§ AMENDMENTS OF 20 & 21 GEO. 5. c. 34, s. 13.
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1. In Section thirteen, after subsection (1) thereof, there shall be inserted the following subsection:
(1A) The following provisions shall have effect with respect to any scheme submitted to the Board of Trade by the Coal Commission—
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2. For subsection (2) of the said Section thirteen there shall be substituted the following subsection:
(2) In relation to any scheme submitted to the Board of Trade under this section by the Coal Commission, the Act of 1926 shall have effect as if for the proviso to subsection (2) of Section seven thereof and Section eight thereof (which both relate to the consideration of schemes by the Railway and Canal Commission) there were substituted the following proviso, that is to say:
§ Provided that the Railway and Canal Commission—
- (a) shall hear such persons, whether in support of or against the scheme, as they think fit, including representatives of persons employed in any undertakings affected by the scheme; and
- (b) shall not have power to make, or require to be made, in the scheme modifications inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade by the Coal Commission but subject as aforesaid may make such modifications, if any, as they consider necessary for enabling the amalgamation or absorption affected by the scheme to be carried out upon terms and conditions that are fair and equitable to all persons affected by the scheme, and are calculated to avoid' financial injury to any of the constituent companies and to enable the undertaking of the transferee company to be efficiently carried on; and
§ LORD TEYNHAM moved to leave out "and not otherwise" in paragraph (a) in the substituted subsection (1A) in paragraph 1. The noble Lord said: I beg to move this Amendment on behalf of Lord Gainford. With regard to it I would suggest that the further Amendments which stand in my name, page 86, lines 4 and 20, and page 87, lines 20 and 21, might be discussed together. These Amendments are intended to make provision whereby in suitable cases of amalgamation the expropriation of the undertaking may partly or wholly be compensated by a cash payment. The Amendment would have the effect of restoring the power of the Railway and Canal Commission under the Acts of 1926 and 1930, by which under Section 7, subsection (2) of the 1926 Act the Railway and Canal Commission were given power in cases of amalgamation where they considered it fair, and not otherwise, to order that compensation should be paid in cash. I would suggest that it is very desirable that this present power of the Railway and Canal Commission in this respect should not be interfered with. In connection with amalgamation cases there will obviously arise many in which shares in the transferee company cannot provide proper compensation, but if the words "and not otherwise" are allowed to remain in the Bill both the Coal Commission and the Railway and Canal Commission will be precluded from providing for cash compensation, even though there may be no difficulty in finding the cash.
§ In another place the Minister for Mines has stated that in the case of any particular scheme going before the Railway and Canal Commission, if they come to the conclusion on the facts that unless cash was paid in a particular case it 765 would be unfair, clearly they must reject the scheme. It would seem, as the Bill stands, that the Coal Commission are in the unfortunate position that if they produce a scheme of amalgamation which the Railway and Canal Commission decide is inequitable except by cash compensation, they would have no power to proceed any further with the scheme, as they are prohibited from sanctioning a scheme unless it is fair and equitable, so that, while the scheme itself might be a sound one, it would thereby be jeopardised. It is quite clear that cases of amalgamation will arise in which it is proposed to add one or two small undertakings to a larger one, and the larger one would prefer in some cases to pay out the small ones in cash, rather than have to issue shares and possibly have to contemplate a reconstruction of the company. It has been argued in another place that this Amendment might have the effect of forcing a transferor company out of the industry, but my Amendments merely make provision for the Railway and Canal Commission to determine the method of compensation which they consider would be fair and equitable.
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Amendment moved—
Page 86, lines 4 and 5, leave out ("and not otherwise.")—(Lord Teynham.)
