COAL INDUSTRY NATIONALISATION BILL. (Hansard, 19 June 1946)

HL Deb 19 June 1946 vol 141 cc930-1008 930

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

§ THE LORD CHANCELLOR (LORD JOWITT)
My Lords, before I move that 931 the House resolve itself into Committee on the Coal Nationalisation Bill, may I make this statement by way of personal explanation and apology? In my speech on the Second Reading of the Bill, reported in Hansard of May 28, at column 498, I was talking about the doctrine of amalgamation, and referring to Mr. Foot's report I said this: Let us see what Mr. Foot says about amalgamation—he does not like it. He says: To compel parties who object to it to work together in a combined undertaking would be a mistaken policy. It is true that Mr. Foot did say that, but Mr. Foot were merely quoting—as a more careful reading of his report shows—from the Report of the Samuel Commission, and therefore it is quite unwarranted that I should attribute to Mr. Foot any views on the strength of that statement. I desire to apologize in the most profuse way to Mr. Foot, to the Samuel Commission, to your Lordships, and to everybody else concerned, and plead guilty to the heinous offence of not having verified my references. Having said that, I beg to move that the House do now resolve itself into Committee.

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

§ On Question, Motion agreed to. House in Committee accordingly.

§ (The Earl of DROGHEDA in the Chair.)

§ Clause 4:

§ Consumers' councils.

§ (2) Each of the said councils shall consist of such number of persons as the Minister may think fit, appointed by him to represent the Board, and—

(a) in the case of the Industrial Coal Consumers' Council, after consultation with such bodies representative of the interests concerned as the Minister thinks fit, to represent consumers of coal, coke and manufactured fuel respectively, for industrial purposes or other purposes involving supply in bulk, and persons engaged in organising or effecting the sale or supply of coal, coke and manufactured fuel respectively, for those purposes;
(b) in the case of the Domestic Coal Consumers Council, after consultation with such bodies representative of the interests concerned as the Minister thinks fit, to represent consumers of coal, coke and manufactured fuel respectively, for domestic purposes and other purposes not falling within the preceding paragraph, and persons engaged in organising or effecting the sale or 932 supply of coal, coke and manufactured fuel respectively, for those purposes.

§ (5) On the notification or making to the Minister by either of the said councils of their conclusions or report on any matter, if it appears to him, after consultation with the Board, that a defect is disclosed in the Board's general arrangements for the production, sale or supply of coal, coke or manufactured fuel, as the case may be, he may give to the Board such directions as he may think requisite for remedying the defect, and the Board shall give effect to any such directions.

§ 2.45 p.m.

§ LORD BALFOUR OF INCHRYE moved, in subsection (2) (a), after "with," to insert "and from persons nominated by." The noble Lord said: I beg to move the Amendment standing in my name and in doing so I must say that I feel that we start to-day's deliberations in this Committee stage under particularly happy auspices. It is given to me as the first speaker on an Amendment to express what I know is the sentiment entertained on all sides of your Lordships' House by tendering congratulations to the noble Viscount, the Leader of the House, on his birthday, and conveying to him our wishes for many happy returns of the day.

§ With the permission of the Committee, I think it will be well if we discuss both this Amendment at page 4, line 27, and the following one, at page 4, line 35, together because they, in effect, deal with the same point. The purpose of these Amendments is to ensure that the Minister in appointing the members of these Councils shall consult with representatives of consumers' bodies in making his appointments, and shall not have the power only to select from his own nominees. As the Bill reads at the present time, it lays down that the Minister shall have consultations with such bodies, and then it says, "as the Minister thinks fit." The Bill also lays down that the Minister shall have consultations in respect of interests concerned "as the Minister thinks fit." This is a minor point compared with the major point that I wish to make in the Amendment, but it does seem to me that the drafting is not very clear, in that as this matter is at present set out the Minister can select firstly what interests shall be consulted, and secondly from what bodies representing those interests he shall take advice I cannot help thinking that in 933 any event some clarification of the actual drafting is called for.

§ My main purpose is to secure that the Minister shall consult with the interests concerned and select his members from persons nominated by those interests. This Amendment deals with the point raised by the Lord Chancellor that there should not be imposed upon the Minister delegates. My Amendment docs not suggest that. All my Amendment suggests is that the representative bodies should be allowed to put forward, as it were, a panel of names, and from those names the Minister should select those whom he considers would best represent the particular interest. I sincerely hope that the Government will feel able to accept this Amendment, and so make sure that the interests concerned shall be able to put forward the particular names of those whom they think are best qualified, and that from them a selection shall be made beg to move.

§ Amendment moved— Page 4, line 27, after ("with") insert ("and from persons nominated by")—(Lord Balfour of Inchrye.)

§ THE MINISTER OF CIVIL AVIATION (LORD WINSTER)
As regards the drafting point raised by the noble Lord, I have no doubt that what he has said will be looked into and taken into consideration with a view to seeing whether any clarification is needed or not. With respect to the main purpose of the two Amendments, they would, as the noble Lord has said, require the Minister to select the Consumers' Councils from among the names of representative bodies of consumers. The Committee will recollect that the Minister is under no obligation to consult any particular organizations before appointing the members of the National Coal Board, still less is he under an obligation to choose from nominees. But these Consumers' Councils are to be advisory to the Minister, and in order that the Minister may feel confidence in their advice it is obvious that he should be able also to choose the members of these Councils perfectly freely, and that it should not be mandatory upon him to accept nominees of consumers' bodies. Apart from the fact that such nominees might in any case be unacceptable, I feel that they would tend to have an excessively sectional point of view built up over a long period of past experience of the industry.
934 It is the opinion of my right honourable friend that it will be desirable to introduce new blood into these Consumers' Councils and to appoint to them people who will understand the new kind of relationship between the industry and the consumer which nationalization should make possible. As regards the relations between these Councils and the Board, we envisage the Councils and the Board working in harmony to ensure that the consumers' interests, as they are affected by the operations of the Board, are properly safeguarded. The Board will explain to the Councils the price structure to be aimed at, and the general policy to be followed, and the Board will keep the Councils well informed about the supply position. The advice of the Councils will be very valuable to the Board, but it would not help the consumer if the Councils felt that it was their prime duty to attack the Board. The relations between the Councils and the Board which we envisage are harmonious relations. Our arrangements about the Councils are directed to that end and we cannot agree to upset them. For these reasons I regret that I cannot accept the Amendment proposed by the noble Lord.

§ VISCOUNT SWINTON
I think the Committee must really have heard with amazement the speech which has just been delivered by the Minister of Civil Aviation, having in mind the very understanding and conciliatory speech which was made towards the close of our proceedings yesterday by the noble and learned Lord, the Lord Chancellor. I have never heard a greater contrast in either the spirit or the substance of two speeches made by Ministers within such a short interval of time.
But the shortness of the interval is no excuse for the Minister of Civil Aviation, who has at any rate had the opportunity not only of hearing the noble Lord, the Lord Chancellor, but of re-reading the speech which he made yesterday. I thought we were very nearly at one in this matter. Yesterday the Lord Chancellor emphasized what he had referred to in a previous debate, the vital importance of the Consumers' Councils. He explained, and I thought there was great weight in his observations—indeed I temporarily withdrew an Amendment—the difficulties that the courts would have in construing matters of undue preference, 935 although we all agreed that we did not want that kind of thing to happen. The noble and learned Lord, the Lord Chancellor, said there would be great opportunity for the consumers on the Consumers' Councils. I feel that there is weight in that, and I said—and I think I carried a great many members of your Lordships' House with me—that we were perfectly prepared to postpone all consideration of appeal to the courts until we had debated the establishment and the working of Consumers' Councils and had tried to see whether we could not make them an effective instrument for our purpose.
If the Consumers' Council is to be an effective instrument for our purpose, it must be an instrument in which consumers have confidence and which will protect them. That, at any rate as I read the measure, was the intention of the Bill—that there should be consultation with the different bodies. But what does the Minister of Civil Aviation say? He says we have got to get a new spirit into this matter—a new spirit in which the Minister is not only going to control and direct the industry but to appoint, control and direct the Consumers' Councils. They are not going to be Councils protecting the consumer but, according to him, they are to be creatures of the Minister, to tender the Minister advice.
I remember a famous minute which was shown to me once, many years ago, when I first attained Cabinet rank. The minute was preserved very preciously and was shown to incoming Ministers as an illustration of the way in which they ought not to proceed. It was, I regret to say, a minute by a Tory Minister who had held that office. He had submitted a certain question to the law officers, and wrote in red ink in the margin (it was not Mr. Churchill):— It is the duty of His Majesty's law officers to give those opinions His Majesty's Ministers desire to receive. The minute was duly excised from the file but was kept by the Permanent Under-Secretary of State and was shown to incoming Ministers as the way not to proceed. It had better be shown to the Minister of Civil Aviation. He wants a new spirit in this. I want the spirit of conciliation. I want consumers, whether they be all the individuals in this country 936 who use coal, or the great industrial consumers, or the small industrial consumers, to have confidence in these tribunals. But they will not have that confidence if the tribunals are to be created in the way the Minister of Civil Aviation has said—creatures of the Minister. Of course he is not going to consult them. He might get suggestions made which he did not like, or he might get people tendering advice which he did not like. That is not the way to establish Councils which are to have the confidence of either Parliament or the country.
How different are the remarks of the Minister of Civil Aviation from those of the noble Lord, the Lord Chancellor yesterday. I fully appreciated how nearly we were at one. My noble friend agreed that we ought to accept that members of the Board in a minority should sit on these bodies. I agree that we ought not to approach it as plaintiff and defendant and that we should work together. But, as I said, my view of that would depend very much on how the Council was to be constituted. I said that these other members ought not to be creatures of the Minister. I fully appreciate the difficulty of having people there as delegates, and in order to meet that difficulty I adopted a precedent. And if the Minister of Civil Aviation had had a little more experience of these matters he would know that I was not drawing on my imagination but on a practice which I and many other Ministers have adopted for many years past. That is, that we have invited associations and different organizations to nominate a representative panel from which we chose. I am not sure that the Leader of the House, as Minister of Agriculture, did not follow this course. Irrespective of Party, Ministers have invited different organizations of the country to submit panels of names to us, and from those panels we have made our choice. It is a very good way of choosing the right people. After all, what you want here is to have people who know something about the industry. This industrial panel must be composed of people who really understand the needs of the industry.
The noble Lord, the Lord Chancellor, said yesterday that he did not think the Amendment was on the Paper. I reminded him that it was. Let me read 937 what the noble Lord, the Lord Chancellor, said: …I am rather anxious to avoid the organizations being able themselves to appoint. I will tell you why. It is because I think it is so fatal, when you get people doing this sort of job, that they should regard themselves as delegates who have instructions, and that if they are taking a particular line they are letting down their constituents. My reply to that was: that is exactly why I took the middle course of not saying: 'you shall become delegates' but of saying to these various bodies: 'you shall put me up a panel of names.' I think you get just the right balance between the two. And then the Lord Chancellor intervened to say that has not been put down as an Amendment. I replied: I think it has. And the noble Lord, the Lord Chancellor went on: I do not think it has. It seems to me much better than the other system. I think the Minister certainly ought to consult with these organizations"— that is very different from what we have just heard— and in nine cases out of ten, no doubt, he would draw his names from the names they submitted. That is exactly what is proposed in my noble friend's Amendment. If the drafting is at fault, let us correct it. My noble friend will correct me if I am wrong, but what I understand the Amendment to mean is this. Taking the Industrial Councils first, the Minister has to consult with a number of different organizations which are representative of the industry. Very well. I agree that the Minister must decide upon those organizations. He must say, "These are the great organizations which ought to be consulted." What we say is, let him ask those organizations to submit to him a panel of names of people in whom they would have confidence if they served on the Industrial Consumers' Council. Then let the Minister, from this panel of names, which may be two or three times as large as the Council is to be, select the individuals whom he thinks wall make the best team. Everybody will agree that that would work. I think it is what the Amendment says. It is certainly what the Amendment is intended to do. Is that not so?

938

§ 3 p.m.

§ THE LORD CHANCELLOR
I will tell the noble Viscount my impression. The essence of a panel, after all, is to have a large number, or a comparatively large number, of names. You select one and reject the others. This Amendment is phrased "from persons nominated by…" You might name only one person, and., consequently, the Minister would be obliged to accept that person. I may say at once that I think that there is a good deal of force in the panel idea, although I regard it myself, as I think the noble Lord will, as a good working rule rather than as an absolute obligation. There may be cases in which, as I said yesterday, somebody is not persona grata with those organizations, and is not put on the panel, and there may be an exceptional case in which the Minister probably would want to go outside the panel; but in nine cases out of ten I agree that the panel would give him what he wants, namely, a list from which to select and from which to reject. I do not think that is implicit in the word "nominated," which is the word used.

§ VISCOUNT SWINTON
I am much obliged to the noble and learned Lord, the Lord Chancellor. I think that he has found a flaw in the drafting. Let me make it perfectly plain that if, let us say, there were to be eight people on the Council, there is no suggestion that the bodies concerned should nominate the eight people, so that the Minister would be left with no discretion. I am prepared—and I am sure the noble Lords would agree with me—to leave it to the Minister to say how many he would like to have upon this panel. The Minister could have three or four times as many names on the panel as there were members of the Council and if somebody who obviously had the confidence of the public had not been nominated, I think it could be arranged that there should be a loophole left by which the Minister should be able to appoint such an individual of outstanding capacity. Do let us carry on in what was, I think, yesterday's atmosphere of something very near agreement, and really try to make this thing work, in the very spirit which the Lord Chancellor mentioned yesterday, that everybody must have confidence in this tribunal, and that it should work as a team. If it is to be done in the way 939 which the Minister of Civil Aviation said, no one is going to have confidence in this tribunal and it is not going to work as a team.

§ THE LORD CHANCELLOR
I do not think that there is very much between the noble Viscount and myself. I shall recommend my right honourable friend the Minister of Fuel and Power to give that suggestion very favourable consideration. I agree with the noble Viscount that what is wanted is public confidence. I think that is very important. I am not at all disposed to disagree with the idea that a panel is a good suggestion, provided it is a sufficiently large panel to give the Minister a sufficiently large measure of selection, with the safeguard with which the noble Viscount agrees, to meet cases—I do not think they will often arise—in which somebody who has not been suggested should obviously be put on it. I suggest that this Amendment should be withdrawn, because the word "nominated" is unsatisfactory, and that he should allow me a little latitude to discuss the matter and devise some method of meeting this point.

§ LORD BALFOUR OF INCHRYE
I rise at once to thank the noble and learned Lord, the Lord Chancellor, for his promise to give consideration to this particular point, with a view to seeing whether the panel idea can be incorporated in the Bill between now and the next stage. On that basis, I do not wish to prolong the proceedings any further, and I beg leave to withdraw my Amendment.

§ VISCOUNT MAUGHAM
May I suggest that when the Amendment is being redrafted there may be some difficulty, because I can see that a number of things may have to be put in. I think that it would be rather desirable—subject to what is said on behalf of the Government—that the number of the people who are to constitute each Council should be fixed and not left absolutely in the air. Eight has been suggested as a very good number, and perhaps that might be inserted. If so, the panel could be defined as being a panel consisting of not less than either two or three times eight.

§ Amendment, by leave, withdrawn.

§ 3.8 p.m.

§ LORD BALFOUR OF INCHRYE moved, at the end of subsection (4), to insert: 940 () For the purpose of enabling the said councils to consider any matter which it is their duty under this section to consider the Board shall furnish the said Councils with such accounts and other information as the said Councils may reasonably require and shall be entitled to make representations to the said Councils with respect to the matter in such manner as may be prescribed and for the purpose aforesaid the said Councils may require the attendance of any member or officer of the Board. The noble Lord said: This Amendment proposes the addition of a new subsection. The clause as at present drafted charges the Councils with various duties, but, on the other hand, it gives no assurance of the Councils having available to them the facilities which I think your Lordships would agree are essential if those Councils are to perform their very important duties. The fact that there are members of the Board on the Councils does not, I suggest to your Lordships, meet my point, because presumably when those members of the Board are sitting in that fraternal spirit which we hope will exist on the Council, they cannot at the same time function as members of the Board. They would certainly not be authorized by the Board to give information to the Council unless the Board as such had given specific authority. This subsection proposes that the Council shall be allowed broadly to have knowledge of accounts, to ask for information, and to call before it, should the Council consider necessary, members and officers of the Board. I feel that if, on the one hand, you charge these Councils with heavy responsibilities, you must equally give them adequate power to discharge those responsibilities. That is the substance of the Amendment. There is no need for me to say any more, except to express the hope that the Government will see their way to accept it.

