HL Deb 04 July 1939 vol 113 cc976-1000

Order of the Day for the House to be put into Committee read.

6.2 p.m.


My Lords, I beg to move that the House do now resolve itself into Committee on this Bill. In doing so I should like, with your Lordships' permission, to refer to two things with reference to what occurred on the Second Reading of the Bill. In the first place the noble Viscount, Lord Swinton, asked me during the debate whether the Director-General of Munitions Production would be a member of the Army Council. I replied that so far as I was aware he would not be, but that if I was wrong I would inform the noble Viscount at a later stage. I now find that the statement I made is at the moment correct, but Sir Harold Brown will be closely associated with the work of the Army Council and I can assure the noble Viscount that what he has in mind—namely, that there should be the closest co-operation between the two Departments—will be assured. The exact arrangement is under consideration at the present time, and has yet to be settled as the new Ministry is established and organised. There is one other point. I am reported in the OFFICIAL REPORT, in Column 908, as having stated that the Minister of Supply would be a member of the Army Council.


I was rather surprised when I read it.


It will probably be within the recollection of your Lordships that that does not correctly represent what I said. I never in my wildest dreams had any idea that the Minister of Supply would be a member of the Army Council. Actually the Prime Minister made a statement on that very point in another place, when he said that the Minister of Supply would not be a Member of the Army Council. I thought it well that I should allay any fears that might have been caused by the misreporting of what I said. I beg to move.

Moved, That the House do now resolve itself into Committee.—(Lord Chatfield.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF ONSLOW in the Chair.]

Clause 1 agreed to.

Clause 2:

General powers of Minister.

2.—(1) Subject to the provisions of this subsection, the Minister shall have power—

  1. (a) to buy or otherwise acquire, manufacture or otherwise produce, store and transport any articles required for the public service, and to exchange, sell or otherwise dispose of any articles bought or otherwise acquired or manufactured or otherwise produced by him.
  2. (b) to buy or otherwise acquire any articles for the purpose of exchanging them for articles required for the public service;

VISCOUNT BERTIE OF THAME moved, in subsection (1) (a), to leave out "or otherwise acquire." The noble Viscount said: Since I put down this Amendment it has been suggested to me that these words have been deliberately inserted to cover cases which fall within the Anglo-American barter agreement. If, however, your Lordships look at paragraph (b) you will see the words "to buy or otherwise acquire any articles for the purpose of exchanging them." If that is the intention of the Government it is already covered by paragraph (b). The words "or otherwise acquire" go much further than cases of barter, and can easily include expropriation without any compensation whatsoever. If the words are intended to cover barter, I think that we ought also to insert some such words as "acquire for valuable consideration" to make the matter quite clear.

Amendment moved— Page 2, line 26, leave out ("or otherwise acquire").—(Viscount Bertie of Thame.)


The words "or otherwise acquire" which the noble Viscount proposes to omit were really introduced for a specific purpose—namely, to cover exchange transactions such as those mentioned by the President of the Board of Trade in another place on June 23. As there is no statutory authority for these operations it is essential that they should obtain cover now. The words proposed to be omitted are, I am advised, needed in addition to the phrase giving authority for exchange. I therefore hope the noble Viscount will not think it necessary to press the Amendment.


I do not wish to press the Amendment, but I certainly do think that it could cover expropriation without compensation.


I am informed to the contrary.


I am quite sure I am right in telling your Lordships that no Judge in his senses would construe the word "acquire" here as justifying the expropriation without compensation of any article.


Having heard that very high legal opinion I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.7 p.m.

LORD GAINFORD moved, after subsection (1), to insert the following new subsection: (2) Provided further that any power given to the Minister by subsection (1) of this section to manufacture or produce any articles required for the public service shall only continue for such period as Part II of this Act shall remain in force, except so far as the Minister may be exercising the powers existing prior to the passing of this Act of any other Government Departments. The noble Lord said: On the Second Reading of this Bill I called the attention of the noble and gallant Lord to a power which seemed to me to have been inadvertently placed in the Bill—a power to which strong objection is taken—that is, a power in perpetuity for a Minister to manufacture or produce any article which he may deem desirable in the interests of the public service. Such a power I am sure neither this Government nor any Liberal or Conservative Government would ever introduce in a measure of this kind. In another place, owing to the procedure there, this Amendment was not called upon and therefore the point was not raised.

I can put the point most clearly to your Lordships by reading a paragraph from a letter which the President of the Federation of British Industries addressed to the Prime Minister on June 14. A paragraph in that letter reads as follows: Clause 2, together with the definitions to be found in Clause 18, would give the Minister power to 'manufacture or otherwise produce' and to 'sell or otherwise dispose of' articles required by any Government Department, the supply functions of which are transferred to the Minister, articles in the opinion of the Minister essential for the needs of the community in the event of war, and anything in the opinion of the Minister likely to be necessary for the production of such articles. These articles would, in fact, include every product of industry in this country. The letter goes on: It is felt that this extends far beyond the present powers of manufacture possessed by Government Departments and indeed covers a vast industrial production, perhaps only limited by the elasticity of the opinion of some future Minister. The inclusion of powers to sell would make State trading as well as State manufacture in this wide field possible. The Federation has already made it clear to the Minister-Elect that it supports the institution of a Ministry of Supply. Furthermore, it agrees that wide powers are necessary during a period of emergency and it readily believes that the present Government would not make any unwise use of them.