§ EAKL STANHOPEThis raises the whole question of the arrangement under compulsory amalgamation, and I am very glad that my noble; friend has suggested that we should have a discussion on the whole situation. The matter was discussed in another place, and it was pointed out that there were considerable difficulties if compensation could be paid in cash. In the first place there was the case where a company has unwillingly to be swallowed up and wishes to remain in the industry. Obviously it would be unfair that perhaps bigger companies should compel it to take cash instead of taking shares and continue in its management of its part of that combined industry. Then there is the other case, where a company might desire to be paid out in cash and might go to the other companies saying, "We desire to have cash." That might cause great difficulties. It might be that none of the other companies had liquid cash available. If it was cash set aside for working expenditure it would cripple them if they had to pay over part of that work- 766 ing capital when the amalgamation took place. In other cases it might be necessary for them to go to the public and raise money. Could anything be more difficult than to go to the public and ask them to subscribe capital to put into an amalgamation company if some of the constituent companies themselves refused to go into it and receive shares? Obviously if you went to the market then and said, "Here are certain companies which refuse to go into this amalgamation, but we ask you to come into it as a suitable investment," you would be very unlikely to get the money you required.
For all these reasons the Government felt that the only way really in which amalgamations could proceed would be by each of the constituent companies being asked to take stock in the new company, and not receive cash. I need hardly point out that where an amalgamation is proposed and a company say, "Well, if you pay us out in cash we agree," that would cease to be a compulsory amalgamation, and would simply proceed as a voluntary amalgamation, in which the various constituent parts could make their own arrangements among themselves without any difficulty whatever. Our feeling was that it was partly because this was one of the things that was necessary under the 1930 Act that compulsory amalgamations have been so few and so far between. It was found a crippling condition under that Act, and that was one of the reasons why we did not wish to continue it in this Bill.
VISCOUNT RIDLEYThe noble Earl, the Leader of the House, has put the case very much more clearly than it was put in another place. Reading the Report of the debate there I could find no reason whatever for the Government's position, except that the matter could be put right by the Railway and Canal Commissioners. But in fact it seems that the only power they have is simply to refuse to sanction any scheme if in their opinion it would cause financial injury to any constituent party. The point to my mind is that what is suggested in this Amendment is not that any of the companies which are to be formed into the amalgamated company are to have the right to ask for cash, or part cash and part shares, or that any of the other companies are to have the right to insist that one of the companies 767 should be given part cash, but simply that the Commissioners are empowered, in a case where it is found reasonable and necessary, to suggest that it should be partly on a cash basis. That, to my mind, could never be done if it did in fact involve the necessity of the new company having to go into the market to obtain money. Nor could it be done in a case where one of the companies was a small company which did not want to be swallowed up. I am rather at a loss to know why this provision should be left out when it was inserted in the 1930 Act. I have not really heard of any reason which has caused a change in the situation. I do not think that under the 1930 Act any amalgamations have taken place where the provision of cash has been necessary, but it seems eminently fair and reasonable that under certain circumstances that should be possible.
§ THE EARL OF DUDLEYThe noble Earl says quite rightly that a case might arise where a company was paid out in cash which wished to carry on in the new amalgamated company and it would be an unfair burden upon it not to be allowed so to do. That is quite true. But on the other hand a case might easily arise when it is almost impossible, without imposing great unfairness on it, not to pay it out in cash. A case might arise where the Railway and Canal Commission would have to turn the whole scheme down unless a company were paid out in cash. I feel that there ought to be some provision if necessary for either paying the company out in cash or partly in cash and partly in securities. A case might arise such as this. You might have as a party to an amalgamation scheme a company whose shares were very much more valuable than the shares of the company with which it was proposed it should be amalgamated. Its shares might have been paying a dividend for some years past, and the shares of the company with which it was to be amalgamated had not been paying a dividend. It is possible that the shares of the company with which it was proposed that it should be amalgamated might be worth a quarter or a half what its own shares were worth on the Stock Exchange. In a case of that sort it might be impossible to amalgamate such a company on a share basis without imposing great hardship on it, and perhaps the fairest and simplest 768 way would be to pay it off in cash. But if a scheme of that sort were put to the Railway and Canal Commission they might have to turn it down because they had not in fact the power to make a cash payment. I do think this principle wants looking into a great deal more closely before it is finally laid down that a mining company can only be amalgamated on a share basis.
