best whether they are going to benefit by it or not, and whether the industry is to thrive under it better or not. They are the people, with their managers, who are most acquainted with that problem. It is relevant, surely, and to my mind it is more than relevant, it is almost decisive, to learn the opinions which they express. So far as I can find, there is 923 no coalowner in the country—certainly none whom I have come across—who supports the system of unification of royalties in this Bill. The noble Lord, Lord Gainford, yesterday gave emphatic expression to his disapproval, and, so far as I am concerned, every coalowner with whom I have had conversation has taken precisely the same view. Why is this so, if this is going to be the beneficent fairy godmother of the coal trade which the noble Earl described in his opening speech?
There are certain circumstances which seem to me to stand out. In the first place, the colliery proprietors who used to suffer from a variety of restrictions in the working of their coal, from separate leases and so on, have found that under the system which was enacted in 1923 enabling them to go to the Railway and Canal Commission if any proprietor of land was recalcitant, it is very easy to negotiate the agreements which they require. That is the first reason: they think they have nothing more to gain in that respect by the unification of the royalties. On the other hand, this unification of royalties produces a very definite detriment so far as the colliery proprietors are concerned. So long as the surface and the mine are owned by the same people, the colliery proprietor knows that he can always approach the surface proprietor in connection with any possible damage that is being caused or any difficulty about ways of working originally prescribed by the lease and he will be met with an ample agreement, which he will have no chance of getting in future under the system of this Bill. Therefore colliery proprietors, so far as I can see, are not impressed with any suggested beneficent results from unification under Part I of this Bill.
But there is more than that. When they begin to examine this position, what do they find? That there is little possibility of rentcharges and other burdens being diminished in their favour. They find a clause which provides for the putting to reserve of the surpluses arising from the working of the mines. There is no indication at all of when these reserves are supposed to be so full that the then colliery proprietors will begin to be considered with regard to a reduction in their charges. It may be not within the 924 lifetime of any noble Lord here, and in fact they think there is very little prospect of it for a long period to come. There is another clause of a more sinister order. It says that when the minimum reserve has been accumulated, thereafter the surpluses may be applied—to doing what? To redemption of the stock in which the royalty owners have been paid! The colliery proprietors say—and say, I think, with great force—that this looks as if the compensation which the royalty owners did not get but ought to have got were to be applied to wiping out the compensation which they actually got. Even if this process utimately enables reductions in charges to be made, the prospect seems to them very remote.
But there is one more dominant feature about the whole matter which must affect the mind of everybody. Of all the coal that is to be acquired by this Coal Commission—and I apologise if I bore the House by repeating a matter which has already been dealt with in previous speeches—one-eighth is already held in freehold by people who are working the coal. I have made inquiries about that. Some of it is in the possession of people like the noble Marquess who has just preceded me and whose family have had it for generations. But the great bulk of that coal has been acquired by colliery proprietors to do the very thing which the Government are supposed to be going to do by this Bill—namely, to get rid of the restrictions upon working. Therefore, for their enterprise and foresight they are to be penalised by losing a large portion of the money which they have paid in order to acquire their rights.
A great deal has been said about being fair. The fact is that my noble friend the Earl of Munster could not have made his speech from this side of the House unless he had protested that in all these transactions fair compensation was going to be paid. There is only one way of paying fair compensation to a colliery proprietor who has purchased the coal in order to work freely. There is no other way than by giving him the lease of the coal, for any length of time that the coal can be worked, at a peppercorn rent. There is no other possible way of treating him with fairness. This situation, I am told, was never considered by the Greene Committee and, so far as I can observe, it has never been seriously treated in another place. I am not sure that debates 925 there have taken into account all the items that go to the make-up of this Bill. I would venture to say that this feature of the Bill is a dirty smudge upon the face of it, and that unless it can be wiped out by some Amendment or other, it will go a long way to justify the very drastic proposal which my noble friend Lord Hastings is going to make to the House before the Bill goes into Committee.
These are some of the things which make it plain that some alteration must be made. When it is said to me, as it was said the other day, that in order to treat separately those colliery proprietors who hold their coal in freehold it will be necessary to be unjust to the other royalty owners, the only result of that argument is to show how unfairly the other people also are being treated. That brings us at once to the question of whether this £66,000,000 really represents the proper purchase price for the royalties in this country. I am sure that anybody who knows anything of the coal trade must have been startled at the suggestion that that was a large enough sum to give them. The masterly exposition of the noble Marquess (Lord Lothian) to-day shows convincingly how it was arrived at. It has always been a great puzzle how such a result was reached. I do not dilate further upon that question. The noble Marquess has said a great deal, and more than I have ever thought of, and I think we must all be greatly indebted to him for the way in which he has expounded this very difficult problem.
I would venture however to say this. Following Lord Gainford, I think it was quite unfair to choose these lean years of the coal trade as the basis upon which the amount to which the royalty owners were entitled was to be calculated. It was also mean of the Government to put forward as a condition of arbitration that the royalty owners should be bound while the Government were still free. That is a condition which I am perfectly certain would never be put forward by any reputable business man in this country in any negotiations into which he was entering. Moreover, it would never be accepted by any body of people who did not feel that they were too weak to resist—that they were in the hands of the man with the big stick. That being said, I beg to express my great admiration of the men who formed the tribunal 926 which decided the question of compensation. No three more distinguished men could be found than those who dealt with this question, and it is perfectly certain that they judged honestly according to the material that was submitted to them. But in my view they never got the proper material on which to form a judgment.
Now how do we stand on that? The noble Marquess, Lord Lothian, made an appeal to the Lord Chancellor to have the whole matter reconsidered. I confess I look at the position with some despair. No voice could be raised in the House of Commons to challenge the amount, because it was incompetent for any private member to seek to increase the amount of money to be paid. The Bill has come here. It is entirely incompetent for us to propose any increase in the amount of compensation. The royalty owners—at least those who were in contact with the Government—are willing to agree, fearful lest something worse should befall them. The result is that the Church is despoiled, that the poorer clergy are to be condemned to an even more poignant penury, and that a lot of simple people in this country, whose whole prospects of a narrow margin of exiguous comfort depended on portions of these royalties, will now have to seek for some other means of subsistence, people for whom this generous country provides no dole. For my part I view the whole transaction with supreme distaste.
I turn to the question of amalgamation, provisions for which are embodied in Part II of the Bill. That has been dealt with also by the noble Marquess, Lord Lothian, on precisely the line which occurred to me. You cannot amalgamate coal pits as you can amalgamate engineering shops. You have to take coal where you find it and that is where God put it. Moreover, there is another reason why you cannot effect reduction of costs in the way that you can in ordinary amalgamations. By Statute you are compelled to keep a certain personnel at every mine that is open. Therefore there is no room for such reductions of staff as you are able to get in an ordinary amalgamation of business undertakings. One must not fail to recognise the fact that there have been amalgamations to such an extent in the coal trade now that 77 per cent. of the whole of the industry is owned by 927 129 concerns. It is true that 800 others own the remaining 23 per cent.