§ Amendment moved— Page 5, line 15, at end, insert the said new subsection.—(Lord Balfour of Inchrye.)

§ THE LORD CHANCELLOR
I really believe that this again is the wrong point of view. If there are two parties dealing at arms' length with each other, then of course there must be the right to summon witnesses, to call for documents and all the rest of it. I am anxious to avoid that sort of approach. It seems to me to be getting into the plaintiff and defendant attitude. That is why I want to have members of the Board on this Council, and I have no doubt it will follow that all the documents which are in possession 941 of the Board will be available to the Council. I ask the noble Lord to agree with me that really this is not the right way of approach, that it is much better to adopt the co-operative method by having the Board and the Council virtually one. That is not because I do not think the Council ought to have those documents, but because I think we are likely to get better results if we have the two parties brought together in the way I have suggested, rather than at arms' length, equipped with legal powers of discovery and the like. I am sure that by the method I have suggested better results can be achieved.

§ LORD BALFOUR OF INCHRYE
I am much obliged to the noble and learned Lord, the Lord Chancellor for his reply, and if he can satisfy me on one point I shall be very willing to withdraw my Amendment. The point is this: If the Council found themselves unfortunately in conflict with the Board and unable to obtain some information, I presume that there is nothing to prevent the Council making that fact known in their report, and so bringing the light of publicity upon such difference.

§ THE LORD CHANCELLOR
It would be their plain duty to do it, because they could not do their duty without the document and they could complain about it in their report.

§ LORD BALFOUR OF INCHRYE
With that assurance from the noble and learned Lord, the Lord Chancellor, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 3.11 p.m.

§ LORD LLEWELLIN moved, at end of subsection (7), to insert: () Whenever it appears to the said consumers' Councils or either of them that it is in the public interest that there should be local committees in any area to which any matter which it is the duty of the said councils under this section to consider may be submitted in the first instance they shall make representations to the Minister to that effect and the Minister shall establish such committees which shall consist of such number of persons as the Minister may think fit appointed by him in accordance with the provisions of subsection (2) of this section. The noble Lord said: I beg to move the Amendment that stands in my name. In this clause as it stands there is no power, it seems to me, to set tip local committees 942 either of the Industrial Coal Consumers' Councils or the Domestic Coal Consumers' Councils. My draft is only an enabling section; that is to say, on the representation of one of the Councils themselves that they would like a local committee, my draft gives the Minister the power to set up such a local committee on the same lines as the Council itself is set up. I do not think the power to set up local committees is inherent in the Bill as it stands. I can well understand Scotland thinking it would rather like a local committee. It has always been put forward that more coal is needed in Scotland than in the south of England, although I am credibly informed that they are having a far pleasanter June than we are having in the south of England. But I can well see there might be a demand for a local Domestic Consumers' Council in Scotland. There might well equally be a demand, say, in the Potteries, for a local committee to deal with the kind of coal used in the Potteries and in industries in such places as the Potteries. It does not go to the root of the Bill but merely enables the Minister to do this. Therefore I hope the Government will be able to accept this. I beg to move.

§ Amendment moved— Page 5, line 40, at end insert the said new subsection.—(Lord Llewellin.)

§ THE LORD CHANCELLOR
I do not think we can accept this Amendment. I am not sure, if I may say so with respect, that the noble Lord himself described the effect of the Amendment quite accurately. The Amendment is as follows: Whenever it appears to the said Consumers' Councils or either of them that it is in the public interest… I pause there for a moment. I think the more appropriate person to consider the public interest is the Minister, because to consider the public interest you have got to take a wide view of the whole thing, and a Consumers' Council could not take that wide view. Consider, for instance, the internal and external use of coal. The Consumers' Council of course would be pressing for imports. The question is rather above that. We have got to look at the whole picture and, therefore, the broad proposition is better left to the Minister. The Consumers' Council has necessarily a limited point of view. The Amendment continues. …there should be local committees…they shall make representations to the Minister 943 to that effect and the Minister shall establish… That means to say there is no option for the Minister; he has got to do what these people, from a rather narrow point of view, decide. Let us consider. The Domestic Consumers' Council alone could, under the Amendment as drafted, require both a Domestic and an Industrial Consumers' Council to be appointed by the Minister for every town or local authority in the country. That is not what it means at all; it would not be sensible.
I anticipate, apart from Scotland, that from Northumberland to Cornwall you may have all sorts of controversies arising. How would you be able to cope with them? First of all, the Board can obviously use their own servants, and they can send their own servants and inquire anywhere. They can send them to Northumberland or to Durham, and can pay out of their own monies anything necessary if they want to get the assistance of local people—if they want to co-opt, for instance, three or four people in Bodmin. The Minister can also appoint anybody he likes. The only thing the Minister cannot do is to pay. The Council itself may break up and go and sit sometimes here and sometimes there, and they can, as I say, sometimes co-opt other people. We have the greatest possible latitude in the present machine, and I should be very sorry to adopt an Amendment which gave these Councils a right, by passing a resolution, to require the Minister to act and set up such a vast multitude of Councils as to make the whole thing ineffective. I think you have to guard against having too many, and you must also have a Council so elastically constituted that it can do its work. With that explanation—the fact that the Board can appoint anybody else they like, and the Minister can appoint, although it is true he cannot pay—I cannot accept this Amendment.

§ VISCOUNT SWINTON
I see the difficulty in this Amendment at it stands, and no doubt it goes too far, if it really is to have the effect that the Consumers' Council can say: "We would like TO have a sub-council everywhere." On the other hand, as the noble and learned Lord, the Lord Chancellor, himself said, we want this thing to work in a friendly 944 way and we want it to work quickly. We do not want to have the atmosphere of the law courts. The great thing is to have matters dealt with quickly. It may well 'be that you can deal with some of these things by the Council splitting up and sitting in panels. On the other hand, it depends how this business is going to be worked. I have seen the report of this only in the newspapers—I do not think there has been an official announcement—but I believe I am right in saying that the Chairman of the Coal Board, who has been touring the country, has said that the way this Board will function will be by setting up a number of regional sub-Boards. It seems to me an eminently practical thing to do. Obviously those regional sub-Boards are going to have very wide administrative discretion. The great questions of policy no doubt will be decided by the Board in London, but it is not the great questions of policy which are going to affect the consumer and give rise to these local complaints; it is the administration. The administration is going to take place in the localities, and the people who are going to be responsible for it will be the regional boards in the different areas. Therefore I think it is only good sense that, if you accept that there should be a Central Council to deal with the Central Board, and if the Board itself finds the right way of conducting this business is to set up eight or nine regional Boards, then you should have regional Consumers' Councils set up to deal with them. My noble friend would probably not desire to press the Amendment at this stage, but I wish the noble Lord would look into this matter with the Ministry, and if he finds (and I think he agrees) that the system is going to be by regional Boards, he can then consider whether it would not be wise to put something into the Bill itself providing that regional Councils could be set up. Although I am not in favour of creating offices and paying them, if it is to be an effective regional Council I think it ought to be paid its expenses if nothing more.
Probably the Bill would require a small amendment for that. Just in the same way, I think you must have these local boards. We agreed yesterday and again to-day that it is right to have representatives of the Board sitting on the Consumers' Councils, so when we come down into the regions I am sure the right 945 thing to do is to have local councils and to have the local members of the Regional Boards sitting upon them. If the noble and learned Lord, the Lord Chancellor, would go into that with the Department, perhaps we might consider whether we could not do something effective on the Report Stage.

§ VISCOUNT MAUGHAM
May I make a suggestion? This is really almost a question of law—of drafting. What occurs to me is that the object of my noble friend who moved the Amendment will probably be carried out in practice by the clause being so worded as to provide that the Minister, at the suggestion of either of the Consumers' Councils, may appoint the sub-councils which he has at heart, which he says will be necessary and which, for my part, I confess I think will be necessary. The word "may" in such a connexion means that in a proper case the Minister has to do it; although it is not legally compulsory, in effect he will comply with the suggestion contained in the section of the Act.
I think there is some weight in the point which has just been made by my noble friend, Viscount Swinton. The work of the sub-councils, or whatever you call them, will entail correspondence, secretarial work, the purchase of paper and perhaps the expenses of a meeting place. If you give a permissive power to the Minister to appoint these bodies, then you must have a clause which provides for the payment of their expenses. Sub-section 6 of clause 4 provides that the councils shall be furnished by the Minister with such clerks and other staff as appear to him to be requisite for the proper discharge of their functions and that he shall pay—perhaps you might extend that to the sub-council—such expenses incurred by the sub-council as he may so determine. I venture to think that on the whole that would carry out the valuable intentions of my noble friend who has moved the Amendment and would also comply with the views of the noble and learned Lord, the Lord Chancellor.

§ THE LORD CHANCELLOR
I am grateful to the noble Viscount for his observations. I will gladly look into this point. I agree it is quite inevitable that the Board will divide itself into regions and I can quite see that the Board may think that for its efficient functioning in 946 any region it ought to have a Consumers' Council There is nothing whatever to prevent the Board from setting up and paying the necessary expenses of such a Consumers' Council. The Board may do that out of its own money—

§ VISCOUNT MAUGHAM
Is my noble friend confident of that? I have some doubt about it, and I have considered the point I only say it is doubtful; I do not say it is wrong.

§ THE LORD CHANCELLOR
I do not say I am confident. I have, however, asked the representatives of the Ministry of Fuel and Power and the Parliamentary draftsmen and I think I am representing what they have told me. I did not investigate it. They told me that the Minister, although he has the power to set up Boards, cannot pay them, but the Board can.

§ VISCOUNT SWINTON
I do not think they ought to be paid by the Board.

§ THE LORD CHANCELLOR
I will gladly look into the matter again and see if there is anything I can do.

§ LORD LLEWELLIN
I am very much obliged to the Lord Chancellor. Before I withdraw this Amendment, as I am going to do, may I mike two comments? First of all as to the words "public interest," on which the Lord Chancellor commented. The point was that if the Consumers' Councils thought they could not perform the whole of the functions themselves and if they thought the public interest required other Councils to tie set up, then they should be set up. It is quite true that the word "may" would avoid difficulties which would arise if the word "must" were used and I would readily accept that, but I should have thought, especially if the Board is going to have regional Boards, that it may want Consumers' Councils in the regions, and in that case it would be better for the Minister to set them up rather than for the Board to set them up. It is in that spirit that I hope the Lord Chancellor will look into this matter. If the Government do not want it. I am not pressing it very much, but I should have thought that if you were going to have a main Consumers' Council and other councils it was much better that they should both be set up by the same authority, who should be the Minister, and that it was 947 right to take power in the Bill to give the Minister the power to set up the local committees, or whatever you like to call them. I am not suggesting that there should be one in every area, although I would say in passing that that is not so absurd a suggestion as perhaps the Lord Chancellor indicated. In the quite successful days of the Ministry of Food we had a local food control committee in every area. I think there were 243 of them, but at any rate there was a tremendous number of them. They were extremely helpful to the Minister of Food in those days, and I expect they are still to-day. As I say, I think it would be a good amendment to make to this Bill and I am obliged to the Lord Chancellor for saying that the Government will reconsider the matter. On that assurance I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 3.26 p.m.

§ LORD LLEWELLIN moved, at end of subsection (7), to insert () Each of the said Councils shall make an annual report to the Minister of their proceedings, and the Minister shall lay the reports before each House of Parliament together with statements of any action which has been taken and of any directions which have been given by him in consequence of any recommendations submitted to him by any of the said Councils during the period to which each such report relates and together also with statements setting out any recommendations so submitted to him upon which no action has been taken or directions given. The noble Lord said: the Amendment which I now move is that each of the Consumers' Councils shall make an annual report to the Minister of their proceedings. It is quite true that they have the duty of reporting from time to time to the Minister, but they have not the duty of making a kind of consolidated annual report. It is an ad hoc report, as I gather. The Amendment further provides that the Minister shall lay the reports before each House of Parliament, and suggests certain things which should be included in those reports. However, if it would be more acceptable without the final words, I am quite prepared to move it in that form. After all, these are Consumers' Councils, and I think their reports should be available to the members of the House of Commons and that they should be annual reports. Apart from that, if there is a regular procedure by 948 which annual reports are presented to Parliament, you will not get the independent people who are on these bodies making little reports on their own from time to time. I should have thought it was right for them to lay some annual report of their proceedings before Parliament and in that spirit I beg to move. Amendment moved—page 5, line 40, at end insert the said new sub-section.—(Lord Llewellin.)

§ THE LORD CHANCELLOR
I am largely in agreement with the noble Lord because he and I both believe in the value of publicity. If he would be content to have the earlier part of his Amendment without the later part I should be quite prepared to accept it. May I read what I would be prepared to accept: Each of the said Councils shall make an annual report to the Minister"— I should leave out "of their proceedings"— and the Minister shall lay the reports before each House of Parliament. I think that is all that is wanted. I think that is the substance of it. If the noble Lord would move it in that form I should be perfectly prepared to accept it.

§ LORD LLEWELLIN
I am very much obliged to the noble and learned Lord, the Lord Chancellor, and if I may by leave of the House move my Amendment in that form, I shall proceed to do so. I beg leave to withdraw my original Amendment.

§ Amendment, by leave, withdrawn.

§ Amendment moved—

§ Page 5, line 40, at end, insert— Each of the said Councils shall make an annual report to the Minister, and the Minister shall lay the reports before each House of Parliament."—(Lord Llewellin.)

§ On Question, Amendment agreed to.

§ Clause 4, as amended, agreed to.

§ Clause 5:

§ Transfer to the Board of assets generally.

§ (8) Notwithstanding anything in subsection (1) of this section, the Minister may by order exclude from the operation of that subsection an asset described in Part I of the First Schedule to this Act, if an application in that behalf is made to him by the Board not later than the expiration of one year from the primary vesting date and the owner of the asset in question consents.

§ Where an order under this subsection is made after the primary vesting date, the asset 949 in question, and any easements, property and rights which would otherwise have been vested in the Board therewith, shall be deemed never to have vested in the Board.

§ 3.31 p.m.

§ LORD O'HAGAN moved, at the end of subsection (8), to insert but without prejudice to any claim which the owner of the asset in question or any person affected by the vesting of any such easements property and rights may have in respect of any loss sustained by him directly attributable to the vesting thereof. The noble Lord said: I would ask permission to deal with both the Amendments which stand in my name, because they both deal with precisely the same point, only in different words, on which I hope to get an assurance from His Majesty's Government.

§ Perhaps I should explain that subsection (8) was moved in the first place as an Amendment by the Minister. It was in the course of the discussion upon it that the point was raised whether an owner should be entitled to compensation in a case where an asset had been actually transferred and used by the Board before the coming into operation of an order under this clause which excluded the transfer of that asset to the Board. In that event, there may be assets which under these subsections may be re-transferred, and which might be out of the use of the owners for some period, possibly up to a year, to the detriment of the owner. What I am asking is whether the Government can give me an assurance that in appropriate cases;—and of course only in appropriate cases—the Board would pay compensation where the Board has had the user of such an asset which is subsequently returned to the owner?

§ The Minister, when this was brought up in another place, said he would look into it and see if the point was one of substance, or one where he could fall in with the suggestions made. I hope the Government can give me, and through me those whom I represent here to-day, an assurance on this point. Both these Amendments, as I have said, deal with precisely the same point in different forms, and I am not particularly attached to one form or another.

§ Amendment moved— Page 8, line 17, at end insert the said words. (Lord O'Hagan.)

950

§ VISCOUNT MAUGHAM
I should like to support this Amendment, with an omission. I am not at all sure that I completely understand the whole of the machinery with regard to the vesting of assets of this kind in the Board. I hope it is all right, but a good many of the things seem to me a little difficult to follow. Under Clause 5 (5) there is a provision that: where an asset vests in the Board by virtue of the exercise of such an option as aforesaid, the owner shall be deemed…to have held it as an agent of the Board, and shall accordingly be liable to account to tie Board for all rents, profits"— and here come the words, which I am not satisfied will cover the case— and be entitled to be indemnified against all expenses, liabilities and other outgoings for that period incident thereto or to the use thereof". It seems to me that if subsection (8) comes into play, and the Minister excludes from the operation of the subsection "an asset described in Part I of the First Schedule to this Act" or if an application is made to him by the Board not later than the expiration of one year from the primary vesting elate and the owner of the asset in question consents, then there may be a question whether losses incurred within the meaning of my noble friend Lord O'Hagan's Amendment will be covered by the phrase "expenses, liabilities and other outgoings," which might not include any special loss which the owner might have incurred during the vesting.
Nor am I quite satisfied at the moment—perhaps if I am wrong the noble and learned Lord, the Lord Chancellor, will put me right—that subsection (6) covers the whole of the matters which are intended to be dealt with in subsection (8), which only refers to assets described in Part I of the First Schedule to the Act. I venture to think that it is obviously intended that if assets vest in the Board and then are re-vested in the owner, he should be completely indemnified against any liability he has incurred in the mean-time. If the Lord Chancellor can satisfy me that that is done I shall be content, but at present I think my noble friend Lord O'Hagan is right.