The noble and gallant Lord, in his speech on the Second Reading, made it perfectly clear that the Government intended to exercise their powers reasonably in this emergency. In this emergency nobody takes exception to these powers being conferred on the Government. What the Federation of British Industries and all industrialists fear is that at some future time this power may be abused and, instead of the nationalisation of an industry being brought in by a Bill and dealt with in a proper way, if this power were extended to a Minister for all time a Government might arise which might nationalise this industry or the other just as they please. It is that power which we desire to have limited by some words. I did ask the noble and learned Lord if he would put down an Amendment himself to meet this point. In our view it probably ought to be dealt with by Part II, which is giving limited powers. I understand, however, that the new Minister desires to have powers to buy and sell in connection with his ordinary duties as Minister of Supply. Nobody takes any exception to that, but what we do take exception to is that it should be in the power of a future Government to destroy private enterprise by a Minister taking advantage of this clause.

Therefore in order to raise the point I have put down this Amendment at this stage, and I do hope the Government will meet it, because I can assure the noble and gallant Lord that the procedure which he thought was a safeguard is no safeguard at all. He suggested that the Minister could be called upon and his conduct reviewed in another place; but if a Socialist Government of an extreme character wanted to nationalise industry and wanted to destroy this private enterprise and the other at a future date, it would be to no purpose to bring under review the Minister's administration, because he would have a majority in the other House. There is no safeguard to these powers being conferred in this emergency or in any other which is likely to be connected with a possible war, and certainly not in time of war. It is the perpetuity for this power which I think is objectionable. I hope the Government will meet the case of traders and of all industrialists who have looked into this point and feel very strongly on it.

Amendment moved— Page 3, line 4, at end insert the said new subsection.—(Lord Gainford.)


I thank the noble Lord for the way he has moved his Amendment, and I wish I could meet his point more satisfactorily. Actually there are four reasons why it is not possible for me to do so. He has already covered a great many of the difficulties which he has himself foreseen in the way of our accepting his Amendment. The power to acquire articles required for the public service, as taken in the Bill, covers the acquisition of a very wide range of articles, much wider than has ever been needed before, for the direct service of the main supply Departments. It is therefore quite fitting that the power to "manufacture or otherwise produce" should be taken in regard to the new class of materials as well as the old.

It is also fitting that this clause should, as it actually does, form the main basis of the Minister's powers and provide a complete and permanent authority. There is no obvious reason why one part of the power to manufacture should be temporary and another permanent. Secondly, it is difficult to define with accuracy the powers which are at present exercised by different Government Departments whose duties may be transferred from time to time to the Minister. Only those duties can be transferred which they already perform, and I am advised that there would be the greatest administrative difficulty if this Amendment were pressed. Thirdly, there is, as your Lordships know, to be an opportunity for consideration in Parliament from time to time of the policy of the Ministry of Supply, and the policy of the Government regarding supply, and the Minister of Supply designate has in another place given his assurance that he will keep Parliament informed from time to time of the progress and of his intentions as he obtains experience in his duties. That should give adequate protection against any excessive use of the powers to manufacture. Fourthly, if it is desired substantially to extend the range of Government manufacture, some such scheme as a nationalisation proposal such as the noble Lord has suggested, the powers that are given to the Minister of Supply in this Bill are not wide enough.

Moreover, it is quite unlikely that a power in a Bill of this kind would ever be used for this purpose. It would be more likely, as it surely would be more proper, that in the event of a decision by any Government having a great majority, as the noble Lord has suggested, to adopt a policy of manufacture, that Government would take complete powers to effect what was wanted. It would not be necessary for them merely to look to see if there was any existing Act out of which the powers could be squeezed. The powers would be taken under a special Bill which would cover any operations which they needed. Therefore I hope that the noble Lord, although I am afraid that my reply will not be at all satisfactory to him, will realise that I cannot accept the Amendment.


My Lords, this Amendment raises a very important question, and it is not one, I think, on which there is really any disagreement of principle, or indeed of practice, in the minds of your Lordships. I believe that everybody in this House wants to vest in the Minister of Supply the fullest possible powers which he can require in the most extreme emergency. Personally, indeed, I have always pressed for going further than the Government are going at the present moment; though I was glad to find, in the speech that my noble friend made in reply to me, that before very long I understand he will extend to what are really common services the powers which are so curtailed at the moment. Therefore there is nothing between any of us in a desire to vest in this Minister the most complete, if you will the most autocratic, and the most universal powers to cover the whole field of supply. But the reason why we want to do that is that we may have the most perfect organisation, equal to any totalitarian organisation which can be devised, which will function and function effectively as an insurance of peace and as a preparation for war. We are quite prepared to give those powers in the most extended form.