I think the noble Viscount, Lord Samuel, must have lost his usual logical faculty on Tuesday when he made certain criticisms of the colliery proprietors. He seemed to say that because they have effected these amalgamations for themselves they ought not to oppose compulsory amalgamation. His syllogism was this: why should colliery proprietors object to compulsory amalgamation? They have already made 129 voluntary amalgamations, therefore it is unreasonable for them to object to complete compulsory amalgamation. If I am in any way misrepresenting the noble Viscount of course I will withdraw, but let me say what the fact is according to my view. The colliery proprietors have effected amalgamations which have been advantageous to them and advantageous to the industry. The reason why they have not effected other amalgamations is that they would be disadvantageous or that they have not been proved to be advantageous. The real fact is that the remaining 800 concerns are for the most part very small concerns. There are all sorts of little pits scattered about the country where a few miners have put their savings together and started shallow pits which they keep working, and very often in times of strike they are the only supporters of the locality. Is it right that these people should be exterminated? I can see no benefit to the country in getting rid of thrifty, thriving people like that who are carrying on small businesses. On the contrary, I would like to see them survive.
You may say that amalgamation is very good in itself. It may be so in theory You may say to me, if you like, that I ought to marry, but I might ask in reply, "Whom am I to marry?" Since it is not to be somebody of my own choice I may be bold enough to ask very sordid questions about settlements, and unless these are satisfactory one does not go on with the amalgamation. This theory of amalgamation is all very well, but I entirely agree with the noble Marquess who spoke first this afternoon that the suggestion that it is going to do so much for the industry is a chimera. As the noble Marquess, Lord Londonderry, has said, the coal trade is now well 928 organised and given a fair chance it will do very great good for the country. When people talk about these things it occurs to me very often to ask why it is that they are so arrogant in thinking they know how to run other people's businesses. When one looks for a reason why there are not more of these amalgamations, is it not possible that these coal-owners know their business best? I feel like asking that question under my breath, because a lot of people who have never been in business are now engaged half the day in trying to teach people who have been in business all their lives how their businesses ought to be run.
I pass from that question of amalgamation and say only one word about Part III of the Bill. The people who are supposed to know nothing under Part I and Part II, and who are supposed to be very incompetent in running their businesses, come out in Part III as angels of light. These colliery owners have succeeded in Part III in inducing the Government to set up a scheme by which they are entitled to get an adequate price for their coal, and anybody who sells under a stated minimum price is to be guilty of an offence against the laws of this country. That was good enough and went a long way, but as the Bill was introduced in the House of Commons it left the consuming community entirely at the mercy of these price-fixing boards, and it required a very determined attack by representatives of consumers in another place to get their case provided for under what might be called an addendum to the provisions of the Bill. This provided that Investigation Committees should have an executive authority enabling them to compel the application of their views, at the same time enabling the consumer to get the quality and quantity of coal which he desired. These things have made the Bill much better and have relieved the anxieties of a great many consumers. The noble Marquess who preceded me said—I hope it was not a reproach—that the railway companies were among the great public institutions which had been getting coal at less than the cost price. I do not know whether we were geetting coal at less than cost price or not, but at least we formed a great stand-by for the collieries in the recent times of depression.
929 I wish just to advert to one point before I sit down. As I have stated, an Investigation Committee is to be set up by the Government for the purpose of reviewing the prices and conditions which these various boards scattered about the country decide upon. That Investigation Committee consists of a legal expert, who will be chairman, a representative of the colliery proprietors, a representative of the miners, a representative of the large consuming industries, and a representative of the small consumers. Originally in the Bill it was provided that if there was any difference of opinion on the Committee the legal Chairman should decide. The Government under pressure altered that to the effect that the legal Chairman should only have a casting vote. It is very interesting to observe how such committees work. An illustration was given by Mr. Osbert Peake in another place, in which he described how in any discussion about price the representatives of the collieries—both the miners and the colliery proprietors—showed an adamantine front for a high price; the consumers, representing I suppose the Popular Front, were as usual divided; and the result was that the small consumer very seldom agreed with the large consumer. The small consumer, when he found that the large consumer was getting a less price than he was all for raising the large consumer's price. Similarly, if it was a case of the small consumer making an appeal, the large consumer, if he was concerned with the gas industry, was for raising the price to the small consumer because it gave an inducement for the use of his product. Accordingly, the result always was that three of the four were for the larger price. I hope in this connection that perhaps we may revert to the practice which the Government originally intended—namely, that of making the expert Chairman the deciding voice when there is any division of opinion.
I have taken up far too much time for which I apologise. I will only add that I do not oppose the Second Reading of this Bill. There are very many blemishes in it, some of which I hope we may be able to put right here, but there are other things which go deeper with which only the Government can deal and which I hope they will very seriously take 930 into account before we come to the Committee stage.
THE DUKE OF NORTHUMBERLAND
My Lords, this is the first time I have ever spoken in your Lordships' House, and I crave that indulgence which is always so readily granted by your Lordships to those who are inexperienced in the art of debate. This Bill, on which so much has already been said, deals with an industry with which, as a royalty owner, I have a fairly large connection, and I felt that I might be allowed to make that my excuse for taking up a few moments of your Lordships' time this afternoon. The question of the acquisition by the State of coal royalties is one which has been hanging over our heads for a very long time, and the best that can be said for this Bill going through Parliament, from the royalty owner's point of view, is that it at least relieves us from the odium which so unjustly accompanies the ownership of that form of property.
As the position is to-day, the interests of royalty owners and colliery proprietors are in the majority of cases interdependent, and the private ownership of coal is a system which, speaking broadly, has worked very well in the past. In no other country has the coal trade developed in the same way, and I think this benefit is largely due to private ownership and private enterprise. It is, however, necessary to recognise that the situation has changed materially since the War. It is I believe true that the coal industry attained its highest output in 1913, since which time the era of rapid development has ceased and a set of new circumstances has arisen. It is maintained that the methods by which the coal was valued for compensation purposes was fair and equitable. However small the figure that might have been awarded by the independent tribunal, the royalty owners, or a certain number of them, were bound to abide by it; whereas the noble Earl who moved the Second Reading of this Bill, I think stated that the Government reserved the right to reject the finding—which of course they would have done in the event of its being a larger sum than they were prepared to pay. In the event of that having happened we should still have been in the position of expecting legislation in the future for the nationalisation of our minerals at, a later date, 931 perhaps under a Government which would have granted us terms even less beneficial than those we are getting to-day.
