Lords Sitting of 23 July 1947

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.
The Lord Walpole—Took the Oath.

PRICE OF GRAPEFRUIT.
LORD LYLE OF WESTBOURNE: My Lords, I beg to ask His Majesty's Government the question which stands in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government, whether they are aware that whereas the price paid to the grower in Jamaica for a case of 72 lbs. of grapefruit amounts to only 5s., the retail selling price to the British public amounts to 48s. per case; whether it is a fact that the Ministry of Food's profit on this transaction approximates to 50 per cent., and whether in the opinion of His Majesty's Government this can be considered a fair and reasonable return in all the circumstances.]
LORD HENDERSON: My Lords, supplies of grapefruit imported into the United Kingdom from Jamaica are purchased from the Jamaican Government on an f.o.b. basis, and His Majesty's Government have no information about the price received by the growers. The Ministry's selling prices to wholesalers are based on the average cost of supplies from all sources, not from Jamaica alone, and the noble Lord will appreciate that, apart from loss arising from wastage, there are many charges to be met between the f.o.b. point and the point of sale by the Ministry; for example, freight, handling charges, insurance, inland transportation, overheads and agency expenses. There are, of course, further charges arising between sale to the wholesaler and sale by the retailer.
It is not a fact that the Ministry of Food are making a profit on this com-
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modity of anything like 50 per cent. Final figures in regard to current purchases are not yet available and while the precise figure for such profit clement as there may be cannot be stated, His Majesty's Government are satisfied that it is very reasonable in the circumstances. It should be borne in mind that on other citrus fruits the Ministry may incur some loss and it is the Ministry's practice to take account of the results of trading in citrus fruits as a whole.
LORD LYLE OF WESTBOURNE: My Lords, whilst thanking the noble Lord for his courtesy in the matter, is he not aware that I would not have asked this question had I not realized all these other costs which he has enumerated? is it not a fact that even taking freight, insurance, delivery and all the costs which he has mentioned, the price delivered to the Ministry of Food in this country is 23S. 4½d.? Is it not a fact that His Majesty's Government sell to the first-hand seller at 36s.? Therefore, is that not approximately 50 per cent. profit? How does that tally with the declarations of His Majesty's Government as to profits which should be charged by private individuals? May I ask His Majesty's Government why they will not give the benefit either to the grower in the hard-pressed West Indies or to the consumer? Is it that they wish to make this high profit to hide various losses which they are making owing to be inefficient buying oz other goods?
LORD HENDERSON: My Lords I thought I stated quite definitely in my answer that the profit is nothing like 50 per cent., and I fail to understand why the noble Lord should base his supplementary on a statement which I have denied.
LORD LYLE OF WESTBOURNE: I would not for a moment impute any ill-faith, but the noble Lord challenged rte. I have not been so foolish as to ask this question without knowing ail these costs which I am giving, and perhaps be will deny them. I say that the price delivered over here is 23s. 4½d., with all these costs added, and I say that they are selling to first-hand sellers at 36s. I beg to apologize if I have seemed to be offensive because I did not mean to be.
LORD HENDERSON: All I can say to my noble friend is that I will bring these

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points to the attention of the Ministry. I am sure that the answer which I have given is based on the facts of the case.

INDIA OFFICE RECORDS.
LORD HAILEY: My Lords, I beg to ask His Majesty's Government the question standing in my name.
[The question was as follows:
To ask His Majesty's Government whether they contemplate taking measures to secure for use in this country the important historical records now in the custody of the India Office.].
THE SECRETARY OF STATE FOR INDIA AND BURMA (THE EARL OF LISTOWEL): My Lords, I am glad to give the noble Lord an assurance that we intend to retain in this country the historical records which are now in the custody of the India Office. These records cover the whole period of the British connexion with India, and are the essential material of the history of the East India Company and of the British Government in their dealings with their representatives in India. Though mainly, of course, concerned with India, they are not exclusively confined to that country. In addition to their importance as documents relating to matters of public administration, they contain much material relating to the lives of British individuals and families associated with India. It is obvious that these records should be available in this country for reference in the future.
LORD HAILEY: My Lords, I am very much obliged to the noble Earl for his answer. I am sure it will be received with great relief by historical and other students who are interested in the use to be made of these records.