But what my noble friend is anxious about is that if in the fulness of time we come to a saner, happier world, there shall not be on the Statute Book an Act which could be used for purposes entirely other than that which the Parliament which passed the Act designed it to fulfil. I am not quite sure that my noble friend the Minister of Defence is really right in his construction of this Bill, and I would asked the learned Lord Chancellor to give us some further assurance on the point. I leave aside the rather naïve expression of opinion which fell from the noble Lord that a Socialist Government which wanted to nationalise all the means of production, distribution and exchange and found on the Statute Book a convenient Statute under which it could operate would not dream of doing anything so underhand as that, but would introduce a nice Act of Parliament which would start the whole business afresh and give them their new powers. I am not sure that I am quite as trusting as that, and I am not sure that any Government, whatever its complexion, if it found an Act of Parliament on the Statute Book which gave it full facilities for all executive actions, would be so enamoured of Parliamentary process as to come back to Parliament and say: "Let us have a fresh Act of Parliament, and debate this afresh." I am afraid that any Government would use all the Acts of Parliament which it possessed. All Governments have done that kind of thing. I am not at all sure that my noble friend (Lord Snell) has not been engaged with one who sometimes is and sometimes is not a member of his Party, a very distinguished lawyer, who sits in another place, in devising very ingenious methods by which behind the back of Parliament the Socialist Party, should they ever come into power, could carry out the whole of their programme.

This is a serious matter. Naturally all of us who engage in Parliamentary and political activities, and do that for the purpose of accomplishing what we are pleased to consider large constructive reforms, wish to get these reforms carried by hook or by crook, by one means or another, and if there are on the Statute Book measures which enable the effective nationalisation of industry to be carried out without bringing it before either the House of Commons or this House, I am not sure that a formidable Minister who wished to get the job done, and wished, in the well-known words of the late Lord Passfield, for "Socialism in our time," might not think this a useful and convenient wav of getting it. I would like to ask Lord Chatfield whether, under these words in Clause 18, which are extraordinarily wide, the Minister has power to do all the things which Lord Gainford read out. He can manufacture any article which any Government Department requires. I do not think that would limit his scope of manufacture. At any rate the Government appetite might grow.

I am quite sure my construction is right. I believe that once having gone into the process of manufacture, what would govern would be the kind of article that the Government uses, and the modern Government uses practically every article. I believe the Minister can go into the whole field of manufacture, and manufacture every article which in his opinion would be essential to the needs of the community in time of war. That does not mean that he can manufacture in view of a war which he knew was coming, because we do not know that to-day, and we hope war will not come. It really means that the Minister can undertake the manufacture of anything which the community needs, and say that is the kind of thing which the community needs in time of war. There is not a thing which under this he could not manufacture, and not only is he able to manufacture the finished article, but also the semi-manufactured, half-raw materials. If your Lordships look at Clause 18 (c), you will see that it says: anything which in the opinion of the Minister is or is likely to be necessary for or in connection with the production of any such article as aforesaid. That is everything, from pig iron to a finished steel product. I am not sure whether he would be able to take over existing steel works. I rather think he would not. That would be temporary power under Part II. But he would be able to set up a new steel works, and new blast furnaces, if he so desired, and therefore the whole process of manufacture, from the raw material to the finished article, the Minister could engage upon, because that is an article required in the public service, or an article which is required by the community in war.

Those are exactly the powers which the Minister should have for an emergency, and we want him to have those powers. They are such powers as no Minister ought to have in normal times. I cannot imagine a more dangerous thing than giving the Minister power in ordinary times, and for ordinary purposes, to do that. Supposing we were to have nationalisation legislation. I do not believe you would ever get an omnibus Act like that through Parliament. I am perfectly certain that no Parliament in its senses would pass a General Bill of Nationalisation which said that the Minister of Supply should have the power to nationalise any industry in this country that he wishes. It is not a fantastic thing that we are talking about. The very fact that we are giving him these powers for an emergency ought to make us sure that they are not used improperly at any future time, when an emergency has entirely past.

The Minister has said on this occasion, and before, in answer to Lord Gainford: "You are safeguarded, because if the Minister acted unreasonably his administration could be brought before the House of Commons, and it could be challenged on a vote." My noble friend is not as familiar with Parliamentary procedure as others of us are, but the Lord Chancellor will, I am sure, confirm me in this, and any old House of Commons man would agree. It is a recognised rule in the House of Commons that you cannot take, merely by a vote, a new power to a Minister. Lord Gainford, as an old Whip, will recognise that very well. The House has always been jealous to exercise control over a Minister in that sense, and it is an immemorial rule of the House of Commons that a new service or power must not be taken by a Minister merely by putting a Resolution down on a Vote. If you are to give a Minister new power Which he does not possess before, that power has to be founded upon an Act of Parliament, duly passed by both Houses, and you only bring his administration into force and under review when an Act of Parliament has given him that power. I am sure every authority will agree that it is no answer at all to say: "We give this power now (give it indeed by a side wind), but it will be all right, because we can, if necessary, challenge it and take it away on Supply." Your Lordships certainly could not. It will never come to your Lordships, because the only way administration can be challenged is by a Vote of Supply in the House of Commons.

