Lords Sitting of 4 March 1941

Preamble
The House met, The LORD CHANCELLOR on the Woolsack.

SUNDAY ENTERTAINMENTS ACT, 1932.
Orders made by the Secretary of State for the Home Department, extending Section I of the Act to the

Urban District of Newquay;

Borough of Workington:

Laid before the House (pursuant to Act), for affirmative Resolution and ordered to lie on the Table.

SUNDAY ENTERTAINMENTS ACT, 1932:)
BOROUGH OF BEBINGTON ORDER.
BOROUGH OF CHARD ORDER.
COUNTY BOROUGH OF EASTBOURNE ORDER.
URBAN DISTRICT OF SHIPLEY ORDER.
URBAN DISTRICT OF WITHAM ORDER.
LORD TEMPLEMORE: My Lords, on behalf of my noble friend the Duke of Devonshire, I beg to move that these Orders be agreed to.
Moved, That the Orders made by the Secretary of State for the Home Department under the Sunday Entertainments Act, 1932, and laid before the House on the 19th instant, be approved.—(Lord Templemore.)
On Question, Motion agreed to.

WAR DAMAGE BILL.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR VISCOUNT SIMON: My Lords, I move your Lordships to give a Second Reading to this very important and necessarily very complicated measure. It comes to this House from another place where it has been the subject of prolonged examina-
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tion and of considerable amendment. It is a Bill now of one hundred and one clauses, divided into four Parts, and it has five Schedules. In the circumstances I shall best serve your Lordships' House if I endeavour to give some account of the general features of the Bill, omitting the smaller technicalities. From the very-beginning of the war it was the declared policy of the Government of this country that, as regards war damage, which necessarily falls by chance upon one victim or another in a large community, it was impossible to let the loss lie where it fell. It was declared from the beginning that it would be necessary for the State to recognise that this really was a communal responsibility which, somehow or other, when the time came, must be discharged by joint effort. At the same time in the early days of the war, when we had no experience whatever of what might be coming, it was of course quite impossible to estimate even in the roughest actuarial manner what might be the nature of the damage to be paid for.
Indeed, when Lord Weir presided over a Committee specially appointed for the purpose, that Committee reported that they did not consider at that time that there was enough material to enable a proper estimate of this sort to be made. But we have learned a good deal since then, and this Bill is, as I claim, a very bold, a very ingenious, and a very sound mode of facing those difficulties of the time we are in. Part 1 of the Bill contains a scheme for compensation for war damage to buildings and other immovable property, including land and fixed plant and fixed machinery, and this scheme for compensation is based upon the collection of funds, which will be primarily provided by compulsory contributions. It is a compulsory scheme, and everyone in respect of his particular property to be covered will have his contribution which must be made. If the funds which are thus provided by the contributions of those interested are not sufficient to meet the damage which is sustained, then those funds are to be supplemented by a State contribution from public funds.
Let me first say two or three words about the nature of these contributions, which, as I have said, are compulsory, and will be collected through the machinery of the Inland Revenue. The

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contribution to be paid will be in five annual instalments beginning on the 1st July next and ending, therefore, on the 1st July, 1945. Apart from agricultural properties, for which special provision is made, to which I will refer in a moment, each of these five instalments will be 2s in the pound on the net assessment to Schedule A, or, where such assessment does not exist, 2s. in the pound on the net annual value for rating purposes. That would be the general scale of contribution. In the case of agricultural properties, in recognition of the fact that so large a proportion of the annual value is attributable to the land rather than to the buildings, the contribution will be one quarter of the normal sum, and will be 6d. in the pound. This reduced contribution of 6d. in the pound on the net assessment under Schedule A will also apply to the case of land that is used mainly, or of course: exclusively, for open air games, for open air racing or open air recreation. That is the main source from which the necessary money will be found. The period of risk to be covered under this scheme will be from the beginning of the war until the 31st August next, practically the first two years of the war. Your Lordships will appreciate, therefore, and it is the essence of this scheme, that it is retrospective in effect and will protect those who have already suffered this loss just as much as it will protect those who come under the scheme after the Bill has become law.
Your Lordships will see at once that it is quite uncertain whether that size of contribution will provide exactly the amount that is necessary, or whether it will provide too much, or whether it will provide too little. It is quite impossible to say, because nobody can estimate now what the damage to be met in total is to be. The Bill contains a very ingenious provision for adjustment. If, for instance, when an estimate is made, the amount that is being produced by the contributions as a whole is not enough to meet the estimated damage, then State funds will bear the whole of the excess, the whole of the surplus, up to an amount equal to the estimated total of the contribution. Supposing, for example, that when the estimate comes to be made it is believed that the contributions I have described will produce £200,000,000, if the damage that is expected to have to be paid is
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also £200,000,000, then you have your equation, and there is no further trouble. But supposing it is estimated that, owing to the number and devastating effects of air raids, the damage is £300,000,000, then the contributions will not be altered, but the State, out of State funds, will add another £100,000,000 to the £200,000,000 already provided, so that the total may meet the bill. The State will go on doing that, finding more and more money without further claim to contributions, until it has put up £200,000,000—in other words, until it has doubled the stake of the contributor.
If even that does not turn out to be enough, if this duplicated total will not pay for all the damage which it is estimated will have to be met then the Treasury may, by order, either increase the number of instalments, or increase the proportion of the remaining instalments, or perhaps do both, in order that the sufficient amount shall be raised. But there are two qualifications worth mentioning there. The first is that, whatever is done under that head, the existing proportions between the agricultural contribution and the normal contribution must be maintained, the agricultural contribution being one-fourth of the normal contribution; and secondly, any order made by the Treasury must be placed before the House of Commons and approved by Resolution there. So much for the contributions should they not be found to be enough. Of course there is the alternative that they may turn out to be too much. If the contributions turn out—again on the best estimate that can be made—to be too much, then Parliament has to make suitable provision for the use or the reduction of the receipts from contributors which will be then found out to be unnecessary. I merely give it as a possible example and not in the least as a matter of decision on policy, but obviously a possible way in which Parliament might act if it is found that a proposed scale of contribution is unnecessarily high is to provide that a proportion of that contribution shall stand good for a future period of risk after August of the present year.
There are two or three other points worth mentioning before I ask your Lordships' attention to the compensation side. I mention three points out of this long

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Bill. First I would mention that contributions will not be collected, will not be asked for, in any case where the property has been rendered uninhabitable or unfit for use by reason of war damage. It will be on all grounds better to wait until the compensation is paid when of course the proper contribution can be deducted. I mention secondly by way of exception that no contribution will be required from charities for the relief of poverty or the treatment of sickness or the advancement of religion. Organisations associated with this class of property will be exempt by the scheme and will not be required to contribute. Further charities for the advancement of education, learning, science or research will pay a reduced contribution of one-third. These are matters, I think, of such importance that they should be mentioned even in a comparatively brief review. As I think I have already stated to your Lordships, this Part of the Bill dealing with the collection and administration of the contributions will be in the hands of the Inland Revenue, with provision under suitable heads for appeal in case of dispute to the Special Commissioners.
Now I turn to one other matter before I leave contributions altogether. Who is it upon whom is cast the duty of paying the contributions? Of course if there is only one interest in a property, the fee simple owner has a proprietary interest: he pays. But take the case where the property is on lease. If all that exists is a short tenancy which when created was for not more than seven years, or a tenancy from year to year, the landlord still pays the contribution. So short a term as that hardly constitutes in ordinary cases a capital interest in the tenant. If, however, the property is let on a longer term than seven years then the occupier pays the contribution in the first instance and he is entitled—I think it is under the Fourth Schedule—to get back from the owner or owners of other interests the appropriate portion of his contribution. The burden of finding the money is on the occupier, but he may in turn get his contribution borne for him in various proportions, himself bearing the proper part.
A very difficult and rather technical question arises about mortgages. Your Lordships will find this dealt with in Clause 25. If the mortgage arises in con-
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nection with the acquisition or construction of a particular dwelling-house, which very often happens with the help of a building society or other body of that sort, and if the dwelling-house is of an annual value not exceeding £150, and if the loan that is outstanding on the mortgage amounts to more than one-third of the price of acquisition of the interest in the property which is mortgaged—normally, of course, more than one-third of the value of the house—then the mortgagee will be required to share in the contribution with the mortgagor according to the scale set out in Clause 25. If the mortgage is for another purpose and the house of a different character that will not be so, and I have no doubt that those of your Lordships who are familiar with these matters will see the Justification for the distinction. In the case of smaller houses the relations between mortgagor and mortgagee are very much the same as the relations of landlord and tenant; whereas of course it would be difficult to get contributions out of debenture interests that have advanced money on some vast property. The complications would be extraordinary and I think it would be directly contrary to the general understanding of how unexpected burdens must be shared between the parties. Similarly, if the mortgage interest is in a farm the annual value of which does not exceed £500, then again the mortgagee will share according to the same scale in bearing the burden of the contribution.
Now we turn to the compensation side of the matter. These payments being made or in course of being made, what do you get for them? This Part of the Bill needs careful study and has already been studied in most careful examination in another place. The compensation will be a payment of one or two different kinds. They are called in the Bill "payment of cost of works" and "value payment" respectively. That is in Clause 3. In the majority of cases—the very considerable majority of cases—the damage which the enemy has done to a particular house makes it worth while to go in for repair, and this payment of cost of works will be a payment, made, if necessary, by instalments, at the time when reconstruction takes place, to the party that bears the cost. If in repairing a fabric the party chooses to make alterations or additions, then, of course, if that adds to the total cost the compensation would be