DUNDEE CORPORATION ORDER CONFIRMATION BILL.
Considered on Report (according to Order).
INVERNESS BURGH ORDER CONFIRMATION BILL.
Considered on Report (according to Order).

ELECTRICITY BILL.
2.40 p.m.
House again in Committee (according to Order).
[The Earl of Drogheda in the Chair.]
Clause 26 [Control of dividends, interest and other payments]:
THE EARL OF LYTTON THE EARL OF LYTTON moved to add to the clause:
"(11) The provisions of this section shall not apply to London Associated Electricity Undertakings Ltd., and notwithstanding anything in this section any company which is subject to the provisions of the London Electricity (No. r) Act, 1925, or the London Electricity (No. 2) Act, 1925, shall be permitted to make such distribution of profits by way of dividend or otherwise as is permitted under the provisions of the said Acts, respectively."
The noble Earl said: This Amendment was very inadequately discussed in another place. Its object was misrepresented by the Government spokesman, and the Amendment was withdrawn without full explanation. I am most anxious that the matter should be made perfectly clear in your Lordships' House. The effect of the Amendment is perfectly clear; the object of it is what I have to explain. The effect is to omit companies which are working under the provisions of the London Electricity Acts, 1925, from the operation of Clause 26 of this Bill. Let me first remind your Lordships of the purpose of this clause. Clause 26 has been introduced into the Bill for the purpose of safeguarding the assets of those companies which will eventually pass to the new Electricity Authority, and to prevent their dissipation during the period which elapses between the publication of the intention of the Government to nationalize the industry, and the vesting date, when the assets will pass. It is, of course, a quite natural and proper clause to have introduced, because in the case of companies that are free to do what they like with their assets it would have been possible—I do not say it would have happened—for some undertakings in the meantime to have paid excessive dividends and to have used up their capital assets, in such a way that when the vesting date came the value of the assets which would pass would be considerably diminished. Clause 26, in order to prevent that, places on all these bodies up to the vesting date a restriction upon the dividends which they may pay, and upon the capital expenditure which they may incur, and so forth.
It may seem, therefore, that the object that I am seeking is that the London companies should be relieved of these restrictions, and that they, and they alone of all the undertakings, should be allowed to do these wicked things which Clause 26 says that they may not do. That was the sense in which it was interpreted by the Government spokesman in another place; and, of course, the Government were not willing to privileged position to that particular group of companies. I hope your Lordships know me well enough to believe that I would never come here and propose that a certain group of companies should be treated in a preferential manner, and should be given privileges and advantages not enjoyed by any other undertakings, merely because I happened to be connected with one of them. That is a thing I would never dream of doing. "Why then," your Lordships may ask, "are you proposing that these particular undertakings should be relieved from the operation of this clause?" My answer is this: because all the restrictions which are imposed under Clause 26 are already imposed on this particular group of companies by the Act of 1925.
They are, therefore, already in a special position, having restrictions imposed upon them by another Act of Parliament. In fact, this particular group of companies were nationalized in 1925, but in their case the vesting date was placed not six months ahead, but many years ahead, from 1931. Meanwhile sinking funds were established to write off the share capital of the companies, so that on the vesting date they would pass to the new authority without the payment of any compensation. They are in fact in precisely the same position which all other undertakings are under this Bill from the time that the Government's intention was announced until the vesting day.
Let me remind your Lordships what the actual restrictions of the 1925 Act are. That Act imposed a limitation of dividends, governed by a sliding scale of prices and dividends. In the case of this particular group of companies, that restriction is a very effective one. Other undertakings have provision for a sliding scale of prices and dividends which is not so effective, but in the case of this particular group that limitation is completely effective. Then the sums that may be carried to reserve cannot be carried for-
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ward, and the companies are strictly controlled. There can be no substantial capital expenditure without the approval of the Electricity Commissioners, and the Electricity Commissioners will continue in existence until the vesting day. So no capital expenditure could be incurred by this company under the 1925 Act without the approval of the Commissioners. In the same way, the terms of issue of car ital are strictly controlled by the Electricity Commissioners and, as I have explained, in the year 1971 the whole of the undertakings will transfer into the possession of the Joint Electricity Authority for whose benefit all these assets are preserved, la the manner I have indicated, by the Act of 1925.
The Act of 1925 is not repealed by this Bill; it remains in existence. It will, of course, be superseded by the Bill after the vesting date, but all that this Amendment asks is that until the vesting date those companies should be left under the statutory control which already exists and they should not have imposed upon them double control by a second Act of Parliament. It would seem to me wholly unnecessary, illogical, and indefensible to pick out a particular group of electricity undertakings and place them under the control of two separate Acts of Parliament in respect of precisely the same matters. That is why I am moving this Amendment, not that these companies should have any privileged position or be relieved of any of the restrictions which Clause 26 imposes, but merely that they should .3e left under the control of the Act under which they have been operating, and will continue to operate, until the vesting date.
Lastly, London Associated Electricity Undertakings Limited, is specifically mentioned because it is not a company subject to the Act of 1925; it is a holding company; but it is a holding company which does not itself operate and only holds the shares of a number of companies that do operate under the Act of 1925 which are, therefore, subject to the restrictions of the Act of 1925, and which can pay no dividend in favour of London Associated Electricity Undertakings Limited, except under the limitation of that Act. There is no need, therefore, to impose any further limitation in respect of dividends which may be declared by that company. I hope I have made the position clear as to my reasons