Although I am no expert on the intricacies of this very complicated measure, I view with a certain amount of alarm what its practical results might be if it were to go through this House in its present form. One of its most dangerous aspects is, I think, the extensive powers that are vested in the Commission, and the encroachment on the rights of the surface owner. In Clause 4 and the Second Schedule the liability of the Commission to compensate for the withdrawal of support does not seem to safeguard the rights of the owner of the surface. As the Bill now stands, the Commission, after they have published the fact that they propose to grant a lease, are only liable to pay compensation for the letting down of buildings which have been constructed since that publication if reasonable and proper precautions have been taken in their construction. It would appear that this will cause a vast amount of expense to fall on the landowner for which he was never liable before, and might have the effect in areas where there is any likelihood of a lease being granted of materially sterilising the value of his surface. It would seem that the Commission is taking certain rights of the surface owner without paving for them.
There is another point I should like to mention to your Lordships—that of the position of mineral agents and surveyors and their staffs after the passing of this Bill. It was, I believe, the case that in arriving at the global figure a reduction was made for management expenses. It seems rather unfair that a professional class of people who have rendered fine services in the past should not receive some measure of compensation for the loss of their employment. It is true that in certain cases these men may obtain employment under the Commission, but there will be many who will be turned away with little or no prospect of earning their livelihood in the future. The administration of privately owned minerals requires highly specialised and technical knowledge, and if the mineral agent's profession is brought to an end its members will find great difficulty in finding other remunerative employment. 932 In view of the fact that a reduction was made for management expenses there does not, on the face of it, appear to be any excuse for not allocating at least that sum, whatever it may be, for compensating these people, otherwise the Government will be depriving a class of the community of their livelihood and abandoning them to a set of misfortunes caused by circumstances quite out of their control.
There is one last point which I should like to mention. It is one which I approach with great diffidence as there are many others amongst your Lordships who have a very wide experience on this point, whereas I have not. It refers to Clause 12—with reference to colliery owners of freehold coal—which has been referred to fairly extensively in this debate. The position of that person is obviously totally different from that of an ordinary royalty owner. The distinction that can be drawn between a person who has purchased coal for greater facility and economy in working and one who has purchased it purely as a good investment, is apparent. He will be paid his compensation from the global figure and will then have to pay back to the Commission a royalty probably in excess of the interest he is getting on that compensation.
If, as is generally accepted, one of the main objects of the Bill is to promote more economical working in the coal trade, it seems to me somewhat incongruous that the industry which it is intended to help should be put in a position of having the amount of that difference imposed on it as an additional burden. It is, I believe, true that in cases of this sort the Commission may grant leases under less onerous conditions, but it would seem that this should be an obligation rather than an option. In the Sixth Schedule it is stated that in the event of a disagreement between the two parties in relation to the fairness of a lease, the terms shall be settled by an arbitrator or, in default of agreement as to whom that arbitrator may be, by the Board of Trade. Therefore the final decision may rest with one of the interested parties. In Clause 12 it is also said that less onerous conditions may be imposed if the situation of the person would otherwise be unduly unfavourable. I cannot understand what that means. Either a 933 thing is fair or it is unfair, and I cannot see that it can be qualified by the word "unduly."
Before I sit down I should like to say one other thing. Many of your Lordships will remember that my father was one of the most ardent opponents of a measure of this description, and some of your Lordships will have lively recollections of the evidence he gave before the Commission presided over by my noble friend Lord Sankey in 1919, when there was an unanswerable case for the private ownership of minerals. At the same time my father, who was above all things a realist, might—I say "might"—in view of the fact that the era of rapid expansion in the coal industry which went on without interrupation and at ever increasing speed up to the War has come to an end, have modified his views if he felt that a measure of this kind could have conduced to the greater prosperity and better efficiency of the mining industry upon which so many of our fellow citizens depend. As far as I am concerned I do not wish to obstruct the Bill, but would wish to reserve the right to vote against the Government should they not feel prepared to give favourable consideration to a good many Amendments. That is all I have to say, and I should like to thank your Lordships very much for granting me your indulgence.
THE EARL OF MAR AND KELLIE
My Lords, as one of the oldest members of your Lordships' House I hope I may, with great respect, be allowed to congratulate my noble friend the Duke of Northumberland on his very effective maiden speech. In the course of this debate several noble Lords have alluded to the word "unification" as a curious term to be applied to the proposals in this Bill whereby the Government acquire the whole coal measures of the country for the State. I imagine the reason for that is that it is not at present the fashion to call a spade a spade. The depressed areas are described as Special Areas. Borstal institutions as approved schools, and the poorhouse as a home of rest, or words to that effect. This unification of royalties is not unification at all in so far as I understand that word. It is, in fact, nationalisation pure and simple—and this, from a Government predominantly Conservative, I am bound to say has strained one's Party loyalty almost to breaking point.
934 At the present time there are throughout the country many instances where the surface and the minerals belong to different owners. That condition of affairs leads to endless confusion and even litigation over surface damage. This Bill proposes to extend that pernicious system to the whole country. It is said that the surface owners are protected. I doubt it. In any case, if this Bill passes in its present form, it must have a deterrent effect on the growth of villages and towns in mineral counties because landowners who are compelled to sell or lease or feu land for building will not be able to guarantee mineral support—meaning that the coal will not be worked—as they can at present. I may be wrong in this, but the Bill is extremely complicated and difficult for a layman to understand. In fact, I was told by a lawyer the other day that, with the doubtful exception of the draftsman, no one really understands it.
With regard to this sum of £66,450,000 which has been fixed by the Greene tribunal as compensation to the royalty owners, it came out in the debates in another place on the Registration Bill of last year that the Mines Department estimated that there were only some 4,000 royalty owners in Great Britain, whereas on the Third Reading of this Bill in another place the Minister of Mines stated that over 17,000 royalty and mineral owners had applied for registration under the Registration Act, and I understand that almost a similar number have intimated their intention to apply for registration before the end of the year. That is 34,000 compared with 4,000—an enormous discrepancy, which I think requires clearing up. The more people you have claiming for the £66,450,000 the smaller, of course, the share of each one will be, which share I cannot imagine will amount to the fifteen years' purchase that has been promised to the royalty owners. I understand that where the existence of coal has not been proved on an estate by boring, although its existence may be inferred from the presence of coal on a neighbouring estate, the owners will get little or nothing. I must say that I do not envy the valuers their almost impossible task. That leads me to ask where these valuers are to come from. An enormous number will be required. They must be very skilled people who understand the geology of the whole of 935 the coal measures of the country. I am extremely doubtful as to how the Government are going to get them unless, as the noble Duke suggested, the agents are appointed.