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limited to such portion of the total cost as would have been payable for reinstatement.
There is another and rather important case which I think will affect the work of my noble friend Lord Reith hereafter. It may be that the damage which has been done has made away with some unnecessary and undesirable ornaments, for it is possible, even in this civilized country, to have an over-ornamented dwelling-house or other building. In cases like that, if any part of the reinstatement could be omitted without detracting from the value then the compensation could be reduced accordingly. All these matters will be under the consideration of the War Damage Commission, which will be a most important public body likely to have a great deal of work: to do for many years to come, the constitution of which is set out in general terms; in the First Schedule. Moreover, all these cases of repair and reconstruction will be subject to control from the point of view which my noble friend Lord Reith explained to the House the other day. People will not be entitled to get back exactly what they had before without consideration being given to the public interest, town or country planning or other matters of that sort.
The restoration will be under control having regard to all those interests, set out in Clause 7. I might perhaps recite to the House a relevant passage. It sets out that the provisions
"relating to the making of payments in respect of war damage shall be executed in conformity with the public interest, as respects town and country planning, the provision of housing accommodation, the development of industries and services, and of agriculture, the preservation of amenities, the consumption of supplies of building materials for the time being available, the building requirements of persons engaged in work of public importance, and such other matters as may be prescribed."
In other words the public interest has got to take first place. But that is not to say that there would not be any compensation.
I would now turn to the second of these kinds of compensation which is called value payment. Your Lordships will see that there will be many cases where the cost of works—that is to say, the actual cost of reconstruction—will be greater than the increase in the value of the hereditament due to the outlay. You will not add as much as you are spending to the value. Economically
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speaking it may not be worth spending the money required to reinstate. That will be manifestly so in many cases of very serious destruction. In Clause 4, subsection (1) (a), the distinction is very clearly described. May I read to your Lordships the words of the paragraph? It speaks of the choice between a payment of cost of works and a value payment, and it says:
"In the case of a developed hereditament the payment shall be a payment of cost of works unless the damage involves total loss, that is to say, is such that the making good thereof would be likely to require works costing more than the difference between the value which the hereditament would have after the execution of the works and the value which the hereditament, with the damage not made good, would have as a site."
Another point in connection with the payment which is called a value payment is this. The amount of depreciation caused by the war damage to the hereditament is arrived at by comparing its value before the damage was suffered with its value after the damage has been inflicted. It is necessary, of course, to measure these two values at the same time for practical reasons, and you cannot measure them with any assurance during the war because values are so constantly changing. A date before the war has been chosen. If you were to choose a date after the war there would manifestly be great delay and you still would not be able to speak with certainty. Therefore the Bill chooses as a date March 31, 1939. And your Lordships will see, therefore, that in such a case the first question will be: "At the 31st March, 1939, what was the value of this hereditament before it was struck or damaged at all?" The second question will be: "At the 31st March, 1939, what would be the value you would put on this hereditament if it had already suffered this damage?" The difference between these two amounts will be the value payment. In most of these cases it will not be possible to pay these sums until after the war, but there is provision for the payment of 2½ per cent. interest to be added.
An objection was raised to this formula, I think, in the public Press, and certainly in the House of Commons, and perhaps as I recite the formula the objection may occur to some of your Lordships. These provisions about measuring value payments in this way gave

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rise in some quarters to the fear that the compensation when it was ultimately paid after the war might not be the full equivalent of the loss suffered. If there was a very substantial fall in the value of money that would be so. Therefore, as long as you are making cost of works payment, the person receiving the money was receiving exactly what it cost to restore his building, but where you are making this value payment and measuring it as at March 31, 1939, it might be thought hereafter that you would not fully measure the loss for which compensation should be made. Therefore, before the Bill left the House of Commons, there was inserted a clause specially intended to meet this difficulty, Clause 14. It is necessarily in general terms, because we are speculating about the future; but the intention is quite clear, and it will not be found that the Government will shrink from it.
The clause is headed "Additional provisions as to payments in certain cases," and it reads:
"If, when the discharge of value payments generally or in substantial volume has become permissible, it appears to the Commission"—
that is, the War Damage Commission—
"that, having regard to any circumstances arising since the passing of this Act, the amounts of any such payments computed as provided by Section three of this Act are inadequate, the Commission shall make a report to the Treasury stating that they are of that opinion, the circumstances to which they have had regard in forming it, and the deductions which they draw therefrom."
That report has to be published, and the Treasury is then authorised to consider it and by order to direct that the amounts of value payments shall be increased "by a sum equal to such proportion of the amount computed as aforesaid as may be specified in the order." The whole adjustment of the value payment has in its turn to be approved by a Resolution of the Commons House of Parliament.
If I have succeeded in making clear what is rather a complex measure, your Lordships will see that Part I of the Bill provides, on the one hand, for the collection of contributions such as I have described from all who are interested in the United Kingdom in any building or fixed plant and machinery or in land, and on the other hand there is a scheme of
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compensation which will meet the loss which is suffered from enemy action, or indeed from our own action, if we have to knock down a house in order to resist the enemy—that is, war damage—and this is provided not only in respect of damage in the future but of damage which has already been suffered, and it includes arrangements by which, if the amount provided is not sufficient, it can be supplemented in the necessary measure by public funds.
Perhaps I may be allowed to mention two supplementary points which arise on Part I. First of all, in Clause 8 your Lordships will find a specific provision for making advances on account. The War Damage Commission may make such advances to enable a claimant who has lost his home or his business premises to obtain assistance up to a total in either case of £800. The only other provision in this Part of the Bill to which I need refer has to do with temporary works. There are, of course, a great many cases in which, after a house has been smashed up, the occupier or owner has executed some temporary works to try to make it rather more habitable, and there are also cases where a shopkeeper whose shop has been damaged has managed by a certain expenditure of money to put himself in a position to carry on his trade. Clause 5 provides that there shall be additional payments made to meet the proper cost of works "reasonably executed for temporarily meeting the circumstances created by the damage." I like to think that in this vast Bill, dealing with hundreds of millions of pounds and pledging our public credit right and left, there is a provision which will meet the case we have all so often seen, where in some small house a man has put up some boards in order to stop the cold from coming through the windows. He is entitled, if he comes within that clause, to a "temporary works payment."
Perhaps I ought to say that, far-reaching as this measure is, there are none the less inevitably some very important omissions. It is not found possible in this Bill to deal with public utility undertakings such as railways and gas and electricity undertakings, or with mines or quarries, or with highways. The reason, if your Lordships are interested in it, is principally that these are matters which are

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not subject to the ordinary process of Schedule A for annual value; there are special calculations which have to be made to arrive at the proper charge. They are rated not by reference to annual value but by reference to accounts or profits or output and so on. There is no doubt at all that it will be necessary to find means of dealing with those omitted subjects, and I merely mention the fact that they are not included and cannot be included in the present Bill.
So much for Part I. I shall not need to detain the House nearly so long over the rest of the Bill. Part II is an exceedingly important section of the Bill. I have myself found it more difficult to understand, and I dare say I shall find it more difficult to explain, than Part I. Part II contains two further schemes. Both of them will be operated by the Board of Trade. One of them is called the "business scheme" and, except for certain minor cases, it is a compulsory scheme; if you fall within the ambit of the business scheme you are not left with any choice as to whether you will pay or not; you must pay your contributions and you will get your protection. The second of the two schemes is not a compulsory but a voluntary scheme, and it is called the "private chattels scheme." I hope that your Lordships will forgive me for detaining you in this way if I endeavour shortly to explain the business scheme.
It applies to people who are carrying on any business, and included in that is any profession. It is insurance of movable plant, movable machinery, business equipment and things of that sort. Your Lordships are aware that we have already legislated for the insurance of commodities; that is all done under the War Risks Insurance Act, 1939. This does not deal with commodities any more than it deals with fixed buildings or with land; it deals with movable things used in connection with business. Insurance policies will be issued on behalf of the Board of Trade by insurance companies and by Lloyds; the premium will be 30s. per cent. on the full capital value, and nobody will be allowed to declare an under-value, as is quite common and quite legitimate, of course, in ordinary insurance business. We want the whole value of the things insured. The insurance will operate for the; period to the end of September this year. As a matter of convenience, especially for the
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smaller people, I think that the intention is to break the premiums up, perhaps into three, and to break the periods up into three; but that is merely to enable people to find the money without great inconvenience. The payment under this scheme of the compensation, which of course is the equivalent of the whole value of what is destroyed, will normally have to be deferred, but interest at 2½ per cent. will be provided to compensate for that.
I said that this was compulsory in the normal case, but in the case of the small man, where the business scheme will apply to not more than £1,000 worth of business assets, it would not be compulsory to insure, nor in the case of a farmer, if the farm is so small that the Schedule A value is not more than £50. Special provision has been made for agriculture which is of great importance, and I know-must necessarily interest many of your Lordships. Your Lordships will see that under Part I of the Bill there is a compulsory insurance of agricultural buildings and of agricultural land at the rate of 6d. in the pound on Schedule A, payable annually for five years. But that of course does not cover movable plant used in the business of farming, tools, and implements; it does not cover livestock, it does not cover crops, whether they are growing or whether they are garnered. All those things it is the intention of this scheme to insure, and the provision will be that in the case of agriculture the insurance must be for an amount which is equal to twice the Schedule A assessment of the farm, or, if the farm is let on a tenancy, up to twice the annual rent. Your Lordships will notice, therefore, that in this case we do not intend to compel the farmer to insure up to the whole value of everything movable or growing on his farm; the requirement is that he must insure up to the amount I have indicated, the premium being 30s. as before.
And the scheme gives the farmer a further advantage, which indeed is a very remarkable one. Your Lordships are aware that if a man takes out an insurance policy and he does not choose to insure to the full value of his goods, and then a portion of his goods is destroyed, the insurance company will not pay 20s. in the pound for what has been destroyed, but they will claim to treat—and they are entitled to treat—the assured as his own insurer for the