§ EARL STANHOPEI do not know if my noble friend thinks that a company would necessarily have to take over exactly the same number of shares in the amalgamated company as it had in its own company. That would be done on a valuation basis, and on the date on which amalgamation goes through these shares would be valued at their price in the market on that day. Therefore, if one set of shares were valued high and the other were valued low, the compensation would be arranged accordingly. The noble Earl is quite right in saying that if injustice were being done through shares being handed over to one of those who were opposing amalgamation, the Railway and Canal Commission would have to turn the scheme down, but frankly I do not see that a payment of cash would be any fairer. If you cannot get a fair basis by handing over shares of a certain value, then probably you cannot get a fair basis by handing over a sum of money. Therefore, the Railway and Canal Commission as the Court concerned would have no alternative but to say: "This is unfair to some of those involved in the amalgamation and therefore we must inevitably turn down the scheme as not being fair to everyone concerned." I do not think that the distinction between stock and cash in that case would make any difference.
§ THE EARL OF DUDLEYI do not know that the noble Earl has explained the objection to bringing in the alternative, which I understand was an alternative before, of paying out an individual company in cash if that were found necessary. The noble Earl has admitted that the Railway and Canal Commission might have to turn down a good and reasonable scheme because they did not think it fair to pay off a company in cash in cases where it might be simpler to do so, and I do not quite see the objection to that principle if it were in the Bill before.
§ EARL STANHOPEThe real objection is that one or other of the parties would object. Either the people being paid in cash would object to taking cash, or the people on the other side would object to paying cash because it might cripple their resources and put the amalgamated company in a difficult position. There is the final case in which every one agrees that cash should be paid. There is just that one case which the Government might be prepared to consider. A normal case would, I think, inevitably become voluntary amalgamation and not compulsory amalgamation, and therefore drops out of the whole of this altogether. The only case that is left is where some company is being compelled to come into the amalgamation and every one concerned would like to pay cash. That is really the only thing not covered by the Bill as it stands that possibly requires amendment. The noble Earl has made a point of that, and I should be very glad to consider that before the next stage if that is the point he is pressing.
§ THE EARL OF DUDLEYThat is the point I am pressing, and that is the point, I think, the movers have in mind—that extreme case.
§ EARL STANHOPEAll the Government are really concerned with is that cash shall not be forced on either side against their will. That is the big point as far as we are concerned.
§ Amendment, by leave, withdrawn.
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THE EARL OF LINDSAY moved to add to paragraph (a) in the substituted subsection (1A) in the first paragraph:
and that no scheme shall be submitted to the Board of Trade unless the Commission have certified that the values of the undertakings of the transferor companies at dates specified in the scheme have been so assessed for the purposes of the scheme.
§ The noble Earl said: The object of this Amendment is to ensure that the values of a transferred undertaking shall be specified in the schemes. This is subject, of course, to the necessary adjustment in respect of changes between the dates of valuation and transfer. As the Bill stands at present, a scheme need only specify the principles, which I suppose means the skeleton, of the arrangement on which 770 the valuation may be left to be determined by arbitration or otherwise after a scheme has come into operation. Obviously it would be extremely difficult for a transferred company, who only know after a scheme is drawn up what they are going to get, to go to the Railway and Canal Commission and make objections. They must know exactly where they stand. As showing how important this is, it is necessary to state that very many colliery companies have large numbers of shareholders, and they will naturally be very anxious to know how they stand. They will want to know what they are getting either in the way of ordinary shares or preference shares, and it is obviously most unfair for a scheme to go through before this information is available. Owing to the habit of referring to colliery companies as the coal owners' the impression has perhaps been created that these companies have only a few shareholders, but in the case of a very great number of colliery companies there is a free market in shares on the Stock Exchange and there are a very large number of shareholders, many of whom are people of small means, and it is very necessary that these people should know where they stand.