I ventured to intervene at this length for this reason. Everybody in the House knows I am as keen a supporter of a Ministry of Supply as there is in this House; I do feel that we ought to give these tremendous powers in their full force to the Minister; yet we really ought in some way to provide a safeguard against a future risk. When, hereafter, happier times have come, when, please God, the need for these powers is past, and they have never been exercised on any extreme scale, and we have gone back to our ordinary avocations and the ordinary channels of trade, it would indeed be a risky thing if we left on the Statute Book perpetual powers to some Government, without any appeal or any obligation to come to either House of Parliament, to exercise such enormous and drastic powers in normal times.

This Amendment may not be the right way of doing what we desire. I quite see you must have temporary and semi permanent powers. But what objection is there to doing this: The temporary powers under Part II are made renewable by a Resolution of both Houses of Parliament, and I do not really myself see why these powers of manufacture should not be renewable by a Resolution of both Houses of Parliament. Believe me, each House of Parliament will be only too ready to renew these powers without debating, as long as the need for the renewal is there. Nor will the Minister be hampered in his activities. He can go and make contracts for the longest period of time, because he has full and complete power as long as the Act is in being. The complete carrying out of these contracts will not be prejudiced long after the three years are finished. I should have thought that, where these exceptional powers are taken, the reasonable thing to do was to say: "All right, give the Minister these powers for three years, and let us extend them year by year by a positive Resolution of the House, if they are wanted." In that way I do not believe you would hamper the Minister in the very least, and you would carry this Bill without any anxiety in the minds of the people, who, after all, have to be your partners in carrying it out, and we could all go forward supporting it completely; whereas, if this case is not met, there will be a perfectly genuine anxiety in the minds of many people—and people who do not hold strong political views one way or the other—and a feeling that we are doing a very wise thing in making this Ministry of Supply but a very foolish thing in passing it in the unlimited form in which it stands.


In the state of alarm into which your Lordships have unhappily fallen lately in this sitting I wonder if I could do anything to comfort your minds? So far as I learn, two of the three political Parties in this country are entirely impeccable: they would never do anything by way of a political trick, or use any Orders that there might be—


No. I said they all had done it, and they all would do it.


The noble Viscount will forgive me: it was not to him that I was referring. But there is another Party which some day might take a low advantage by the mere fact that it would have a majority. Well, I resent in some small way that attack upon an entirely reputable and altogether guileless political Party. I assure your Lordships that we are not afraid of a political fight, and it ever the need came to nationalise we should not be afraid to advertise it. But, in actual fact, nobody on my side of politics has ever proposed or thought of wholesale nationalisation. The noble Viscount referred to the noble Lord, Lord Passfield, who, as your Lordships know, invented the phrase "the inevitability of gradualness," and our view is that a time may come when particular things will be ripe for nationalisation before all things are ripe for nationalisation. We should be perfectly willing to take things as they come. And therefore, I hope your Lordships will be able to go away to-night without feeling that there is this terrible danger of using Orders that may have been passed against your interests. We shall have pleasure in looking up the record of both these two honest Parties in these matters in the future.


As I have been more than once referred to on the question of the construction that should be put on this clause, I think I ought not to shirk an answer, and I wish to say quite clearly that in my opinion—this will perhaps comfort some of your Lordships—it will be impossible under Clause 2 to nationalise the industries of this country, or any of them. As I read the clause, it is confined to giving powers, subject to the provisions of the subsection, to the Minister, for instance to manufacture or otherwise acquire articles required for the public service. If you read the proviso, you will see that a Minister who was a Minister of Supply for the purposes of the Army would not even be entitled to manufacture or supply articles for the Navy or the Air Force. In other words, as I think, the clause is limited, and the dangers which are anticipated will not arise. Of course, it does not mean that the Minister who is engaged in manufacturing, we will say guns, must wait to see if an exact number of guns is required. He has to act like a reasonable man, and he will manufacture those which he thinks will be needed. But the notion that he can acquire the steelworks and the land, and have a monopoly in regard to them, is one which as a matter of law is ill-founded.


If the Minister is entitled to manufacture articles for the public service he may enter upon a manufacturing trade. The power may not be universal in this Bill but he is authorised to manufacture cloth for the Army, boots for the Navy, food for the Air Force, and I do not know what else, shall I say for the postmen or for the Civil Service? He can pick out industry by industry, and under this Bill he can do what he pleases.


What I ventured to say to your Lordships shows that he cannot do what he pleases. He has only got a very limited right.