It appears that this £66,450,000 will turn out to be almost as good an investment to the Government as the purchase of the Suez Canal shares in the 'seventies of last century. The miners will not benefit, at least for a number of years, and royalties will have to be paid to the Coal Commission instead of to the present owners. That is so even in the case of the colliery companies who have bought their mineral rights in order to avoid paying royalties. That seems to me to be an injustice, to say the least. It must be completely forgotten that the colliery companies only came into existence about a hundred years ago, at the commencement of the steam age. Before that proprietors both large and small worked their own coal, and many of them do so to this day, including some members of your Lordships' House. These proprietors spent large sums in constructing dams, building houses for their workmen, founding schools, etc. In my district of Central Scotland, where coal has been worked for upwards of four hundred years, we learn from family histories that the proprietors took a personal interest in their workers, although it is true the latter were little better than serfs and were thirled to the mines. In spite of that they were sorry when the companies took over and the personal touch was lost. I think it may be said that the position of the coal industry today is largely due to the pioneer work carried out by the ancestors of the present much-abused royalty owners. All that applies to Part I of the Bill.
As regards Part II I will merely say that I think very large amalgamations are a mistake. Take the case of the railway companies. The L.M.S. from Euston to Wick, and the L.N.E.R. from King's Cross to Mallaig with weekly takings of £1,250,000 and £900,000 respectively, are surely rather too large and unwieldy amalgamations, the Great Western with weekly takings of £500,000 being considered, I think, the ideal size. Costly safeguards have been inserted in the Bill, but I hope that the Government will see their way to withdraw Part II altogether. With regard to the Bill as a whole, I 936 admit that I am personally interested, therefore if I support the Bill I shall be cutting my own throat, which I am not at present prepared to do. On the other hand, and for the same reason, I am not opposing the Bill, in the hope that it may be amended and improved in Committee. For years past a succession of Royal Commissions and Committees have reported in favour of the buying out of the royalty owners, and we in Scotland, I think, have no wish or desire to wreck the Bill, but we do insist that not only the royalty owners but the coalowners and the consumers and, last but not least, the miners themselves, should have justice and fair play.
My Lords, before addressing your Lordships for a few minutes on this Bill I should like to join my tribute of congratulation to those that have been made to the noble Duke who made his maiden speech to-night. I think it must be a matter of congratulation to your Lordships as well as to himself that in his case the principle of heredity is so finely maintained by nature, and that there has descended to him the great qualities that from generation to generation have always distinguished his family. As a matter of fact the principal subject of his speech was one which I myself wish to bring to your Lordships' attention, and I shall be very grateful to the Government if, in their reply to what has been said in this debate, they will give some indication of their intentions towards the various firms and individuals who are at present employed as mineral surveyors in connection with royalties. I understand that for some three and a half years these men will be extremely busy. I do not know whether it is so, but it has been suggested that the Government may employ some of them as valuers. There is always this to be considered, that such an employment might possibly militate against their own loyalties, because they would be bound, I think, many of them, to look after the interests of those who have been their clients up to now. After that time it is true I believe that some, probably the younger members, may obtain Government appointments, but there will be very little reason for the continued existence of the remainder. I do not know if the Government are sufficiently up-to-date to wish to liquidate these gentlemen.
937 I believe there are many firms whose practice is confined to mineral surveying alone, a very specialised branch of the surveyors' profession. These will suddenly cease to exist, and cease to receive income. Their staffs will have to be dismissed, and they will have to make their way anew in untried professions. Old clerks who have hitherto been in receipt of pensions from these firms will suddenly cease to receive them, and the principals themselves may be very little better off. It may be said that they have some three and a half years to prepare for the new state of things, but if they are busy during those three and a half years I do not see how they will find the time to make preparations. Moreover, many of those who are most deserving will be old. I think probably that they deserve most consideration; at any rate, I know what the position in which they will be means. I do not want to trouble your Lordships with a personal experience, but it did happen to me that at a little over forty the circumstances of my own life changed so completely that I had to go to school again and learn a new profession. It took many years of apprenticeship and study, but I succeeded. I owe much to the kindness of those who gave me my chance, and made success possible, to the masters whom I served, and to the companions with whom I was associated; but I can assure your Lordships that it was not in the least amusing, and that for most older men, after the age say of forty-five, it would be impossible.
What does the Government suggest should become of such men, with whose lives they are so violently tampering? It is only fair to point out that but for the services of these mineral surveyors it would have been impossible for the Government to have drafted this Bill. They would not have possessed the necessary knowledge to frame it, and I think, therefore, they should be very chary of kicking down the ladder in this particular case. Your Lordships, I think, will agree that the global figure has received so many punctures during the debate that it looks far less global now than when it was so proudly rolled before your Lordships by the noble Earl in introducing the Bill. But a proposal for some compensation of the men to whom I refer does not affect this global figure at all. A figure of £220,000, as 938 has been said, was deducted from the royalties for expenses before the global figure was arrived at. These expenses consisted very largely in fees to and earnings of mineral surveyors, and if they had not been deducted the price to the Government would have been higher by £3,300 000. Is it too much to ask that some of this saving be used to mitigate the immense hardship that is to be inflicted upon an honourable profession by this Bill.
I know it may be urged that the same kind of hardship occurs every time a great landed estate is broken up for Estate Duty, but there, at least, the evil is piecemeal, and the people displaced do have a chance, however scanty, of finding employment elsewhere. Here a whole highly technical career is to be abolished, practically at a blow, after what is called the vesting date. It may be said that there are no precedents for such compensation, but I think that at a later stage I can produce precedents for the course which I suggest. If in fact there were no precedents, it is time that one were made now, and for the following reason: In spite of what has been said about the special nature of coal I differ reluctantly but persistently from the great experience of Lord Horne and think that the measure before your Lordships is merely the first of a long series of measures affecting the subject matter of every learned and skilful occupation in the country.
We have had hints and more than hints to that effect already. It is also true, I think, to say that without the loyal and cordial co-operation of the various skilled professions in this country it would be impossible for any Government to manage its concerns for a week, and so every Government owes particular care and consideration to the interests of the great professions of the country. I think the members of all these professions, therefore, will be wise to examine how the members of this particular one are going to be treated in this case, because it will form, undoubtedly, the standard by which they will be treated when their time comes. I am sure that the Government will greatly facilitate the progress of this measure if they will give some indication now of their attitude on the point that I have raised.