§ THE LORD CHANCELLOR
I think I can give some shall measure of satisfaction to the noble Lord. This is rather 951 a complicated clause and, if I may say so with the greatest respect, I am not quite certain that the noble and learned Viscount who has just spoken has not made it more complicated by referring to subsection (5) and subsection (6) which deal with a wholly different matter. The problem is this. There are certain assets which vest automatically. There are certain assets which vest only by reason of option. Either side has an option. Your Lordships will see that subsection (3) deals with the sort of point which the arbitrator has to decide. That is not the question we are now concerned with. Subsection (8) is put in for a specific object. I have no illustration to give, but this is the sort of thing we have in mind. We are using with regard to those words which automatically vest, very wide terms, and we may find some asset not caught by those words which is going automatically to vest, whereas both sides, the owner and the Board, would say, We never really intended this. "I have not such a case in mind, but one might arise, and so we thought it wise to have this escape clause, if I may so call it. It provides that the Minister may exclude an asset". if an application in that behalf is made to him by the Board not later than the expiration of one year from the primary vesting date, and the owner of the asset in question consents". Therefore the whole basis is agreement between the Board and the owner. Having agreed that this asset, although caught by the words and therefore coming within the primary vesting, is an asset which really ought not to vest, they agree. Nothing is clearer than this, that if people agree they may agree as to any particular terms. If the owner, for instance, thinks, "Well, you have had this asset for a year, and you have messed about with it, you ought not to hand it back to me", then he will not agree. If, on the other hand, he does agree, then he can agree on terms, and make whatever terms he likes. This clause was really put in for the protection of the owner, in order to enable him to make an agreement or not to make an agreement, as he likes. If something is caught by the general words of transfer which both sides think ought not to be caught, then they make their agreement. It is all conditional upon making an agreement. They may go to 952 the Minister on or after the primary vesting date and the Minister can assent to that agreement. 'The agreement, like all agreements, is a matter for them to decide. Therefore, I think that this Amendment which the noble Lord has moved is not very necessary.

§ VISCOUNT MAUGHAM
I admit certain obscurities in what I have had the honour of addressing to the Committee, because it is almost impossible, unless noble Lords have a document before them and can be taken through a number of clauses, to follow an attempt to make a statement of a legal kind on this subject. I admit that what I said was open to criticism on the ground of obscurity. So, I venture to think, is the statement which has just been made by the noble and learned Lord, the Lord Chancellor. The objection which Lord O'Hagan is really taking here is in respect of this clause which it is said was put in for the benefit of the owner. If it is put in for the benefit of the owner, and in answer the argument is urged that it is ineffective and does not completely protect him, then the retort to that is, "Take it out altogether". But the owner of that asset may consent to the property not vesting, as if the property never had vested in the Board at all, and yet he may desire to have repaid to him some losses which he has incurred during the year, and I cannot think it is right to insert a clause which says that if the order is made—which, I agree, involves general assent—he is not to get anything back because the property is deemed never to have vested in the Board. It does seem to me that to make it a really proper clause you ought to say that it shall be deemed never to have been vested in the Board, but the owner shall be entitled to be repaid or indemnified in respect of liabilities and other outgoings, which he may have incurred during the year. That is my contention, and I hope that the noble and learned Lord, the Lord Chancellor, will consider it before a further stage of the Bill is reached.

§ THE LORD CHANCELLOR
I cannot hold out any hope of that being done. I am prepared to take subsection (8) out—I do not mind that a bit. It is simply put in for the benefit of the owner. If you are going to impose all sorts of onerous conditions on the Board, obviously the Board will never agree. I suggest that 953 however much against the interests of the owner it may be, it is for him to agree or not as he likes.

LORD O'HAGAN
In view of the statement of the noble and learned Lord, the Lord Chancellor—though I am bound to say that I was rather shaken by what the noble and learned Viscount, Lord Maugham, said—I am under the general impression that the case I have put forward has achieved the assurance from the Government for which we were seeking, and under these circumstances I beg leave to withdraw the Amendment.

§ Amendment by leave, withdrawn.

§ Clause 5 agreed to.

§ Clause 6:

§ Transfer of interests in patents and designs.

§ (1) The following assets, namely, proprietary interests of colliery concerns and of class A and class B subsidiaries thereof in patents for inventions intended for use or capable of being used for or in connection with colliery production activities, and in copyrights in registered designs intended for applicaton or capable of being applied to articles adapted for use for or in connection with such activities, shall be subject to the following vision, that is to say, the Board and the owner thereof shall each have the option to require that any such assets shall vest in the Board, exercisable by notice in writing given to the other, and unless the party to whom the notice is given (whether the owner or the Board) gives to the other a counter-notice in writing objecting, as respects all or any of the assets to which the original notice relates, to the vesting thereof in the Board, the assets shall vest in the Board on the first day of the month next after that in which the notice is given:

§ Provided that if the notice is given before the primary vesting date, the vesting shall be on that date.

§ (7) Subsections (4) to (7) of section five of this Act shall, with the requisite modifications, apply for the purposes of this section as they apply for the purposes of that section.

§ (8) The Minister may by regulations make such provision supplementary to or consequential on the provisions of this section as appears to him to be necessary or expedient, and in particular, but without prejudice to the generality of this subsection, provision may be made by regulations made thereunder for adapting the terms of licences to changes consequent on the passing of this Act in the circumstances in which they will fall to be exercised after the date of a transfer of interests subsisting by virtue thereof.

§ (9) In this section the expression "proprietary interest," in relation to a patent-means the interest of a person whose name is for the time being entered in the register of patents as the grantee or proprietor of the 954 patent or as one of two or more grantees or proprietors thereof, and, in relation to a registered design, means the interest of a person whose name is for the time being entered in the register of designs as the proprietor of the design or as one of two or more proprietors thereof; and references in this section to colliery production activities and to subsidiaries of colliery concerns shall be construed in acordance with the relevant definitions contained in the First Schedule to this Act.

§ THE LORD CHANCELLOR
This is a mere drafting amendment.

§ Amendment moved— Page 8, line 21, after ("activities") insert ("as defined in Part I of the First Schedule to this Act".).—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
This is drafting also.

§ Amendment moved— Page 9, line 14, after ("the") insert ("last").—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR moved to leave out subsection (7) and the first part of subsection (8) up to and including the word "thereunder," and to insert: (7) Subsections (4) to (6) of section five of this Act shall apply, with requisite modifications, for the purposes of this section as they apply for the purposes of the said section five and of the First Schedule to this Act, and subsection (7) of that section shall so apply subject to the further modification that the power thereby conferred shall extend so as to authorise the making of provision". The noble and learned Lord said: This is another drafting Amendment. These Amendments are necessary in consequence of some alteration which was made in the Report stage in another place.

§ Amendment moved— Page 9, leave out linos 34 to 41, and insert the said new subsection.—(The Lord Chancellor.)

§ VISCOUNT MAUGHAM
Before this passes, is it impossible for the Lord Chancellor to consider making it intelligible to the ordinary reader? You have got to go back to subsections (4) and (6) of Section 5, and then you have to apply the requisite modifications for the purpose of this section as they apply for the purpose of Section 5 and of the First Schedule of this Bill. If the clarification which I suggest is made, it will involve writing out a few more lines, but the alteration would be quite easy to make so that the ordinary human being could understand it. I do 955 not believe that there is a single person in the House, except possibly the noble and learned Lord, the Lord Chancellor, who understands what this clause is intended to do.

§ THE LORD CHANCELLOR
I could not find the appropriate piece of paper before. May I now say what I ought to have said in moving this. On recommittal in another place, the point was made that subsections (7) and (8) of Clause 6 overlapped, in that the first three lines of subsection (8) were already covered by the application by subsection (7) of Clause 6 of subsection (7) of Clause 5. That is as clear as daylight, and I am told that the Amendment I have proposed meets that point.

§ VISCOUNT MAUGHAM
But I am on a point of drafting. I know that it is the Lord Chancellor's view, because he has already expressed it, that an Act of Parliament should say what it means. I do not think that this does.

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
This also is a drafting Amendment.

§ Amendment moved— Page 10, line J, after ("entered") insert ("or required to be entered").—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
This, too, is drafting.

§ Amendment moved— Page 10, line 5, after ("entered") insert ("or required to be entered").—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
The next is also a drafting Amendment.

§ Amendment moved— Page 10, line 6, leave out from ("thereof") to the end of the subsection.—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ 3.50 p.m.

§ THE LORD CHANCELLOR moved, at the end of subsection (9), to insert: () Part V of the First Schedule to this Act shall apply (so far as relevant) for the purposes of this section as it applies for the purposes of that Schedule with the substitution, for references to an option notice date, of references to the date on which a notice exercising an option under subsection (1) of this section is given. 956 The noble and learned Lord said: This Amendment inserts a new subsection applying Part V of the First Schedule generally. This includes the definitions in paragraph 23 of the First Schedule, and also the important "freezing" provisions designed to prevent the frustration of the purposes of the Bill by disposal of assets between the date of the publication of the Bill and the primary vesting date. The definition of colliery production activities does not appear in Part V but in paragraph (2) of Part I of the First Schedule. I beg to move.

§ Amendment moved— Page 10, line 9, at end insert the said new subsection.—(The Lord Chancellor.)

§ On question, Amendment agreed to.

§ Clause 6, as amended, agreed to.

§ Clause 7:

§ Transfer of rights and liabilities under contracts.

§ —(1) Subject to the provisions of this section, contracts such as are mentioned in the Second Schedule to this Act shall have effect in favour of and against the Board as therein mentioned and to the extent therein mentioned.

§ (2) If in the case of any of the provisions of such a contract as is mentioned in the Second Schedule to this Act, being provisions so entered into as to render that Schedule applicable to them subject to the limitations contained in this Section, the Board are of opinion that that Schedule ought not to apply thereto, either at all or to any particular extent, on the ground that they were not reasonably necessary for the purposes mentioned in paragraph I of that Schedule, or that they were entered into with unreasonable want of prudence, the Board may, at any time within twelve months from the date as from which the Board would become subject to liabilities thereunder apart from this provision, give notice to the effect that they are of that opinion to each of the parties to the contract, and if the. Board give such a notice, the Second Schedule to this Act shall not apply to the provisions to which the notice relates, either at all or to the extent specified in the notice, as the case may be (except as regards performance thereof due under the contract before the date of service of the notice):

§ Provided that any of the parties to the contract may, within the prescribed period from the date on which the notice is served and subject as mentioned in the next succeeding subsection, refer the matter to arbitration under this Act, and, if the matter is so referred, the arbitrator shall consider whether or not the provisions in question were reasonably necessary as aforesaid, or were entered into as aforesaid, and shall determine whether, and to what extent, the Second Schedule to this Act is to apply to them.

§ (3) In the case of a provision for the rendering of personal services or for the giving of 957 consideration therefor, being a provision which was entered into on or after the first day of August, nineteen hundred and forty-five, or which has been varied after that date, a reference to arbitration as aforesaid shall not be made unless the Minister consents.

§ 3.51 p.m.

§ LORD DE L'ISLE AND DUDLEY moved, in subsection (2), after the first "into", to insert "on or after the first day of August nineteen hundred and forty-five" The noble Lord said: The object of this amendment which stands in my name is to insert the words "on or alter the first day of August nineteen hundred and forty five" in relation to the contracts mentioned in the Second Schedule. That is obviously of great importance, where it is proposed to set aside a contract that has been legally entered into. I speak with some timidity on a legal matter, after hearing two such learned noble Lords, but this is a matter of principle and not one solely concerned with mining interests. I must, like the noble and learned Viscount, declare my ignorance of the technicalities of that trade, but it is important that we in Parliament should safeguard contracts and set them aside only after very mature consideration.

§ The Schedule as it now stands proposes to submit to arbitration any contracts which may appear to the Board to be unreasonable or showing unreasonable want of prudence. It is a very difficult thing, in my humble submission, to determine after the event—perhaps some time after the event—what was at the time reasonable or prudent. It depends on the point of view from which you look at the contract. Let us take two colliery concerns, A and B. One makes a contract for the forward sale of its coal. The price goes up and in consequence the concern either loses, or does not make as much money as it might have done. In the light of after events, that may appear unreasonable or imprudent. As I understand it, it is proposed that this sort of contract should be set aside and submitted to arbitration. Now let us look at colliery B. This buys its timber forward. It makes a very good bargain—prudent from the colliery point of view, but most imprudent from that of the timber supplier. The Board will get the advantage of the prudence of that company, whilst avoiding the imprudence of the other. Surely the way in which the prudence or imprudence 958 of colliery management should be rewarded or punished ought to be by the price at which the colliery concerned is sold to the Board, and not by setting aside a contract and thus possibly penalizing other parties. That is my submission. That is why these words are put down as an Amendment to be inserted.

§ It is quite clear that contracts entered into after August 1, 1945, fall into a different category and may properly be said to be subject to arbitration. Contracts before that date should, in my submission, be taken over by the Board in the same way as they were taken over under the London Passenger Transport Act, 1933, which might be a precedent for this. I beg to move.

§ Amendment moved— Page 10, line 22, after ("into") insert ("on or after the first day of August nineteen hundred and forty-five."—(Lord de L'Isle and Dudley.)

§ VISCOUNT SWINTON
I would like to add one word in support of this Amendment. I do feel it is common justice. As regards contracts entered into after August 1, 1945, then everybody had notice that the collieries were to be nationalized, and that is quite a different matter. It may well be that it could be alleged that some people were not as careful as they should have been, and might have entered into a contract to pay a large sum of money for a long period of time; therefore it was quite the right thing to make the dividing line at that date. It is an intolerable proposition apart from that. Any of us who have bought and sold businesses know that when we take over a business we take over all the assets and liabilities attaching to it. If it is an onerous contract, it is reflected in the price. But it would be most unfair to give the buyer the option of availing himself of all valuable contracts, and of all valuable speculations, but of disclaiming all those which have not turned out well. It is extraordinarily easy for any of us to be wise after the event. If we take the history of the last war, in which I am bound to say the Government on the whole did extraordinarily well, it will be seen that we made some ventures which were certainly not at all successful. But if we had not made those ventures, we should not have made ventures which were successful. That often happens. In fact, the man who came in for the most severe 959 condemnation was the man who kept his talents inactive and kept all his assets liquid and never tried to do anything with them. Yet now he is to be rewarded, while the man who was industrious and enterprising may be regarded as having failed.
In mining for example, everybody knows that the way development is carried out is by speculation. I do not mean speculation on the Stock Exchange—that occurs after the mine is floated off. But speculation is the way great ventures are built up. The individual, or firm, or company, goes in for three or four ventures. Two of them may turn out complete failures and all the money put into them is lost; another works out moderately well, while yet another turns out a great success. Yet the great success would never have been attained if all four of the enterprises had not been undertaken. You could not tell at the start which would be a success and which would be a failure. In cases like this, the buyer comes along and claims full advantage of the successful venture, but says, "I am not going to take responsibility for the others in which there are liabilities still running." Surely that cannot be fair and right.
May I make this suggestion to the noble and learned Lord, the Lord Chancellor? I am sure he will accept that generally as a sound proposition, but he may say "Even in the past there might have been a case where there was not a real, bona fide contract." I draw a clear distinction between a bona fide contract which has been entered into, but which has turned out commercially a failure, and others. Obviously, you must take the rough with the smooth, but if you find there has been a contract which is not a bona fide contract but one in which a company has arranged to pay something to some subsidiary in which it had a particular interest, or to pay some particular official an unreasonable sum for a term of years—it may be with the object of making taxation easier—then, although that is not an illegal contract it is not, as between buyer and seller, a bona fide contract. Then let us devise some means by which that can be made an exception, if you will, but do not let us put on the face of this Bill the very vicious principle that when you are buying you take over what is good and discard what is bad. I am sure that the noble and learned Lord, 960 the Lord Chancellor, will agree that that is reasonable, and that the Bill may be amended to meet that point.