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balance and will therefore only pay a smaller sum. But we intend, and we have provided in the case of the farmer, that though he only insures to cover himself for a payment up to twice the Schedule A assessment on the farm, he none the less shall be entitled under this scheme to recover that amount in full if he loses as much as that, even though there may be other insurable matters of his on the farm which he has not covered with insurance at all.
I venture to give an illustration which even in your Lordships' House might be helpful. Suppose that the Schedule A value, or the annual rent, of the farm is £100, and suppose that the farmer's implements, livestock and crops are valued at £1,000. Well then, he will be required under this Bill to insure them for as much as £200, that is, twice the annual value; and of course he will be allowed to insure them, if he chooses, for any amount over £200 up to the actual value. The policy will be a "first loss policy," and so if he has insured for £500 and loses £500 of his livestock or crops or implements by war action, he will receive compensation under this scheme for the whole amount of £500, and that although under an ordinary policy of insurance, to which average is applied, he would only receive £250. I think the House will see that that is an extremely important provision affecting small farmers.
Lastly comes the second of the two schemes, which has aroused great interest in the minds of small people in this country who have actually suffered the results of war damage. This is a scheme to insure private chattels—not business things at all, but furniture, books and so on. It will be necessary to have some limitation perhaps to the extent to which people can insure, say, jewellery or objets d'art, but it is intended to be a system of insurance for all who care to use it for private chattels. As introduced in the House of Commons—and a great deal of trouble was taken with this Bill to my knowledge before it ever saw the light of day—the idea was that the limit of insurance should be £1,500. There was a good deal of criticism of that and the scheme in the Bill is now of a much more favourable character. Indeed, I think it is a very remarkable feature of the pro-
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posed legislation. It is now proposed with reference to private chattels to give every householder a free insurance up to £200; if he is married to add another £100, and for each child under sixteen to add a further £25.
LORD ADDISON: I am sorry to interrupt, but where in the Bill is that set out?
THE LORD CHANCELLOR: If you will give me one moment I think I can find it. I would just like to give my description first. Take a man who has already lost chattels to the value of £400, or a man who loses as much as that during the currency of the scheme. For your Lordships will know that this does not apply merely to those who suffer such a loss in the future. It applies to people who have suffered such a loss already. We have all seen these pitiable cases of the small householder whose little house has been rendered perfectly uninhabitable, and whose furniture is smashed. I am glad to say that the equivalent of the furniture or other things which he has lost in this distressing way, and which he thought had gone for ever, can be thus provided for, and it is a feature which must give very great satisfaction. Then it will be permissible for the individual to go in for further insurance if he likes. These are the rates: 1 per cent. up to £2,000, 1½ per cent. for the next £1,000, 2 per cent. for the remaining £7,000 up to a total maximum of £10,000. You cannot issue policies retrospectively, but you can in a Bill of this kind make appropriate provision, and therefore the policies under the voluntary scheme will be annual policies operating from the date of issue. As I think I made plain, it is not the intention of the Government to leave those who have already suffered loss of chattels from war damage uncompensated; it is the essence of the Government plan that it takes in and provides for the losses, not from the date of the passing of the Bill, but from the beginning of the war.
To answer the question of the noble Lord, Lord Addison, I would refer him to Clause 68, which authorises the Board of Trade to make payments to a person in respect of goods which would have been insurable if the damage had taken place later. Subject to a deduction of the appropriate premium, if it is a case for

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premium, the intention is to cover all those who have unhappily suffered before the scheme came into operation as well as those who may have to suffer in the future. The language is rather general, and perhaps that is why the noble Lord asked for information. That is the scheme embedded in this clause. Public assurances have beer given, and I repeat them, that that is what the Board of Trade is going to do. We may take it as a feature of the Bill that will not he lost sight of.
I need not detain your Lordships with the other Parts of the Bill. Part III contains certain necessary and useful amendments to the commodity insurance scheme. Such is the nature of this most important and, I venture to say, very remarkable measure. It may fairly be reckoned as one of the security measures of the war, for it is designed to rebuild the houses, buildings, machinery, and plant of this country. No country would undertake such a plan as this unless it was a country unitedly resolved on victory and confident that, by perseverance, victory will be attained. I venture to make one other concluding observation. It has been our object in this Bill not only to protect private tights, where private rights ought to be protected, not merely to compensate the individual whose private property has teen damaged, but we have put in front of that the necessity of paying due attention to the public interest and of seeing that the scheme is not used to renew buildings which are no credit to the country, and which it is an important part of the Government's policy not to see reproduced. If, as Lord Reith said the other clay, our object in this matter is, if possible, to bring good out of evil that we may have a better Britain, then I commend this Bill to your Lordships' House as one of the instruments that will help to secure that result.
Moved, That the Bill be now read 2a—[The Lord Chanellor.]
LORD ADDISON: My Lords, in common, I am sure, with the rest of your Lordships, we would wish to pay tribute to the ingenuity that is in this Bill and to its great courage. I confess that, casting one's mind back, I am made to think of the day, with which the Lord Chancellor himself was personally familiar, when the National Health Insurance Act was in the course of gestation, and when I, in
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common with some others, had a share in supervising the metabolism of that operation. I do not know how the rest of your Lordships fared, but although I followed the discussions on the Bill in another place with interest and with as close attention as one could give to them, and although I applied for a copy of the Bill, as amended, on Wednesday last, I did not, in fact, receive it until this morning. Therefore one's comments on the amended draft of the Bill are, necessarily, greatly handicapped. Whilst, I am sure, not one of us would wish to stand between the Bill and its passage into law, we might plead for a little more time to consider it than we have so far been given. I say that in the presence of the Chief Whip.
My comments, except in one or two respects, are largely in the form of interrogations. I do not suggest to the Lord Chancellor that he should answer them all now; he will no doubt deal with them more properly in Committee when we get there. I am still not very clear as to the answer the Lord Chancellor gave to the question I put to him in the course of his speech. I am quite sure that compensation in respect of chattels of lower values will be made. I am quite sure that the Government's pledges in all the matters recited by the Lord Chancellor will be made good; but I confess I should like to see a little more about them in the Bill. I read that clause and, as the Lord Chancellor expected, I was not very much wiser when I had finished than when I began. It does not tell you much. I do not say it is reasonable to expect it to do so in an elaborate matter of this kind, but, for all that, when we get further on, I hope the Lord Chancellor will be able precisely to indicate the form of the provision which will be made in respect of all these matters which he grouped together for people who have lost their property, furniture, and so forth up to certain values which I understand will not be insurable.
There is another matter of a general character which is not very clear to me on the face of the Bill, and that is the limitation to August, 1941. I should be only too happy if the Lord Chancellor would interrupt me and say where it is in the Bill.
THE LORD CHANCELLOR: If the noble Lord will give me a moment or two.
LORD ADDISON: I was aware, of course, of what had been said about it, but I have not been able to find it very clearly stated, although I have read the Bill carefully. I gather that the Bill covers damage and compensation for damage inflicted up to August 31, 1941. I think that is the correct statement, but we have got to anticipate, I am afraid, that there will be a lot of damage caused after August 31, 1941. We shall be exceedingly fortunate if there is not. As I do not see quite clearly what the provision is with regard to that, I would ask the Lord Chancellor what the Government have in mind about damage caused after August 31, 1941. As I understand the scheme, it covers war damage, and in the definition of "war damage" there is no limitation as to time. Those are two very important considerations. I am not looking for an answer on the spur of the moment, but they do require answering.
THE LORD CHANCELLOR: May I interrupt the noble Lord to point out that in the definition clause, on page 49, line 18, it is stated that
"'risk period' means the period beginning with the third day of September, nineteen hundred and thirty-nine, and ending with the thirty-first day of August, nineteen hundred and forty-one."
LORD ADDISON: I am much obliged. I had looked at that, but I confess that I did not interpret that as meaning that the limitation on war damage was limited to the risk period. I take it that is so, but it still leaves me uncomfortable as to what is to happen after August 31, 1941. This is a splendid Bill, and I am not making hostile comments upon it, but am merely inquiring about some of its features. If this is to cover prospective damage up to August 31 next we shall expect to have some assurance regarding what is going to be done about the damage which may be suffered after August 31, 1941. It is that anxiety, and it is a real anxiety, which I think merits reply. I can say this, that I am quite sure it is not in the mind of the public. I do not believe that the public realises that this Bill will only cover damage inflicted up to August 31, 1941. It is generally thought—I confess that I myself thought until I came to study the Bill more closely—that it did cover damage inflicted, or to be inflicted, during the war. That it does not is a matter of great importance.
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May I direct the noble and learned Lord Chancellor's attention to a series of questions? In the definition of war damage which is insured against, "war damage" is defined on page 64 as damage due to
"the direct result of action taken by the enemy, or action taken in combating the enemy,"—
as the Chancellor described it, or it may be
"damage (whether accidental or not) as the direct result of measures taken under proper authority to avoid the spreading of, or otherwise to mitigate, the consequences of such damage as aforesaid."
I have in mind quite a number of cases where damage is done, unavoidably done, in constructing defence works and in all sorts of other ways, to the property of citizens. Is this to take the place of, or in any way to be related to, the compensation which people might, or might not, be able to obtain for damage to their property by military operations or otherwise? I am afraid that at the county war agricultural committees we have a crop of such interrogations every week arising out of various depredations by the War Department, and it is a question of who is to pay for them. I confess that as chairman of such a committee I find considerable difficulty, while giving as comforting an answer as possible, in giving an answer that really satisfies. I want to know whether the definition of war damage covers the damage which is quite necessarily done by war operations apart from enemy operations.
May I imitate the noble and learned Lord Chancellor's example by illustrating what I may have to say by quoting simple cases? I will refer first to the value payment as set out in Clause 3 on page 3:
"The amount of a value payment shall be an amount equal to the amount of the depreciation in the value of the hereditament caused by the war damage. …"
That is to be estimated as at prices current on March 31, 1939. Take the case of a shop to which the Lord Chancellor referred. Damage will have been inflicted upon the owner's chattels and goods in his shop. Goods in his shop will be separately insured under the Board of Trade. The chattels also will be insured under the Board of Trade, but what I want to know is how will these different insurances be related to one another? I have a case here which I believe to be