My Lords, I must apologise for intervening in this debate as I have been away during the first two days, like Lord Horne, assisting at a very important function in the Northern Kingdom, and could not be here at the same time. Nevertheless I would not have spoken in those circumstances, except that it might be misunderstood if, at the close of an important debate, which has occupied your Lordships for three days, on a Bill of such magnitude, there was no speaker from the Labour Benches. Lord Snell made our attitude clear in the speech which he delivered yesterday, which, like all the other interesting speeches, I have read with great care. I need not add to what my noble friend and Leader has said about our attitude towards Government measures. It seems to have been a very lively debate, and I am sorry that I missed it, and I envy the noble Earl Lord Stanhope, with his gusto for debate, in winding up. He will miss some of the pleasure, however, because I am afraid that some of his critics will not have returned to hear his reply, which is rather unfortunate.
Of course we all know that the Labour Party do not like this Bill. I can only repeat what I have ventured to state in this House before, that it is a mistake for Tory Governments to embark upon Socialist legislation, and they had better leave it to us. The result is that they muddle it, and the community gets the worst of both worlds. The measures which the Tory Government bring in of this kind have inherent in them the disadvantages of private enterprise and the disadvantages of collectivism. I need only instance the Electricity Bill. There the generating of electricity and its transmission were brought under semi-public control, and a very good thing it was, but the sale of electricity was left in private hands, so that the hundred per cent. savings which could have been made were denied to the public generally, and the real profits of amalgamation went into the hands of private undertakers. Also there are certain other defects, which are traceable to the fact that a Government which in its heart believes in, and is there to support, private enterprise, feels compelled to embark upon collectivist legislation, with unfortunate results.
I must take the opportunity, if I am allowed to do so, of congratulating the 940 noble Duke who made his maiden speech. He bears a name very historical in recent generations in connection with this subject. I am sure your Lordships will support me in saying that he made an admirable first speech in this House, and that his future interventions will be of great value to us. I only wish to make one or two points in connection with this very great Bill, and the first is that, as my noble friends Lord Addison and Lord Snell have already pointed out, the case for the nationalisation, complete, of the whole of the coal industry—and by the coal industry I do not mean only the royalties, but also the getting of the coal and, above all, the utilization of it afterwards —is overwhelming. 'We are reinforced in that faith by everything that has passed in connection with this Bill and by the debates upon it both in your Lordships' House and in another place. That is what we believe in, that is what we know we shall one day carry through, and we also believe profoundly that it will be to the public advantage when we do that.
I notice that the noble Marquess, Lord Londonderry, made a heavy attack upon the Bill. I do not know whether the noble Earl, Lord Stanhope, is going to reply to that attack, but perhaps it is unnecessary for me to remind him that, standing at that Box, the noble Marquess, Lord Londonderry, as Leader of the House, made a great defence of the Oil Bill for taking under public control the oil under the land—petroleum. I should have thought the principles would have been the same. However, the noble Marquess was then leading the House. Who knows but that perhaps, if for his own good reasons the noble Earl should deprive the Government of his services, he might make a different speech from the one which we are about to hear and, I am sure, enjoy? What, however, the noble Marquess, Lord Londonderry, whose speech I certainly enjoyed very much, did not deal with was the use of the coal after it is extracted. I venture to agree with the noble Marquess, and also with the noble Viscount, Lord Horne, that the mining industry to-day, in the getting of coal, is efficient. We do not attack it on those grounds. It is in the whole economic structure of the coal industry itself that the deficiencies are to be discovered. It is not merely the raising of the coal to the surface; it is the use 941 that is made of it afterwards. We have wasted this asset, our second most valuable natural asset in the country, second only to the land in importance, in a most shameful way for over a hundred years, ever since the industrial revolution.
The Scientific use of coal, the real economic utilisation of coal, is only just now being taken in hand. In that connection—.I enjoy throwing an occasional bouquet at the Government—I should like to pay tribute to the excellent work that is being done by the Department of Industrial and Scientific Research under the ægis of the Lord President of the Council, and to the coal survey that they are making, and, above all, to the most wonderful work that has been done of recent years by the Fuel Research Department of the Department of Scientific and Industrial Research. If the lessons that they have presented to us could have been absorbed and acted upon more quickly, I believe the coal industry would be in a more flourishing condition than it is to-day.
After that solitary bouquet, that solitary compliment to the Government on a success for which this Administration is not primarily responsible, may I, with your Lordships' permission, point out a very serious defect? I am very sorry to see that the present system of marketing coal under limitation and control is being continued. I refer to the quota system. On every occasion, and even in 1930, when the last great Coal Bill was introduced by a Government which I supported, I have protested against any system of artificially limiting the output. I think it is wrong, and I think that in the end it defeats its own purpose. The whole trend of modern legislation under the present and immediately preceding Governments has been artificially to limit output and to control and hamper the natural production by business men of the resources of the country. The particular part of the 1930 Bill which is being increased, fortified and strengthened by the present measure, has worked very badly indeed. I regret very much that it is being continued. I have before me a letter from a very old friend of mine, a coalowner in Wales, and with your Lordships' permission I will read one or two short sentences from it. He says:In my little concerns I was called upon to pay £300 to £400 for disposing my coal above the quota. I was fined 6d. per ton 942 for exporting my coal, which, as you see, is ridiculous in view of the demand for increasing exports.I break off there, my Lords, to remind your Lordships of what you are well aware, and that is that our excess of imports over visible and invisible exports is becoming a very serious matter, and that anything that can help the export trade is of great importance and value to the country.
As this gentleman points out to me, he had a letter from the Minister of Mines asking him to do all he could to increase the output of his pits, because the Government anticipated a coal shortage; and when he proceeded to do it he was fined. Then he goes on to quote the case of another and much larger concern, that of Mr. Evans-Bevans, also in Wales. He had to pay a fine of £4,000, and for what? What was his crime? Exporting coal; selling coal above his quota. No, not as the noble Marquess, Lord Lothian, says, for selling too cheaply, but for selling more than a certain amount. That is the wicked and iniquitous part of it. It is like the case of a farmer in my part of Yorkshire who was fined the other day for growing too many potatoes. The Government bid us know that they are storing food. But here is a farmer storing it in the best possible way, by growing it in the ground, and he is fined; and here is more than one coalowner fined for exporting coal and helping the export trade of the country. That sort of economic policy is worthy only of the madhouse.
I must also make this further point, which I think is quite important. The accusation is usually made against us on these Benches that we only speak here for the mine workers. We do that, and we are proud and glad to do it. But on this occasion I am also speaking for the small independent coalowner. I venture most respectfully to agree with that part also of the speech of the noble Viscount, Lord Horne: that the small independent coalowner is worthy of more consideration than he has received. This gentleman says:There has crept into the trade what is known as 'protection':I hope that the noble Lord, Lord Gain-ford, will forgive me for drawing his attention—it does not refer to Durham but to Wales—to this particular iniquity:that is to say, if a colliery owner wishes to change his source of supply he has got great 943 difficulty in doing so, for he is at the mercy of the Control Board, which is controlled by the big coal owners, who use the Control Board to their own advantage. This latest dodge, known as 'protection,' is not a protection to the owner, but to those who sit back in their arm chairs and will not go all out for new orders.He is referring to Part III of the Bill.
