§ Provisions supplementary to the preceding provisions of this Schedule.
§ 21. Where an interest in a thing was owned by any concern, company or other person or for any purpose, or a thing was used for or in connection with any purpose or available for use for any purpose, at any time between the first day of January, nineteen hundred and forty-six, and the primary vesting date or a relevant option notice date, but was no 1071 longer owned by that concern, company or other person or for that purpose, or used for or in connection with that purpose or available for use for that purpose, as the case may be, immediately before that date, it shall be treated for the purposes of this Act as if it had been so owned, used or available immediately before that date, unless it is proved by the person whose interest in that thing would vest in the Board by virtue of this paragraph, that the fact that it was not so owned, used or available immediately before that date was due to something done or occurring in the ordinary course of business, and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision
§ 23. In this Schedule the following expressions have the meanings hereby assigned to them respectively, that is to say,—
§ 5.28 p.m.
§ LORD FAIRFAX OF CAMERON moved, in paragraph 10, to leave out subparagraph (a). The noble Lord said: I would like to speak on the three Amendments standing in my name. The effect of this Amendment is to transfer the provision regarding brickfields from where it is now, subparagraph (a) of paragraph 10 of Part II of the First Schedule, to Part III of the Schedule, so that the transfer of assets in property used for making bricks, tiles, or earthenware pipes, etc., will become subject to arbitration. As the matter now stands, the brickfields, etc., can be transferred to the Board at the option of either the Board or the owners, and solely on that account, without any account being taken of extenuating circumstances or arguments put up by the dissenting parties if disagreement arises. There is no check on the transfer. It could of course (I am not saying it would) become indiscriminate. Brickfields vary in relation to the coal industry. Some are very closely enmeshed in the industry and cannot be easily extricated. The right thing to do under those circumstances would be to transfer those brickfields to the Coal Board. But other brickfields are not so completely enmeshed with the coal industry and there would be no real reason for transferring them under the Board. Furthermore, the transferring of brickfields to the Coal Board is a most dangerous precedent and one which might be followed on future nationalization Bills in regard to an industry other than that being nationalized.
§ One has to draw the line somewhere in nationalization Bills as to where other industries must be brought into the industry 1072 that is being nationalized. I do feel that it is our duty to make quite clear just how far other industries should be brought in and how far we should overstep the needs of utility. Brickmaking is quite a different thing to coalmining; a person may understand how to mine coal, but it does not necessarily follow that he knows how to make bricks. I feel that these brickfields coming under the Coal Board are going to be of no help at all to the Board. It is quite a different job and I think it would be far better, wherever possible, to leave the brickfields in the hands of those people whose job it is to deal with them.
§ There is one last point which I think I should not leave out, because it may be of some importance. The wage structure of brickmaking is controlled by the brick industry; it is quite different from that in the coal industry, and I feel considerable complications may arise over the difference in the scales of pay. I feel that the question of bringing ancillary industries under the Board needs some clarification and that there should be some set rules to guide us.
§
Amendment moved—
Page 52, line 5, leave out subparagraph (a).—(Lord Fairfax of Cameron.)
§ THE EARL OF DUDLEYI should like to support the Amendment which has been moved by my noble friend. I cannot see any logical reason for transferring compulsorily an ancillary industry such as brickmaking to the nationalized colliery undertakings. These brick kilns have sprung up, as your Lordships are no doubt aware, in close proximity to collieries because they use a certain amount of raw material which is thrown up by the collieries, but in other respects they have nothing to do with them and in most cases they are very easily severed from them. They will continue to be of use to nationalized colliery undertakings because they will continue to be an outlet for the sale of these raw materials of which the collieries wish to dispose. Noble Lords opposite have told us that the object of this Bill is to reorganize the coal industry, which they say has been such a great failure in the past. Surely it would be much wiser for them to concentrate on that and not to become involved in the small or moderately small ancillary undertakings, such as brickmaking, which have nothing whatever to do with the raising of coal from the ground.