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quite a genuine one. I will quote it as a simple instance of the kind of overlapping which I am afraid is bound to occur, and I do not see clearly how such cases are to be dealt with. There is a man on whose field of onions a bomb fell and destroyed the onions and scattered the ground all about. The crater was six feet deep and sixteen feet in diameter. The bomb scattered the ground all over the place, and not only destroyed the whole crop of onions, but made it impossible to grow others on the ground. I do not know whether many of your Lordships have seen these bomb craters, but in my district we see a lot. In several cases it will cost as much to fill in the hole as would have been the value of the field to buy, and when filled in the ground will not be as good for the purpose as it was before, because all the beautiful top soil will have been buried.
This is not an imaginary case but a real one. What is to happen to this man in regard to the destruction of his onions? He cannot grow another crop of onions on the field. I take it that the onions would be insured under the form of chattels by the Board of Trade. But the man would be insured under Part I of the Bill In this particular case the man estimated his damage at £17 10s., and some Government valuer has offered him 12s. 6d. There is a good deal of difference there. The man has been prevented from carrying on his trade. It seems an egregious story, but it is a true story. What I want to know is how cases of this kind are to be dealt with between the Board of Trade and the War Damage Commission. Taking this simple case as an example I would ask what will be the working relations between the Board of Trade and the War Damage Committee. I am quite sure there will be thousands of cases where there will be two damages. Here it is the mail's land and his onions. They are insured under two separate Parts of the Bill. What applies to this man and his onions will apply to other people. The house will be insured under one clause, clothes will be insured under another clause and the stock in trade in the shop will be insured under still another. They will all be damaged together. That has happened in thousands of cases already and it will go on happening. What I am asking, in view of the fact that there will be in some cases three sorts of insurances,
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is what is to be the working relation between the Board of Trade and the War Damage Commission.
It is fair to say, I think, that the success and public appreciation of this measure will largely depend upon its administration. It will be an exceedingly difficult Bill to administer and I do not envy those ingenious public servants who will have to devise a way of administering it. It will be nearly as difficult and thorny a problem as was presented at the beginning of the operation of the National Health Insurance Act. One can see endless opportunities for overlapping and difficulty. The first thing that is necessary in administering this Act is sympathy with the public and promptitude in action, and I am glad to see that generous provision is made for payments to be made in advance, for anticipating the time of payment, and so on. It is quite clear that in the case of a number of people whose property has been completely destroyed it will be a terrible hardship if they have to wait until the end of the war for compensation. It is quite unthinkable that that should be allowed to happen. I have no doubt it would never be suggested that they should, but it is important to be quite sure that people who have suffered should not be delayed in getting compensation by having to apply to two different authorities which have not a working relation with one another.
It is the first necessity, I think, that there should be sympathetic consideration, and so far as the general public is concerned there should be the utmost possible simplicity of procedure. These two things will make or mar the reputation of the measure. I confess that these observations, made on the spur of the moment on a measure of this kind, are far too scrappy. I can only add that I am lost in admiration, as an old Parliamentary hand, of those who have had to grapple with this problem, and that those who will have to administer the Act deserve our prayers.
LORD DENMAN: My Lords, my noble friend Viscount Samuel is unavoidably prevented from attending here to-day and has asked me to say a few words on this measure. In the first place I should like to say that I think we are all indebted to the noble and learned Viscount on the

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Woolsack for the very lucid manner, in which he has presented this Bill to your Lordships' House this afternoon. I have been a member of this House for a long time. When I first came here the late Earl of Halsbury occupied the position of Lord Chancellor. Since then I have known ten occupants of the Woolsack. They were, of course, men of great eminence and ability, men well known in the legal profession, and most of them had served in the House of Commons. But none of them had held the post, which the noble and learned Viscount held for some years, of Chancellor of the Exchequer. He speaks with great authority on matters of national finance and I think the Government are to be congratulated on having so able a spokesman to present to your Lordships a financial measure of this kind.
In some respects this is an insurance Bill, but it is something more than that, for it recognises the principle that the State should give some compensation to owners of property which has been destroyed or damaged by enemy action. I think that this Bill will be particularly welcome to the small man. It will be welcome to owners of cottages and small houses, for they will receive compensation which, though possibly they may not consider it adequate, will be certainly substantial, for loss which they have sustained, and may in future sustain if this cruel business of night bombing continues, as it most probably will do. There are two particular clauses on which I should like to comment. The first is Clause 1, which sets up the War Damage Commission. Here I quite agree with what the noble Lord, Lord Addison, has just said. I think it is of the utmost importance that care should be taken in the selection of these men because this is going to be an exceedingly difficult Act to administer. I hope they will be men of understanding, men with experience of different kinds of social conditions, men like the officials of great building societies who are intimate with the problems likely to arise. Very great care ought to be taken in selecting the best possible men to perform this task.
The other clause to which I would draw attention has already been commented upon by the noble and learned Viscount: that is Clause 7. That clause says:
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"The Treasury shall give directions to be observed by the Commission for securing that the provisions of this Part of this Act relating to the making of payments in respect of war damage shall be executed in conformity with the public interest, as respects town and country planning. …"
I regard that as a most important provision, for it ensures that where slum areas have been destroyed by bombing those areas should not reappear but that reconstruction and rebuilding should be carried out under the most approved practice of modern town planning. I am very glad that that particular provision has made its appearance in this Bill. In conclusion I will only say that I think this is a good Bill and a courageous Bill, and I am sure it will be warmly welcomed in all quarters of the House.
THE LORD BISHOP OF LONDON: My Lords, this is the first time that I have ventured to address this House and I therefore crave, as no doubt your Lordships will have anticipated that I would, for your Lordships' indulgence. I will try to be as brief as I can, but it is right I think that something should be said on this Bill from these Benches, for although I shall be dealing almost entirely with' that clause which relates to property held for charitable and religious purposes, yet the provision made in respect of such property is very notable and deserves some comment. If this comment is to be made from these Benches, as the most reverend Primate is absent it is natural that I should say something, for a double reason. In the first place, I am Chairman of a Committee appointed by him on behalf of the Church of England to deal with this Bill. In the second place, I am also Chairman of a quite informal group of representatives of the Church of England, the Church of Scotland, the Church of Wales, the Roman Catholic Church and the Free Churches, which has been meeting for some time since the Bill was first published to discuss matters of common interest. In what I am going to say I think I can say that I am speaking on behalf of that rather wide group of representative persons.
I would say first that all those with whom I am thus in touch do recognise and appreciate the generosity of the action taken by the Government in exempting wholly or in part from contribution properties held for charitable purposes. It is true that in the case of