§ LORD GAINFORD
Might I interrupt the noble Lord for one moment? I am not conversant with the system of the Control Board in Wales. So far as I know it in the rest of the districts in England, there is no restriction on export which could possibly be the subject of any complaint.
My Lords, I have this letter from a very old friend of mine, a gentleman of the highest standing in his own business and a man on whose word I rely absolutely. I shall be very glad to show it to the noble Lord, and I welcome his help in this matter. Then, with regard to amalgamation, my friend says:Under the Bill a good-going concern can be compelled to take paper shares in a concern which is inefficiently run.This is another of Lord Horne's good points:For instance, at one of my collieries the shares are worth about £3"—And then he mentions another great concern, to which I will not refer—it is in the letter, but it would not be fair—whose shares are worth 1s. 9d. He goes on:I will be compelled to accept shares"—in that great concern, one of these great amalgamations, these wonderful amalgamations which are going to do so much—whether I want to or not.That is what Lord Horne referred to as a compulsory marriage, where he looks twice at the marriage settlement. That is the sort of thing that happens when Conservative Governments embark on Socialist legislation. They attempt to combine support for certain favoured vested interests with collectivism, and they cannot do it. If you want collectivism, the only people who can deal with the matter are the Party for whom I have the honour to speak.
§ THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE)
My 944 Lords, the noble Lord opposite has cheered us all by telling us how things ought to be done. He did not tell us to which country he was referring, but I imagine that he has learned nothing about nationalisation and therefore still adjures us to follow the example of Russia which under a beneficent system appears to be wiping out not only profits but individuals.
I was not referring to Russia, but perhaps the noble Earl is not aware of the tremendous increase of output there. I believe it is about 400 per cent.
§ EARL STANHOPE
I believe that is true, but I was thinking—as some of us who are members of the National Government and the Conservative Party do think—more of those engaged in the industry. I understand that the profits of those engaged, whether as workers or as controlling the industry, have practically disappeared in Russia. However, I do not want to follow the noble Lord into the affairs of other countries. I have quite enough to do to deal with the Bill now before your Lordships. The noble Lord, the Leader of the Opposition, said that the Bill has not received enthusiastic support from any quarter. I think I could put it rather more strongly than that and yet be fairly accurate. But when I find that I am attacked by some of your Lordships, including the noble Lord who has just spoken, because the Bill does not go far enough, and by others who say that it has gone a great deal too far, I am entitled to claim that the Government have taken the middle course, one which can be supported and approved. We have been told that the Bill has a political origin. I am under no illusion as regards the popularity of the Bill. It is one some parts of which some sections of the industry like, while other parts are intensely disliked by other sections. Therefore as far as vote-catching is concerned we are satisfied that this is very far from a vote-catching measure.
We have had a large number of speeches, and I should like to congratulate the noble Duke, the Duke of Northumberland, on the maiden speech which he addressed to your Lordships. It makes me feel very old because I have heard not only his father but his grandfather speak here, both of them with tremendous effect. They made speeches 945 which I think many of your Lordships will still remember. We rejoice to find heredity once more prevailing and that the noble Duke has made such a good start.
The noble Viscount, Lord Elibank, spoke as a coal user and referred to the coal-selling scheme in Part III. He was somewhat doubtful as to whether consumers of coal were adequately safeguarded as regards price and the control schemes and whether they had sufficient redress in case prices went too high. I do not want to go into the matter now at very great length, but I think if he looks at the Eighth Schedule he will find that the price control scheme which is set up under the Bill is a very great improvement on the last one and that the ordinary consumer of coal will have adequate safeguards against the price being kept too high. Of course, he will realise that the price control scheme only applies to the first sale of coal after it leaves the colliery. Subsequent prices and transportation and distribution do not come under the scheme. But, as your Lordships will remember, it was promised in another place by the Government that there should be inquiry into these costs of sale and distribution—an extremely difficult matter, incidentally. We shall have to wait for the report of the result of the inquiry.
One point which I should like to make at once is that noble Lords who are engaged in the coal mining industry must, I think, realise that the public are certainly not going to agree to a price control scheme being allowed to continue unless they are absolutely satisfied that the industry is being run on the best and most economic lines. I hope the noble Earl, Lord Lindsay, and other noble Lords, will not at once think that I am going to accuse the coal mining industry of being inefficient. I am not going to do anything of the kind. The noble Lord, Lord Gainford, told us yesterday that so far as present conditions allow the coal industry does its best to organise and modernise itself. But let us look at the facts. We have a total of 963 coal undertakings. Of those, 523, or 54 per cent., produce under ro,000 tons of coal a year. That works out at 5 per cent. of the total coal production. There are a further 151 undertakings producing from 10,000 to 100,000 tons which give a further 3 per 946 cent. Therefore, 674 undertakings—no less than 70 per cent. of the whole—produce only 3.5 per cent. of the total output. Can any of your Lordships imagine that you can get a proper coal selling scheme, or proper organisation, when you have such a vast number of small undertakings producing only 3.5 per cent. of the total output? You cannot get your industry organised and a selling scheme properly set up until you get a scheme of amalgamation and co-operation between these various companies.
§ LORD GAINFORD
If the noble Earl will allow me to interrupt for a moment, I think he is under a misapprehension with regard to these small collieries. The great majority are tiny little surface coal workings, worked by groups of men for themselves quite independently of any firm. It would be, I think, a monstrous injustice, as the noble Viscount, Lord Horne, said, to interfere with the work of such groups of men. In Durham there are seventy or eighty of them—handfuls of men who work these pits themselves and sell the coal to their neighbours. It is quite impossible to amalgamate concerns of that kind.
§ EARL STANHOPE
I quite agree, but the 151 collieries with outputs of over 10,000 tons are not in that category. I could go further still and produce still more cases of the same kind. Let me reinforce my argument by referring to what was said by the Committee on Cooperative Selling in 1926 and by the Coal Mines Reorganisation Commission in 1933. The noble Marquess, Lord Lothian, thought there was nothing wrong in recent years because the Railway and Canal Commission had been given special powers over these organisations, but may I remind him that the last Bill on that subject was introduced in 1923. The Report of the Coal Mines Reorganisation Committee to which I refer was published in 1933, only five years ago, while that of the Committee on Co-operative Selling was published in 1926. The Committee on Co-operative Selling said this:… we feel that a serious impediment lies in the present lack of consolidation in the industry; and we are convinced that the full development and benefits of organised marketing within the industry cannot be realised unless the industry can be consolidated, by amalgamations, into a much smaller number of units. This raises a wider question than the one we have been asked to consider and it is no part of our duty to 947 express an opinion about the practicability or desirability of amalgamations on other grounds than that of developing organised marketing. On that ground amalgamations are in our opinion urgently necessary and desirable.Now let me refer to a passage in the Report of the Coal Mines Reorganisation Commission. They say:We were greatly impressed … by the evidence that we received about the extent to which costs are swollen by working below capacity. Estimates of the difference between present costs per ton and what they would be at full capacity were most striking. Even if ample allowance is made for what would have to be paid for collieries to be closed, and for the obvious practical limitations to a policy of closing some pits and concentrating at others, there must be scope for a saving of many millions a year in this way.I confess I was somewhat surprised to find the noble Viscount, Lord Horne, the head of one of the great railway companies of the country, objecting to amalgamations. I should have thought that at any rate the railways themselves are some proof that amalgamations can have great advantages, not only for the companies but also for the public as well.