LORD MESTON
I support the Amendment of my noble friend. I would like to point out that in all Acts of Parliament dealing with the acquisition of land, the material time is always the notice to treat. If the owner of the property does anything after the notice to treat has been served, he does so at his own peril. In this case, it appears to me most unjust to insert anything to do with prudence or imprudence. The main thing is the material date. The noble Lord who has moved this Amendment is not able to use the words "notice to treat," for the simple reason that notice to treat does not come into this matter at all, but he has done the equivalent thing: that is to say, he has taken an arbitrary date, after which anything which the owner does shall be at his own risk. I am in favour of the Amendment.

§ VISCOUNT MAUGHAM
I must support this Amendment on the grounds that have already been stated', and also on the general ground that it cannot be right, in handing over property on nationalization, to arrange that there should be, in the events mentioned in this subsection, a unilateral power to put an end to a contract. It is a fact that a contract involves not less than two parties, which seems to me to be a very strong argument against such a provision as that contained in Clause 7, and the Amendment is absolutely necessary in the interests of justice. Of course, it is plain that there may be contracts running over a period of years in which the other party to the contract—not the colliery company—would be only too anxious to get rid of the contract, but he cannot. It is the Board who have the right, under the terms mentioned here (it is true, subject to appeal) to complain on the grounds mentioned, and to give notice to the effect that they are of that opinion, and then the contract ceases to be applicable.
I have the very strongest feeling that this would be a fatal precedent to set in the case of nationalization Bills, and that the limit should be the limit suggested in Lord de L'Isle's Amendment, namely, the date of 1st August, 1945, that being the date which the Government have themselves selected in subsection (3) of 961 the clause in the case of contracts containing a provision for the rendering of personal service. It is true that after that date there may have been contracts entered into which the Board might clearly object to as being contracts entered into with a knowledge that there was going to be a nationalization Bill, but with regard to anything else, I cannot think that, assuming the contract is an honest one, the Board has any reason to object to being bound by it.

§ VISCOUNT BRIDGEMAN
I should like to say one more word, if I may, in support of this Amendment. So far as I know, this is the first time that this principle has been introduced into a Bill of this sort. This may not be the last Bill on nationalization, and therefore I think the House ought to consider what the effect would be if this clause were accepted without amendment, not merely on the coal mining industry but on other enterprises which may be the subject later on of nationalization Bills. I cannot help thinking that it will be the signal, I will not say for extreme caution, but something worse than that—in many cases the total abandonment of a justifiable enterprise because of the fear of unforeseen consequences.

§ LORD WINSTER
The Amendment moved by the noble Lord, Lord De L'Isle and Dudley, raises a point of some considerable substance which certainly requires discussion. The Amendment relates to the provision empowering the Board to repudiate the provisions of contracts which in their opinion were not reason-ably necessary, or were entered into with unreasonable want of prudence. The effect of the Amendment is to limit the power of repudiation to contracts entered into on or after the 1st August, 1945. I would like at once to call attention to this point: that the Board would look at the contract from the point of view of the time at which it was entered into, and not from the point of view of whether the contract had turned out well or badly. I also call attention to the word "unreasonable", in the phrase "with unreasonable want of prudence" That is a very strong word indeed, and the Board will act in the light of that word "unreasonable".—"unreasonable want of prudence".

962

§ VISCOUNT SWINTON
Would the noble Lord forgive my interrupting? He mentions that they will look at it from the point of view of time. Surely they will be looking at it now, when the event is known and the contract has turned out unfavourably, and they will be looking back at the time the contract was entered into, which may have been years before. In the light of their knowledge to-day they are going to determine whether or not the people were reasonably prudent five years ago.

§ LORD WINSTER
That is the case. The words are: "or that they were entered into with unreasonable want of prudence", and the Board will decide whether at the time the contract was entered into there was unreasonable want of prudence shown or not. They will not be deciding whether, in the light of after events, the contract has turned out well or badly. The reason for the repudiation provision may perhaps be better understood if it is explained that the Board will not be taking over colliery concerns en bloc, but will be taking over only specified assets. The Board therefore cannot step completely into the shoes of colliery concerns so far as their contracts are concerned, but they will take over responsibility for all contracts and provisions of contracts which specifically relate to those, assets which they are taking over. In its past history, a colliery may have had an interlocking interest with other concerns which the Board are not taking over. It may have entered into long-term contracts, for instance, for the supply of coal at reduced rates to concerns—contracts which were not really reasonably necessary for the colliery company itself, but were primarily for the benefit of the associated concern. To saddle the Board with such contracts would necessarily involve the perpetuation of a system of discrimination between consumers against which the Party opposite have shown themselves very anxious to guard. It is not considered to be either necessary or desirable that the Board should be obliged to take over contracts of an unreasonable or improvident character, made before the fact that the industry was to be transferred to public ownership was known.
The Government have in the Bill provided a safeguard against the powers to which the noble Lord's Amendment refers 963 being used in a high-handed manner by the Board in providing for the right of any of the parties to a contract to take the matter to arbitration if they disagree with the Board's proposal to repudiate the contract. The arbitrator will certainly have regard to that word "unreasonable", and also have regard to the conditions prevailing at the time the contract was entered into. If it is said that before August, 1945, a person entering into a contract with a colliery would have had no warning that nationalization was going to take place, it may be replied there are precedents for the Government intervening to terminate provisions of contracts which have become out of date owing to the course of events. For example, at the beginning of the late war an order was made under the Defence Regulations permitting colliery companies to increase the price of coal notwithstanding the provisions of contracts prevailing at that time. I feel that the provisions made afford real security in this matter. The Board can only act if at the time the contract was made it was entered into with unreasonable want of prudence, and provision is made that in the event of any of the parties to the contract being dissatisfied the matter can be taken to an arbitrator who will have to take notice of those words and sentences in the Bill to which I have called attention. For those reasons I regret to have to tell the noble Lord that I feel unable to accept his Amendment.

§ VISCOUNT MAUGHAM
May I just say something in order to see if we can agree to some extent, because I do think this is a very serious section for the House to agree to. Would it not be sufficient if it were provided that the contracts could be objected to on the ground that they were not entered into in good faith in the interests of the company concerned? I hear a voice say it would be very difficult to prove that they were not entered into in good faith. I would like to say quite plainly that it is still more difficult to prove whether a contract was reasonably necessary, we will say, ten years hence, for the purposes of the company. The company acts by a board. The directors are bound by law to act in good faith, and if they do not they become personally liable for misfeasance. The implicit suggestion is that these contracts were so badly contrived and entered into 964 that the directors who entered into them ought to have been held liable. That is a very serious matter to consider years after when the directors may no longer exist or may be no longer directors of the company.
I would suggest that the Government would get all the advantages if they are entitled to object to a contract on the ground that it was not entered into in good faith in the interests of the concern. That I would advise my noble friends to assent to, but the present clause, as has been pointed out, is something quite new in the history of legislation and ought not to be assented to.

§ LORD BALFOUR OF INCHRYE
I think we are entitled to ask the Minister of Civil Aviation to deal with the particular point the noble and learned Lord is dealing with and which he studiously avoided in his speech to the committee just now. That is the point of "not reasonably necessary". I think what we would like on this side of the House, and on all sides of the House, is some statement from the Minister as to how those looking at a situation five years after can really judge properly whether something was reasonably necessary or not.

§ THE LORD CHANCELLOR
If you cannot prove that, then you cannot prove your case at all. It is not for the man whose contract is being attacked to prove that it was reasonably necessary; it is for those attacking the contract to prove that it was not reasonably necessary. I agree with what the Minister of Civil Aviation says. The time to look at is the time when the contract was made. Anybody can be wise after the event. You have got to look at the time the contract was made, and say that then the provisions of the contract were not reasonably necessary, or the contract was entered into with unreasonable want of prudence. The onus is on the Board to establish that, and only if they establish that can they claim the right to repudiate it. I do not like the words "not bona fide". My experience in recent years has been that there are so many companies in which it is rather difficult to use the words "not bona fide". Family businesses are so arranged as not to attract the maximum amount of taxation. Those arrangements are now very common, and it is a little hard to dub them malafides, or something of that sort. I should prefer the phrase which we have 965 got here. If it can be established before an arbitrator that a contract was made, not with mere want of prudence but unreasonable want of prudence, then I think you ought to be able to say you repudiate the contract.

§ VISCOUNT SWINTON
I really do think this is an extraordinary good example of hard cases making bad laws. Because there may have been, and I dare say there will be, cases of contracts entered into which were designed so as not to attract the maximum of taxation, we are asked to do something which is really impracticable, unprecedented and unjust to the majority of companies. I know what is said to-day here is to tell the arbitrator not to think of these things in the terms of to-day but to think of the position ten years ago when the contract was made. I have sat as an arbitrator—not as often as the noble and learned Lord, the Lord Chancellor—and I know it is difficult enough to make up one's mind on the facts before one at the time. One gives the best award one can. But I defy any arbitrator sitting today who is asked to decide whether something was reasonably prudent ten years ago to come to a decision without having regard to how the matter has turned out. What else is he going to refer to? Putting myself in the position of the advocate, I should say to the arbitrator: "Here are some business men and they have done a very imprudent thing. The proof of the pudding is in the eating, is what is always said. No doubt they had the best intentions, but this is not a question of best intentions. Did they do a prudent thing? Let us see how it has turned out." We have been talking all the time of "unreasonable want of prudence."
Repudiation of contract is put on two grounds; one, unreasonable want of prudence, and the other that it was not reasonably necessary for the purposes mentioned in the Schedule. It is not "and that they were entered into with unreasonable want of prudence"; it is "or that they were entered into". What is reasonably necessary for the conduct of a business? Let us leave aside the difficulty of assessing today what was reasonably necessary ten years ago. Why should we have so narrow a definition of what is reasonably necessary in the conduct of a business? In the conduct of a business you do not only do, and are not 966 only entitled to do, things that are reasonably necessary; you do things that are reasonable. They may not be necessary to the business, but they may be perfectly desirable things to do. I do not know what is necessary in the conduct of a business. I understand what is the duty of the director or the manager of a business, and that is to conduct the business in the most successful way possible.
If I make a contract which is not necessary for the conduct of my business but which is a perfectly legitimate thing for me to do in the exercise of my discretion as a manager, is that something which is not reasonably necessary? It is not necessary at all and therefore "reasonably" does not come into it. But acting on these words as they stand any contract can be repudiated which was not necessary for the conduct of the business. That seems to me to be wholly unnecessary for this purpose and to have nothing whatever to do with the question with which I have some sympathy, of the avoidance of taxation. I really do not think we ought to accept the clause as it stands. I appreciate the difficulties which have been referred to by the Lord Chancellor. The noble and learned Viscount, Lord Maugham, has made what I am bound to say stems a very reasonable suggestion. It would possibly be inconvenient to withdraw this Amendment now and to tender a manuscript amendment, but, if I may join my advice to that of the noble Viscount, Lord Maugham, I would strongly counsel my noble friend, if he withdraws this Amendment now in deference to what the Lord Chancellor has said, to propose an Amendment on the Report stage to limit this provision to contracts which were not made in good faith and in the interests of the company.
I think the Lord Chancellor said he had some difficulty in accepting the words "in good faith" because in the case of a family business it might be difficult to say that some of these taxation arrangements were bona fide arrangements. But if we have a combination of the words "in good faith" and "in the interests of the company", I think the Lord Chancellor's point is completely met, because although such an arrangement might be made in good faith, or at any rate not in bad faith, in the interests of a particular gentleman, it would not be in the interests 967 of the company. If we accept the words suggested by the noble Viscount, Lord Maugham, then a contract cannot be repudiated if it was made in good faith and in the interests of the Company. That would be a compromise which I think we could all accept. I would suggest to my noble friend that he might withdraw the Amendment he has moved and move the Amendment I suggest on the Report stage, unless the Lord Chancellor is prepared to accept an amendment in that form now.

§ THE LORD CHANCELLOR
I would rather look into the matter again.

§ LORD DE L'ISLE AND DUDLEY
This Amendment has been debated fully and at some length. Having listened to the noble Lord, the Minister of Civil Aviation, I was not minded to withdraw my Amendment because I did not think he made out a case for the clause as it stands. I thought the Government wanted to adopt a "heads I win and tails you lose" procedure. However, in view of the advice which I have received from the noble and learned Viscount, Lord Maugham, and from the noble Viscount, Lord Swinton, I withdraw this Amendment. But I shall put down another Amendment, drawn in very much the terms suggested by my noble friend Viscount Maugham on the Report stage.

§ Amendment, by leave, withdrawn.

§ 4.25 p.m.

§ LORD WINSTER moved, in subsection (2), to leave out "(except as regards performance thereof due under the contract before the date of service of the notice)" The noble Lord said: It might meet the convenience of your Lordships if I move this Amendment and also speak to the next one, which proposes to insert words at the end of line 6 on page 11. These two Amendments deal with a point which was raised during debates on the Bill in another place. As the Bill stands at present, the Board, if it is of opinion that an unreasonable contract should not be transferred to it, may by notice repudiate it, subject, in cases of difference, to arbitration. If the matter were submitted to arbitration it would not be known between the date of the notice of repudiation and the date when the arbitrator gave his award whether a contract was or was not to continue in existence. 968 There would be an interim period of uncertainty about the validity of the contract, and doubts would also arise as to performance between those dates. The extent to which a contract is to be transferred is set out in the Second Schedule. The second Amendment with which I am dealing clarifies the position and states that if there is no arbitration and the application of the Second Schedule is excluded by notice of repudiation, the Schedule shall be treated as having never applied to the contract, but in the alternative, if there is arbitration, and the award of the arbitrator goes against the Board in the matter of repudiation, then the Second Schedule shall be treated as having applied continuously notwithstanding the service of the notice. The first Amendment removes from subsection (2) words which are inconsistent with the second Amendment because they provide for performance by the Board during the period of uncertainty of a contract which is ultimately not transferred to them. As I have said, these two Amendments are designed specifically to deal with this point which was raised in another place.

§ Amendment moved— Page 10, line 35, leave out from ("be") to the end of line 37.—(Lord Winster.)

LORD TEYNHAM
I must confess that I find this Amendment and the further Amendment to be proposed at the end of line 6, page 11, most difficult to understand. As I see it, the first Amendment seems to be consequential upon the second, and the second Amendment appears to have the effect of permitting the Board to disclaim a contract on the basis that they had never been bound by it at all. That seems to me to be a most extraordinary state of affairs. The first Amendment leaves out the safeguard for acts done under the contract before the date of the notice. Under subsection (2) of the clause the Board has a period of twelve months in which to make up its mind whether it wishes to disclaim a contract. It would be quite possible that there might be a perfectly reasonable contract which, perhaps through some mismanagement by the Board itself, might become a burden to the Board and they might wish to disclaim it. Surely if they did so the other party concerned—because he may possibly have taken action in another direction—ought not to be involved in a loss. That is how I 969 understand the effect of the Amendment, but I may be quite wrong.

§ LORD WINSTER
The object of these two Amendments, as I tried to explain but I fear with indifferent success, judging from the remarks of the noble Lord, is simply to deal with a situation which would arise when the arbitrator differs from the Board. The Board have repudiated a contract and one of the parties refers the matter to an arbitrator, and the arbitrator gives his decision against the Board. The question then arises as to what is the position about that contract between the period when the Board gave notice of repudiation and the time when the arbitrator gave his decision against the Board. The object of the two Amendments is to ensure that in that case the repudiation shall be treated as never having applied to the contract. That is the purpose of these two Amendments.

§ VISCOUNT SWINTON
What happens in the converse case? If judgment is given against the Board, then obviously the Board takes over the whole responsibility. But I understood the difficulty which was raised was the converse case, that the arbitrator decides that the Board need not take over the contract, and therefore the contract is thrown back upon the original parties to it. But something may have been done in the meantime which has prejudiced the position and involved the party to the contract in a loss. Now what is the position in that case? That is for the arbitrator to decide. It would be competent for the arbitrator to say that the Board is entitled to repudiate this contract but at the same time they have agreed the position, so to speak, and while repudiating they ought to pay to the contractor a certain sum.