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churches it would have been very difficult to do anything else. They are not assessed under Schedule A or for rates, and it would have been a very formidable task to decide what contribution should have been made, and on what basis of assessment, by every church and chapel throughout the country from St. Paul's Cathedral and Westminster Abbey down to the little country church. Once assessment had been made it would not have been easy to decide who would be responsible for paying the contribution, and when that was decided, it would not have been easy to collect the contribution from those who were held to be responsible for payment. But although that is true enough there is no doubt that the Government's reason for dealing as they have done with charitable and religious bodies was quite other than that, and much higher. It was, as the Lord Chancellor has said, the Government's whole aim in this Bill that the public interest should be regarded as supreme. I think it was recognised by the Government that it was in the public interest that certain things should not be crippled or destroyed by the actions of our enemies, and that all the charitable and religious bodies of this nation should not be hindered or hampered by anything our enemies might do. We ourselves recognise and appreciate that determination of the Government that there should be no undue crippling of charitable and religious work as being necessary for the well-being of this nation, and the fact that they have taken this attitude is a stimulus and encouragement to the Churches to see that they, to the best of their power, discharge the responsibility which lies upon them for securing godliness and uprightness in the nation.
The Churches, as other charitable bodies, make no contribution under the Bill but they have a certain expectation of compensation at the end of the war. How much compensation depends entirely and absolutely upon the War Damage Commission. If any of your Lordships have read the latter parts of Clause 39, you will have seen that it is there put with brutal frankness that, in a matter of value payment, if they so decide, they shall pay nothing at all, and in the case of cost of works payment they shall, if they so determine, make it in part or not at all. There is no appeal over that. The Churches will
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have to accept what is decided. That might have been thought an insecure and even precarious position, and indeed some members of the Churches were inclined to feel that we were left completely defenceless. After all, Governments change, policies change, and the financial condition of the country is liable to change. It might be thought that, the war being over and the question of rebuilding being brought to the forefront, there will be a disposition to say to charitable bodies: "You have paid nothing and therefore, so far as your claims go, we shall postpone or minimise them until we have dealt with those who have made contribution." Actually, the compensation money paid to the Churches, or other charitable bodies, and those bodies who contribute, does not come out of precisely the same purse.
The contributing bodies will get their compensation from the fund to which the Lord Chancellor referred, which may come to some £400,000,000. The compensation paid to the Churches is not to come out of that fund at all. It will not be taken into account in assessing receipts and expenses under Part I. It comes direct from the Exchequer and from nowhere else. It has been sometimes supposed that the more churches that were destroyed and the more money paid in respect of them, the more would be taken from this pool of £400,000,000 to the detriment of the contributors. I think it is worth while making this matter clear. As I said, some members of the Churches felt that there was insecurity in the fact that if a disposition arose to postpone or minimise claims put forward by the Churches, we should have no defence against it. I, therefore, on behalf of all the Churches desire to welcome the promise given by the Chancellor of the Exchequer to the group which I represent, and repeated by him in the House of Commons, that the compensation to be paid to charitable and ecclesiastical bodies will not be reduced or postponed by reason of the fact that no contribution, or a reduced contribution, is payable by them. That statement entirely disposes of the hesitations which some of us were inclined to feel and enables me wholeheartedly to say that we entirely trust the intentions of the Bill in this matter. We are grateful for and appreciate the way

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in which the Churches have been treated, and we are satisfied that the desire is to see that churches, hospitals and all other charitable bodies shall, after the war, within the resources of the nation whatever they may then be, be enabled to fulfil adequately and well their responsibilities.
There are two points in particular which I should like to mention. The first is that this Bill gives very great flexibility in dealing with schemes coming from the Churches. The War Damage Commission can discuss matters with any body representing the Churches that it pleases, and can make what general arrangements it likes. That means that a claim for a particular church may be considered by itself and settled by itself; but, if a particular Church so wishes, the claims within a whole area, within a whole diocese or within a whole denomination can be considered together as part of one problem, and a settlement arrived at by a block payment to that diocese or denomination. It is easy to see that that flexibility is of immense value.
In London our churches have suffered quite an astonishing amount of damage. The Ministry of Information tells me one day that I may mention the number of churches destroyed in London, but next day tells me that I must not mention if, so that perhaps I should not give the figures; but I can say that the churches have suffered widespread destruction. Whenever that has occurred, there will have to be much replanning of the parishes, and not every church which was destroyed will have to be rebuilt just where it was before. We shall obviously have to look round and to try in the changed conditions, with the changes in the industrial situation, in habits and so forth, to see that our churches are as well placed as possible. That means that when compensation is received for a church which once stood on a certain site, the money will not necessarily be spent on that site, but may be expended somewhere else. We welcome enormously this possibility of free discussion between the denominations and the War Damage Commission, in which we can take an area and, so to speak, plan it together. The noble Lord, Lord Reith, will, I hope, allow us to consult with him also in that planning, and then when the compensa-
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tion is paid we can use it to the best advantage.
The other point which I wish to mention is that we welcome very much indeed the Chancellor of the Exchequer's statement that churches and charitable bodies can, like anybody else, claim for interim payments for temporary repairs. That is a matter of immense importance for the churches. In London we have already borrowed a very large sum of money to protect from further destruction churches that have been damaged, to make them and to keep them weatherproof and to save them from further deterioration. We have almost come to the end of the resources that we can borrow. It is to us an immense comfort to know that as soon as this Bill is an Act of Parliament we can, with every proper right, come to the War Damage Commission and show what we have spent in saving buildings from further damage, thereby saving further and more substantial claims. We hope to obtain some immediate help and assistance in that manner.
Finally, let me say a word or two on Part II of the Bill. It shall be a very brief word. When the Bill was first introduced, there was no particular reference to the furniture and fittings of churches. They fell into the private chattels portion of the Bill, and any church could insure or not insure as it pleased. At the very end of the passage of the Bill through the House of Commons, an Amendment was introduced by the Government—I do not know whether they quite knew that they were affecting churches by it—which did in fact transfer the fittings and furniture of a church from the private chattels part of the Bill to the business scheme. The business scheme, as your Lordships have already heard, is compulsory, and entails insurance of the full capital value of every article. If that were to stand unchanged, it would mean that every church and every cathedral in the country would be compelled to insure to the full capital value every part of its furniture and fittings. I should not like to say what is the capital value of all the furniture and fittings and equipment of Westminster Abbey, and what the charge which would have to be paid would be.
However, I need not develop this theme, because the little group of which I have spoken, which represents almost all the Christian Churches of this country, is

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already in touch with the Board of Trade. We see clearly, and we have represented to them, the problems that arise. The Board of Trade have sufficient power under the Bill to deal with all the questions involved. They have power to make insurance in the case of churches voluntary instead of compulsory. They will have to decide which part of a church is fabric under Part I and which part is fittings under the business scheme in Part II, and they will not find that this is an easy matter to determine. There is a question, for example, of the pulpit, and of the heating and lighting installations and so forth, and the pews. Then there is the question of the organ. By the law of the land an organ is partly a part of the fabric: of the church; but which part of it is part of the fabric and which is not is a further and a disputable question. I believe that strictly speaking the organ is part of the fabric and the case is part of the fittings. The Board of Trade, however, can deal with these matters. They will have to deal with them, and they will have to produce a schedule describing exactly where we stand. But, as I say, those for whom I speak are perfectly satisfied to leave the matter there, because the Board of Trade have all the necessary powers. I apologise for keeping your Lordships so long, but this is a matter of considerable interest and concern, as will be seen, to every Christian body in this country. I will end by saying that all those for whom I can speak—certainly the Church of England, and I think all the other bodies—do deeply appreciate the attitude which the Government have taken and the help which they have given to us.
VISCOUNT SWINTON: My Lords, few maiden speeches in this House or in another place can have needed less apology than that to which we have just listened, and I count myself fortunate that, following the right reverend Prelate, I have the chance of being the first to congratulate him on a model maiden speech. I know that I speak for all your Lordships when I say that I hope he will not confine his interventions in our debates to these occasions, all too rare, when a Prelate of his Church is able to speak on behalf of all the church militant, but that many causes and many measures will call for his personal
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intervention, which will always be very welcome.
Like all the speakers I welcome this Bill. I welcome it because, as the noble and learned Viscount on the Woolsack said at the end of a model exposition of a complicated measure, it is indeed strong evidence of our confidence in our cause and in ourselves, but also because the principle of universal insurance and universal contribution is not only a bold but a sound and a wise one. That principle being right, it is, I think, very important that we should see that it is applied fairly; for that, I know, is the intention. The intention is that we should all contribute and that we should all contribute in the right proportions. I do not cavil at the rates in the Bill. If they require adjustment there is a power to adjust them. The only rate I feel some uncertainty about is the agricultural rate under Part II. The Lord Chancellor explained how great were the advantages which the farmer would get because, even if the whole of his property was not destroyed—a rather remote contingency in the case of his livestock, I think—he would be entitled to compensation to the full amount for which he had insured. But I wonder really whether it is right to levy the same percentage rate of contribution upon the livestock of farms as upon the plant of a factory in a large town, which may be a very attractive military objective.
The difference is, of course, not only accepted, but given effect to in Part I of the Bill, where ordinary buildings (I do not use precise legal language) are to pay the contribution rate of 2s. in the pound, whereas the agricultural building or land will only pay 6d., or a fourth of that rate. Presumably the differentiation in that rate was laid down, if I may put it in sporting parlance, because as between the building in the town and the agricultural building the betting was four to one in favour of the agricultural building. I do not suppose it was in order to treat the agricultural tenant or occupier four times as favourably as it was reasonable to treat the landowner or the occupier in the town. And therefore I think it is worth considering whether the same rate under Part II should apply to farm stock as applies to the plant and machinery of a factory.