The whole point is this. He cannot do what he pleases because he is limited to the public service, but one of the biggest employers of labour in this country is the Post Office, and under this Act he can manufacture anything which is necessary for the Post Office and its work. He can manufacture paper, metal sheets, vans; he can manufacture paint—I do not know what he cannot manufacture for one service or the other of the State.




I quite agree—wheat, if it is thought necessary to feed the Post Office. The noble Lord, Lord Snell, assumed that this was going to be done by Order. On the contrary, power is conferred by Statute of the Realm, and the Order is a very subordinate thing. This is a very dangerous Bill—very dangerous indeed. I am not afraid of Lord Snell and his friends so much as I am afraid of some of my own friends and the pressure which outsiders can bring to bear upon them. It is not that the whole industry is going to fall into the hands and control of the State, it is that one section of it is going to be set up in competition with the rest of the industry—the paper industry if you like. It is legitimate to make paper for the use of the War Office and the public service generally. In doing so you establish a new section within that industry, and you have got the taxpayer behind it. The Government does not pay rates except ex gratia, and there you have a form of competition dangerous to ordinary private commercial enterprise being supported by Government subvention to meet losses.

That is the power that is being conferred upon this Government and its successors by this Bill. It is no good saying it is not likely it will be done, as Lord Chatfield said. The noble Lord below the Gangway said that was a rather naive remark. I could put it more strongly than that. The matter cannot really be dismissed by saying it is not likely to be done. We are going to have an emergency, and for all time we must labour under the commercial and industrial disadvantages of that emergency. This power should be confined to what the Government by Order in Council pronounce to be an emergency, and for so many months or so many years thereafter, or else the Bill should be limited to two, three, or five years, or else be included in the Expiring Laws Continuance Bill. One thing or another should be done, and I would ask the Government not to dismiss this matter as a mere departmental affair, but to give some guarantee that it will be considered before the Report stage.


I agree with the noble Lords who have spoken and who have pointed out that this is a far more important matter than would appear from the terms of the Bill. Nor does it seem to me that the reply given on behalf of the Government really covers the point. I am not arguing whether the State production of goods is a good thing or a bad thing. I am one of those who think that in many directions it might be extended, but if it is to be extended it ought to be done overtly and consciously with the full authority of Parliament. The noble Lord, Lord Snell, acquiesces in that. He said that if the time came for such an extension to be accomplished in that way it might or might not be done. But there are many instances in the history of this and other countries of Statutes passed for one purpose being used for another. Take France, for example, where the compulsory Military Service Acts have been used to enlist people to break a railway strike or a dock strike by conscripting them and calling them up for service and then using them for some industrial purpose.

This clause which we are discussing says that the Minister may manufacture or otherwise produce any articles required for the public service, and the definition clause, Clause 18 on page 16, says that articles required for the public service mean articles required by any Government Department for the purpose of the discharge of its functions. That does not mean for the discharge of its functions at the present time—1939—at a time of crisis. It must obviously mean the discharge of its functions as they may be at any future time during which this Act may be in force. There are a great number of Government Departments which have already very wide functions and might possibly in the future have these functions extended very considerably. There is the Ministry of Health, for example—the supply of milk and so on. There is unemployment insurance, and measures for dealing with the unemployed. Then there are the military Departments themselves. The War Office, the Admiralty, and the Air Ministry have enormous powers for the supply of food for, perhaps, hundreds of thousands of men. The Lord Chancellor says that this Bill applies at present only to the Army, but it has been pointed out—


I did not say that the powers conferred referred only to the Army.


The noble Lord said that the example given by Lord Gainford regarding supplies for the Air Force and the Admiralty did not apply.


The noble Viscount has totally misunderstood.


I am sorry if I misunderstood the noble and learned Lord, but for the purposes of my present argument there is advantage in the fact that the Lord Chancellor did not say that. The three great Services could exercise their powers under this Bill to manufacture and produce, supposing some Government that way inclined thought it desirable, all that they required for their own purposes including the feeding of the troops. They would be immediately authorised under this Act to engage in State farms and State production so long as all the products were used in the public service. Consequently this becomes a very large and important matter. The noble Lord, Lord Chatfield, said that the Minister of Supply had given an assurance that such things would not be done. But we are not contemplating present circumstances or the present Ministry. He further said that any Government that wished to do these things would take powers under a special Act; but to pass an Act through Parliament is a long process, and if an Act exists already which could be misused according to the intentions of its originators but nevertheless could be used according to the desires of those in power at the time, no doubt the instrument ready to hand would be employed.

If the proposed Amendment is in the wrong form and would impose obstacles to the due carrying out of the purposes we really have in view in establishing the Ministry of Supply, then the matter would have to be dealt with in another way. I feel convinced that in some way or other it should be dealt with in this Bill, but your Lordships would not be well advised to pass the Bill in the form in which it is now presented.