§ Another reason why this Amendment should be agreeable to the Government is that it will facilitate, as they desire, amalgamations. It must not be understood that I entirely approve of amalgamations—certainly not compulsory amalgamations, and only to a modified extent voluntary amalgamations. There has been a great deal said about them. I entirely disapprove of what fell from the noble Viscount, Lord Samuel, the other evening when he stated that one of the advantages of amalgamations would be that they would facilitate selling arrangements and prevent undercutting and underselling. They cannot possibly do that because already, as things are, it is impossible for a company to sell an ounce of coal without the approval of the selling agencies set up in the various districts, so that in that respect amalgamations will be of no assistance. As far as amalgamations carried out on a voluntary principle are concerned, if fair compensation is given to those who wish to take part in them, I suppose amalgamation will be all to the good. For these reasons I beg to move.
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Amendment moved—
Page 86, line 12, at end insert the said words.—(The Earl of Lindsay.)
§ EARL STANHOPEWe think my noble friend's Amendment is unnecessary, and if he would look at the beginning of the paragraph he will see also that the words will not do either. What it says is that "the scheme shall provide," and then, turning to his own Amendment, "no scheme shall be submitted to the Board of Trade." Obviously that does not make sense. The Railway and Canal Commission has to be satisfied that a scheme is fair and equitable as between all parties. The only way in which they can do that is by going into the details of each of these companies, seeing what value they have and what prospects they have, and drawing up a scheme and considering a proposal on these lines. My noble friend wants figures put in, and of course figures will be put in, but you cannot put in the final and definite figures until the date of the amalgamation. There is the case of the value of stocks on the market; perhaps you have to take the actual value of each of those stocks on the actual date on which the amalgamation took place, and give them a few more or a few less according to whether the price fell or rose. Someone would also have to take into consideration the amount of coal they had on the premises. You would have to take into consideration the amount of outstanding debts, whether those who bought the coal had actually paid for it and had given cash, or whether there was still an amount due to the amalgamated companies. Therefore all those final details cannot really be settled until it comes to the actual date of the amalgamation itself.
I think my noble friend will realise that the Railway and Canal Commission have put upon them the duty of seeing that all these conditions—the actual value of the stock, the coal, and the price due and so on—are taken into consideration before they can accept this scheme at all. Therefore, every one of the shareholders, large or small, will have almost an exact idea of what he will receive, but he will not have an absolute idea because these matters vary from day to day, and therefore cannot be settled until the date of the amalgamation actually arrives. I hope my noble friend will see that really he is only putting into the Bill what is already a 772 duty of the Railway and Canal Commission, and that to suggest that the actual figures should be put in is really not possible because of the sliding scale which he himself suggests it will have to operate.
§ Amendment, by leave, withdrawn.
§ LORD TEYNHAM moved to add to paragraph (a) in the substituted subsection (1A) in paragraph 1 "and shall provide for the purchase at a price to be fixed in default of agreement by arbitration of any undertaking considering the terms of amalgamation financially injurious." The noble Lord said: I beg to move this Amendment on behalf of my noble friend Lord Gainford. The matters dealt with in this Amendment are somewhat similar to those discussed on the last Amendment, and I suggest that this and the following Amendment on page 86, line 17, in the name of Lord Gainford and other noble Lords, should be discussed together. The objects of these Amendments are very similar to those of the last Amendment. They are to ensure that the valuations of the transferred undertakings are specified in any scheme for amalgamation. It will obviously be impossible for a transferor company to put before the Railway and Canal Commission a case to show that it will be financially interested unless the consideration which it is to receive is specified in the scheme itself when it comes before the Railway and Canal Commission. It would be very difficult for the parties concerned to argue whether their shares in the proposed new company are fair and equitable if they do not know what those shares are going to be.