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What I do feel more strongly about, if I understand the Bill aright, is that as it stands at present, it seems to me not to deal fairly as between the mortgagor and the mortgagee. I can approach this problem, I hope, with a proper detachment because, though I am a landlord, I have the good fortune not to be a mortgagor and the misfortune not to be a mortgagee. And therefore the only interest I can conceivably have in this is that I suppose I am a shareholder in an insurance company which is a mortgagee, and I own a share in some company whose house or property is mortgaged. But I am bound to say that, looking at it as detachedly as I can, it seems to me on the face of it rather unfair. I understand it has been said that a mortgage is a contract and you must not interfere with a contract. I make no apology for raising this question on the Second Reading rather than on the Committee stage because I think it is a very large question of principle, and it is desirable that this sort of question should be raised on the Second Reading, though it can be dealt with in more detail on the Committee stage.
As regards the question of contract I would say two things. First of all, the real interest which the mortgagee has under a mortgage is much more—I think we should all agree with this—in the security he possesses in the land than in the personal undertaking of the mortgagor to repay the interest and the principal. If that were not so, obviously it would be unnecessary to add to the promissory note the security of the mortgaged premises. But I do not think I need argue that, because the Bill itself intervenes to protect with great care the interest of the mortgagee. If your Lordships look at Clause 9 (4) you will see that where the compensation under the Bill takes the form of a compensation payment, and not the repayment for rebuilding, and the property is mortgaged—whatever be the value of the mortgage or whatever be the value of the property—in all such cases the whole of the compensation payment is paid to the mortgagee, and the mortgagee out of that compensation payment is entitled to discharge the whole of the principal secured on the mortgage and any interest which is due and has accumulated, and merely to pay over to the mortgagor the balance, if any—with values falling there may be no
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balance—of that compensation money exactly as if he exercised his power of sale under a mortgage.
That may be perfectly fair, and I think it is fair because the security has been destroyed by enemy action, and if the compensation is to be paid the mortgagee has the first charge upon the property, and he is no doubt entitled to receive the first cut at the compensation money. But surely one would suppose that if you were protecting the mortgagee in this manner as against his mortgagor, ensuring that he received the full sum due to him, the mortgagee should contribute to this compensation fund in proportion to his interest; that if his interest was 50 per cent. the mortgagee would contribute half and the mortgagor would contribute a half; just as in the Schedule there is a distribution of liability as between the various persons who share in a leasehold interest.
It is of course a little difficult to follow—for I was doing other work till midnight and only started on it then—but I thought when I reached Clause 25 that this principle was soundly established, for there I read that
"Where the interest of a direct or indirect contributor in respect of a contributory property to which this section applies is at the relevant date subject to a mortgage to which this section applies, and the amount secured by the mortgage at the relevant date is more than one-third of the price of acquisition of that interest, he shall be entitled to be indemnified by the mortgagee to the following extent "
Then it makes a series of provisions: first, that if the amount secured by the mortgage at the relevant date is half or less, the mortgagor can recover—not, as I would have supposed, a half but one-sixth from the mortgagee; and if the amount exceeds one half but does not exceed two-thirds of the price the mortgagor can recover one half, not two-thirds. And so it runs on in an ascending scale. Therefore the principle that where the mortgagor and the mortgagee both have an interest, the contribution shall be shared between the two of them, though not exactly in proportion to that interest, was, I understood, established.
But being also an old Parliamentary hand, I read on because there were some words that raised my suspicion, and these were "a mortgage to which this section applies." When I reached subsection (4) on the next page I discovered

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that this clause, laying down what I should have thought was an elementary principle of justice as between the mortgagor and the mortgagee, is limited, I will will not say to a few, because the cases may be large in number, but is strictly limited by subsection (4) to mortgages where the property is valued at less than £150 per annum—to a mortgage which, putting it loosely, is in the nature of a building society mortgage, a mortgage which has been granted for the purpose of carrying out building operations. There was an ingenious, but I thought entirely erroneous, gloss put upon this by the noble and learned Viscount on the Woolsack, who said we should all appreciate why this was done because in the case of these building society mortgages for the purpose of erecting a building the relationship was more that of landlord and tenant than that of mortgagor and mortgagee. Frankly I sec very little resemblance between the two.
What happens in every case where you go to borrow money on a mortgage, whether you go to a building society or to a bank—if you are lucky enough to be able to get money out of a bank—or to an insurance company? You say, "I have a property which is worth something, I am going to improve it in such-and-such a way, how much will you lend me?" and the lender lends the appropriate amount at the appropriate rate of interest. I do not see that in such a case the relationship is at all that of landlord and tenant. The mortgagee does not enter into any covenant to repair. The relationship is the well-known relationship of mortgagor and mortgagee with the rights and liabilities appertaining to both of them. Having established the right of the mortgagee to receive the whole of the compensation money and satisfy himself, that must surely carry with it the obligation to pay some part of the contribution. I cannot see that that is not fair. Having that position With regard to what I may loosely term building society mortgages, it might suggest itself to some minds that it is much more likely to be a case where votes were concerned than the relationship of landlord and tenant. Were we not all concentrated, quite rightly, on the same effort, that suspicion might arise. There being no consideration of that kind present in any of our minds to-day—and it would be most wrong if there were—I make my appeal to the bar of justice,
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coming impartially and disinterestedly, and beg the noble Viscount on the Woolsack, who holds, as he should, the scales of justice in his hands, to put down on behalf of the Government such Amendment on the Committee stage as will let us part with this Bill with the certainty that we are all contributing in fair proportion, that we are doing complete justice, and that we have made a comprehensive and fair measure.
LORD BARNBY: My Lords, I should like to associate myself with the remarks of Lord Denman in his appreciation of the noble and learned Viscount who sits on the Woolsack for the patient and expansive picture he gave to us of the conditions and intentions of this Bill. The Bill has received very elaborate discussion in another place, and has been the subject of a great number of Amendments. Much has been said on at least two of the fundamental points to which I am going to draw your Lordships' attention. It seems however, right, in spite of all that has been said and the care with which the Bill has been debated, that there should be from these Benches an expression of the anxiety which property owners feel on the two fundamental points I have mentioned. We must admit that for a Bill of this character, controversial and complicated as it is, to have achieved passage through another place with the speed that this one has done is a great tribute to drafting and to skilful Parliamentary tactics. If we cast our minds back to the length of time taken to pass through Parliament other Bills of an insurance character—Social Insurance Bills—we must acknowledge that this has been indeed a rapid piece of work. But although these matters have been so fully discussed, and presumably there is no longer expectation of too generous a revision, I suggest that no considerations as to the swiftness with which things are moving and the need for early enactment should be regarded as grounds for overlooking these points.
First of all, the question of contribution is one that is naturally exercising the minds of property owners. It is obvious that the value of properties has been seriously affected. The position of many owners of property is such that the payment of this contribution is going to be a serious burden. It is going to be a matter of serious anxiety. It has been urged in another place that the five years should