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for moving this Amendment. I beg to move.
Amendment moved—
Pane 12, line 5, at end insert the said subsection.—(Earl of Lytton.)
THE LORD CHANCELLOR (Viscount Jowitt): Anybody who knows the noble Earl—and which of us in this House does not?—would know that he would never be actuated in moving any Amendment by any sort of desire to benefit any company in which he personally is interested. He has made quite plain what his motive is. The principle on which he bases his Amendment is this: Here are a number of companies already subject to some control and, in that they are already subject to some control, there is no need to exempt them from this further control. That is the principle of his Amendment. I am sorry to say that I cannot accept this Amendment because it does seem to me that it would have, and it is intended to have, the effect of exempting these companies from the control of Clause 26. If the noble Earl comes to look at it, it is rather an odd reason, as it seems to me,, to exempt them from the control of this clause of this Bill, in that they are already subject to some limitation to which the ordinary company is not subject. The ordinary company might very naturally, I think, raise a great criticism of this control. and how should we stand if we said: "Well, you who have not been subject to this rigorous control before must now be controlled, but these people who have been subject to some control can get off this clause"? Quite frankly, I do not think we can do it; I think it would be invidious if we did it, and I think that the actual form in which this Amendment is drawn, referring specifically to some particular company, would get very near to bringing us into a hybrid Bill.
The long and short of the matter is this: I understand that London Associated Electricity Holdings Limited, which is not itself, as the noble Earl told us, controlled by the 1925 Act, is a holding company which owns various companies—it owns one at any rate: I think it is the Central London Company, which is controlled by the 1925 Act. The actual dividends paid in respect of the year 1945 as regards the London Companes were as follows:—London Power paid 6 per cent.; London Electric Supply paid 6 per cent.; Central
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London—one which in particular the London Associated Electricity Undertakings Limited owns—paid 7 per cent.; City of London paid 7 per cent.; South London paid 7 per cent.; South Metropolitan paid 7 per cent.; Notting Hill nil; Metesco paid 9 per cent. and County of London paid 10 per cent. Metesco and County of London both operate outside as well as inside London and are restricted in relation to their London operations only; that is what I am told.
The scheme of this Bill in this clause which we are discussing is that this company for its final notional dividend may pay 4 per cent.—I am paraphrasing the words—or the last dividend, whichever is the greater; I think that is a fair way of putting it. If we were to exempt this particular group of companies from the operation of the clause, I am quite certain that other companies would feel they had a grievance. They would think it unfair that these companies should be exempted and, if I said: "Well, you see, the reason is that these companies are already under some measure of control," they would think that that made the position even worse because, after all, if you are going to control the payment of dividends, there is more justification for doing it in the case of a company which is already under some control than in the case of a company which is as free as the wind. Consequently, from that point of view, I regret that we cannot accept this Amendment. We think that this would create a criticism and would create an invidious distinction between the London companies and other companies. For those reasons, and for those reasons only, I regret that I cannot accept this Amendment.
THE EARL OF LYTTON: The noble and learned Viscount has really not made an answer to this case. He said that this Amendment would be invidious, that it would set up a distinction; but the whole point of my case is that this particular group of companies is to-day subject to precisely the same restrictions as will be imposed upon the other companies and for precisely the same reasons—namely, that they are awaiting their vesting date and they are operating subject to an Act of Parliament which was passed in order to protect those assets in favour of the beneficiary to whom they will pass. That is precisely the object of Clause 26 which