§ VISCOUNT MAUGHAM
I am inclined to think that the proposals made by these Amendments will work, but it is a little bit complex. I would venture to think that the House might properly accept the proposals in these two Amendments, and give us liberty to reconsider the matter before the Report stage if we find there is some defect in the Clause. I do not think there is, and I think they are going to work.

§ On Question, Amendment agreed to.

§ LORD DE L'ISLE AND DUDLEY moved to leave out subsection (3). The 970 noble Lord said: This Amendment affects subsection (3) of the same Clause, and I have moved the omission of this subsection because of the last words, "unless the Minister consents."

§ This subsection provides that contracts entered into for personal services on or after the first day of August, 1945, shall not go to arbitration unless the Minister consents, and it is to those words that I have taken objection. I can quite see that contracts of that nature, entered into on or after the 1st August, 1945, may have to be set aside subject to arbitration, but I do not think that the Minister should be judge in his own cause, and I consider that the person affected should have a right to go to arbitration, whether the Minister wills or no. I therefore beg to move the omission of this subsection.

§ Amendment moved— Page 11, line 1, leave out subsection (3).—(Lord De L'Isle and Dudley.)

§ THE LORD CHANCELLOR
This is a variant of the topic we were discussing just now, but it differs in this important respect: that you are here dealing first of all with a contract of personal services, and secondly with a contract entered into after August 1, 1945. That date was the date on which the Minister had issued a warning to the Mining Association that they should not enter into those contracts. If, notwithstanding that warning, they choose to enter into that contract for personal service, then I think we have a very strong case for saying that there should be the plain and simple right of repudiation. It is very difficult to prove what is exactly the worth of the man. There have been cases reported to me where, it is alleged, directors who feared they were going to lose their positions as directors became servants of the company in another capacity at higher salaries. It is very difficult to prove the sort of worth we are talking about We cannot very well say what is the value of the man. It is difficult for the arbitrator to do it, and I shall submit to your Lordships, with confidence, that so long as there is provision in regard to the date it is perfectly reasonable to say that the Board should be entitled to repudiate.
But the Board can if they like honour the contracts. The Board equally can repudiate, and in that event there should be not the right of appeal to an arbitrator unless in exceptional cases— 971 there may be some cases—where the Minister consents. I hope the noble Lord will think that this is really a reasonable proposition and one which stands out in sharp contra-distinction to the other matter which he has been discussing.

§ LORD DE L'ISLE AND DUDLEY
I have listened to the able and very moderate reply of the noble and learned Lord Chancellor, but I confess I do not like any person having to apply to a Minister for a right to go to arbitration. Of course there is a contra-distinction between the two forms of contract, the one which we debated in the last clause and the one which we are now debating. I do not propose, therefore, to go on with this Amendment and I beg leave to withdraw.

§ Amendment, by leave, withdrawn.

§ 4.35 p.m.

§ THE LORD CHANCELLOR moved, after subsection (3), to insert: (4) As regards the time of operation of subsection (2) of this section"—

(a) where the application of the Second Schedule to this Act to a provision of a contract is excluded to any extent by a notice under that subsection without any reference to arbitration as aforesaid, or by the determination of the arbitrator on such a reference, the said Schedule shall be treated as having never applied;
(b) where on such a reference it is determined by the arbitrator, contrary to such a notice, that the said Schedule is to apply to any extent to a provision of a contract, the said Schedule shall be treated as having applied continuously, without regard to the service of the notice;

and any adjustments required in consequence of the provisions of this subsection shall be ascertained by agreement between the parties to the contract and the Board, or, in default of agreement, by arbitration under this Act, and shall be made accordingly. The noble and learned Lord said: I beg to move the next Amendment, about which I have already spoken.

§ Amendment moved— Page 11, line 6, insert the said new subsection.—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
The next Amendment is a drafting Amendment.

§ Amendment moved— Line 8, leave out ("does") and insert ("do").—(The Lord Chancellor.)

972

§ VISCOUNT MAUGHAM
May I just say this. I do hope somebody will find out the practice with regard to plural words and the verb which follows them, and that it will be consistently followed throughout this Bill. I myself prefer "does" in the case of a Board, where you are speaking of a number of people. No question is more hotly disputed amongst grammarians than these plural words.

§ On Question, Amendment agreed to.

§ Clause 7, as amended, agreed to.

§ Clause 8:

§ Vesting in the Board of rights to use of certain property.

§ (3) The Board shall be entitled, for the purposes of colliery production activities within the meaning of the First Schedule to this Act, to make, use and exercise an invention which is the subject of a patent and to apply a registered design in which copyright exists, being an invention or design a proprietary or other interest in which appears to them to fall within subsection (1) of section six of this Act or subsection (6) thereof, as the case may be, pending their decision as to the exercise by them of an option under that section with respect to the interest in question and pending the taking effect of such an option when exercised or (in the case of an option with respect to a proprietary interest) the grant of a licence in lieu of the vesting of the interest in them.

§ LORD WINSTER
Perhaps it would be for the convenience of the Committee if the next three Amendments were taken together. They are all three drafting Amendments. As at present printed, the clause refers to the proprietary or other interest being in the invention or design. This is wrong, because the interest subsists in the patent or copyright. These Amendments are designed to put that matter right. As I say, they are drafting Amendments. I beg to move.

§ Amendment moved— Page 11, line 44, leave out ("an") and insert ("the").—(Lord Winster.)

§ On Question, Amendment agreed to.

§ LORD WINSTER
I beg to move.

§ Amendment moved— Page 11, line 45, leave out from ("patent") to ("a") in line 46.—(Lord Winster.)

§ On Question, Amendment agreed to.

§ LORD WINSTER
I beg to move.

§ Amendment moved— Page 12, line 2, leave out ("as the case may be") and insert ("and to apply a registered 973 design in the copyright in which such an interest appears to them so to fall,").—(Lord Winster.)

§ On Question, Amendment agreed to.

§ Clause 8, as amended, agreed to.

§ Clause 9:

§ Ascertainment of assets, rights and liabilities transferred, and determination of questions as to transfer.

§ (3) Any question arising in giving effect to the provisions of this Act— (a) as to what is or is not included in the assets described in the First Schedule to this Act or in any Part thereof, or otherwise as to the construction or effect, so far as regards the vesting of assets, property or rights in the Board, of section five of this Act or of regulations made thereunder, or of that Schedule, or

§ LORD WINSTER
This Amendment is consequential on the inclusion in another place of the new clause, Clause 6, regarding patents and designs.

§ Amendment moved— Page 12, line 34, after ("thereof") insert ("or in section six of this Act").—(Lord Winster.)

§ On Question, Amendment agreed to.

§ LORD WINSTER
The next is consequential for the reason which I have just mentioned.

§ Amendment moved— Page 12, Line 37, after ("five") insert ("or six").—(Lord Winster.)

§ On Question, Amendment agreed to.

§ Clause 9, as amended, agreed to.

§ Clause 10 agreed to.

§ Clause 11:

§ Allocation of transferred interests to compensation units and to districts, and determination of their status as respects coal industry value.

§ (5) Determinations under the last preceding subsection as to transferred interests included in compensation units which the Minister has allocated, or proposes to allocate, to any valuation district shall be made by reference to the practice observed in making the district wages ascertainments for the district corresponding with that valuation district of results for the period of ascertainment which included the month of June, nineteen hundred and thirty-nine (or, if the said month of June was included in two or more successive periods of ascertainment, for the first of those periods), and, in the case of a determination as to an interest of a colliery concern dealt with in making those ascertainments, to the practice observed as respects activities of that concern, 974 and accordingly, for the purposes of such determinations—

(a) activities shall be treated as activities relevant to district wages ascertainments if they are such as were treated as comprised in the coal industry under the practice aforesaid, and not otherwise; and
(b) the value of a transferred interest attributable to usefulness for any activity shall be treated as value attributable to usefulness for activities relevant as aforesaid in so far as figures relating to that activity would have been brought into computation under the practice aforesaid, so however that the value of a transferred interest attributable to usefulness for an activity such as was treated as excluded from the coal industry under the practice aforesaid shall not be treated as attributable to usefulness for activities relevant as aforesaid notwithstanding that under that practice figures relating to that kind of activity were brought into computation at a fair transfer price or similar charge:

§ Provided that, whatever such practice as aforesaid has been in any case, the value of the following transferred interests shall be treated as not to any extent attributable to usefulness for activities relevant to district wages ascertainments, that is to say—

(i) interests in stocks of products of colliery production activities and interests in consumable or spare stores within the meaning of the First Schedule to this Act;
(ii) freehold interests in minerals other than coal; and
(iii) interests arising under a lease granted in accordance with the provisions of section four of the Coal Act, 1943, or by virtue of a right to such a lease (in this Act referred to as interests under a "former freeholder's lease"):

and, to the extent to which the value of any transferred interest is attributable to a provision relating to undergettings, short workings or similar matters, it shall be treated as not attributable to usefulness for such activities as aforesaid.

§ LORD WINSTER
This is a drafting Amendment. A valuation district is one for which ascertainments have been made. I beg to move.

§ Amendment moved— Page 14, line 31, leave out ("an ascertainment was") and insert ("ascertainments were").—(Lord Winster.)

§ On Question, Amendment agreed to.

§ LORD WINSTER moved, in subsection (5), to leave out "accordingly, for the purposes of such determinations—", to leave out paragraphs (a) and (b), to leave out "Provided that, whatever such practice as aforesaid has been," and to insert: In this section—

(a) the said practice by reference to which such a determination is to be made 975 as to any transferred interest is referred to as 'the wages ascertainments practice';
(b) the expression 'activities relevant to district wages ascertainments' means activities treated as comprised in the coal industry under the wages ascertainments practice.

§ (6) Notwithstanding that, in general, determinations under subsection (4) of this section are to be made as aforesaid by reference to the wages ascertainments practice, the subsequent provisions of this section shall apply in the cases therein mentioned.

§ (7) The fact that figures relating to a particular activity have been brought into computation under the wages ascertainments practice shall not render it an activity relevant to district wages ascertainments under this section where the figures in question constituted an item known under the wages ascertainments practice as a fair transfer price or similar charge and the activity in question was one treated under that practice as excluded from the coal industry.

§ (8) Whatever the wages ascertainments practice has been.

§ The noble Lord said This again is a drafting Amendment.

§ Amendment moved— Page 15, line 41, leave out from ("and") to the end of line 14 on page 16 and insert the said new paragraphs and subsections.—(Lord Winster.)

§ LORD LLEWELLIN
I understand that the effect of this Amendment is to get rid of paragraph (b) on page 16, which I must say was a paragraph that was incomprehensible to a very large number of people who read it. Certainly it was to myself. The Amendment which the noble Lord moved is one that is far more acceptable than paragraph (b), and we certainly have no objection whatever to it.

LORD RENNELL
The passage referred to is one to which I drew attention at the time of the Second Reading, and I would like personally to express my thanks to the Lord Chancellor for the redrafting. So far as I am concerned, the re-drafting entirely meets my point. I would, however, like to draw the noble Lord's attention to another line subsequent to the offending paragraph which, as noble Lords will recall, contains the phrase which I think was particularly unfortunate, and the repetition of which excited a certain amount of amusement—"attributable to usefulness" That has been successfully eliminated in the new draft with, I think, great consequent improvement. But if the noble Lord will 976 look down the lines which follow the offending paragraph he will find a further reference to "attributable to usefulness", at line 16, and as it has been eliminated in the offending paragraph it might with advantage be eliminated at that point also.

§ LORD WINSTER
a: I note the point made by the noble Lord and it will be given consideration.

§ On Question, Amendment agreed to.

§ Clause 11, as amended, agreed to.

§ Clause 12 agreed to.

§ Clause 13 [Determination of values for compensation purposes]:

§ LORD WINSTER
This is a drafting Amendment, consequential on the inclusion in another place of the new clause, Clause 6, regarding patents and designs. I beg to move.

§ Amendment moved— Page 18, line 35, leave out ("section five") and insert ("or by virtue of section five or six").—(Lord Winster.)

§ On Question, Amendment agreed to.

§ Clause 13, as amended, agreed to.

§ Clauses 14, 15, and 16 agreed to.

§ Clause 17:

§ Compensation for overhead expenses increase caused by severance.

§ 17.—(1) Compensation shall be made in respect of any increase in the proportion of the overhead expenses of the business of a company or other person having assets which included (but did not consist solely of) transferred interests to the volume of the business over which those expenses are spread, in so far as such increase is one due to the severance of those interests from the residue of those assets and not reasonably capable of being avoided or mitigated.

§ (2) The amount of the compensation to be made under this section in the case of any business shall be determined by a District Valuation Board designated by the Minister, by reference to the extent of the loss sustained or likely to be sustained at any time during the five years beginning with the primary vesting date in consequence of such increase as aforesaid by the company or other person whose assets are severed, subject to provision to be made by regulations for review of such determinations by referees in such cases and in accordance with such provisions as may be prescribed.

§ 4.52 p.m.

§ LORD TEYNHAM moved to leave out subsections (1) and (2) and insert:—

("(1) In addition to any compensation payable under the provisions of this Act in 977 respect of the transfer of any transferred interest, the owner of such an interest shall be entitled to receive compensation from the Board for any loss or damage which he may Suffer in consequence of such transfer including any loss or damage suffered by reason of the severance of such transferred interest from any other of the interests of that owner which are not transferred or by reason of such other interest being injuriously affected by anything done under the provisions of this Act.
(2) The amount of the compensation to be made under this section shall be determined by a District Valuation Board designated by the Minister.")

The noble Lord said: Clause 17, as drafted in the Bill, seems a very narrow one. It appears to cover only overhead expenses which may be increased through severance and to cover only very small increases in expenses which may occur on the part of concerns taken over. There is a much more serious point which will arise in certain cases. That is the increase in working expenses and in management expenses, which do not appear to be covered by this clause. I know of one composite undertaking which at present is able to get advantageous rates for electric power by having a combined rate for the whole undertaking. If this rate is split, owing to severance, the additional cost to the undertaking will amount to something like£15,000 a year. It may well happen that when a colliery is severed from its iron and steel interest that iron and steel interest will suffer damage and when its turn comes to be nationalized the iron and steel interest may be assessed for compensation at a very much lower figure. That would seem very unfair. My Amendment is designed to cover this loss or damage. I beg to move.

§ Amendment moved— Page 21, line 40, leave out subsections (1) and. (2) and insert the said new subsections.—(Lord Teynham.)

§ THE LORD CHANCELLOR
I think in the first place that I ought to point out, although it does not bind your Lordships in any way, that this Amendment is entirely outside the terms of the Money Resolution which does bind another place. This Amendment makes it difficult for the other place. The problem here is this. On what basis are we to deal with severance? The Bill is drafted quite deliberately to limit severance to claims in respect of expenses. That is to say, where you have a large building which is used as the headquarters 978 for two or three businesses, one of which is a colliery, the fact that these premises are altogether too large when the colliery is taken over is a ground for a claim. If we widen the clause there would be an enormous variety of claims which could be brought on account of severance. Undoubtedly the cost of meeting these claims would be very heavy, and the difficulty of assessment—and this I particularly stress—would be insuperable. Then your Lordships must remember that where there is a composite undertaking whose assets are sold the owner will be able, either unconditionally or subject to arbitration under Parts III and IV, to secure transfer to the Board of the assets which they claim it would be unfair to leave in their hands, since they would no longer be of any value.
There are certain exceptions. There is the exception in paragraph 19 (1) of the First Schedule, but broadly speaking my statement is right. In Part II it is an absolute obligation, bat under Parts III and IV it is possible to say, if they do not agree to arbitration, "It is very hard to leave this patch, which is virtually derelict. We demand that you take it over." That is how we should try to approach the severance problem. The alternative approach, I believe, is quite impossible. It would mean a vast number of claims and the difficulty of assessment of these claims would be very great. The noble Lord referred to iron and steel works. One does not know, and one must not anticipate, what is to be the future of some of these iron and steel works. But they might claim in future that they were prevented from obtaining their coal on those favourable terms which they enjoyed when they owned their own coalmines. What is to be done there?
If the Board acceded to any request on the lines suggested they would have to continue price discrimination in favour of a particular consumer, unless that consumer was compensated, and that would mean a continuance of the very price discrimination which we are all anxious to avoid. There is the possibility that in the fullness of time the iron and steel works may themselves be taken over by the State. If they had been taken over under this Bill there would be no question of severance, but if they were taken over by another Bill there would be a I short-time severance. I suggest that 979 much the better way of dealing with this is the way that we have dealt with it in the Bill. We give a man the right to say "You have taken this coal mine and left me with this" (whatever the works may be)"I demand that you take over that as well. It is no good leaving me with this, which is no good without my coal."