§ As the Bill stands at present the scheme of amalgamation need only specify the principles on which the values may be left to be determined by arbitration or otherwise after the scheme has come into operation. I cannot see that there would be any practical difficulty in specifying the amount of the property and the actual consideration to be given in shares which are to be brought into the combined undertaking. It would, therefore, be unnecessary to have recourse to arbitration over this matter after the scheme has 773 been confirmed by the Railway and Canal Commission. It has been argued in another place that the shares or stock to be taken over will vary from day to day, and that the amount which will actually be taken over at the time of the amalgamation may differ materially from the amount at the time the scheme was submitted; but, as suggested by the Secretary for Mines in another place, it might be possible to have some sliding scale for determining the varying elements concerned which, of course, may vary between the date of the submission of the scheme and the date on which the amalgamation actually takes place. I do not, however, think that this is any reason why it should not be possible to lay down the precise shares which are to be allocated.
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Amendment moved—
Page 86, line 12, at end insert the said words.—(Lord Teynham.)
§ EARL STANHOPEThis is exactly the same point we have just been considering, except that it goes a little further and makes it a little more difficult. What my noble friend proposes in his Amendment is that there should be submitted to the Board of Trade the actual price that has to be paid—"shall provide for the purchase at a price to be fixed in default of agreement." That of course means absolutely definite figures. Similarly, in the case of the word "specify," that also means quite definite figures, and apart from the actual stocks and shares, as I mentioned just now, there is also the question of the coal and the amount of debts outstanding. One has to take into consideration also the question of the mine itself. It might be that between the time the scheme came up and the time of the amalgamation a fault might appear, or there may have been a fall or a fire; therefore to lay down before the amalgamation takes place exactly what price is to be paid is, I think, quite impossible.
§ On Question, Amendment negatived.
LORD BALFOUR OF BURLEIGHThe Amendment on page 86, line 17, to leave out "make pro vision for the determination of" and insert "specify," which has been passed over, is in my submission essential to the comprehension of the Bill. I know we have passed it because the noble Lord said it was taken with another Amendment, but if my noble 774 friend the Earl of Lindsay will move it we could discuss it. It is merely a drafting Amendment, but it is a very excellent Amendment.
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LORD BALFOUR OF BURLEIGH moved, in paragraph (b) of the substituted subsection (1A), to leave out "or otherwise." The noble Lord said: I move this Amendment on behalf of my noble friend Lord Lothian. My task would have been very much easier if your Lordships had assented to the Amendment in the name of my noble friend Lord Lindsay on page 86, line 17, to leave out "make provision for the determination of" and insert "specify," because the words in the Bill are the most appalling example of Parliamentary drafting I have ever seen. I will read them to your Lordships and you will see that without the Amendment which, unfortunately, we have not made they are almost incomprehensible. Paragraph (b) says:
the scheme shall determine the classes of securities of the transferee company which are to be given to the transferor companies in respect of the different classes of property transferred to it, and shall make provision for the determination of the amount of the consideration to be given to each of the transferor companies out of those securities, in so far as it is not determined by the terms of the scheme, being finally determined "—
How can the "determination of the amount of the consideration" be finally determined? It makes sense if you substitute the word "specify" for the words "make provision for the determination of." Then it would read—
§ EARL STANHOPEOn a point of order, I think my noble friend does not realise that we have already gone beyond that Amendment.
LORD BALFOUR OF BURLEIGHI will speak to the Amendment which I have moved on behalf of my noble friend Lord Lothian. I was trying to explain that it was an error that the Amendment of the noble Earl, Lord Lindsay, to which I have referred, had not been taken, but I must not go into that. The intention of this Amendment is to leave out the words "or otherwise." The point to be determined is the amount of the securities which has to be transferred, and this section says it has to be settled by "arbitration or otherwise" after 775 the scheme has come into operation. I want to omit the words "or otherwise." If it had been by arrangement or failing an arrangement by arbitration I could have understood it, but I want to ask the noble and learned Lord what the words "or otherwise" mean in this connection. I think there is something a little bit sinister about the words "or otherwise", because they suggest that if it is not to be arbitration, it is to be something else. Is that the Ogpu method we heard about earlier in our debates, or is it not? It might be quite consistent with the arrangement that the scheme might provide that the compensation should be fixed by a valuer appointed by the Coal Commission. If that were the case, of course justice would not necessarily be done. It is because I think it ought to be by arbitration and not "or otherwise" that I move this Amendment.