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is applicable to companies which had not hitherto been threatened with nationalization until the moment of the Government announcement. From the moment that the Government announced that the industry would be nationalized, those industries, of course, became for the first time in the same position as the London companies have been in since 1925. All that I am asking the Government to do is to place these companies in the same position with regard to their assets as we were in when the intention to nationalize this group of companies was announced in 1945 and not to place us under two different Acts of Parliament in respect of precisely the same matters of precisely the same character. There is nothing invidious in the distinction between them at all. If there is anything invidious, it is in selecting a particular group of companies for different treatment from that applied to all the others.
On Question, Amendment negatived.
Clause 26 agreed to.
Clause 27:
Final payment of dividends and interest
(3) The stockholders' representative shall apply the sums paid to him under the foregoing provisions of this section (so far as they will go) for the following purposes and in the following order of priority:—
(a) in making interest payments on any debentures or debenture stock of the body, which have accrued up to the vesting date and have not been paid, at the rates permitted under the last foregoing section;
(5) Where the sums paid to the stockholders' representative under the foregoing provisions of this section are insufficient to enable him

(a) to make the interest payments referred to in paragraph (a) of subsection (3) of this section at the maximum rates permitted under the last foregoing section; and

(b) to distribute to the holders of the securities referred to in paragraph (b) of that subsection gross amounts equal to payments of interest or dividend on those securities at the maximum rates so permitted;

and the body possessed immediately before the vesting date reserves applicable for the purpose of maintaining payments of interest and equalising rates of dividend, the Central Authority shall, if the Minister authorises them to do so, pay to the stockholders' representative an additional amount equal to the total amount of the said reserves so possessed or to the total amount of the said deficiency, whichever is the less, and the stockholders' representative shall apply that amount in like manner as the other sums paid to him under this section.
(12) In this section the expression "final financial period" means such part of the financial year during which the vesting date to occurs as precedes that date:
Provided that, in the case of a body whose financial year ends on the date immediately preceding the vesting date, the said expression means the whole of the financial year immediately preceding that date.
3.2 p.m.
LORD LLOYD LORD LLOYD moved, in subsection (3), to insert as a. new paragraph:
"(b) in pitying such sums if any as may be authorised by the body in general muting to be paid to any person as compensation for the loss of office or employment under the body or in recognition of past services to the body."
The noble Lord said: This Amendment is linked with a similar Amendment which we put down to Clause 29 of the Bill, but it is different in two respects. The object of the Amendment is to provide compensation or recognition to persons for loss of office out of the financial revenue to be distributed by the stockholders' representative. The Amendment which was linked with this Amendment, and which is to be moved in Clause 29, is different in two respects: first, because the Amendment in Clause 29 deals with ex gratia payments before the vesting date, whilst this Amendment deals with similar payments after the vesting date; and, secondly, because the Amendment under Clause 29 deals only with payments to officers as defined in the definition clause of this Bill. This Amendment is wider; it deals with persons who would include not only officers, as defined in the Bill, employees and managing directors but also other directors.
I would like to deal first of all with the employees. I do not think that the number of cases where the employees would have to be compensated or have payments made to them under this Amendment would be great, because I think that any payments which had to be made would be met under the subsequent Amendment to Clause 29, of which I have spoken. There are, of course, a number of cases, which are not provided for in the Bill al: the present time—of employees who retire before the vesting date who are not on any approved pension scheme or anything else. The custom with many companies has been that these people are given a lump sum, either in recognition of their services, or in he form of a pension, or both; at the