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be extended to ten or even twenty, but, as the noble Lord, Lord Addison, explained, this Bill only deals with the position up to August 31 this year. To attempt to deal with this period by means of a property loan would, one can readily see, throw the whole picture into confusion. The second point has already been dealt with very ably by my noble friend who preceded me. The detail into which he went requires little amplification, but one can easily see the relationship between the mortgagor and the mortgagee. The mortgagee may be the equity owner of the property, and he is to receive some payment plus interest, while the mortgagor is going to have to continue his payments and interest. It looks as if, as my noble friend contended, the matter justifies some reconsideration.
The third point I would mention relates to Clause 86, which deals with mutual insurance schemes. This provision specifically precludes some activities of the kind of insurance offered and available under these schemes. It seems a serious precedent that this Bill should so categorically reject the possibility of employing under this Bill these established organisations. Probably it is difficult to deny that the insurer will receive better treatment under a Bill which has the full guarantee of the State behind it than under any other scheme, but there is a question of principle. Here is a case of dispossession, not by enemy action, but by legislation. There is naturally a dislike of, and danger in, precedents. If disturbance without compensation can be once admitted then there may arise claims for a very wide extension of such a precedent, but it would seem that it might have been possible under the Bill to have found some means in the case of excess valuation for the employment of the bodies which have acquired much experience in this kind of valuation.
In the discussions that have taken place the Board of Trade have been consistently unsympathetic to the operation of these experienced bodies. It was suggested in the Weir Report that mutual insurance schemes were unnecessary. I, personally, have had a good deal of experience in other countries of these mutual insurance schemes, which are not customary in this country. I know that they have been operating very effectively elsewhere, and
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the fact that they have not been customary here is no ground for looking upon them with disparagement. Hire-purchase schemes, for instance, were looked at askance, anyhow by banks, in the early days of their development in this country, but they afterwards received the hall mark of respectability by the Bank of England going into them under the United Dominions Trust. The point is that they offered a legitimate service to the community. Personally I took a great interest in watching the development of these schemes, because they offered facilities that were denied by Parliament. The companies whose activities led them to operate these schemes did so for profit, but that does not necessarily vitiate the principle that a company that offers facilities which the public require should be encouraged rather than condemned.
These companies operated under the Board of Trade, they have had recognition in the case of the promotion procedure required by the Act passed by your Lordships in November, 1939, and they were again recognised in a Budget Resolution. Then we come to the Weir Committee. It will be argued that the Weir Committee discountenanced their usefulness. The Weir Committee, presided over by a member of your Lordships' House, recommended categorically against the possibility of establishing this form of insurance. Therefore I contend that whatever consideration might otherwise be given to the Report of that Committee is destroyed by their recommendation in this particular respect. Under this Bill, in Clause 89, these companies are disposed of, and that is my reason for appealing for sympathy from the noble and learned Viscount on the Woolsack, who, I hope, will see if some consideration cannot be accorded to them. I realise that the noble and learned Viscount is himself in a somewhat difficult position. Contrary to his customary vision and liberal ideas, it was his duty in another place, as Chancellor of the Exchequer, categorically to resist the justification for this type of insurance. If one were to turn up some of the phrases he employed in speeches that he has made, it would be found that he entertained views different from those which the Government now think it necessary to assume.

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I recollect debates in your Lordships' House and in another place (where they were taken part in by Colonel Baldwin-Webb, whose ill-fated voyage to the United States on war relief resulted in his losing his life). He took a very active part in this matter and the result was that the debates compelled a modification of policy. As a consequence the noble and learned Viscount on the Woolsack, then Chancellor of the Exchequer, agreed to the setting up of the Committee presided over by a member of your Lordships' House to which I have already referred. There has been a change since then in the public outlook, and this Bill now before your Lordships is the result. In this Bill there is no provision whatever for use and occupancy or consequential losses either for the householder or for the factory operator, and that in itself will be the cause of many and widespread hardships. I hope I may have your Lordships' indulgence while I give just one illustration of the Exports Credits Scheme which, when it was first discussed, was most emphatically resisted by the Government. Then it was decided that the State should assume the kind of risks that were involved, and that has since been extended, but it did not include the principle of excluding companies that were already functioning.
It only remains for me to add that in Part II there is the valuation of machinery which I think is going to produce a very perplexing problem. One can easily see that if you establish the value of machinery as that between a willing buyer and a willing seller, there must be a great variation in the books of companies throughout the country on cost price, written down price, replacement cost, and so on. There will be great difficulty here, but I would suggest that the difficulty is rather one of administration than of legislation. There has already been in the case of the mortgagee a suggestion of supplementary legislation. What that will produce the future alone will show, but my concluding note would be an appeal to the noble and learned Viscount that in the case of the clause in Part II of the Bill, where the provision of payment for loss is limited to a minimum of £5, the amount should be reduced to £3 or even £2, so that the hardship which will be felt in many cases may be limited.
LORD MOTTISTONE: My Lords, before the Lord Chancellor replies and we proceed to a Second Reading of this Bill, I desire to say one word on its main principle and to indicate my whole-hearted support of it. As Chairman of the National Savings Committee, I thank the Government and the noble and learned Viscount on the Woolsack for having introduced and being determined to pass what I am sure will always be regarded as a most generous measure and one of a very extraordinary character when we come to compare it with anything done of the same sort in any country of the world. I view this matter especially from the point of view, as I have said, of the savings of the people and of the appeal we are now making to them to save all they can and lend it to the Government. They can do that very largely because their fear of the future has been greatly mitigated by the kind of legislation to which the noble Lord, Lord Barnby, referred. The different Insurance Acts dealing with national health and old age pensions gave people a measure of security. It was only possible for the people of this country to lend voluntarily to the Government in such measure as they are doing now because they had this sense of security.
Now comes the danger of the bomb and there was a very real danger that the people would say, as people have said in every country in Europe, "What is the good of saving or lending to the Government when everything we have is going to be destroyed?" My information is that there is very little such saving or lending in any European country, while we still have this tremendous reserve of power. It will interest your Lordships to know that the result of the impact of the ferocity of German bombing has so far not been to make people start hoarding and hiding away all they have got, as has happened in Europe. On the contrary, in many cases it has even increased the determination of the people to lend all they have to the Government. This was contrary to our expectation, but it was very fortunate.
It does seem to me that a word ought to be said in commendation of His Majesty's Government for boldly coming forward and saying, just before we were threatened that the Blitzkrieg would be resumed with even greater vehemence:

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" We are determined to justify the faith of our people in the stability of our institutions and in the belief that little homes and little businesses, as well as great businesses and great cathedrals, shall be restored as far as we can in the best way at the expense of the State." It is a fine gesture of confidence in victory which really is a presage, I am sure, of the victory of our just cause. So it will be taken, I have no doubt, by the people of this country who, having waited and wondered, as I know they have been waiting and wondering, now see that the Government are united and determined in saying, "We will see you through."
LORD WARDINGTON: My Lords, may I just say one word in connection with the point made by the noble Viscount, Lord Swinton? On the face of it what he said appeals to one's sense of justice and it appeared to be logical, but I think that the noble Viscount did not quite realise the implication of his suggestions and did not distinguish between the ordinary commercial advance on mortgage and the purely building mortgage. If you take the case of a large debenture issue which is secured by mortgage over the real property of the company, amongst other things, every holder of those debentures—there may be hundreds if not thousands—are mortgagees in respect of the property. From the administrative point of view it would be impossible to try and apportion the amount of the contribution amongst all those debenture holders.
Moreover, in the case of an advance by a bank, which may be secured by mortgage on a house amongst other things, the mortgage on the house may be very small in comparison with the value of the stocks and shares and other securities which are held against that advance. If you take the relevant date of the advance being granted as January 1, the banking account—which is of a fluctuating nature and not like a building society mortgage—may have been in credit on that date, or it might be that on January 1 the full amount of the advance was taken. I hope the Government will stand by the restrictions in Clause 25 (4) and (5) because otherwise they will be confronted with an extreme kind of administrative difficulty.
I would like also to refer to a point made by the noble Lord, Lord Addison.
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I do not know whether I am right, but I understood that the compensation to be obtained under Part I of the Bill is confined to 1941 under the contributions which are mentioned in the Bill. After 1941 I presume that further contributions would have to be paid. I do not know whether I am correct about that or not.
I have been asked by the noble Lord, Lord Luke, who was unable to stay, to put a point which was referred to in part by the right reverend Prelate. Under Part I of the Bill hospitals, like many other charities, will make no contribution in respect of their buildings and will have no guarantee of compensation, but the Chancellor has given very welcome assurances, first, that compensation will not be reduced on account of there being no contributions, and, secondly, that there will be full consultations with the various organisations representing the voluntary hospital movement and with the particular hospitals concerned. In respect of hospital equipment, however, changes were made in Part II of the Bill at the Report stage in another place the effect of which is not at first sight perfectly clear. The property of hospitals can be exempted by the Board of Trade from compulsory insurance under the business scheme. In the original Bill it can also be exempted from the original maximum amount of £1,500 for the private chattels scheme. At the Report stage this limit disappeared and also this power of exemption. In its place the scheme will be subject to regulations which will provide for a maximum of £10,000. Hospital equipment is very expensive; it will often exceed £10,000 and may in a hospital of, say, 500 beds, easily amount to £75,000. Apparently the Board of Trade can, also by regulation, pay compensation even where there has been no insurance. On behalf of my noble friend Lord Luke I would like to say that if an assurance could be given that here again, as with their buildings, hospitals will not lose because of exemption from compulsory contributions, a good deal of anxiety would be removed.
LORD JESSEL: My Lords, I agree with what was said by my noble friend Lord Mottistone, that this is a great Bill which reflects the greatest credit on the Government, on the Chancellor of the Exchequer, who so ably piloted it through another place, and also upon the House of Com-

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mons, which so quickly came to a decision on a very complicated matter. There were two questions to which the noble Lord, Lord Addison, referred to which I hope the noble and learned Viscount on the Woolsack will give an answer. As has been said by the noble Lord, Lord Addison, this Bill lasts for two years but the contributions go on for five years. One would like to have some indication of what is going to happen. It has also been said, and I know it very" well from representations which have been made to me, that this contribution of 2s. in the pound is going to weigh very heavily on certain classes of property; on certain companies which are engaged in building houses and which own property. Whether there is any power under the Bill to modify that I cannot quite understand.
There is just one further point and that is this; it has been suggested in another place, and I hope the Government will take it into consideration, that there should be an explanatory memorandum published for the public use so that they can find where they are in dealing with these various questions. I consider that most important, because this is a very complicated measure. If there could be a simple guide from which people could learn what to do and how to do it, I am sure it would be greatly appreciated. I would emphasize that if this Bill is to be a success, as we all hope it will be, it will be, to a great extent, a question of administration and the sympathetic consideration extended to those who are making claims.
THE EARL OF CLANWILLIAM: My Lords, may I ask the noble and learned Lord Chancellor a question with reference to Clause 5, which deals with additional payments in respect of temporary works? Can this payment be made immediately after the work is completed and will the amount which is to be paid, and can be paid under the Bill, amount to £800? I rather gathered that: that was so, but I am not quite sure. Can this payment be made immediately on completion of the work or must it wait till the end of the war and is the amount of it up to £800?
THE LORD CHANCELLOR: My Lords, there are several questions which I have been asked to answer at the close of the debate. The noble Lord will find that the matter of £800 occurs in Clause 8, which relates to the time when payments
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may be made, and it is intended to be, and in fact it is, a payment which may be made to assist in a case where a man or his family have got to move to another residence immediately, or where a shopkeeper has to move and open a shop somewhere else. The payment is to help such people so that they shall not be completely stranded until the value payment is worked out. Clause 5, which deals with temporary works payments, relates to a payment which may be made if the owner or occupier has been compelled to make some temporary repairs. The two matters, therefore, are not the same, and I think that if the noble Lord will read Clause 5 and Clause 8 he will see the difference.
I am grateful to the noble Lords who have spoken for the way in which they have been pleased to refer to the Bill and, on behalf of the Government, I desire to say that we are greatly encouraged thereby, particularly by the words of Lord Jessel. He just now expressed some doubt as to whether the rate of contribution of 2s. in the pound on the Schedule A value might not in some cases operate hardly. The whole aim, I think, of a Bill of this sort must be to secure as far as may be simplicity, and great difficulties would arise if one attempted to draw in an ascending order the gradations of contributions in different circumstances. It is true that this is only a rough measure of justice. There are parts of the country which, so far as one can see, are less likely to be violently bombed than others and yet the payment is a flat payment. That is done because you cannot satisfactorily draw lines of division and I think that will have to be accepted as a general principle of the Bill.
So far as Clause 86 is concerned, noble Lords will be aware that the Weir Committee expressed an extremely unfavourable view of mutual insurance schemes dealing with war damage. Inasmuch as there is, I am glad to say, an adequate Government scheme, there is no reason why these methods—some of them very distinctly methods of the mushroom variety—should continue to be encouraged. There is no case for giving special indulgence to such schemes, and I do not think that the House would wish to alter Clause 86 of the Bill.
The noble Lord who said that he could see that I was in a position of some embarrassment was quite mistaken. If he has followed closely and impartially the

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course of affairs, he will have discovered that there is nothing in the production of this Bill which is contrary to what I have previously said. As a matter of fact, it is the view of the Treasury that this is a natural development of the situation which arose earlier in the war. The proposition which I laid down, and which I am glad to think is now universally approved, is that such loss or injury ought not to be treated as merely the concern of those who directly suffer. I will read my own words spoken in January, 1939:
"The general principle which the Government think should be applied is that such loss or injury ought not to be treated as merely the concern of those who directly suffer it, but must be regarded as falling upon the community as a whole, and consequently as constituting a proper subject for compensation from public funds."
LORD BARNBY: My object in referring to this was not to criticise, but to point out that there had been speakers in both Houses who emphasized that this country was in need of some such Bill as this which is now produced. I was only pointing out that by speeches which have been made such a measure had been recommended as far back as 1939.
THE LORD CHANCELLOR: My noble friend will no doubt be credited for whatever portion of original virtue he feels properly attaches to his name in the matter. I am in no embarrassment because it has been the view of this and the previous Government that it was not right to leave this burden to fall on the individual sufferer. It was felt that a method of compensation must be found, but it was not possible to devise such a method until there was some experience of what was involved. The noble Lord, Lord Addison, told me that he had only had the opportunity of seeing this Bill to-day. And another noble Lord told me the same thing. The Bill was in fact in the Printed Paper Office on Friday, but I understand that unless the noble Lord asked for it he would not very easily see it until later.
I should like to express my entire concurrence with what the noble Lord, Lord Addison, has said as to the great importance of co-ordination in the working of this measure. Steps are being taken to secure in every possible way that the War Damage Commission will be
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in proper contact with those who are bound to have their say and who ought to have their say. I do agree, however, that the test of a Bill such as this is really whether, when it passes into law, it works smoothly and to the satisfaction of the public. That view, expressed by him and others, the Government most heartily welcome.
With regard to the risk period, I think that my noble friend has found the passage in question now. When one reads Clause 2 of the Bill, one sees that it is for the risk period, which is defined as ending on August 31. I agree that, that being so, this may well turn out to be only the first of possibly a series of measures; but of course the answer is—and I am sure that no one will accept it more readily than my noble friend—that it is necessary to establish a scheme and work it to the best of your ability even though you do not know what is coming later on. It may be that by that time we shall have so overwhelmed the enemy that this class of risk will not be serious, or it may be that we shall have to face something equally serious. I do not speak with any complacency or self-assurance about that. But we must see how this thing works and, if in some aspects it has to be amended, we must recognise that fact and make another scheme for the purpose of being adopted and carried into force from August 31 next.
I wish to put it on record that I accept, as most impartially as well as most clearly stated, what fell just now from the right reverend Prelate the Bishop of London. He quite accurately described, I think, the discussions which were going on and which are going on still. I am very glad that it is possible in this way to meet not only the Church of England but all religious bodies, and to make a provision which seems really in the public interest and right from the point of view of their assessment.
My noble friend Viscount Swinton made some very important points about mortgages. I speak for the moment quite provisionally, because we may have to discuss this on the clause; but I must say that for my part I think that there is a material distinction between what may be called the convenience of the building society mortgage, which is helping a man to buy or to build a small house, and the

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very large and complicated transactions, often represented by debentures, which were pointed to just now by the noble Lord opposite, to say nothing of bank advances, where frequently every kind of property is charged but the particular item of the house is a very unimportant element. It is the case that a man who is buying a house with the help of a building society looks to the building society, and very naturally, as his landlord. He makes a weekly or monthly payment, and very often regards it as rent; and in substance it is rent. That is quite a different case from these great commercial transactions, where I must say I think that those who designed this Bill have been wise in avoiding the enormous complication which would follow if an attempt were mace scientifically to distribute the contribution in the way suggested by my noble friend.
The noble Viscount, Lord Swinton, also referred to the: position of the agricultural community under this Bill, and he expressed the view that it might be that the arrangements which we have made pressed unduly upon the farming community. That has to be carefully considered, but I cannot see any justification for a separate rate of insurance for persons who are supposed to be in less vulnerable areas or whose property is of a less vulnerable kind. As regards the rate itself, the fact is that the farmers have very considerable advantages. The farmer, for example, is not compelled to insure to the full value of his goods; everybody else is, but he is not, and that is a very considerable advantage. He need do no more than insure the minimum and he will receive, if he suffers that amount of damage, the whole of that sum without any question of average. Other people have to insure up to the full value of all that falls within the scheme. Again, most of the farmers' produce should logically have been insured under the commodity scheme which we passed some time ago. There was a time, I think, when that was contemplated; but it was objected to and the fanners' produce was taken out. The rate under the commodity scheme is 4½ per cent. per annum, whereas this business rate is very considerably less. I do not think that, on a clear examination, the ancient controversy between
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town and country is going to arise on this occasion, and I know that very great efforts have been made to try to get a fair balance between the two.
I must not forget the question of the onions mentioned by Lord Addison. I think that I followed my noble friend's illustration very well. A bomb is dropped in the middle of a field where onions are growing, and it does two things: it makes an enormous hole, perhaps causing considerable depreciation to the field as a field, and in addition to that the crop of onions is spoilt. First of all, let us appreciate that both those matters are covered by this Bill. It is quite true that the compensation in respect of the onions is under a different scheme from the compensation in respect of the soil; but I really think that if my noble friend will examine the Bill, and imagine himself as drafting it or as putting it into its compartments, it will become clear that that must be so. It is necessary to have a simple, self-contained scheme for buildings and permanent things, of which land is one. On the other hand, the farmer may or may not choose to have an insurance covering all the crops which he produces. If he does, there is no question that he will get compensation to the full; if he does not. it will depend on whether he has exhausted his claim. I think that it is almost inevitable that we should have the two schemes, but I agree that the greatest care must be taken in a practical way to secure that the two schemes really do work side by side and do not lead to complications or, so to speak, cut one another's throats.
I can only end as I began, by saying that I shall be glad if this Bill can receive the approval of your Lordships' House. There will, of course, be a Committee stage, where some important matters have to be discussed. It is of great importance, of course, that we should get this Bill into the best possible shape and passed into law without delay, and I imagine that the authorities of the House will arrange for us to have a further discussion at the earliest convenient moment.
On Question, Bill read 2a, and committed to a Committee of the Whole House.
House adjourned.