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Amendment moved—
Page 86, line 23, leave out ("or otherwise").—(Lord Balfour of Burleigh.)
§ THE LORD CHANCELLORI am very sorry that any sinister effect has been attributed to these words. In a case with which I think all your Lordships are familiar a very sinister meaning was attributed to the words "chops and tomato sauce." It really seems on rather the same principle that a sinister motive is attributed to these words. I will say something in a minute about the suggestion that there might be a wholly improper person appointed who would in effect be an arbitrator but would be himself interested in the matter. The words "or otherwise" are intended to cover, so far as I know, only two things which really are not very difficult to understand. One possibility is that the matter may be determined by agreement, by negotiation. Then you do not want arbitration. The other thing that may happen is that instead of arbitration the question may be remitted to the Court to determine what amount of consideration is to be given to the transferor company.
All sorts of things arise on an endeavour to amalgamate in these circumstances—for instance, methods of calculating the valuation of a particular estate, and, of course, there may be all sorts of assets which are concerned here, stock in trade, machinery and subsidiary works, and so on. It may be necessary to deter- 776 mine a question of law which may arise as to the meaning of some agreement or obligation imposed upon a particular transferor company. It may be necessary for the Court to determine what amount of stocks or shares, or for all I know debentures, ought to be payable to that company in respect of the particular asset which I have in mind. It may be that the better way of determining that would not be by arbitration but by one of the methods I have been considering. But if it is suggested that a valuer may be appointed who would be interested in the matter, or something of that sort, or who would be so concerned with the matter that he is not a proper arbitrator, it would not help anything to call him a valuer because there is a question to be determined which would make him an arbitrator. I do not think it is right to suggest that in such a case either the Board of Trade or the Houses of Parliament would be likely to consent to a scheme in which some wholly improper arbitrator was appointed to determine how much consideration should be given to one of the constituent companies. I do not think the noble Lord is really pledged to that. Accordingly I would submit, having regard to the explanation I have given as to the words "or otherwise," that my noble friend might think it wise not to press this Amendment.
LORD BALFOUR OF BURLEIGHI am much obliged to the noble and learned Lord. What troubles me is that the powers of the Railway and Canal Commission to alter parts of a scheme are being very much curtailed. The matter will arise again on the next Amendment which stands in my name, and after what the noble and learned Lord Chancellor has said I will not press this Amendment but will raise the matter on my next Amendment.
§ Amendment, by leave, withdrawn.
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LORD TEYNHAM moved to add to proviso (a) in the substituted subsection (2) in paragraph 2, "shall not confirm a scheme unless satisfied that it will result in lowering the cost of production or disposal of coal." The noble Lord said: I beg to move this Amendment on behalf of my noble friend Lord Gain-ford. The object is to reimpose one of the safeguards for the consideration of amalgamation schemes which are already
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contained in the Coal Mines Act, 1930. Before proceeding with a full explanation perhaps I might be permitted to remind your Lordships that the Government have agreed to add to Clause 43(2), which refers to the duty of the Coal Commission to reduce the number of coal mine undertakings, these words:
and such report shall set forth the proposals of the Commission in regard to that area and the advantages which are expected to follow therefrom.
I should like to have the view of His Majesty's Government as to whether these words are intended to provide that the Railway and Canal Commission shall not confirm a scheme unless they are satisfied that it will result in lowering the cost of production or disposal of coal. If that is intended, I shall beg leave to withdraw.
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Amendment moved—
Page 87, line 14, At end insert ("shall not confirm a scheme unless satisfied that it will result in lowering the cost of production or of disposal of coal").—(Lord Teynham.)