§ THE EARL OF DUDLEY
I should hate to enter into a legal argument with the noble and learned Lord, the Lord Chancellor. We on this side of the House pay a good deal of attention to what is said by Socialist judicial Ministers and I would like to ask, is there not similarity in this case with an extract from the late Lord Parmoor's work Cripps on Compensation? In the eighth edition, page 241, there is the following passage: Where the damage complained of has arisen from acts done on lands taken, the measure of compensation for damage done to lands held therewith is the full consequential loss which the owner has sustained by reason of the severing of the lands taken from the other lands of such owner, or otherwise injuriously affecting such other lands by the exercise of statutory powers. Surely that is a similar measure to what my noble friend Lord Teynham is asking for in this Amendment? I would also suggest that a similar reference can be found in the London Passenger Transport Act, 1933, Section 14, 6 (a) and Section 24 (5), which deal with similar cases.

§ THE LORD CHANCELLOR
May I just answer the noble Lord. He is perfectly right. Under the Land Clauses Act, if you have a piece of land, say a farm, and part of it is acquired to build a road, it is common knowledge that not only the value of the land must be paid but also compensation in respect of the fact that one part of the land is on one side and another part is on the other side of the road—that is, that the lands are severed. But supposing you are going to take all the land on the right-hand side. This Bill is doing that. It is taking the colliery. The feature of this Bill is this, that under those circumstances the owner has the right to say, "You are taking my land on the right-hand side of the road. I call upon you to take the land on the left-hand side." And you must do it. In this way the owner will prevent this severance arising. That is 980 the provision which we have here, but it has no counterpart in either of the two illustrations your Lordships have been given.

§ THE MARQUESS OF LONDONDERRY
I do not know how far we can discuss this matter in your Lordships' House, but we are well aware that colliery undertakings dominate the whole situation in a district, and by reason of that fact other under takings may be penalised or handicapped if a colliery passes into different ownership. I wonder what the position would be in the case of a harbour which serves a colliery district. At Seaham the harbour has served the colliery interest for 100 years. The policy which the Government follow may change the manner of carrying on the industry which has obtained for 100 years. What is the position of the harbour? The harbour does not belong actually to the undertaking, because it is a public company.

§ THE LORD CHANCELLOR
I think the noble Marquess will find that in Part II of the First Schedule. If he will look at Page 52, line 20, he will see private harbours dealt with there. The words are: Interests of colliery concerns and of class A subsidiaries thereof in wharves not being canal wharves, private harbours, and staithes… In those circumstances the colliery owner, as owner of the private harbour, is entitled to call upon the Board to purchase also his private harbour, and the Board has no option. That is one of the Part II cases. They are bound to do so if he calls on them to do so.

§ VISCOUNT MAUGHAM
This excepts harbours, it does not include them. I am not quite sure that I follow the meaning. It is no doubt my fault. Clause 11 deals with certain wharves used for colliery purposes which are to be within Part 2.

§ THE LORD CHANCELLOR
Yes.

§ VISCOUNT MAUGHAM
That is wharves, not being a private harbour. I understood my noble friend the Marquess of Londonderry's question to relate to a private harbour.

§ THE LORD CHANCELLOR
Not being canal wharves.

§ VISCOUNT MAUGHAM
Not being canal wharves—private harbours.

981

§ LORD LINDSAY OF BIRKER
In wharves not being canal wharves.

§ THE LORD CHANCELLOR
Yes.

§ VISCOUNT MAUGHAM
That is what I am saying.

§ LORD BALFOUR OF INCHRYE
Is it not a drafting fault in this particular clause?

§ THE LORD CHANCELLOR
When the noble Lord asked me, I looked to see. I may be quite wrong, but I read this thing grammatically to mean this: "Interests of colliery concerns and of Class A subsidiaries thereof in wharves not being canal wharves, private harbours" and so on. I think that is what is meant.

§ LORD BALFOUR OF INCHRYE
Perhaps the Lord Chancellor might think that clarification is advisable.

§ THE LORD CHANCELLOR
I think that is right.

§ VISCOUNT MAUGHAM
Yes, I think that is so.

LORD TEYNHAM
I am not entirely satisfied. I feel that there will be damage done when severance takes place, because when the iron and steel concern becomes nationalized under the proposed Iron and Steel Nationalization Bill, it may be assessed at a lower figure. I do not know whether it is possible for the noble and learned Lord on the Woolsack to give me some assurance that it will not be assessed at a lower figure because of the damage that may be sustained by severance.

§ THE LORD CHANCELLOR
I will look into that.

LORD TEYNHAM
In view of what the noble and learned Lord has said, and also in view of the Money Resolution in another place, it would be difficult to proceed, and I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 17 agreed to.

§ Clauses 18 and 19 agreed to.

§ Clause 20:

§ Recipients of compensation.

§ 20.—(1) The person legally entitled to the compensation in respect of a transfer of transferred interests shall be—

(a) where the compensation unit includes only transferred interests of a company, and 982 none of those interests was subject to any charge or lien for securing money or money's worth from which it is freed by section five of this Act or to any other restriction, right or liability from which it is freed by virtue of regulations made under that section, that company;
(b) where the compensation unit includes only transferred interests of a person other than a company, and none of those interests was subject as aforesaid, that person;
(c) in other cases, such person as may be designated by regulations for the purpose of safeguarding the rights of persons entitled to beneficial rights in the compensation, and the regulations to be made for the purposes of this paragraph may, without prejudice to the generality thereof, designate, as the person to be legally entitled to the compensation in any such cases fading within this paragraph as may be prescribed, the proper officer of the prescribed court or a trustee or trustees appointed by the Minister:

§ Provided that, where paragraph (a) of this subsection would apply but for a transferred interest's being subject to a floating charge and the charge; will attach to the compensation, the said paragraph (a) shall apply as if the interest had not been subject to the charge; and this proviso shall also extend to a case in which I the said paragraph (a) would apply but for a transferred interest's being subject to a fixed charge for securing any matter in favour of any person if that matter will be secured in his favour by a floating charge on the compensation nor materially differing in priority from the fixed charge.

§ 5.5 p.m.

§ LORD AMMON
In its passage through another place, a new clause was added to the Bill, and consequential Amendments are necessary in order to link up the references to Clause 6. I beg to move the first Amendment on the Paper.

§ Amendment moved— Page 23, line 44, leave out ("section five") and insert ("or by virtue of section five or six").—(Lord Amnion.)

§ On Question, Amendment agreed to.

§ LORD AMMON
The same point covers the next Amendment I beg to move.

§ Amendment moved— Page 24, line 3, leave out ("that section") and insert ("or by virtue of either of those sections").—(Lord Ammon.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR moved, in the proviso to subsection (1), to leave out "and this proviso shall also extend to a case in which the said paragraph (a) would apply but for a transferred interest's being subject to a fixed charge for securing any matter in favour of any person if that matter will be secured in his 983 favour by a floating charge on the compensation not materially differing in priority from the fixed charge" The noble and learned Lord said: This Amendment is one which I should explain. The Amendment is to leave out from the word "charge" on page 24, line 21, to the end of line 26. In page 24, line 21, noble Lords will see a phrase beginning "and this proviso". We are proposing to leave out from "and this proviso" down to the words "fixed charge" about six lines lower down. We originally inserted those words in the Bill in an attempt at simplification, but it does not quite work, for this reason: the effect of the Amendment is that wherever there are debenture holders with a fixed charge payment is to be made to a person designated by regulations whose duly it will be to see that the debenture holders are protected. As the Bill stands, without this Amendment, payment would be to the company, and if that were done, priorities might be affected. There is this distinction, as your Lordships know, between what is a fixed charge and a floating charge, that certain preference creditors come in between the two. They rank after the fixed charge but before a floating charge. Therefore, if you are going to protect debenture holders' property, you must see that ordinary creditors, preference creditors, do not come in before them, and it is to secure that result, with which I think everyone agrees, that it is proposed to leave out these words.

§ Amendment moved— Page 24, line 21, leave out from ("charge") to the end of line 26.—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ LORD AMMON
The next Amendment is consequential on one I moved just now. I beg to move.

§ Amendment moved— Page 24, line 33, leave out ("section five") and insert ("or by virtue of section five or six").—(Lord Amman.)

§ On Question, Amendment agreed to.

§ LORD AMMON
There is one more consequential Amendment. I beg to move.

§ Amendment moved— Page 24, line 34, leave out ("that section") and insert ("or by virtue of either of those sections").—(Lord Ammon.)

§ On Question, Amendment agreed to.

984

§ Clause 20, as amended, agreed to.

§ Clause 21.

§ Mode of satisfaction of compensation.

§ (2) Compensation in respect of an overhead expenses increase shall be satisfied by the issue of government stock, subject to the power conferred by paragraph (c) of the preceding subsection in relation to compensation in respect of a transfer of transferred assets.

§ THE LORD CHANCELLOR
There is a drafting Amendment to be made in this clause, to correct an error. I beg to move.

§ Amendment moved— Page 25, line 42, leave out ("assets") and insert ("interests").—(The Lord Chancellor).

§ On Question, Amendment agreed to.

§ Clause 2i, as amended, agreed to.

§ Clause 22 [Interim income pending satisfaction of compensation]:

LORD TEYNHAM
Before we agree to this clause, there is one point in connexion with the payment of interim income which is dealt with under it to which I wish to refer. Interim income becomes payable to colliery concerns in two years after the primary vesting date, and is to be equivalent to 50 per cent, of the average profits over a period as set out in the clause, though compensation may not become payable for three, four, or five years. Why 50 per cent? Surely if assets are taken away from an owner compulsorily he should continue to receive for them profits until such time as the buyer pays for his business. I really do feel that is fair. I understand that a payment of only 10 per cent, is proposed. This is really on the suggestion that it is equivalent to a ration of profit which has been paid out by colliery companies in the past, as profit to the shareholders. I really fail to see the equity of this. The fact that the whole of the profits are not distributed by way of dividends does not take away the shareholders' rights to the undistributed balance. I further fail to see why it is not just to continue to pay this until the compensation is settled. I thought it I might be possible for the noble and learned Lord in charge of the Bill to see if some increase in interim income could be arranged for at a later stage.

§ THE LORD CHANCELLOR
There is no Amendment down in regard to this. I must say I do not pretend to be an 985 expert on the other parts of the Bill, but surely the answer is this. The reason why you pay less, is because you are now getting a gilt-edged payment from the Government, and you are no longer at risk. After all, if you are carrying on a colliery it is by no means a certain proposition that you are going to continue to make profits. If you have a promise from the Government to pay money, then certainly you will be paid. I should conjecture that is the reason, but as the noble Lord has asked me to look into this, I will see if I can find out.
A NOBLE LORD: There are cases—and perhaps the noble and learned Lord will look into it from this point of view—where the interim payment of 50 per cent. might not in fact cover the charges of the colliery in question during those two years. It is not therefore a question of the security of the payments but of the amount of the payment.

§ Clause 22 agreed to.

§ Clause 23:

§ Restrictions on disposal of stock issued for compensation of companies.

§ 23.—(1) Stock issued for compensation to a company legally entitled to the compensation by virtue of paragraph (a) of subsection (1) of section twenty of this Act, and any stock issued to the company in exchange therefor under subsection (4) of this section, shall be subject to restrictions as to the disposal thereof to the extent specified in this section. (2) Such stock may be disposed of— (d) when the company is not being wound up, by way of sale of so much of such stock as it may be shown to the satisfaction of the Treasury to be requisite to sell for the purpose of raising an amount of liquid capital which in the opinion of the company is needed for its business or in order to facilitate a development or extension of business to be carried on by it, and which apart from this section it would be entitled to raise; and, when any such stock has been so disposed of, it shall be free from any restriction under this section.

§ 5.12 p.m.

§ LORD TEYNHAM moved, in subsection (2) (d), after the first "be", to leave out "shown to the satisfaction of the Treasury to be."

§ The noble Lord said: As this clause is drawn, compensation stock may be disposed of by a colliery under certain conditions, one of which is where a company is not being wound up and wishes to raise an amount of liquid capital in order to carry 986 on an ancillary business. Before the company can dispose of this stock in order to raise the necessary capital, it has to obtain the consent of the Treasury. The purpose of my Amendment is to make it unnecessary to obtain this consent, because in any case the Treasury has control of sums of£50,000 and over. It would seem unnecessary for the firms to go and get the consent of the Treasury to raise sums of a much smaller figure. That is really what the Amendment means, and I beg to move.

§ Amendment moved— Page 29, line 6, leave out from ("be") to ("requisite") in line 7.—(Lord Teynham.)

§ LORD WOLVERTON
I should like to support my noble friend on this Amendment. It does seem very hard that an ancillary company cannot spend that amount of money without going to the Treasury; if they wish to spend above that amount of money they would have to go to the Treasury. It does seem a very hard and unreasonable provision.

§ LORD WINSTER
The Amendment moved by the noble Lord, Lord Teynham, relates to the provision under which a company which has not been wound up may exchange blocked compensation stock for stock convertible into cash, if it has satisfied the Treasury that it requires to sell stock to raise liquid capital for its business, or in order to facilitate the development or extension of its business. The effect of the noble Lord's Amendment would be to leave cut the requirement that the company must satisfy the Treasury that it needs to sell the stock, so that the company would have a free hand to draw so much of the stock in a form convertible into cash as it may be requisite to sell for the purpose specified.
This Amendment should be looked at against the background of the clause as a whole. The clause is designed to protect the gilt-edged market from the depressing effect which would be exercised on it by large blocks of Government stock coming on the market all at once, which is what would be expected to happen if companies were given a free hand to dispose of the stock as they liked. The effect of the clause as it stands in the Bill is to ensure that the compensation should be distributed in the form of stock to the shareholders of the companies 987 who are then completely at liberty to dispose of it. In this way the sales of stock would be reduced, because many of the shareholders, on receiving it, would be perfectly content to retain this Government stock. In any case, the sales by individuals of the stock would, of course, be far more piecemeal than would similar sales by the companies, and consequently such sales would have a far smaller effect on the market.
In order to avoid unnecessary restrictions on the transfer of stock, beyond what is necessary to secure the object which I have just mentioned, provision is made under which the companies themselves may dispose of the stock for certain purposes, one of them being covered by the provision to which this Amendment relates, namely, a development or an extension of the company's business. The main objection the Government have in mind to leaving it to the companies to decide in what circumstances they may dispose of stock, as proposed in the Amendment, is that the company's view of what was requisite might differ from that of the Treasury, to whom in any case they would have to go to draw their convertible stock, in accordance with regulations to be made under subsection 4 (a) of the clause. To justify a refusal to issue convertible stock, the Treasury would have no alternative but to take the matter to the Courts, and that would involve litigation and consequently delays. For that reason alone it is essential that the requirements of the Treasury sanction for the disposal of stock should be retained. I wish to point out that the requirement of Treasury sanction for these disposals of stock will not involve companies in any hardship at all.
The reason which the noble Lord had in mind in moving his Amendment may have been a fear that the Treasury would use the powers given to them under this clause to approve exchange of stock only in cases where they approved the extension of business for which the capital was to be raised. I am happy to be able to remove that misapprehension and to assure the noble Lord at once that that is not the case. All that the company has to do in order to obtain the transfer of the stock is to prove that it is needed to raise capital for the extension of its business, without regard to the merits or otherwise of the extension 988 of the business in question. A clear assurance was given in another place that the Treasury would not use the powers given under this Clause to usurp any of the functions of the Capital Issues Committee. In view of that quite definite assurance which I have been able to give to the noble Lord, I hope that he may see fit to withdraw his Amendment, which otherwise I am not able to accept.

LORD RENNELL
I am personally grateful to the noble Lord for his explanation, because the point was raised by me in the course of the Second Reading debate. It does not entirely answer the question that I asked him then about the motives behind the rather complicated clauses dealing with the blocking of compensation stock. The only point that I still wish to make, if the noble Lord will permit mc, concerns the doubt that I have as to whether this complicated procedure, which lays down when compensation stock I is negotiable and when it is not, is in fact likely to produce the effect that the noble I Lord has described. He said that a great many people who received this compensation stock might be very likely to keep it; they would be satisfied with it and would not try to negotiate it. That is very likely to be the case whether the stock is negotiable. Many people who hold negotiable stock would be happy to retain it, but if they were given non-negotiable stock they would be very tempted to get rid of it as quickly as possible. There is, more-over, the effect of the piecemeal selling to which I referred in the course of the Second Reading debate. That point has not been covered by the noble Lord, and it is one on which opinions may differ. My own view is that it will not have the effect he described. I would like to say how grateful I am for the explanation and for the fact that the noble Lord did pick up a point which I made in the course of the Second Reading debate.
May I say that it would have saved a very complicated clause, and would also have saved the insertion of an additional clause after Clause 23, if Clause 23 had merely said that any stock issued for value received might be disposed of at any time, and if the clause had concluded at that point? It would have saved a great deal of what I think is going to be really complicated procedure, a good many heartburnings, and undoubtedly some hardship.