By leave of the Committee, I would ask the noble Marquess, Lord Zetland, if before the next stage of this measure he would put himself in a position to make an announcement to your Lordships about this matter on which, I can assure him, many members of this House feel very strongly indeed.


I have no desire to oppose the Government at the present time, but we do feel that something ought to be done. I would rather the Government agreed to put down an Amendment than press the matter now. The point, however, is such an important one that I do ask the Government if they will kindly undertake to consider it between now and the Report stage with a view to meeting it in some way, otherwise I feel I am bound to go to a Division on a principle of such far-reaching consequence.


The noble Earl behind me has asked me whether I will put myself in the position to make a statement with regard to this matter at a later stage of the Bill. I fully realise the fears which are entertained in many quarters of the House as to what the ultimate effect of this clause in its present form might be. I am advised that those fears are certainly exaggerated, and probably groundless, but in view of the arguments which have been submitted this afternoon I am certainly quite willing to have this matter further considered in the light of those arguments with a view to a statement on the point being made at the next stage of the Bill.


In those circumstances I beg leave to withdraw the Amendment, but in order that the matter shall be raised I suggest that my Amendment should be put down at a later stage so that the point may be gone into in that form if we are not satisfied with the Government's way of meeting the point.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 agreed to.

Clause 4:

Payments by Minister for creation of reserves.

(2) If any person for the purpose of obtaining a payment under this section, either for himself or for any other person, knowingly or recklessly makes any untrue statement or untrue representation, he shall be guilty of an offence under this Act.

6.52 p.m.

VISCOUNT BERTIE OF THAME moved, in subsection (2), after "representation," to insert "or wilfully fails to disclose any material fact." The noble Viscount said: I think I am right in saying that these words have been put into clauses in other Bills dealing with the same subject. I therefore beg to move.

Amendment moved— Page 5, line 4, after ("representation") insert ("or wilfully fails to disclose any material fact").—(Viscount Bertie of Thame.)


I am advised that the wording in the Bill "any untrue statement or untrue representation" does cover a partial statement or failure to disclose material facts, and that the Amendment therefore does not appear to be necessary having regard to the tenor of the clause. I hope, therefore, that the noble Viscount will not consider it necessary to press his Amendment.


I do not propose to press the Amendment, but I am certain that these words do appear in other Acts, and if that is so doubts will be thrown upon the question whether a concealment of material facts is indeed an untrue statement. I hope the noble Lord will look into it between now and Report and perhaps change his mind.


I assure the noble Viscount that I have taken the advice of the Law Officers on this particular point. They have carefully considered the whole matter and have come to the conclusion which I have stated to the noble Viscount.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clauses 5 and 6 agreed to.

Clause 7:

Power to require delivery of supplies and carrying out of works.

(6) Where directions are given to any person under this section with respect to any articles or works, then—

  1. (a) if the directions are given under subsection (1) or subsection (2), the price or remuneration, if any, to be paid for the articles or works in addition to the price or remuneration which would have been payable therefor if the directions had not been given; and
  2. (b) if the directions are given under subsection (3), the price or remuneration to be paid for the articles or works;
shall be such as may be agreed between that person and the Minister or, in default of agreement, such as may be determined to be fair and reasonable, having regard to all relevant considerations, by an arbitrator or arbitrators selected by the Minister from a panel of arbitrators appointed by him.

6.54 p.m.

LORD CHATFIELD moved, in subsection (6), to leave out "selected by the Minister from a panel of arbitrators appointed by him" and insert "appointed as hereinafter provided." The noble Lord said: The object of this Amendment is to carry out an undertaking given on the Report stage of the Bill in another place by the Minister who was in charge of it. In that place an Amendment was moved to give effect to the suggestion which the Minister himself had made on the Committee stage of the Bill, that, though the panel would continue to be appointed by the Minister, the arbitrator for each particular case should be appointed from the panel by the Chairman, who would be elected by the members of the panel themselves. In the course of the debate on this Amendment the Minister suggested that, though it might be desirable that the arbitrator or the arbitrators in any particular case should be appointed by the Chairman, it would be better if the Chairman were appointed by the Minister himself instead of being elected by the panel. He also suggested that it would be necessary to have a Deputy Chairman in case the Chairman was ill or otherwise unable to act. But he undertook that if the appointment of the Chairman or Deputy Chairman were left to him he would appoint persons who had had wide legal experience. He further undertook that the House of Lords would be invited to give effect to his suggestions when the Bill came before it.

The Amendment that I am now moving carries out this undertaking. Under subsection (1) of the proposed new clause to be moved later, the Minister will appoint the panel and a Chairman and Deputy Chairman. Under subsection (2) the Chairman or Deputy Chairman must be a barrister, advocate or solicitor of not less than ten years standing. Under subsection (3) the arbitrator or arbitrators for any particular case will be selected by the Chairman or Deputy Chairman. In addition to carrying out the Minister's undertaking the new clause deals with two small technical matters. It provides, first, that the number of arbitrators to hear any particular case shall be either one or three—that is in subsection (3)—and, secondly, that where there are three, the award of any two of them shall be binding. That is in subsection (4). The reason why it is so provided is that where there are two arbitrators difficulties may arise if they are unable to agree. Delay occurs by having an umpire to rehear the case, and it is essential that the arbitrations under this Bill shall be determined as quickly as possible. I beg to move.