§ THE LORD CHANCELLORI cannot, I am afraid, give the noble Lord the assurance he requires, because I am unable to agree that no scheme shall be confirmed unless the body considering the matter has come to the conclusion as a matter of evidence that it is certain that it will result in lowering the cost of production or disposal of coal. The position is this. The question whether a scheme will so result is not capable of direct proof. It is a question of weighing all the circumstances—the future course which the coal trade may take, whether the export of coal can continue, the state of trade in the country, and a number of circumstances which I cannot at the moment enumerate but which the noble Viscount, Lord Samuel, if necessary, can tell my noble friend—in an endeavour to ascertain whether a particular scheme will result in lowering the cost of production or disposal of coal per se. It may so result.
What is to happen? In the first place, under Clause 42, the Commission have got to come to the conclusion that the number of separate undertakings to which the coal in any area is leased is so great as to be detrimental to the efficient working, treating or disposing thereof. Thereupon it may be their duty to effect a reduction in the number of such undertakings, if it can be done. Then there is to be a representation to the Board of Trade recommending that the powers 778 of the Commission under the clause should become exercisable in any area. Then the matter comes in effect before Parliament in the form of a Provisional Order which is to be the subject of debate in special Committees. Those Committees have got to be satisfied as a matter of reason that there is a probability that as a result of the undertakings being combined they will be carried on more economically and efficiently, so far as human beings can tell, owing to the fact that there has been the amalgamation. That will be a thing that everybody can talk about in Committee, and a thing on which the Committees will have to be satisfied. The matter has to go before the Board, and Parliament may make a Provisional Order declaring—that is what I want to say—that it is expedient in the national interest that the number of coalmining undertakings should be reduced in the area with respect to which the recommendation is made. That Provisional Order will not be made unless Parliament is satisfied that there is good reason for it. It will not be made unless probabilities are satisfied in that matter.
That does not mean that Parliament will have definite positive evidence to show that there must be a reduction in the cost of production of coal or in its marketability. Accordingly the words proposed are not possible to accept. That is the stage at which things are a matter of policy, and that is not a matter with which, under the Bill as it stands, the Railway and Canal Commission will be charged. The question of policy has already been determined when the matter has resulted in the Provisional Order becoming part of the law of the land, and then the questions of law, and questions which can be determined by strict evidence, will finally come before the Railway and Canal Commission. But as the Amendment stands it requires the Railway and Canal Commission to be satisfied that the scheme will result in lowering the cost of production or disposal of coal—a thing that is not intended to be submitted to the Railway and Canal Commission at any stage in their duties, a matter which is one of policy and probability and which is to be determined on the Provisional Order. These words cannot possibly be accepted.
LORD TEYNHAMI have very fully considered the views put forward by the noble and learned Lord, but I should 779 like to remind your Lordships that when the 1930 Act was before this House, an Amendment was carried which prevented the Railway and Canal Commission from confirming a scheme of amalgamation unless they were satisfied that it would lower the cost of production and disposal of coal. I hardly think that your Lordships would wish to exclude from this Bill this very necessary provision which your Lordships have already inserted in the 1930 Act.
§ EARL STANHOPEThe point is that, since the 1930 Act, Parliament has been brought into the matter to consider the whole of that aspect of the question. In the 1930 Act the whole thing was left to the Railway and Canal Commission. Now Parliament is brought in. The Board of Trade have to make a report to Parliament, and both this House and another place have to consider the matter from its broader political aspects; only the technical aspects are now left to the Railway and Canal Commission. It is a different procedure from what was enacted in 1930.
LORD TEYNHAMIn view of the assurance which has been given by the noble and learned Lord and the noble Earl that the matter of the lowering of the cost of production of coal will also be considered when the matter comes before a Committee of Parliament, I beg leave to withdraw.
§ Amendment, by leave, withdrawn.