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moment, the companies can do that only by exposing themselves to all the penalities that attach to Clause 29. However, this other Amendment, which I would like to refer to again later, deals With that set-up and, as I say, I think most of the payments to employees under this particular Amendment would be dealt with before the vesting date under the subsequent Amendment. Of course, there might be cases where that had not been done, where nothing had been paid, or where there had been some mistake, or it had been overlooked. This Amendment would enable the stockholders' representative in such cases to make ex gratia payments to employees. So much for the employees' side.
Obviously the main purpose of this Amendment is to do something for directors. Under the Bill the only directors who are eligible for any form of compensation or recognition for loss of office are directors who are dealt with as officers under the Bill, that is to say managing directors, or directors whose functions are substantially those of employees. Even those categories are not really altogether protected in the Bill because, as I read it, in the case of a director who was substantially an employee, for example, but who did not work full time for any one company, he would be eliminated from compensation under subsection (1) of Clause 55. But nothing is being done for all the other directors. It is not my purpose this afternoon to contend that all directors who lose their jobs without compensation or recognition will suffer great hardship on this account. I am not going to pretend that for a moment. I think probably a great majority of them will not, although I think it would have been a gracious gesture on the part of the Minister if he had made some provision—which I submit this Amendment does—whereby shareholders might show their recognition of the very considerable services that these men have rendered for years in this industry.
However, that is not my purpose. I think most of those directors are quite capable of looking after themselves, despite anything the Minister can do about it; but there are some cases, I suggest, where that is not the case, and where genuine hardship will be caused. Let me take the case of one of the old employees of the company—and there are a great
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many cases like this—who, when he retires, is taken on to the board. He may or may not get a pension, but he is taken on to the board because he does not want to leave the company, and because the company are very glad to have him on the board. He may have been the head of one of their departments. There are quite a number of cases of this kind where such a director, who does not come in the class of directors who get any kind of compensation, is deprived of any compensation for losing this directorship which had been given to him. Perhaps, instead of a larger pension, they might have said: "We will give you a pension, and a seat on the board," or they might have given him a pension and no seat on the board, or they might have given him no pension and a seat on the board. I submit that those men do definitely suffer hardship under this Bill.
There is another case, which is the case of a director who is a technician, perhaps a consultant who gives particular advice. Perhaps he started in that way with a number of companies and, as a result, is taken on to the boards of a number of different electricity companies. He does not work full time for any single company, but the whole of his life has been given to different electricity companies. That man, if he loses all his directorships, as he will do under this Bill—he is not whole time with one company but does an extremely good job of work—will receive nothing, and I submit that again hardship is being caused by the provisions of this Bill. It is primarily because I believe there are genuine cases of hardship, and probably many cases of hardship, but even if there were only one case there is justification for an Amendment of this kind, and it is for this kind of case that I am moving the Amendment. One may ask: "Why has nothing been done for such cases?" I do not know. The only reason I can think of is that the Minister is allergic to the directors of electricity companies, judging by his utterances in and out of Parliament. I do not know the reason for his attitude. It may be because the directors have stood up to him and opposed nationalization. It may be that it is some deep organic antipathy which the Minister has—I mean, dogs do not like cats, bulls do not like red rags, and the Minister does not appear to like the directors of electricity companies. I do not know what it is, but