Amendment moved— Page 8, line 38, leave out from ("arbitrators") to the end of line 40 and insert ("appointed as hereafter provided").—(Lord Chatfield.)


It will be within the recollection of your Lordships that while this Bill was passing through its earlier Parliamentary stage in the other House, great apprehension was expressed by those connected with industry about the wording of Clause 7. It was felt that it was not altogether fair that the Minister, who would be a party to the dispute, should appoint the arbitrators' panel and select the arbitrator from that panel to deal with a dispute. I wish now to thank my noble friend for having introduced this Amendment. I welcome it because I think it goes far to meet the apprehensions of the trades concerned. I offer no hostile criticism, but I wish to refer to one little point in the Amendment. It says that the Minister shall appoint a panel of arbitrators. I do not object to a Minister appointing a panel of arbitrators; but from what body or bodies are these arbitrators to be chosen? I cannot think they will be chosen from the legal profession, and I cannot think that they will be chosen from civil servants. I do not suppose my noble friend can give the answer now, but perhaps between now and the Report stage he will look into the matter and give me an answer on this point—from whom these arbitrators would be chosen. My own view is that it would be very helpful, and I think would give great satisfaction both to the great and the small manufacturing firms who would be supplying the goods about which there would be a dispute, if the Minister were to announce that he would select for the panel men who are actively employed in the great industries supplying the Government. Those men know the difficulties; they are fair-minded, just and patriotic men; and they would give better assistance in coming to a decision than anyone else. I hope that my noble friend will give some consideration to this point between now and the Report stage.


I desire to refer to a matter which I rose to speak about when my noble friend opposite got up. I am very glad that the noble Lord, Lord Mancroft, has raised this matter, because it rather bears out what I was going to suggest to the noble Lord in charge of the Bill. I want, if I may, very respectfully to make an emphatic protest once more against the building up of a further vested interest in legal appointments in Acts of Parliament. There have been a number of cases recently in which it is laid down that so-and-so shall be appointed by the Minister but he must be a member of the legal profession. There are many important arbitrations carried out under the existing Arbitration Acts by gentlemen appointed, in some cases, by the President of the Institution of Civil Engineers or the Institution of Mechanical Engineers or by the Association of Chemical Manufacturers—men who carry the confidence of the particular trade or business con- cerned. I have the greatest and highest regard for the legal profession, but I would point out that the noble and gallant Lord himself belongs to a profession which has to adjudicate on matters of life and death when sitting as officers on Courts-Martial. If he were told that he had to have as president of one of those courts a barrister, or a member of the Faculty of Advocates, or a solicitor of ten years standing, I can imagine what he would have to say about it. It would not be in the usual terms in which we express disapprobation in your Lordships' House; it would be much firmer, and I am sure that every member of his profession would say the same.

Why are both the Chairman and the Deputy Chairman who will have to deal with intricate trade and commercial matters to be lawyers? I must repeat that we are building up a still further vested interest in legal appointments of this kind, and I do not think it is quite fair to your Lordships' House. This was promised in another place. I do not know to whom it was promised, but I imagine to Government supporters. I can understand that the Chairman might possibly be required to be a lawyer, but that both should be lawyers I think is rather extraordinary. I think it right to make a protest, and I shall continue to make it on other occasions.


I should have thought the obvious reason for both being lawyers is that the Deputy Chairman will only act in the absence of the Chairman.


I must say I consider the proposed new clause a very great improvement, but I should like to make one practical suggestion and that is that the members of these panels should not be appointed for more than a certain number of years. This system of panels is well known, but it has been found that panels have a tendency to grow in number and that some people remain in these panels long after they have passed their period of useful work. This is a practical point, which I think should be considered. There is an advantage in the Chairman having the selection of arbitrators, because he gets to know who are the people best suited for particular cases. I do not quite follow the noble Lord, Lord Strabolgi, in his remarks about lawyers. I think that the Minister ought to have considerable latitude as to those selected for the panel. I do not say you know an arbitrator when you see him, but I do say that in the case of a lot of people you know directly you see them that they cannot be arbitrators. Therefore there should be latitude to choose good men, who are patient and have some judgment, from any kind of profession.