The whole case for the Government in regard to amalgamations lies in this, that we believe that by amalgamations, and above all by working to capacity, and not working a great deal below capacity in a number of small units, the efficiency of and the profits from this industry ought to be materially increased. We are not saying that the companies themselves are inefficient; we are saying that we think they have a greater chance of increasing their efficiency and lowering their price if they succeed in making amalgamations. Several noble Lords have said that they agreed with amalgamations provided they are voluntary. So do the Government. The very last thing the Government want is that these amalgamations should be made compulsory, but there is a case which I think many of your Lordships know, somewhere up in Yorkshire, where the majority of the coalowners were very anxious to get an amalgamation but two or three small companies absolutely refused, and under the powers then in existence it was impossible to get that amalgamation through. That is a case where, I think everybody will agree, compulsory powers are advisable and indeed essential. There may be other cases where, for some particular reason, people are "sticky" about going ahead and 948 making amalgamations which really I think every fair-minded outside person would agree were advisable and salutory.
I was asked who pays the cost of the Provisional Order procedure. The answer is that the general cost of that procedure is found by the taxpayer under the Board of Trade Vote. But each party who raises objections before either House of Parliament has to pay his own costs; and if the objection which is made is thought by the Committee to be frivolous he can be made to pay a part of the costs of the general inquiry. The noble Lord, Lord Gainford, asked that full particulars should be available before proposals for amalgamation came before Parliament. I think that is covered in the Bill but I am not quite sure about it, and it is certainly a point that we shall be very glad to look into in Committee. I think there is a certain amount to be said also on the other side, about inspection of books and so on; but it is a matter that we should be able to deal with more satisfactorily at another stage of the Bill. The Reorganisation Commission reported in 1933 that "even if structural reorganisation of the industry were to be carried out the present system of mineral ownership would stand in the way of effective and lasting reorganisation." That is the Government's case for the unification of royalities, which, as has been pointed out by several noble Lords, appeared in the Government's policy at the General Election in November, 1935.
Some of your Lordships have objected to the term "unification." It is certainly not nationalisation, as is shown by what is desired by the noble Lord, Lord Strabolgi in his speech just now, and by the noble Lord, Lord Addison, on the first day of the debate. It is not the policy of His Majesty's Government to take over the control and the management of coal mines. But perhaps I may use a phrase which your Lordships may agree to—that of "compulsory purchase." Now, does any member of your Lordships' House object in these days to compulsory purchase, provided the price is fair and equitable? We have, as everybody knows, the compulsory purchase of land for school buildings, for roads, for railways and for all sorts of objects, as was pointed out by the noble and learned Lord on the Woolsack at the beginning of yesterday's debate.
949 The noble Lord, Lord Balfour of Burleigh, asked, Did the Government think the price was fair and equitable? Well, I am not going to pretend that I have sufficient knowledge of the coal industry to be able to say, but let me remind your Lordships of how this price was arrived at. There has been a considerable amount of misunderstanding about it among several of those who have addressed your Lordships' House. In the Memorandum of the Executive Committee of the Mineral Owners' joint Committee, which I understand represents some 70 to 80 per cent. of the total royalty income of those who receive royalties in this country, a Memorandum dated February 4, 1936, I find this—and I find it incidentally in a pamphlet which was very kindly sent to me, which has a foreword by the noble Lord, Lord Hastings, so no doubt he will recognise it:Although the valuation of every individual property is a laborious undertaking, it is comparatively easy to determine the value of coal royalties treated as a whole. Moreover, it seems probable to us that the Government would welcome a scheme which would make it possible for the total compensation to be fixed by the Act instead of asking the Legislature to commit itself to an uncertain liability. We therefore submit proposals on that basis.Now the proposal for a global figure came from the Mineral Owners' joint Committee itself, and not from the Government at all.
Let me go a stage further—the figure for the average net annual income for the seven datum years, 1928 to 1934. The figures that were put forward on behalf of my honourable and gallant friend the Secretary for Mines and by the joint Committee differed by an extraordinarily small amount, and I will tell your Lordships how that figure was arrived at. The other side first of all put up the figure of £5,220,000 as being the average value of royalties during the seven datum years. Incidentally those datum years were again chosen by the joint Executive Committee. The first point was that it included payments for some surface rights and for some minerals other than coal. In order to get at the figure for coal alone these elements needed to be extracted, and the amount of the deduction to be made on this account was subsequently agreed between the parties on the basis of a special return obtained by the Mines Department in consultation with the 950 Royalty Owners Joint Committee from the collieries. This deduction was agreed at £193,000 and reduced the annual figure from £5,220,000 to £5,030,000 in round figures.
This, however, was still a gross figure, and in order to arrive at the net annual value it was necessary to make deductions on account of management charges, Mineral Rights Duty, royalty welfare levy, and—which I think will please the noble Earl, Lord Lindsay—royalty owners' liability to payment of rates in Scotland. There was no disagreement about this, nor was there any very large difference between the ideas of the two sides about the amount to be deducted for these items. The amount of the deductions suggested by the royalty owners brought out a net annual figure of £4,500,000; that suggested by the Government produced a figure of £4,360,000; and the final figure of £4,430,000 was a compromise between the two. Not much "rubber truncheon," as I was told yesterday, about the way in which that figure was arrived at!
The seven datum years were referred to, I think, by the noble Lord, Lord Gainford. He said that two of those years were very bad years. That is perfectly true, and when those who represented the royalty owners came before the Greene tribunal they were not slow to make mention of that fact, and the fact that there were two bad years in those seven was undoubtedly taken full notice of by the Greene tribunal in arriving at its award. The thing that the Greene Committee was asked to settle was this: "During the seven datum years the net annual revenue from the industry is £4,430,000. There is enough coal in the ground to last in perpetuity"—that covers a point made by the noble Marquess, Lord Lothian. "The revenue derived from it in the future may on the average be more or less than this £4,430,000, or it may be the same. That is the issue we shall argue before you. When you have heard everything that each side has to say on this issue, we want you to give your opinion on the number of years' purchase on the basis of a net annual value of £4,430,000. All that we ask for is that one figure."