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it is perfectly plain that, despite the fact that this has been raised on a number of occasions in another place, he is absolutely determined to do nothing for any director, whatever the circumstances, unless he happens to fall into these two categories.
I would like to quote what the Minister said in this connexion. It appears in the Official Report for June 24, at column 300.
"If there were an amalgamation of electricity undertakings or, as sometimes occurs, absorption of one undertaking by another, does one expect the part-time directors of the absorbed undertaking to be compensated by the major undertaking? If they are, on what basis are they compensated?"
All I can say is that the Minister does not seem to have any very good idea of how his Department works. I am rather astonished at this, because I have in my hand Statutory Rule and Order 2153, issued by the Ministry of Fuel and Power, the object of which was to amalgamate the Sheffield and District Gas Company with an undertaking called the Worsborough undertaking. If your Lordships care to examine this document, you will find on page II that all directors, quite regardless of whether they are full-time or part-time, were fully compensated under this Order. And what is more, they got compensation on the basis of seven years purchase of their office. I have also in my hand another Order, No. 2212 of 1946, which deals with a similar. case, that of the Carmarthen Gas Company which was acquiring another concern. Here, also, the directors were compensated.
There is therefore no principle against compensation of directors that I can see. In fact, the Minister himself, on previous occasions seems to have done it. I have only found two instances up to date, but no doubt if I went through the files of the Ministry I could find a great many more. I submit that the precedents which I have produced would be sufficient for me to ask for a great deal more than I am in fact asking for. I claim that there are cases of hardship in this connexion, which should be dealt with, and I consider that it would be only fair and reasonable if the shareholders were allowed to do in such cases what I am certain they would have done out of common fairness and generosity but for the provisions of the Bill. I am not
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asking that they should dissipate capital assets. It is revenue we are dealing with, and not even a full year's revenue, but revenue for the final period, which may be only a matter of three months. So it would not be a great loss, in any case, to the Central Authority. I submit that, in the circumstances, there is a very good case for an Amendment of this kind. It does not dissipate assets; it merely enables shareholders, in those cases where it seems proper to them, to do what I am convinced they would do but for the passing of this Bill. I beg to move.
Amendment moved—
Page 42, line 41, at end insert the said new paragraph.—(Lord Lloyd.)
LORD CHORLEY: I regret that we cannot accept this Amendment. The noble Lord who has moved it has explained that he is really not asking for very much, hut, in fact, the Amendment which he has tabled would enable every company which is. concerned to hold a general meeting before the vesting date, and the shareholders could then be invited to make awards to the sort of persons who are covered by the Amendment, and who are a very wide class of people, as the noble Lord appreciates. If that were done, the stockholders' representative would have no alternative but to pay those sums to the person concerned. The noble Lord has made some remarks, which are, perhaps, rather exaggerated about the Minister's inhibition regarding directors. He has also referred to some Gas Orders in which some compensation to directors was provided for. He has deduced from that that there is no principle against compensating directors. On that he is perfectly right. Not only is there no principle against compensating directors, but a very important clause of the Bill, Clause 55—which we shall come to in due course—is concerned with nothing more nor less than "Compensation to officers in connection with transfers." Of course, the noble Lord's case is not in regard to granting compensation to what are called whole-time directors. What he is anxious to obtain is compensation for the type of director who is called a part-time director.
LORD LLOYD: Will the noble Lord forgive my interrupting him? I would