There are three points which have been raised. The first was by my noble friend Lord Mancroft as to the composition of the panel. I will certainly inquire into that matter, but I think I am right in saying that it has been already stated in another place that it is fully the intention that the panel of arbitrators should be drawn from a very wide field and would certainly include representatives of industry and other persons who would be appropriate. I believe that statement to be correct, but I should like to check it and satisfy the noble Lord at a later stage of the Bill. As regards Lord Strabolgi's remark about members of the legal profession being so popular with the Government, I think I may say that this Amendment arose from a debate in another place where the whole question was very extensively discussed. I am under the impression that very great store was set by the fact that the Chairman should be a man who had judicial experience, and that that was considered a very necessary factor. As the noble Viscount said, if you are going to have a Chairman of a certain type and a Deputy Chairman who only acts in his absence, it is common sense to have a Deputy Chairman of the same type as the Chairman. The question raised by the noble Lord, Lord Askwith, about the period of service of individual members of the panel, is one which I will take up and I will give him an answer later.

On Question, Amendment agreed to.

Clause 7, as amended, agreed to.

Clause 8 [Power to require storage]:


The next Amendment is consequental. I beg to move.

Amendment moved— Page 10, line 15, leave out from ("arbitrators") to end of line 16 and insert ("appointed as hereafter provided").—(Lord Chatfield.)

On Question, Amendment agreed to.

Clause 8, as amended, agreed to.

LORD CHATFIELD moved, after Clause 8, to insert the following new clause:

Provisions as to arbitration.

".—(1) For the purpose of the last two foregoing sections, the Minister shall appoint a panel of arbitrators, and shall appoint one member of the panel to be chairman thereof and another to be deputy chairman thereof.

(2) No person shall be qualified to be chairman or deputy chairman of the said panel unless he is or has been a barrister, member of the Faculty of Advocates or solicitor, of not less than ten years standing.

(3) Where under this Part of this Act any matter is to be determined by an arbitrator or arbitrators, it shall be referred to and determined by such member or such three members of the said panel as may be appointed for the purpose by the chairman or deputy chairman thereof.

(4) In any case where three members of the panel are appointed, the award of any two of them shall be binding."

The noble Lord said: I beg to move.

Amendment moved— After Clause 8 insert the said new clause.—(Lord Chatfield.)

On Question, Amendment agreed to.

Clauses 9 to 11 agreed to.

Clause 12 [Power to require protection of essential undertakings in event of war]:

7.9 p.m.


I should like to draw attention particularly on this clause to the expenditure which may be incurred by any manufacturer in connection with the directions given him by the Minister of Supply. Under this clause it is quite clear that he may recover by way of grants 27½ per cent., which is equal to the standard rate of Income Tax for the year 1939–40. That leaves 72½ per cent. It is understood from the Explanatory Memorandum attached to the Bill that of the remaining 72½ per cent, he may recover up to a percentage believed to be 50 by adding as a supplementary charge to current contracts amounts which will come to that total. It is from that provision not clear what would be the position of a manufacturer who should not be doing a proportion of work large enough to permit, by supplementary charges to those contracts, the recovery of what equalled the 50 per cent. of the 72½ per cent. Again, it may well be that if he should succeed and recover an amount equal to what it is intended he should recover, by addition of a supplementary charge to the contract price of the goods which he is under contract to supply to the Ministry, it may be assumed that that would be in the nature of profits, and it is not understood that it would be a charge to trading. It would therefore fall under the Armaments Profits Tax.

This matter was dealt with in another place, but it appears that ambiguity remained after discussions in that House, and certain other means sought to obtain interpretation of this provision suggest that it is still a matter of ambiguity. In raising this question on the Second Reading I must admit to encountering some difficulty, which may also have appeared to some other members of your Lordships' House. The Explanatory and Financial Memorandum supplied with the Bill is drafted in a peculiarly difficult fashion. An unsuspecting person who looks at the first page, at Clauses 1, 2 and 3, and then turns to Clause 12, might fail to realise that it is divided into two sections. That may be some reason to account for the ambiguity which has arisen under this clause. When I raised the matter on Second Reading, the noble and gallant Lord, in dealing with the points raised in this House, did not deal with that particular point. It is because, on the best authority I can get, some ambiguity does remain that I respectfully ask him to elucidate the matter at this stage.


My Lords, I am not sure that I can give a complete answer to the question raised by the noble Lord. In so far as I am unable to do so, I hope he will let me do so later. As regards the question about the grant for the protection of plant and whether it will be subject to the extra Armaments Profits Tax, the answer is that it will have nothing to do with that tax, as the grants are to meet capital expenditure and there will not be any question of their being part of the revenue.


I did not mean to raise that point. That would be a capital repayment.


Yes. The other point that he has raised I should like, if I may, to answer at another time. I did not expect him to raise it to-day.


I have drawn attention to it, and I shall be quite satisfied with the assurance given by the noble and gallant Lord that some clear explana- tion of it will be made. I hope that he will realise that it does appear at present that the contractor, in recovering it, would be recovering amounts which would appear to be subject to Armaments Profits Tax and therefore would be in conflict with the intentions of the Bill.

Clause 12 agreed to.

Remaining clauses agreed to.

Schedule agreed to.


My Lords, it may be for the convenience of the House that I should notify your Lordships that it is proposed that the Report stage and Third Reading of the Ministry of Supply Bill shall both be taken on Thursday.