989

LORD TEYNHAM
In view of the assurances we have received from the noble Lord, Lord Winster, I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ THE LORD CHANCELLOR moved in subsection (2) (a) to leave out "its business" and insert "business of the company or of a subsidiary within the meaning of the First Schedule to this Act of the company."

§ The noble and learned Lord said: This Amendment, and the Amendments to lines 11 and 12, all hang together, and give effect to a concession we were asked to make. The point has been raised on behalf of the industry that a parent company holding non-transferable compensation stock ought to be permitted to sell it in order to raise capital needed for the purposes of a subsidiary. We are conceding the point by these three Amendments. I beg to move.

§ Amendment moved— Page 29, line 9, leave out ("its business") and insert ("business of the company or of a subsidiary within the meaning of the First Schedule to this Act of the company").—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
I beg to move the second Amendment to which I have referred.

§ Amendment moved— Page 29, line 11, leave out ("it") and insert ("the company or such a subsidiary thereof").—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ THE LORD CHANCELLOR
I beg to move the third Amendment to which I have referred.

§ Amendment moved— Page 29, line 12, leave out ("it") and insert ("the company").—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ Clause 23, as amended, agreed to.

§ THE LORD CHANCELLOR moved, after Clause 23, to insert the following new clause:

§ Interim protection of persons having assets transferred against enforcement of liabilities.

§ "—(1) If, on application made to it by any company or other person, the tribunal to be established for the purposes of this section is satisfied—

(a) that the applicant is an owner of transferred interests and that those transferred 990 interests formed a substantial part of the applicant's resources;
(b) that steps have been taken for the enforcement of a liability of the applicant to make a payment, or for the enforcement of a security upon property of the applicant, and that the taking of those steps is attributable to the passing of this Act or to matters arising in consequence thereof;
(c) that the applicant will be in a position, so far as can reasonably be foreseen, to meet his liabilities as they fall due, or, in the case of liabilities arising in connection with transferred interests, on satisfaction of a right of his to compensation attributable to those interests or to interim income; and
(d)that it will be for the benefit of the applicant and of the persons entitled to enforce liabilities of his, or to enforce securities upon his property, as a whole, that the enforcement thereof should be controlled;

the tribunal may direct that the applicant shall be entitled to protection under this section.

§ (2)Whilst a direction under this section is in force none of the rights or remedies for the exercise of which leave is required under section one of the Courts (Emergency Powers) Act, 1943, shall be exercised against the applicant or his property (whether or not that Act remains in force for the time being), except with the leave of the appropriate court within the meaning of that Act.

§ (3) The tribunal may, at the time of giving a direction under this section or thereafter at any time whilst the direction remains in force, specify, and from time to time vary or revoke, conditions subject to which the direction is to operate for the time being (including, without prejudice to the generality of this provision, conditions requiring, or prohibiting, or limiting the amount of, payments to any particular creditors or class of creditors, or, where the applicant is a company, prohibiting, or limiting the amount of, dividends to be paid by the company), and on breach of any such condition the direction shall cease to be in force.

§ (4) The tribunal may at any time revoke a direction under this section, and any such direction not previously revoked shall cease to be in force at the expiration of six months from the date when the compensation for the transferred interests of the applicant is fully satisfied.

§ (5)The tribunal may and shall if so required by the appropriate court, furnish for the assistance of that court on any application made to it for leave to exercise any of rights or remedies mentioned in subsection (2) of this section a report of the tribunal's reasons for giving a direction under this section or for the imposition of conditions under subsection (3) of this section and generally as to the circumstances relevant to the direction.

§ (6) Provision shall be made by regulations for the establishment of a tribunal for the purposes of this section, having as its chairman a barrister or solicitor of not less than 991 seven years' standing, and having included amongst the members thereof an accountant having the prescribed qualifications and a person having wide experience in commercial or financial matters, and the regulations may, without prejudice to the generality of this subsection, include provision—

(a) for the charging of fees for meeting the cost of remuneration or allowances to members of the tribunal and its expenses;
(b) for regulating any matters relating to the practice and procedure of the tribunal, including provision as to parties and their representation;
(c) for awarding costs of proceedings before the tribunal, determining the amount thereof and the enforcement of awards thereof;

and, subject to the provisions of any such regulations, the tribunal shall have power to regulate its own procedure."

§ The noble and learned Lord said: This new clause arises in the following circumstances. Your Lordships know that under Clause 22 we have provided for the payment of interim compensation. Whether the amount is the right amount, and so on, is another point, but a difficulty arises which we have taken the opportunity of discussing with eminent people in the City, who desire to remain anonymous. Very often there is a trust deed for securing debenture holders, and a very common clause in such trust deeds is that the security becomes enforceable directly the company ceases to carry on its business. That is almost a common form of clause. Of course, in these cases the trustees are not in the position of ordinary men who are able to use their discretion as to what line they will take; they have to act as a duty, in the interests of those for whom they act as trustees. Where, for instance, a colliery company is taken over and receives this interim compensation which it may want for the purposes of other business, and where there are debentures probably secured by a trust deed, just consider the position which may arise. Although the company might be perfectly solvent and well able to carry on, and although the debenture holders might not be in the least in jeopardy, still the trustees for the debenture holders might be bound to come along and say, "You have ceased to carry on your business; our right has crystallized and we must come in and take everything there is." The effect of that, of course, might be to destroy all the benefit that there was in respect of the payments.

992

§ Therefore the scheme to be adopted is this. We have to set up a tribunal for this purpose. If a company applies to that tribunal and can show that it is likely to be in the position of having these steps taken against it, and can show that it is perfectly solvent, that there is no doubt about the security and that it will be to the benefit of the company and to the benefit of the persons entitled to enforcement of liabilities that the enforcement should be controlled, the tribunal can then so certify; and if it does so certify the various conditions of the Courts (Emergency Powers) Act about not having proceedings taken without permission, and all those sorts of things, apply. I believe this is a clause which will commend itself to all your Lordships. As far as I know, it is completely non-controversial and is a real effort to meet a difficulty which would otherwise arise.

§ Amendment moved— After Clause 23, insert the proposed new clause.—(The Lord Chancellor.)

§ VISCOUNT SWINTON
I should like to congratulate the noble and learned Lord, the Lord Chancellor, on having devised what appears to be a most admirable clause. A good deal of anxiety was occasioned, not as to the intentions but, as he said, as to the inevitable action which would follow by trustees for debenture holders, who would, by the terms of their trusts, be forced to take action although that action was not in the least necessary for the debenture holders and was distinctly against the interests of the company and of the shareholders. That was obviously a position which had to be met, and it was a little difficult to see how to meet it. I would congratulate those who have produced this clause on the ingenuity and the success with which they have met a troublesome situation.

§ VISCOUNT MAUGHAM
I entirely agree with what has just fallen from my noble and learned friend. I would only add this measure of precaution. This is not a very easy clause to understand, even for people who have been engaged in this sort of business all their lives, and it may be that between now and the Report stage some eminent and anonymous people in the City—almost as eminent as those the Lord Chancellor has consulted—will find some slight flaws in the clause which it will be desirable to amend on 993 Report. I only mention that because I do not want it to be thought that we have swallowed the whole clause without understanding it.

LORD RENNELL
May I say that this clause is an immense improvement on the compensation clauses as a whole, but there is one point upon which the noble and learned Lord could give me a little clarification. He said that the protection provided under the new clause gave protection in the case of a company which might in the course of its activities find itself in the difficulties described as the result of the interim payment referred to and provided for in Clause 22. Will that protection also extend to a company in similar circumstances where, under Clause 23, it has received non-negotiable stock and cannot meet its obligations by reason of the stock being non-negotiable? In other words, will that protection provided by the tribunal referred to also cover the company by requiring at that point that the Treasury should give permission for the negotiation of the stock so that the company may meet the liabilities and obligations described in the new clause?

§ VISCOUNT MAUGHAM
That is the sort of thing which we may have to consider carefully. Another point which occurred to me, though I am not sure that it is march of a point, is the phrase "that the applicant will be in a position so far as can reasonably be foreseen, to meet his liabilities as they fall due." That is a well-known legal phrase which denotes insolvency. It may be that they could not meet their liabilities as they fell due because they had a large amount of stock which they could not negotiate. I am quite sure that that ought to be dealt with, but whether it can be dealt with by debate here to-day is another matter.

§ THE LORD CHANCELLOR
I think the answer to the noble Lord's question is Yes, but I will certainly look into the matter. I quite agree with what the noble and learned Viscount said. It may quite well be that there are some improvements which can be made in this clause. I am grateful to your Lordships as a whole for the reception of this clause.

§ On Question, Amendment agreed to.

994

§ Clause 24 [Adjustments as between classes of debenture and share holders of companies entitled to compensation]:

§ 5.34 p.m.

§ THE LORD CHANCELLOR moved, after subsection (2), to insert (3) Subsection (6) of the last preceding section shall have effect in relation to the tribunal to be established for the purposes of this section. The noble and learned Lord said: The purposes of the tribunal to be established under Clause 24 are in many ways similar to those of the tribunal to be established under the new clause we have just been discussing, as to the interim protection of persons entitled to compensation as regards enforcement of liabilities, and it is desirable that the provisions of that clause as to the personnel of the tribunal, as to fees and costs, should apply equally to the tribunal to be established for the purposes of Clause 24. I beg to move.

§ Amendment moved— Page 30, line 32, at end insert the new subsection.—(The Lord Chancellor.)

§ On Question, Amendment agreed to.

§ Clause 24, as amended, agreed to.

§ Clauses 25, 26 and 27 agreed to.

§ Clause 28:

§ Reserve, fund of the Board.

§ 28.—(1) The Board shall establish a reserve fund, and shall, at such times as the Minister, with the approval of the Treasury, may direct, carry to the credit of that fund out of their revenues such sums as he may so direct.

§ (2) The reserve fund shall be managed in such manner and applied for such of the purposes of the Board as the Minister, with the approval of the Treasury, may direct.

§ 5.35 p.m.

§ VISCOUNT SWINTON moved, in subsection (1), after the second "shall," to leave out "at such times as the Minister, with the approval of the Treasury, may direct." The noble Viscount said: This is the clause which deals with the creation of a reserve fund. We all agree that a reserve fund should be created in an undertaking like this, but the object of my Amendment is to vest in the Board, as distinct from the Minister and the Treasury, all the duties for the creation and management of the reserve fund. We have been told—indeed, assured—that the Minister will only intervene on grave matters of national importance, and we accept that. But the creation of this reserve fund, the question how much should 995 be carried to the reserve fund in a particular year and the management of the reserve fund are not great matters of national importance. They are obviously business matters for the Board. It is an elementary function of any board of directors to decide how much should be carried to reserve in any particular year, how the reserve fund should be administered, how it can be wisely and safely drawn upon, and for what purposes.

§ Really this is an acid test of whether the management is going to be vested in this extremely competent Board, or whether it is going to be vested in the Minister. It is really a question of whether they are to be a business board, or whether they are to be civil servants. This brings in both the Minister and the Treasury, and I submit to your Lordships that neither of them really have any status in this matter. Why the Treasury? No part of the profits of this business, and therefore no part of the reserve, if it becomes so large that it can be disposed of, is to inure for the benefit of the Exchequer. That, I think, was made quite clear in the Second Reading debate. It is true my noble friend Lord Ammon expressed some uncertainty about it in replying to me, and said that it could be applied to the relief of taxation or to the Treasury. But the Minister for Civil Aviation, in winding up the debate, made it perfectly plain that the Treasury had, and could have, no possible interest in any part of this fund or surplus revenue. He was absolutely explicit in that, and he will remember, that he said he wished to make that abundantly clear. No doubt he was speaking on full instructions. If that is so, there can be no possible reason for bringing in the Treasury, and I submit that the Minister ought not to be brought in. This is essentially a pure business transaction, namely, how much should go into reserve, and how that reserve should be managed.

§ If the Board do their business badly—and I have no reason to suppose that they will—then the right course is to remove the Board and put in another Board. What is certainly not the right course is to try and do the Board's business for them. I do attach considerable importance to this, because what we do now will form a precedent. The Lord 996 Chancellor, who is very astute, as well as a very fair controversialist, would not hesitate on a future occasion to say about anything we do, "Well, your Lordships gave the fullest consideration to the Coal Industry Nationalisation Bill and you decided this or that upon that Bill, and having decided it there you certainly would not wish to go back and make a contrary decision."

§ I think there would be force in that argument. Therefore it becomes doubly important to make sure that we do the right thing here. I submit, without any shadow of doubt, that the right thing if we create, as we intend to do, a business board, is to give it the ordinary functions of an ordinary business management, and there is no more obvious function than the creation and management of a reserve fund.

§ VISCOUNT MAUGHAM
May I say a few words in support of this Amendment? I think it is of the very first importance from the point of view of the business of the Board in disoharging its duties in connexion with the management of these concerns. I think that on this side of the House we have all accepted the view that this nationalization is essential in the circumstances that have arisen and, for my part, I think it is true to say that we are all desirous of making it work. And it is because I do not think that this Clause 28 will really facilitate the working of the enterprise which is committed into the hands of the Board that I object to the clause. Your Lordships remember that, under Clause 3 of the Bill, the powers of the Minister in relation to the Board are exceedingly wide, and I see no reason to doubt that the Minister could, under Clause 3, give proper instructions to the Board in reference to—for example—an extravagantly big reserve fund being established. But what occurs to me is this.
Under the clause as it stands, the Board have from time to time to listen to the directions of the Minister with the approval of the Treasury. So the Board have got to go running round to the Treasury for an agreement in the matter (or the Minister has to go and talk to the Treasury officials) in order to carry to the credit of the fund out of their revenues such sums as the Minister may so direct. Why should this Board, established under the Bill, including in its composition, as it 997 does, people of great eminence, be thought to be unable to come to a decision on the question, from time to time, of how much money—if they have earned it—can be carried over to the credit of a reserve fund, or how much money they may deem it necessary to spend, from time to time, in the administration of particular colliery concerns. The business of the Board is going to be one of indescribable complexity. The Board will have 792 colliery concerns to administer, and they will require constant supervision with regard to such matters as the sinking of shafts, the installation of machinery, and things of that kind. Very many of these matters will involve expenditures on capital account; some expenditures will be on revenue account. But if the Board, which will comprise people who have largely been concerned in this sort of business all their lives, are not to be at full liberty to establish reserve funds and to apply them according to the discretion they are given, without the consent of the Minister, who may be a newcomer, and of the Treasury officials, who obviously are not expert colliery managers, my considered opinion is that the working of this business by the Board will be very greatly hampered. They will continually find that they have got to ascertain the will of the Minister as he is advised by civil servants and by Treasury officials. The Lord Chancellor has asked us on more than one occasion in the last couple of days to put trust in the powers and the discretion of the Board. I venture to think that this is a case where above all the Board should be given a free hand subject to general directions under Clause 3 of the Bill to constitute a reserve fund and to apply it from time to time for the proper administration of each of the 792 collieries which are committed to their charge. It is for those reasons, and simply because I want this Bill to work and to give a satisfactory future to the colliery concerns of this country that I support this Amendment.

§ LORD DE L'ISLE AND DUDLEY
I confess I am a little puzzled by the clause as drawn. The Board is to be required to establish a reserve fund, and from that I would take it that they have to withdraw money out of the business and invest it outside. That, in accountancy, is a strict definition of a reserve fund. I see that the noble Lord opposite shakes his 998 head. There is this difference between reserve and reserve fund—reserve is something you take out of revenue and may leave in the business, that is merely an allocation of the revenue. To establish a reserve fund is to take money out of the business and put it into a separate fund. I should like to know what is really the meaning of this clause. Is it to establish a reserve fund, or merely an allocation out of revenue to reserve account? I cannot for the life of me see why the Treasury or the Minister should intervene in this matter.