Several noble Lords thought that freehold coal should come before the Greene tribunal. It was not put before 951 them at all except to this extent, that of course freehold coal was included in the global figure. The Greene tribunal had to be given a figure which included all coal, and therefore it included coal which was being worked by a colliery who owned the coal in the same way as the coal that was leased. The figure was arrived at from knowledge of the output of each colliery and of the average royalty that was paid in that area—that figure was included in the royalty income—and on that basis the Greene tribunal arrived at its award. The tribunal, which both in regard to terms of reference and in regard to personnel was an agreed tribunal, after hearing evidence and going into the whole matter, assessed the global figure at £66,450,000, excluding what is known as subsidiary hereditaments which are to be valued separately. Lord Balfour of Burleigh said he would have preferred a recommendation from reasonable men that they were satisfied that the proposal was fully fair and fully reasonable. What more could the Government have done? They put this before people who were not in any way connected with the political side of the question, not connected with the coal industry, two of them men of great judicial experience, one, as your Lordships know, perhaps the greatest chartered accountant in the world, and they arrived at this figure. I am not going to pretend that I have knowledge, and I do not believe any of my colleagues in the Cabinet have knowledge, which would entitle us to go against those people and enable us to say they have given an unfair award.
I frankly admit that the figure paid to the royalty owners is going to mean a great loss of income if that income is going to be invested in Government securities. But is that a fair comparison to make? As the noble and learned Lord on the-Woolsack pointed out yesterday, coal is a wasting asset so far as an individual lease is concerned. Coal may last five hundred years or more, but as regards each individual lease it is a wasting asset. In addition, nobody who knows anything about coal mining would pretend that it was not a rather risky business. After all, there are faults which are encountered suddenly. There are stoppages from a variety of reasons, and after these stop- 952 pages, as noble Lords themselves have admitted, there is a very heavy loss on markets. There are unfortunately, in addition, serious accidents which may put an individual colliery out of work for a long period, and possibly even for ever.
Nobody can pretend that that is a gilt-edged security, and therefore it is not fair to value the return you get from your coal mining royalties and say you ought to get the same thing in perpetuity by investing in first-class Government securities. Actually if you choose to invest the proceeds of fifteen years' purchase in something producing 6⅔ per cent. you will get exactly the same income. I am not going to suggest that that is possible. For instance, the most reverend Primate could not dream of suggesting that the Ecclesiastical Commissioners should invest their money in a thing of that kind. But let me remind your Lordships a little further. The noble and learned Lord pointed out yesterday that the life tenants of property are not entitled in normal cases to use the whole of their income from royalties. If you take a case where only one-quarter is deducted, and the owner takes three-quarters, he has only got to invest in a 5 per cent. security, and again he gets the same return. Surely your Lordships will agree that there are many perfectly sound investments of an industrial character in this country where perhaps the risk is not greater than it is in the coal industry and from which you might get a return of 5 per cent. Everyone has the most intense sympathy with cases of hardship as they may affect the clergy. We know of cases all over the country where already the clergy are receiving stipends altogether too low, and these are going to be yet further cut, and that may cause great distress.
But let me look at the thing from another point of view. My noble friend Lord Horne, as a good Scot, has tried to have it both ways. He tried to say on the one hand that the price is totally inadequate and that the royalty owner was not receiving his due. Then he turned round to say that the profit which would result to the Coal Commission in the future was so small that any benefit that might come from it could be postponed to the Greek Kalends, and certainly for many years ahead. That is our case. The profit that will enure to the Coal Commission is by no means the figure which 953 noble Lords have suggested. The Coal Commission will have to have a sinking fund in exactly the same way as the Ecclesiastical Commissioners on a comparatively wasting asset, though as it owns the whole of the coal it will be far less a wasting asset than in the case of private individuals.
The noble Viscount, Lord Ridley, in a speech I wish many more of your Lordships had heard last night, although critical of the Bill, asked if I could not define what would be the terms of the loan which will be raised by the Coal Commission. At the present time that is impossible. It depends on the condition of the money market at the time, but if the loan is raised at a figure such as we expect, after paying various costs and deductions and having a reserve fund and so on, the margin will not be by any means a large one. Therefore when your Lordships suggest it should be used in a variety of ways our answer is that we think we had better wait and see. We were anxious as a Government not to raise undue hopes that these profits were going to be far larger than we actually expect. If we were to suggest that the profits would be put to all sorts of purposes—assisting miners' wages and all the rest of it—there might be a good deal of disappointment. Of course we are quite prepared with regard to this matter, as with regard to all parts of the Bill, to consider Amendments when we get into Committee and get to Clause 21, but under present conditions we think it will be a number of years before we can go further than reducing the payments on coal, which I would remind your Lordships enure as to 85 per cent. to the benefit of the miners themselves.
I was asked in regard to freehold coal. As I mentioned earlier, that was included in the global figure for the valuation, and frankly at the moment I do not see very much difference between a colliery company being given a value arrived at by the Regional Valuation Committee and being actually paid in cash, in one case paying only a peppercorn rent and in the other paying the normal rent of the district. There is this difference that if they are paid in cash, and there is a profit, it enures to the reduction of coal payments. If they get a peppercorn rent they will be outside that agreement, and will get no advantage from it, whereas 954 the other coal concerns in the area will in time get those payments reduced. The companies that remain outside will, of course, not get that advantage. It is a matter that I should like to consider further. I know there is a good deal to be said on the coalowners' side. I understand there is also a good deal to be said on the Government's side. Therefore it is a matter which I think we had better discuss when we get to Clause 12 in Committee. But I do not want your Lordships to imagine that off hand I am in a position to turn it down and say the Government cannot consider it, nor am I prepared to give any kind of promise that we can arrive at a decision different from that which was reached in another place.
Any dealing with the law of property is, of course, in itself extremely complicated, and your Lordships who have studied this Bill will realise that it is more than possible that we have omitted things that we did not intend to omit, and we may have been unfair in various terms. Therefore, if your Lordships will help us to put this Bill into a better state when we get into Committee no one will be more grateful than I and other members of His Majesty's Government. I am afraid I have by no means dealt with all the points which have been raised by your Lordships, but I have endeavoured to show why the Government introduced this Bill and why, in our view, the three parts are complementary one to the other. We are well aware that this Bill had no prospect of being a popular Bill, particularly, I may add, in your Lordships' House. I hope, however, you will be able to agree with us that it does conduce to the better organisation and greater prosperity of one of the greatest of the industries of our country and, therefore, that we may receive your support not only now but in the further stages of the Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.