1073 There may be cases, of course, where it is very difficult indeed to sever a brickworks from a colliery, and where indeed the owners may prefer that the brickworks should pass over to the State together with the colliery; but those are all matters which would be dealt with in arbitration. It seems entirely wrong to me that they should be compulsorily passed over to the State and not passed over under arbitration. I agree with my noble friend when he says this is a very dangerous precedent. On several occasions we have been told by noble Lords opposite that industries become ripe for nationalization under certain circumstances. If a part of this brickmaking industry is going compulsorily to pass into the Government's hands without any option on the part of the present owners, the time may very shortly arrive when the Government will say that the brick industry is ripe for nationalization. I hope that the Lord Chancellor will see fit to transfer this from the part of the Schedule which lays it down as an option on the part of the Government or on the part of the owner to that part of the Schedule which will ensure that the brickworks are not taken from the present owners without arbitration.
§ THE LORD CHANCELLORNoble Lords have quite accurately stated the effect of this Amendment, which is simply to move the transfer of brickworks from Part II of the Schedule to Part III, with the result that there will be arbitration on the question of whether or not brickworks should be transferred. The difference between Part II and Part III is, of course, clear to your Lordships. In Part II there is an absolute right vested in the Board to acquire assets and an absolute right vested in the owners to transfer them, on the ground that the assets in question are major ancillary activities carried on in connexion with collieries. Such major assets would be liable materially to affect the efficient operation of the Board's undertaking and the Board should, therefore, have an absolute right to acquire them. In the circumstances, of course, it is only fair, too, that the owners should have an absolute right to get rid of them and to be paid the appropriate compensation therefor; otherwise they might be left with a major asset for which they would have little use after losing their primary asset, namely, the colliery. Part II procedure, therefore, obliges the Board to 1074 take the rough with the smooth. Part III, on the other hand, enables the Board to have recourse to arbitration if the owners wish to transfer to them some unwanted property.
In regard to brickworks there are certain considerations which make them of especial importance to collieries. First of all, collieries have to consume large quantities of bricks, especially for their underground workings, and it is important for them to have quantities of bricks constantly at hand. Secondly, many collieries produce the raw material from which bricks are made—shale and clay; those are unavoidably produced in mining operations or found in association with the coal seam and mined with the coal. Thirdly, the availability of coal and brick-making materials in the same place enables the heavy transport and fuel costs associated with brickmaking to be reduced to a minimum, and moreover certain low grade fuels for which there may be no outlet can be used in brickworks. Therefore it seems to us from every point of view that brickworks are preminently activities which can advantageously be carried on by the Board "by reason"—and I am reading now the words of Clause 1 (2) (d)
of their having materials or facilities for the production or manufacture thereof in connection with the working and getting of coal or any other of their activitiesThere are, it is true, certain large brickworks under the same ownership as the collieries which could readily be detached from them and could be worked separately. Some are mixed up, but some could be worked separately. I think it is quite impossible to define which of such brickworks it would be inappropriate for the Board to take over, and the Board themselves will be in the best position to assess the advantages and disadvantages in each case after the examination of the problem on the spot. It is right, we submit, to leave them discretionary power in the matter. For this reason, therefore, I could not agree to the proposition that brickworks should be transferred from Part II to Part III.
VISCOUNT CRANBORNEI would like to say one or two words. I cannot be called an expert, either upon collieries or brickyards, and I am speaking merely from the point of view of the ordinary listener to this debate. I think that the noble and learned Lord, the Lord Chancellor, 1075 made out a very good case for the transfer of brickworks to colliery undertakings under certain conditions. It is quite obvious that there are certain brickworks so closely integrated with the collieries that they may almost be regarded as one single undertaking. On the other hand, the noble Earl, Lord Dudley, who speaks with considerable knowledge of these questions, pointed out that there are others which are not so closely integrated, and although in the same neighbourhood are not part of the same undertaking, and where the connexion could easily be severed.
It seems to me one of those cases where arbitration is extremely desirable. The Coal Board may take over a particular brickyard and the owner may not wish them to do so. The Coal Board may be absolutely right, but the owner ought to feel that he has had every chance of stating his case. If the thing goes to arbitration both sides put their case before an impartial arbitrator, and if the owner is defeated he has no further complaint. I think all of us feel that one of the most important things is that nobody should have a legitimate grievance. To transfer this provision from Part II to Part III would avoid any possibility of grievance arising, and would provide for an absolutely full and impartial inquiry in cases where there was a difference of opinion. I cannot feel that that is an unjust or wrong thing, and I hope the Government will consider the matter further. It would be the greatest possible pity if in numbers of cases where owners had been operating these brickworks with the greatest assiduity to the advantage of the country those owners felt that they had been badly treated, and the Amendment of the noble Lord, Lord Fairfax, is designed to avoid that.
§ THE EARL OF DUDLEYThis is really a very important point, and I would like to make one or two observations in reply to the extremely clear statement of the noble and learned Lord, the Lord Chancellor. He said that bricks were required for the purposes of the colliery. I do not know of a single instance—and I do not believe there exists a single instance—where brick kilns have been set up alongside the colliery for the purpose of supplying bricks to the colliery, because the requirements of the colliery from the total output of even a very small kiln 1076 would be so infinitesimal as to make such a thing quite ridiculous. Obviously collieries buy their brick requirements in the open market the same as anyone else, and in many cases they get their bricks very much cheaper in that way than by operating kilns for the purposes of supplying themselves with bricks. I think that shoots—if I may respectfully say so—all the gunpowder out of the Lord Chancellor's first argument.
The noble and learned Lord then said that it was necessary for the Government to take over these brickworks because the collieries produce raw materials which are used in the brick-making. That is quite true, but that is no reason why the State should take over the brickworks, because they could go on selling this material to the brickworks under contract in the same way as they are sold now. In most instances they are separate companies, and the brickworks buys from the colliery, under contract, the raw material, whatever it may be, dirt, shale, or slack. That could go on just as well if the brickworks remained separate from the State-owned colliery. I think that disposes of his second argument.
Then there was the third argument, in which I admit there was a good deal more weight, which dealt with the question of overheads. It is true that in some cases a certain amount of supervision is carried on between the collieries and the brickworks, but that is no reason why an amicable arrangement should not be arrived at in this respect between the State-owned collieries and the privately owned brickworks. Collieries sell power to all sorts of people under present conditions. If they have power to spare from their power-houses they can sell it to an adjoining industrial undertaking of any sort, and there would be really no objection whatsoever under the noble and learned Lord's third head.
He said it was quite impossible to differentiate between those brickworks which are so closely allied to the colliery as to be impossible of severance, and those which could be quite easily severed. I agree with the noble Viscount, Lord Cranborne that there are certain brick works which are so closely allied that they cannot possibly be severed, but all those things would be brought out in arbitration proceedings. I cannot see any reason for this arbitrary and dictatorial 1077 method of taking over brickworks without any logic, rhyme or reason. I hope the noble Lord will press these Amendments unless we are assured that between now and the Report stage further consideration will be given to this principle.
LORD FAIRFAX OF CAMERONI would like the noble and learned Lord if possible to explain to me one point which I must confess I cannot make out at all. The question has been asked twice on this particular Amendment: Why is it that the arbitration tribunal cannot judge each individual case as well as the Board? Why is it that the arbitration cannot be done by a tribunal set up for that purpose as well as it can be done by the Board? I should be grateful if the noble and learned Lord, the Lord Chancellor, would explain that point to me.
§ THE LORD CHANCELLORBecause, speaking broadly, these are major ancillary industries. After all, the scheme of the Bill is that when you are taking over the collieries you are taking over automatically the major ancillary industries. As I have tried to say, they are so very closely intertwined in the colliery working. I have been asked to look at this matter, but I have not yet had an opportunity of finding out the views of my right honourable friend the Minister. I will find out what view he takes about this, although I hold out no grounds for hope. Indeed, the reverse.
VISCOUNT CRANBORNEI am grateful for what the noble and learned Lord has said. We attach considerable importance to this provision for we regard it as an undue extension to the Bill. We shall be glad to hear the result of his consultation with the Minister. If he cannot produce a satisfactory result, we shall be inclined to press this matter. I was not really greatly impressed by the argument of the noble and learned Lord, the Lord Chancellor, about ancillary undertakings. The only reason that they are ancillary is because they use what comes out of the mines. If we are to proceed on that basis, then the noble Earl, Lord Dudley's steel undertakings and other industries all over the country are ancillaries in that sense. Not all, but some of these brickyards are, in fact, separate undertakings, and if it is suggested they should be taken over without the owners being given any 1078 option, I think that would be a hardship upon them. We feel that they should have a fair opportunity of stating their case before an impartial arbitrator. That is surely fair and I hope the noble Lord will find it possible to persuade the Minister that it is. Otherwise we shall be obliged to return to the attack at a later stage.
LORD FAIRFAX OF CAMERONIn view of the assurance given by the noble and learned Lord, the Lord Chancellor, I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ 5.40 p.m.
§ LORD WINSTER moved, in paragraph 19 (2), after the first "activities" to insert" of a kind specified by the Board in their notice exercising the option as being activities for which they intend to use that property, or, if the option is exercised by the owner, activities of a kind" The noble Lord said: This is an Amendment of some importance, and I will endeavour to explain it to your Lordships as clearly as I can. Paragraph 19 (2) of the First Schedule, as it now stands, provides that where property mentioned in paragraph 19 is used for certain activities, and that property, by the exercise of an option, vests in the Board, ancillary equipment (as is mentioned in paragraphs 3 to 8 of the Schedule) which is needed in order that property may be used for these activities, shall also vest in the Board—for example, transport equipment.
§ It was, however, overlooked when that paragraph was drafted that property acquired in this way might have been used both in respect of activities for which the Board were proposing to use the property, and also in respect of activities which the colliery-owner will continue to carry on. It is not intended to vest in the Board ancillary equipment relating to these latter activities, that is to those activities which the colliery-owner will continue to carry on. The proposal, therefore, is to draw a distinction between, on the one hand, those activities in connexion with which the property which is the subject of the option was used by the colliery owner, and will continue to be used by, the Board and on the other hand, those activities in connexion with which the property was used by the colliery-owner, but will not be used by the Board in that connexion.
1079§ The Amendment which I am proposing makes the necessary distinction between these two classes of activities, on the basis of the Board's intention in taking the property under option. To give an example, if the Board take under option from a composite undertaking property used partly for coal carbonization and partly for some other activity such as steel making, intending to use the property for coal carbonization, then transport and equipment of the undertaking used in connexion with coal carbonization will vest compulsorily, but similar equipment used for other activities of the undertakings will not so vest. Where the option is exercised by the owner, this Amendment makes a similar distinction between the two classes of activities on the basis of what the property was mainly used for before. This Amendment puts straight a matter which was overlooked when the Bill was drafted. I beg to move.
§
Amendment moved—
Page 53, line 30, after ("activities") insert the said words.—(Lord Winster.)
§ On Question, Amendment agreed to.
§
LORD AMMON moved, at the end of paragraph 20, to insert
("(2) References in this Schedule to any business or activities, and references in the definition therein of the expression "subsidiary" to ownership of capital of a company, shall be construed as references to the business or activities as carried on immediately before the dates respectively mentioned in the preceding sub-paragraph, or to the ownership of the capital as held immediately before those dates respectively, subject however to the provisions of the next succeeding paragraph")
§ The noble Lord said: This Amendment and the next one on the Paper go together, and with the permission of the Committee, I propose so to deal with them. They really are Amendments of paragraphs 20 and 21 of the First Schedule to the Bill, which constitute a provision for preventing evasion of the vesting provisions of the Bill; that is, to prevent the sale of assets between the date of publication of the Bill and the vesting dates. It is, of course, possible that attempts at evasion might be made by diversion of ownership or use between the dates of the publication of the Bill and those future dates. Neither paragraph deals adequately with the position so far as vesting depends on ownership by subsidiary companies, or on use for particular 1080 businesses or activities. This point is covered by the Amendment which is now moved. The first Amendment clarifies the use of references to "subsidiaries", as can be seen in paragraph (2) of the second Amendment and safeguards the operation of the Schedules against a change in the ownership of a subsidiary designed to evade the vesting of assets owned by such a subsidiary.
§ Secondly, some forms of diversion are not covered by the wording as it stands. For example, the retention of a freehold interest but the draining of the substance out of it by the creation of a long lease at a peppercorn rent is not covered. It is now proposed to substitute a general reference to all forms of dealing with interests. This defect is remedied by subparagraph (a) of the second Amendment where the many relevant ways of diversion are set out. Further, the Amendment makes clearer on whom is the onus of proving that diversion is within the exception for bona fide diversion in the ordinary course of business, namely, on the person concerned. This is set out in paragraph I of the second Amendment. A further point is that provision is proposed for the protection, as regards compensation, of bona fide purchasers who may be dispossessed by the operation of these paragraphs. Lastly, the opportunity is taken to make a verbal amendment for removing an ambiguity as to whether a diversion on the first day of the "close" period (the 1st January, 1946) is within the scope of the provision.
§
Amendment moved—
Page 53, line 48, at end insert the said new sub-paragraph.—(Lord Ammon).
§ On Question, Amendment agreed to.
§
LORD AMMON moved, in paragraph 21, to leave out "between the first day of January, nineteen hundred and forty-six, and the primary vesting date or a relevant option notice date, but was no longer owned by that concern, company or other person or for that purpose, or used for or in connection with that purpose or available for use for that purpose, as the case may be, immediately before that date, it shall be treated for the purposes of this Act as if it had been so owned, used or available immediately before that date, unless it is proved by the person whose interest in that thing would vest in the Board by virtue of this paragraph, that the fact that it was not so owned used or available immediately
1081
before that date was due to something done or occurring in the ordinary course of business, and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision, and to insert:
during the period beginning with the first day of January, nineteen hundred and forty-six, and ending with the primary vesting date or a relevant option notice date, then—
§ (2) Where during the period aforesaid there has been a discontinuance of any business or activities mentioned in this Schedule or a change relevant to provisions thereof in the circumstances of the carrying on of any such business or activities, or there has been a change relevant to the definition therein contained of the expression 'subsidiary' in the ownership of the capital of a company, this Act shall have effect as if the discontinuance or change had not taken place, unless the like matters as are mentioned in the preceding sub-paragraph are proved as to the discontinuance or change.
§ (3) The regulations as to disposal of compensation to be made under section twenty of this Act may make provision for securing that compensation for the transfer of an interest vesting in the Board having regard to the preceding provisions of this paragraph shall be disposed of with due regard to the rights of any person who has purchased or otherwise dealt with that interest during the period aforesaid in good faith."
§ LORD AMMONI beg to move this Amendment which I have already explained.
§
Amendment moved—
Page 54, line 4, leave out from ("time") to the end of line 16 and insert the said new paragraphs"—(Lord Ammon.)
§ On question, Amendment agreed to.
§ LORD WINSTER moved, in paragraph 23, to insert "'interest' does not include 1082 a mortgage estate or other interest held by way of security." The noble Lord said: Clause 5 (6) extinguishes mortgage interests. It follows, therefore, that compensation for interests acquired by the Board is assessed on the basis of such extinguishment. It is important to exclude a mortgage interest from being treated as a "transferred interest," since if it was not excluded it would follow that double compensation would be paid, both on account of it being extinguished and on account of it being treated as a transferred interest. Normally a mortgage interest would not vest in the Board, since it would not be owned by a person carrying on activities of the coal industry; however, it is just possible that in exceptional cases it might happen that vesting would take place, and this Amendment is drafted to exclude any such possibility of the payment of double compensation. I beg to move.
§
Amendment moved—
Page 53, line 48, at end insert the said words.—(Lord Winster.)
§ On Question, Amendment agreed to.
§
THE LORD CHANCELLOR moved, in paragraph 24 (Application to Scotland), to insert—
the expression 'mortgage estate' means the right of the creditor in a heritable security
§ The noble and learned Lord said: This Amendment deals with the application of the definition to Scotland. It is consequential on the insertion in the interpretation clause of the definition of "interest" and not including mortgage estate or other interest held by way of security. I beg to move.
§
Amendment moved—
Page 55, line 45, at end insert the said new words—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ First Schedule, as amended, agreed to.
§ Second Schedule:
§ Transfer to the Board of Rights and Liabilities under Contracts.
§ 2. Provisions of a contract being provisions to which this Schedule applies shall have effect in favour of and against the Board so far as the performance thereof is due under the contract on or after the primary vesting date (or, where the application of this Schedule depends upon the vesting of an interest in the Board by virtue of the exercise of an option, on or after the date of its vesting), as if the Board had been a party to the contract instead of the concern, subsidiary or owner mentioned in subparagraph 1083 (1) or (2) of paragraph r of this Schedule:
§ Provided that—
- (a) rights and liabilities in respect of payments due on or after the date aforesaid for goods or utilities delivered or supplied before that date, or for work done or services rendered before that date, shall be excepted from the operation of this paragraph; and
- (b) the operation of this paragraph may be excluded, as respects all or any rights or liabilities as respects which it would otherwise have effect, by agreement made between the Board and the concern, subsidiary or owner mentioned in sub-paragraph (1) or (2) of paragraph r of this Schedule and notified to the other party to the contract, but, if such a notice is served after this paragraph has taken effect as to the provision in question, so far only as regards performance thereof due under the contract on or after the date of service of the notice.
§
THE LORD CHANCELLOR moved, in paragraph 2 (b), to leave out "but, if such a notice is served after this paragraph has taken effect as to the provision in question, so far only as regards performance thereof due under the contract on or after the date of service of the notice," and insert:
but subject to the following provisions, namely, that if the other party to the contract (or any of them if more than one) objects to the exclusion he may within the prescribed period from the date of the 'notification to him refer the matter to arbitration under this Act, and in that event the arbitrator shall determine whether and to 15 hat extent the exclusion is to be effective, and except, in accordance with the determination of an arbitrator on such a reference, the exclusion shall not extend to performance of the contract due thereunder before the notification.
§ The noble and learned Lord said: This Second Schedule makes provision for the transfer of contracts of the Coal Board. By paragraph 2 (b) operation of the Schedule may be excluded, in the case of some particular contract, by agreement between the Board and the colliery concern or other person mentioned in the paragraph. This provision is desirable as in certain cases it may be convenient for the colliery concerned to carry out the contract, rather than the Coal Board. It has been pointed out that such exclusion might produce hardship to a third party to the contract. This Amendment makes it possible for a third party who objects to the contract being excluded from the operation of the Schedule to take the matter to arbitration. The arbitrator will decide to what extent exclusion shall apply. I beg to move.
1084
§
Amendment moved—
Page 57, line 6, leave out from ("contract") to the end of line 10, and insert the said new words.—(The Lord Chancellor.)
§ LORD LLEWELLINWe have no objections whatever.
§ On Question, Amendment agreed to.
§ Second Schedule, as amended, agreed to.
§ Third Schedule:
§ Provisions as to Selling Schemes under Part I of the Coal Mines Act, 1930, and as to the South Yorkshire Mines Drainage Committee.
§ Contracts.
§ 4.—(1) Subject to the provisions of subparagraph (3) of this paragraph, as from the primary vesting date a contract to which the body administering a selling scheme, other than a central selling scheme, is a party shall have effect in favour of and against the Board as if the Board had been a party to the con_ tract instead of that body.
§ (2) Subject to the provisions of sub-paragraph (3) of this paragraph, as from the primary vesting date—
- (a) a contract to which the body administering a central selling scheme is a party; and
- (b) a contract for the rendering, for the purposes of colliery sales activities, of personal services to a selling agent appointed under a group selling scheme;
§ (3) Subsection (2) to (4) of Section seven of this Act and subsection (3) of Section nine thereof shall apply to the contracts mentioned in sub-paragraph (1) and sub-paragraph (2) of this paragraph respectively as they apply to the contracts mentioned in the Second Schedule to this Act with the substitution, for references to that Schedule, of references to the said sub-paragraph (r) and to the said sub-paragraph (2), respectively.
§ THE LORD CHANCELLORThe first Amendment is a mere drafting Amendment.
§
Amendment moved—
Page 59, line 1, at beginning insert ("The provisions of")—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ THE LORD CHANCELLORThe next is also a drafting Amendment.
§
Amendment moved—
Page 59, line 1, after ("and" insert ("of").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
1085§ THE LORD CHANCELLORThis is a third drafting Amendment. I beg to move.
§
Amendment moved—
Page 59, line 5, leave out from "substitution "to end of paragraph and insert:
§ On Question, Amendment agreed to.
§ Third Schedule, as amended, agreed to.
§ Remaining Schedule agreed to.
§ House resumed.