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LORD BALFOUR OF BURLEIGH moved, in paragraph (b) of the substituted subsection (2) in paragraph 2, to leave out "inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade by the Coal Commission" and insert "on the ground that the reduction of undertakings as provided for in Clause 43, subsection (1) of this Act is desirable or otherwise." The noble Lord said: On behalf of the noble Marquess, Lord Lothian, I beg to move the Amendment which stands in his name. This paragraph has to do with the powers of the Railway and Canal Commission, and I am very much concerned at what appears to be the effect of proviso (b). It appears to limit those powers to a degree much greater than has, I think, been generally realised. There appears
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to be a general impression that, apart from the fact that the Railway and Canal Commission are no longer to judge whether a scheme is in the national interest, their powers and duties are not affected. But if my reading of this very complicated paragraph is right, they are affected to a very great extent. This proviso (b) provides that the Railway and Canal Commission
shall not have power to make, or require to be made, in the scheme modifications inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade by the Coal Commission"—
and so on. If I understand it aright, the effect of those words is that a modification in the scheme would be inconsistent, and therefore prohibited, if the scheme after the proposed modification would contradict provisions dealing with reserved matters.
I do not know if the noble and learned Lord Chancellor follows what I mean, but what I understand is that all these matters referred to on pages 85 and 86 of the Bill under the heading:
The following provisions shall have effect with respect to any scheme submitted to the Board of Trade by the Coal Commission,
are excluded from the purview of the Railway and Canal Commission. Then we have:
- "(a) the scheme shall provide for the consideration to tie given to each of the constituent companies … out of the securities….
- (b) the scheme shall determine the classes of securities"
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Amendment moved—
Page 87, line 16, leave out from ("modifications") to ("but") in line 20 and insert ("on the ground that the reduction of undertakings as provided for in Clause 43, subsection (1) of this Act is desirable or otherwise.")—(Lord Balfour of Burleigh.)
§ THE LORD CHANCELLORIf the noble Lord will allow me, I can assure him that, although I know that view has been entertained in a certain quarter, it is not right. If the noble Lord will look at page 87, line 15, the beginning of proviso (b), and just follow me, I think I can make it clear that the fear which others have entertained is incorrect: 781
shall not have, power to make, or require to be made, in the scheme modifications inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade.That is to say, that where there is a provision required by the enactments—and I emphasize the words "by the enactments"—the Railway and Canal Commission have to bear those in mind and cannot go beyond them. But the reserved matters which the noble Lord has mentioned are matters not "required by the enactments relating thereto," but matters which ate provisions of the scheme. The very object of the power to modify may be to modify the provisions of the scheme that are before them. For instance, it would be inconsistent with the provisions of the enactments if the Court were to award consideration to a constituent company otherwise than in the form of securities in the company to which this property is to be transferred, because that is one of the enactments, or if they assessed the consideration otherwise than on the basis of the value of the property ascertained as between a willing vendor and a willing purchaser, or again if they omitted from the scheme a provision for the final determination of the consideration by arbitration or otherwise. Those are the things in the enactments, but the other things which it is feared would not be permitted are not in any way touched by this proviso.
LORD BALFOUR OF BURLEIGHMay I ask if in a word it is merely the national aspect of the matter which is withdrawn from the Railway and Canal Commission, and other things remain within the purview of the Commission?
§ THE LORD CHANCELLORIt is not only the national interest but the basic agreement by which constituent companies are to be bound as between themselves and the transferee company. They have in the Bill as provided, and in the Act of 1930, certain safeguards for their protection, and the safeguards and the actual provisions required by the enactments relating to the scheme are immutable and are not to be affected by anything that the Railway and Canal Commission may do.
LORD BALFOUR OF BURLEIGHI am very grateful for the patience with which the noble and learned Lord has 782 tried to explain this complicated matter. I expect the explanation given will carry comfort to those high legal minds which have expressed doubt. If not, if I withdraw my Amendment now, perhaps he will allow me to return to it on the Report stage.
§ Amendment, by leave, withdrawn.
§ Seventh Schedule agreed to.
§ Eighth Schedule: