HL Deb 31 January 1946 vol 139 cc101-12

Order of the Day for the House to be put into Committee on re-commitment of the Bill read.

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

On Question, Motion agreed to.

House in Committee accordingly:

[THE LORD STANMORE in the Chair.

Clause 1:

Transfer of Bank stock to Treasury

(4) After the appointed day, no dividends on Bank stock shall be declared but in lieu of any such dividends the Bank shall pay to the Treasury, on every fifth day of April and of October, the sum of eight hundred and seventy-three thousand, one hundred and eighty pounds, or such less or greater sum as may from time to time be agreed upon between the Treasury and the Bank.

LORD BALFOUR OF INCHRYE moved, in subsection (4), to leave out all words after "less" and insert sum as may from time to time be agreed upon between the Treasury and the Bank, provided that if any greater sum is to be paid notification of such intention shall be laid before both Houses of Parliament not less than twenty-eight days before the date when the next payment becomes due from the Bank to the Treasury. In reckoning any period for the purpose of this subsection no account shall be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.

The noble Lord said: I beg to move the Amendment in Clause 1 standing in my name on the Order Paper. The effect of this Amendment would be to ensure Parliamentary notice and, if thought necessary, Parliamentary discussion for any proposal to pay more than the sum specified in the Bill—namely, £873,180 Or less—half-yearly in lieu of dividend, and at the same time not to deny that flexibility to the Government which the Chancellor of the Exchequer said he wished to retain as regards the freedom of the Government, should they so wish, legislating on a long-term basis, to increase the amount paid yearly or half-yearly by the Treasury.

I realize that this Amendment raises the question of Privilege, and I do not propose to amend it, but I hope for some acceptance from the Government, and some indication from the Government that they are willing to accept it. The reason I move the Amendment is to prevent, without Parliamentary approval, the Treasury recovering for general revenue purposes sums from the Bank beyond those sums that the business of the Bank can properly yield. The present dividend has been the same for approximately twenty-three years, and it has been stated that the Bank has no intention of increasing the rate of that dividend. The noble Lord, Lord Catto, said in his evidence: I do not think that the increase in the reserves would have affected the dividend in the future. Our object would have been service, as I have indicated a few minutes ago, and we would have reduced our charges for any service or we might have done a great many other things so as not to increase our earnings; in any unreasonable manner, that is. And the Chancellor of the Exchequer in another place has also declared that he has no intention of raising the dividend. In Column 956 of the House of Commons Hansard for December 17, the Chancellor of the Exchequer is reported as saying: I hasten to add that I have no present intention of suggesting a variation. He continued: I have no reason to think that the Bank of England has any reason to suggest a variation, but if it seemed to both parties reason- able to alter it, it would be a pity if they were prevented from doing so by rigidity in the Statute.

The Amendment which I move does not tie the Government down, and does not give that rigidity that the Chancellor wished to avoid. At the same time it does give the safeguard of Parliamentary consideration for any such proposal to increase the amount recovered by the Treasury. The Chancellor of the Exchequer in all good faith said that he had no intention of raising the amount paid, but nevertheless he has said on several occasions that he cannot bind his successors, and all Chancellors of the Exchequer in future may not be so broadminded and wisely guided as the present Chancellor, because the possibility does exist that in future some Chancellor, ignoring the services the Bank is required to render to the nation as the first consideration of the Bank's business, may fall into the temptation of depleting the resources o; the Bank for general taxation purposes. Indeed, in another place yesterday, Major Lloyd-George dealt with this very point, and he said in very clear words: Whatever party the Chancellor belonged to, the Chancellor did not alter a great deal in his habits. One of the most deplorable things about Chancellors is that they are always short of money. He also said: "I was saying Chancellors are always broke and any source of revenue which they can collect they will take." Well, that possibility does exist in the future. We have seen examples of it in the past, such as the Road Fund—the large taxation upon motor-cars— which was originally designed and intended for improvement of the roads, and which is now diverted to general revenue purposes. Then the Post Office is a constant source of wonder and satisfaction to the Chancellor every year when he comes to prepare his Budget. I sincerely hope that this safeguard against the Bank's resources being raided for general revenue purposes will commend itself to the Government. I beg to move.

Amendment moved— Page 2, line 9, leave out from ("less") to the end of line 10 and insert the said new words. — (Lord Balfour of Inchrye.)


I quite appreciate the motive of the noble Lord, Lord Balfour of Inchrye, who has moved this Amendment. He is exceedingly anxious that there should be no loophole through which some nefarious practice shall be carried out by the Chancellor, not necessarily the present Chancellor, but some future Chancellor, and it is perfectly right that the Opposition should scrutinize every line and every comma in a Bill of this character to make sure it does not lay itself open to such abuse; but I venture to submit to your Lordships that in bringing forward this proposal the noble Lord is really finding something that does not exist. The remedy would be a very grave one to adopt in a case of this kind.

Let me first of all deal with what is involved. The proposal—and it is obviously one that will commend itself to the Chancellor and future Chancellors and to the Bank—is that the amount of money which will be passed in this way will exactly correspond to the dividend. The noble Lord was perfectly right in saying the dividend had been the same for the last twenty or more years, and it is the intention of the persons concerned that it shall remain at the same figure. Therefore I can give him the assurance that it is not the intention of the present Chancellor of the Exchequer in any normal circumstances to put up the figure, but, as he himself has agreed, it is desirable, or may be desirable, that there should be a certain amount of flexibility, not for the purpose of making a great raid on the Bank's funds but for some slight adjustment that might be a little less in one period and a little more in another. That might become desirable, and it would seem foolish if in this Bill we shut out that possibility.

The noble Lord says, "I agree with that, but if so, let it be formally available to Parliament and let us have a full debate on it in both Houses before the matter becomes a fait accompli." I would venture to suggest that that would be a most undesirable solution, because for this House and for the other place to debate this matter, which is a matter of the reserves of the Bank, would not be a very desirable thing, and I should have thought that it really was quite unnecessary. The reasons why I would venture to suggest that it really is quite unnecessary are ones which have, I think, perhaps escaped the attention of the noble Lord. In the first place I would like him to read the last words of the subsection: or such less or greater sum as may from time to time be agreed upon between the Treasury and the Bank. Therefore it is not a matter of the Treasury deciding to take more from the Bank: this can only happen if there is an agreement between the Treasury and the Bank, and I am quite sure it could not be so if that agreement was subject to directions which the Treasury might impose on the Bank under a later clause. Therefore the first prerequisite is that the Bank should be a party to and should agree to this proposal that a larger dividend be paid. I think that in itself is a very substantial safeguard.

I would further remind the noble Lord, however, that though the procedure which would actually arise under the Bill does not provide for previous discussions in the Houses of Parliament, the fact that this sum was being taken and was greater than the normal amount would appear at the time in the Treasury accounts. It would no doubt be seized upon at once by the Press and called attention to. Therefore it would be not only certain to come under the notice of the Public Accounts Committee but it would be discussed, if it was thought desirable. Therefore I think there are quite adequate safeguards: first of all in the concurrence of the Bank in the proposal, and secondly in the fact that even if it is not published in advance it will be published at the time, and will therefore be subject to review by the Public Accounts Committee and can, if necessary, be called in question in the Houses of Parliament. In those circumstances I hope the noble Lord will not press his Amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Clauses 2 and 3 agreed to.

Clause 4:

Treasury directions to the Bank and the relations of the Bank with other banks.

(3) The Bank may, if they think it necessary in the public interest, request information from and make recommendations to bankers, and may, if so authorized by the Treasury, issue directions to any banker for the purpose of securing that effect is given to any such request or recommendation:

Provided that:

  1. (a) no such request or recommendations shall be made with respect to the affairs of any particular customer of a banker; and
  2. (b) before authorizing the issue of any such directions the Treasury shall give the banker concerned, or such person as appears to them to represent him, an opportunity of making representations with respect thereto.

4.15 p.m.

LORD PETHICK-LAWRENCE moved, in subsection (3), to delete the first "may" in order to reinsert the word after "interest." The noble Lord said: This Amendment which I have caused to be put down is moved as a result of the debate which took place on the Second Reading of the Bill. I was called upon by the noble Viscount, Lord Swinton, who perfectly properly, of course, interrupted my speech, to give a very precise explanation of Clause 4 and, in particular, subsection (3) of Clause 4. Subsequently the noble Lord, Lord Catto, referred to the matter and there appeared to be some slight difference between the view I expressed on the spur of the moment in answer to the noble Lord and the view of Lord Catto. There may have been some slight divergence but I think we really were not addressing ourselves to precisely the same aspect of the matter, and I take the view that what the noble Lord, Lord Catto, said on that occasion is a perfectly correct interpretation.

Later in the debate Viscount Swinton asked, as I understand it, for a legal ruling from my noble friend the Lord Chancellor, who, being more adroit than I am in giving answers to legal conundrums, described, I think, the precise meaning of the words in the clause probably with greater accuracy than I did. I have very little doubt in my own mind—and this is the view of the Government—that the interpretation that the Lord Chancellor placed on the words already existing in the subsection is correct. It has been pointed out to me, however, that the meaning which the Lord Chancellor attached to the words could be made free of any conceivable dubiety if there was a small alteration in the order of the early words. The words of the subsection as it stands are: The Bank may, if they think it necessary in the public interest, request information from and make recommendations to bankers, and may if so authorized by the Treasury, issue directions" … and so on. It might conceivably be argued that the phrase, "if they think it necessary in the public interest "only applied to the matter of requesting information, and that that proviso did not apply to the second part of the subsection, the matter of the Bank issuing directions. I am therefore proposing an Amendment to relieve the matter of any conceivable doubt and to alter the place in which the word "may" occurs, to take it out from being the third word of the subsection and to put it in after the word "interest" in the second line of the subsection.

In its new form the subsection will read as follows: The Bank, if they think it necessary in the public interest, may request information from and make recommendations to bankers, and may, if so authorized by the Treasury, issue directions to any banker for the purpose of securing that effect is given to any such request or recommendation: I do not personally think it changes the meaning of the subsection, but it may help to remove doubt and it may help with the interpretation which Lord Catto gave of this subsection. It is one which I think the noble, Lord sitting opposite (Viscount Swinton) desired should be made abundantly clear. Therefore, on that principle, I have pleasure in moving the Amendment standing in my name.

Amendment moved— Page 3, line 9, leave out (" may ")—(Lord Pethick-Lawrence.)


I am much obliged to the noble Lord for the explanation which he has given to the House, and for moving this Amendment. I am very glad that I raised this point, which I think is a very important point of principle, on the Second Reading. The Lord Chancellor was good enough then, on the spur of the moment, to give me an answer after we had had a good deal of debate about it, and I am very glad that he finds, after further consideration, that the view he expressed on the spur of the moment was, as it so often is in legal matters—I will not say in all other matters—entirely correct. It is enormously important that the principle about which we are all agreed should not only be maintained but that there should be no doubt about it—namely, that in all cases where directions are to be given by the Bank of England to the joint stock banks, or to a banker as defined under the Acts, the initiative shall rest, as Lord Catto expressed his opinion that it was the intention that it should rest, with the Bank of England. That is the common intention, and I am very glad that the Government have proposed this Amendment which makes the matter clear.

On Question, Amendment agreed to.


I beg to move a consequential Amendment.

Amendment moved— Page 3, line so, after ("interest"), insert ("may")—(Lord Pethick-Lawrence).

On Question, Amendment agreed to.

4.22 p.m.


had given Notice that he would move, in subsection (3), to add to proviso (b) the words "and no restriction shall be imposed on the banker by the Treasury or Bank on publication by the banker of any direction or directions, and matters thereon, unless the First Lord of the Treasury shall certify that such publication would be against public interest."

The noble Lord said: Since I put down this Amendment the Government have put down the Amendment which appears on your Lordships' Order Paper, and which I think entirely covers the point I was endeavouring to, raise and to get agreed to in my Amendment. The point was simply to ensure that any banker receiving a direction under Clause 4, subsection (3), should be free to give publicity to that direction unless it was certified by the Government of the day that an opposite course should be followed because otherwise the public interest would suffer. I would like to refer to the Commons Hansard of 19th December, when this point was raised in another place and when Captain Crookshank said: The Chancellor spoke of questions in the House and said that of course nothing could prevent the recipient of a direction from making it public. Then let us he quite clear and say so. The direction might say 'This is a secret', and therefore the recipient would be stopped from giving it any publicity. Subsequently the Chancellor of the Exchequer said he did not consider the Amendment necessary, but that he would be willing to consult with Captain Crookshank and other members of the Opposition on the subject. Presumably that consultation has taken place and the result is this Government Amendment which is on the Order Paper. So far as I am concerned it covers my point entirely and I will not move my Amendment.


had given Notice that he would move, in subsection (3), after proviso (b), to insert: and (c) Subject as hereinafter provided every authorization by the Treasury together with the direction to which it relates (not being an authorization or direction relative only to the securing of information) shall be published forthwith in the London Gazette, and if not so published within two days after it has been issued, shall be void without prejudice to anything previously done thereunder. If, however, the Chancellor of the Exchequer considers that it would be contrary to the national interest to disclose the terms of any such authority and certifies under his hand to this effect for the information of the banker concerned, then such authorization and relative direction shall not be so published.

The noble Viscount said: In view of the Amendment which has been put down on behalf of the Government, I do not propose to move this Amendment.

4.25 p.m.

LORD PETHICK-LAWRENCE moved, after subsection (3), to insert: (4) If, at any time before any recommendations or directions are made or given in writing to a banker under the last foregoing subsection, the Treasury certify that it is necessary in the public interest that the recommendations or directions should be kept secret, and the certificate is transmitted to the banker together with the recommendations or directions, the recommendations or directions shall be deemed, for the purpose of Section two of the Official Secrets Act, 1911, as amended by any subsequent enactment, to be a document entrusted in confidence to the banker by a person holding office under His Majesty; and the provisions of the Official Secrets Acts, 1911 to 1939, stall apply accordingly. (5) Save as provided in the last foregoing subsection, nothing in the Official Secrets Acts, 1911 to 1939, shall apply to any request, recommendations or directions made or given to a banker under subsection (3) of this section.

The noble Lord said: I am obliged to the noble Lord and the noble Viscount for their attitude in this matter. Personally, I should have thought the Bill, as it stood, covered the point, but I agree that the whole Bill is one for putting into definite words what has been the practice for some time past, and as the noble Lord and the noble Viscount were so anxious that the practice should be made abundantly clear, I thought the point they wished to make should be made in some way or another. For reasons which I need not go into now, as they are both willing not to proceed with their Amendments, I should not lava agreed with either of their proposals. I think the proposal in the Amendment which I now move is quite unexceptionable, and I am glad the noble Lord and the noble Viscount take the same view. Therefore, without more explanation, I move the Amendment which stands in my name.

Amendment moved— Page 3, line 22, at end insert the said new subsections.—[Lord Pethick-Lawrence.]


I am obliged to the noble Lord for proposing this Amendment, and if I say two or three words about it I hope he will not think I want to go over unnecessary ground. I do not quite agree that the Bill as it now stands covers this point. It does not cover the point. It may not be a very important point, but certainly the Bill, as it stands, does not cover it. There were two objects which it was considered desirable to secure, and I do not think there is any real difference between us as to either of them. One was that if the case were to arise—and I hope and believe it will very seldom arise—that under subsection (3) the Treasury came in to give directions, were such directions to be regarded as confidential matters or were they to be, as things ought to be whenever possible, open to publicity? The Chancellor of the Exchequer, in another place, said—and I guile agree with him—that there was no reason here to seek unnecessary secrecy. I think we all accept the proposition that wherever possible publicity is better than secrecy. But the Chancellor of the Exchequer made a second point; he said, in effect, that a situation could be conceived in which a direction was initiated by the Bank of England, and countersigned, as it were, by the Treasury, where, on grounds of public interest, that direction should be kept secret. I do not deny it. I can imagine a case, perhaps on the eve of some really terrible international crisis, where it might be desirable to give an indication to the joint stock banks which, in the public interest, at any rate for the time being, ought to be kept a secret, and certainly none of us would want to put anything into the legislation which prevented that.

This Amendment puts in a different form, and I think in a better form, what I had in mind in the Amendment I put down. It covers both points. The only difference is that whereas I put the principle first and the exception second, the Government draftsman puts the exception first and the rule second. He begins by saying that if there is such an exceptional case and the Treasury certify that it is necessary in the public interest that the recommendations or directions under this clause shall be kept secret, well then, they shall be kept secret. He goes on to say what would necessarily, I think, occur as right to a lawyer without it being said—namely, that it shall be treated as an offence under the Official Secrets Act if a confidential direction is disclosed. I think that is quite right. He then goes on—and this is a case where the tail is more important than the dog—to say in subsection (5): Save as provided in the last foregoing subsection, nothing in the Official Secrets Acts, 1911 to 1939, shall apply to any request, recommendations or directions made or given to a banker under subsection (3) of this section. I personally prefer the Government's proposal to the one I made, for the reason that the proposal in the Amendment I put down would have really automatically published every such direction. There may be cases in which that would not be generally desired and therefore I think it much better to do as the Government do in this Amendment, which is to say that it is perfectly open to publish the information and no one is to be blamed, reproached or prosecuted if he does publish it, except in a case where the public interest is the overriding consideration and it must be treated as a secret because otherwise the public interest would be injured. I have no desire whatever to supplement the explanation of my noble friend, but perhaps I may be allowed to say so much because this really secures what some of us had in mind. I am perfectly willing to agree that the draftsman's form of words is always better than the form suggested by somebody else.


I should like to thank the noble Lord for his Amendment, and to say once again that I am entirely satisfied.

On Question, Amendment agreed to.

Clause 4, as amended, agreed to.

Remaining clauses agreed to.

Schedules agreed to.