§ VISCOUNT MAUGHAM
The clause is to be read in conjunction with the next clause, Clause 29, under which any surplus revenues have Lo be applied for such of the purposes of the Board as the Minister, again with the approval of the Treasury, may direct. So they can do nothing with surplus cash unless they get these two bodies to agree. My feeling is that the reserve fund should be applied as the Board think fit.

§ VISCOUNT SWINTON
Apart from that, there is this very important point which I admit I had missed before. If you create a reserve you can plough it back into the business. Say you carry£1,000,000 to reserve: all that can be reinvested in the business;. In fact it is one of the soundest ways of ploughing back profits. It is still a figure in your account, and on the other side, you have all the assets that you have created with it. If you have a reserve fund you must have it in liquid assess and not plough it back into the business. What are you going to do here? If you create a reserve fund of say,£10,000,000, are you going to plough it back or keep it as a trust fund in Government securities?

LORD RENNELL
That is certainly the implication of Section 2 of Clause 28, which states that The reserve fund stall be managed in such manner and applied for such purposes of the Board as the Minister, with the approval of the Treasury, may direct. Its implication, as I read it, is that a reserve fund shall be created and held outside the business, and shall be managed in such manner by the Board as the Minister with the approval of the Treasury may direct. The management will, in fact, be controlled by the Minister and the Treasury. I feel disposed to agree with everything that has been said 999 on this Amendment. One of the arguments noble Lords opposite have advanced, in discussing the Board's functions under Clause 3, is that if the Board is to have any responsibility it must have responsibility for the internal financing of the business and the allocation of a surplus for one purpose or another, including reserve funds. If noble Lords opposite would put themselves in the position, separately or collectively, of being the Board, what sort of function or responsibility would they in fact have, if the Minister and the Treasury are sitting on their hands the whole time? What is there left for the Board to do, except the day-to-day administration, routine matters, and little matters, when even one of the most elementary functions of the board of directors or the board of control is taken away from them and put in the hands of the Minister or the Treasury?
In Clause 3 (1), it is perfectly clear what were the intentions regarding the relations between the Minister and the Board. The words used are that the Minister may, after consultation with the Board, give the Board directions of a general character.… Note the words "general character." Is it really consistent with the use of those words to empower the Minister to give directions to the Board not of a general but of a most detailed character, not only on the amount which is to be allocated for the reserve fund, but, under subsection (2), as to how the fund may be managed? That is one of the most elementary functions of any Board that one can conceive. In those circumstances you are derogating in every possible way from the dignity, responsibility and standing of the members of the Board. If the arguments which have been advanced by noble Lords opposite about the functions of the Board and the sort of people of whom it should be composed, are genuine—as I accept that they are—you cannot at the same time detract from that dignity and standing by putting them back into the kindergarten. In those circumstances I certainly support the Amendment moved by the noble Viscount.

§ 5.52 p.m.

§ LORD AMMON
The noble Viscount who moved the Amendment drew attention to the fact that we have already had some short discussion on this same point 1000 on the Second Reading, and he referred to the statement which I made there. The answer I then gave I now stand by as the correct answer; that is, that the Board has full power to apply these funds for the general purposes of the Bill, including those which I mentioned on the Second Reading which are set out in Clause 3. Some noble Lords have set up dummies and aimed at them as though those dummies constituted the main purpose of the Bill. Let us see what the noble Viscount's Amendment would have the effect of doing. It would have the effect of establishing a reserve fund and carrying to the credit of that fund out of their revenues such sums and at such times as they may think fit. The proposed Amendment will also have the effect of saying that the reserve fund shall be managed in such a manner and applied for such of the purposes of the Board as the Board may think fit.
The objection to the Amendment is this. The State, although in effect the sole shareholder and provider of the capital of the Board, will have no say whatever, if the Amendment is agreed to, in the manner in which the Board deals with their reserves. I venture to say that no Government, either this or any other, could agree to such a proposition. I would remind the noble Viscount that the pre-war Conservative Government, in passing the Coal Act, 1938, setting up a statutory body—the Coal Commission—to administer the "unified" (that is, national) coal resources went even further than is now proposed in the way of Governmental control, despite the fact that the Coal Commission raised its own stock to pay the necessary compensation. The 1938 Act provided in a long clause for automatically carrying any surplus to a reserve, and for the application of the reserve to specific contingencies. We do not go in any way as far as that. The State must surely be in a position to exercise a considerable amount of control over investment. It is universally recognized that the control of industrial investments is of paramount importance, and the Government should be in a position to influence or control the use made of them, and should be able to accelerate or retard capital expenditure. If the Board were to regard themselves as a purely commercial undertaking they would have to 1001 regulate their policy in regard to reserves accordingly.
In the Second Reading debate a question was addressed to me, and I answered quite succinctly that the Board would have power to form a reserve and their duty in carrying out the provisions of this Bill would be to see that it was applied to the reduction of costs, and to improvements, wages, welfare conditions, and such like. Surely it is not departing from that to say that the Board should consult with the Minister, who may himself have some suggestion that might be of great advantage in carrying out the provisions of this Bill. The noble Viscount, as I said on the Second Reading, need not be under any misapprehension, or in any doubt whatever. There is no thought of ploughing all this back into the Treasury, or anything of that sort. This Board will be in precisely the same position as the board of any other company, with the single exception that the State itself will be the sole shareholder and the Minister must have some say in matters. As I said in the speech referred to by the noble Viscount who opened this debate, the position is quite clear and it is quite easy for the State to act in that manner. There is no question whatever of setting up a reserve and putting it by in the way indicated.
Clause 1 states simply that the policy of the Board shall be to …carry out the advancement of the safety of persons in their employment, and the promotion of their health and welfare; that the revenues of the Board shall not be less than sufficient to meet all their outgoings properly chargeable to revenue account.…

§ 5.59 p.m.

VISCOUNT CRANBORNE
I hope very much that that is not the last word of the Government. If I may say so, I thought the noble Lord, Lord Ammon, made a most deplorable defence of the present wording. We have been told all through the debates on this question that what the Government were setting out to do was to set up a Board to manage the industry and that the Board were to be given adequate powers in just the same way as if they were in a private concern. In a private concern the shareholders appoint a Board and the shareholders, of course, are the sovereign power. They 'have the right to discharge the Board or 1002 to continue it in power Until the Board is discharged the shareholders do not manage the business. In this particular case, as the noble Lord, Lord Ammon says, the State is the only shareholder and, exactly in the sane way as with a private company, the State appoints the Board.
It says to the Board, "We appoint you—you are excellent, reputable, experienced men—to represent our interests," and until there is reason for disappointment with the Board, they should be allowed to manage the business in exactly the same way as if it was a private concern. If the Board are not to be allowed (and the noble Lord, Lord Ammon said this was a small exception) to manage the financial allocation that is necessary to make the business a success—

§ LORD AMMON
If the noble Lord will permit me, I did not say anything of the sort. What I said was that the Board have full power, but, of necessity, the Minister, who represents the shareholders—because it is public money—may have some advice to give them But they have full authority to carry on the work and the organization of the industry, and to dispose in the way I indicated of the surplus, if there is a surplus, if I may use that term, of the profits.

VISCOUNT CRANBORNE
With all due deference to the noble Lord, I would not agree that it is the Minister who represents the shareholders. It is the Board which represents the shareholders. The Minister is in fact the shareholder for this purpose, and he appoints the Board. If a Board is not to be allowed to decide what money goes to reserve, and what is to be used in the active operations, no reputable Board could carry on at all.
I was also surprised to hear one other thing which the noble Lord, Lord Ammon, said. He will correct me if I am wrong. He said that if this had been an ordinary commercial concern of course this might be clone, or that might be done, but there were certain factors which came into the present case. I do not know what those factors are.

§ LORD AMMON
What I said was that an ordinary commercial concern may decide to build up a very big reserve. What lam now saying is that the Board may use its surplus either for reduction I of prices, or for improving the conditions 1003 of workpeople, and so forth. That is the power they have. But the Minister after all is responsible, because he is dealing with public funds and therefore he has a certain say. In consultation he might say, if they wanted to reduce the price of coal, "You will probably consider whether or not you may raise the wages of the workers."

VISCOUNT CRANBORNE
With all deference to the noble Lord, Lord Ammon, I do think that his intervention was really irrelevant. As I understand it, what I said was substantially correct. A differentiation is drawn between an ordinary commercial concern, which has power, in order to maintain the prosperity of the business, to build up a big reserve, if it thinks it necessary, and this concern which is not, as I understand it, to have that power.

§ LORD AMMON
There are no competitors.

VISCOUNT CRANBORNE
I do not think that makes a ha'porth of difference. I do think that if the Government are going to set up a State-managed industry, it must be an industry which is economic, and it must be, for that purpose, managed by ordinary commercial standards. I do beg the noble Lord and the Government not to insist on refusing this Amendment. I think in every part of the House it is accepted that it is a perfectly sound and serious one, and I am afraid that it is one we shall have to press to a Division.

§ 6.5 p.m.

§ LORD PIERCY
I venture to make the suggestion that noble Lords opposite are pressing the analogy with a private concern rather too hard. This reserve must be built out of any margin that may exist between the total outgoings of the Board and its total receipts by way of the price of coal.

LORD RENNELL
And what about the sale of assets?

§ LORD PIERCY
Yes, that is quite true, but I think the general tenor of these clauses is that they relate to the normal conduct of the business. I think that is a fair construction to put upon Clauses 27, 28 and 29. The point I am desirous of making is this: that any reserve or reserve fund created will come out of the margin remaining broadly between 1004 the total revenue incomings and revenue outgoings. I quite agree with the noble Viscount.

LORD RENNELL
I am afraid I could not accept that at all.

§ LORD PIERCY
Then let us go a little way with the noble Lord, Lord Rennell. It may very well be that the Board come into possession of funds arising from the realization of capital assets. What I assert—and I may easily be wrong—is that these three Clauses, 27, 28 and 29, have not as their primary purpose the discussion of what may happen to capital receipts obtained by way of realization of assets. Whether they do or do not, obviously the main point with which they deal is any surplus which may arise out of the difference between the outgoings chargeable to revenue, which is the expression used in Clause 29, and the incomings from the prices at which the Board will sell. I did not expect that there would be any dissension on that point, because it is clearly indicated in Clause 29 that the reserve will be built up out of such difference, and it may very well be that if there is such a difference, a very substantial proportion of it will be earmarked as reserve or reserve fund. That I should have thought was non-contentious.
The point I am trying to make is something rather different, and I think it has a bearing. It is this: that you cannot expect the Treasury or the Minister to be disinterested in the sale price of coal; in other words, any margin which may prevail between the total sale proceeds of this Board and their total outgoings will depend on the policy followed with regard to price-fixing, apart, of course, from accidents. I am just trying to make this one simple point: If it is conceded that the Minister and the Treasury cannot be disinterested in fixing the price policy for the sale of coal, it follows that they will largely be responsible for the dimensions of the surplus, if any, whether it is large or small. Is it then reasonable to cavil very much at the provision that they shall have a substantial voice in how the surplus will be disposed of?

§ VISCOUNT MAUGHAM
Will the noble Lord permit me to ask a question? I hope that I am not interfering with his speech, because I agree with a great deal of what he has said. The question I 1005 wish to ask is this. At the end of the year, the Board have in their revenues an excess of incomings over outgoings. Under Section 29 they have to apply that amount as the Minister, with the approval of the Treasury, may direct.
They cannot touch that surplus unless they get this two-fold consent. They know that, shall I say,£100,000 will be immediately needed to sink a shaft or drive a gallery in a particular mine. They have a reserve fund of£500,000. Can they take that£100,000 out of the reserve fund without leave? The answer is that they cannot. They cannot, under this Bill as it stands, take a single penny of it without that: two-fold set of red tapes of the Treasury and the Ministry. I want to know from the noble Lord how they are going to apply the£500,000 which they have got in the reserve fund?

§ LORD PIERCY
The noble Viscount is perfectly correct. He has merely recited what the Bill says. The application of the reserve fund, in the way the Bill is drawn, will depend upon the consent, the assent, or the concurrence of the Minister and the Treasury. The question we are discussing is whether that is a proper position or not. The line of argument which is advanced against is that it is not, because if you take the analogy of a private company, one of the things you necessarily leave to a board of directors is the creation of a reserve and its application. One could also concede to the noble Viscount very freely that it will be necessary to find funds for the sinking of new shafts; and the application of this reserve might very well be a proper use for that. It seems unreasonable to object to the Minister having some voice in the disposal of this reserve when the amount of surplus out of which the reserve can be built up must necessarily be controlled by the Minister and the Treasury, since they cannot dissociate themselves from, the policies for fixing the price of coal.

LORD RENNELL
I am afraid I cannot accept the noble Lord's premises and I venture to suggest: the premises are not correct that a surplus is only likely to be built up by a differential between costs and prices. May I draw the noble Lord's attention to the fact that of all those assets referred to in Part II of the First Schedule it will very likely be deemed not to be necessary or desirable to maintain a great many, and they will 1006 inevitably be sold. Obviously that will be done under the Bill and it is one of the most fruitful sources from which a reserve fund could be built up.

§ LORD PIERCY
If I may be permitted one other word, it is this: there would be a very slender case for giving the Board complete control over the application of funds—which might be extremely large—derived from the sale of special assets. I cannot myself conceive that the clauses in the Bill are directed to anything other than the long-range commercial operations of the Board.

§ LORD DE L'ISLE AND DUDLEY
I have listened attentively to the speech of the noble Lord, Lord Piercy. If I am not misrepresenting what he said, I understood him to justify this clause by saying the Ministry and the Treasury should have control of the capital expenditure of the Board.

§ LORD PIERCY
I do not dissent from that.

§ LORD DE L'ISLE AND DUDLEY
May I then point out that it can hardly be the right way to do it, if that is the intention of the Bill, because you might well show a deficit on your revenue account by means of writing off your other assets, and yet be making capital expenditure. The capital expenditure will not depend upon the existence or otherwise of a surplus. I still cannot see why it should be necessary for the Board to take some of their surplus out of their assets and turn it into cash, and then have to seek the advice or orders of the Ministry as to how they are to invest it.

LORD LINDSAY
May I, as a person of reasonable independence, hope that we shall think a little more about this? I do not think it is as simple as the noble Lords opposite think. I consider that the other side are pushing a little too much one way. I wonder whether we cannot somehow stop and think about this, and not either accept or reject this Amendment.

§ VISCOUNT SWINTON
I really think this is a very simple and straightforward issue which lies in a very narrow compass. The question is, quite: simply: Is this Board, or is it not, to have this primary, elementary function of a business board, or is it merely to be a set of functionaries doing exactly what they are told by the Minister? The noble Lord is entitled to 1007 his opinion, but I hold most strongly that there can be no more acid test as to whether you are going to have a business board and whether you are going to entrust it with the elementary duty of deciding what to carry to reserve and how that reserve is to be applied.

LORD LINDSAY
If you take the words in the Bill as they actually stand, I feel there is very great force behind what the noble Viscount says, but I cannot accept it as being quite as simple as all that. I think you can find a form of words which will meet the point the noble Viscount is making.

§ VISCOUNT MAUGHAM
Then let us accept this clause, and we shall listen to a new clause by the noble Lord afterwards on the Report stage.

§ THE LORD CHANCELLOR
I do not know whether this would be a convenient course. I have kept very silent on this matter of high finance, because I do not pretend to understand these matters, but I do think it would be a good idea to have a little more time to look into this question; and if it meets with the convenience of your Lordships, this might be not an inconvenient time to adjourn.

VISCOUNT CRANBORNE
I am very grateful to the noble and learned Lord, the Lord Chancellor, for what he has said. I quite realize, and we all realize, that it is not for the Leader of the House or the noble and learned Lord to tie his colleagues in this matter, and all they can say to us is that they will take the matter back to their colleagues and see whether any compromise or agreement can be reached. I am sure the other members of the House will agree, in view of the observations which the noble and learned Lord has made, that there is obviously an endeavour on his part to find a settlement to this difficulty acceptable to the whole House. I think it would be very invidious and discourteous for us to refuse the representatives of the Government in this House a chance of seeing what they can do. Therefore, most gratefully I accept the noble and learned Lord's proposal that the debate should be now adjourned and that we should discuss this matter further to-morrow.

§ LORD AMMON
I beg to move that the debate be now adjourned.

1008

§ Moved, That the debate be now adjourned.—(Lord Ammon.)

§ On Question, Motion agreed to, and debate adjourned accordingly.

§ House resumed.