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just like to get that perfectly clear. I have not sought to make a case for all part-time directors. The case I am trying to make is for those part-time directors who will certainly undergo hardship as a result of this Bill. I believe that there are quite a number of such cases. I also suggested that in view of the fact that this was to come out of revenue, strictly speaking (and that is a very material point), I do not see that it really belongs to the Government until the vesting date. It is revenue not capital assets. But, as I say, my main contention was that it should be for those directors who suffer hardship.
LORD CHORLEY: I am always ready to give way to any noble Lord, and if the noble Lord, Lord Lloyd, wishes to make a speech in reply, I would be very glad indeed for him to do so.
LORD LLOYD: I apologize to the noble Lord for interrupting at such length.
LORD CHORLEY: I am glad that the noble Lord has made it clear that it is only a limited section of directors who are covered by this particular Amendment. I gather that he is satisfied with the arrangements which are provided for the main mass of the whole-time working directors and others who are concerned. The noble Lord is, I am sure, aware that the Government have, from the first and right along, set their faces against the provision of compensation for part-time directors—the sort of directors who hold directorships here and there in a considerable number of concerns. In connexion with this Bill, the Government are taking up exactly the same attitude as they have taken up in respect of other Bills which have already been discussed hi this House. It is true that there may be a number of hard cases as a result of this. Indeed the Bill makes provision under Clause 29 (1) (iii) that the Minister may agree to payment. That is a clause which deals with the re-opening of transactions resulting in dissipation of assets. There are various safeguards provided in the proviso to subsection (1) of the clause among which is one under which the Minister may, so to speak, confirm, whether before or after the event, the making of a payment.
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Obviously, a number of the cases of the type which the noble Lord has put forward would be covered by this proviso. Let us take the case of the technical man who had put in a lot of work and had been rewarded with a part time directorship. Clearly, a good case might be made out in the circumstances for a man of that kind, and if a reasonable sum were suggested as compensation for him there is no earthly reason why that suggestion should not be put up to the Minister. I have not the slightest doubt that, if it were a reasonable case, the action would be confirmed if it had already been carried through or, if it were still only a proposal, no doubt the Minister would be prepared to give it his sanction. So, if it is just a question of dealing with genuine hard cases there will be no difficulty about that. The Amendment, however, would cover the case of every part-time director, whether he had a case or not, and is drafted in such wide terms that obviously the Government cannot accept it.
LORD LLOYD: I am grateful to the noble Lord for his reply and apologize again, because I did not mean to make a speech, only to make my point clear. I am grateful for the assurance about Clause 29. I must confess that I did not read the clause to mean quite that and I had not considered that such cases could be dealt with under this clause. I am not going to press my Amendment, but I would like to ask the noble Lord whether the Government could not make assurance doubly sure and put in "with the consent of the Minister." I believe that that would go a long way towards meeting my point. I do not know whether the noble Lord could put those words in the Bill. If not, I must accept his assurance, which I do readily, and beg leave to withdraw my Amendment.
VISCOUNT BRIDGEMAN: Before the Amendment is withdrawn, may I ask the noble Lord to deal with two points in his reply? Did I understand the noble Lord to say that Clause 55 included in its scope directors of companies? I rather understood that, but I am not quite certain. And could the noble Lord enlighten us on the exact point of difference between the position of electricity directors and that of gas directors?
LORD CHORLEY: With regard to the first point, certainly the word "officer" in Clause 55 does cover the particular

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type of director to whom I refer. With regard to the point raised under Gas Orders, I am afraid that without a chance of looking at them I cannot deal with them. It was not at all clear from the speech of the noble Lord, Lord Lloyd, whether they were part-time directors or not. I shall have to look into that before making an answer satisfactory to the noble Viscount. My noble and learned friend has drawn my attention to the fact that the term "officer" is defined in the interpretation clause as including "a managing director and a director whose functions are substantially those of an employee but not any other director, and also includes a servant."
VISCOUNT BRIDGEMAN: But not a part-time director.
LORD CHORLEY: Certainly not a part-time director.
VISCOUNT SWINTON: I am not quite sure about this. I understand the assurance, which seems a reasonable one, to mean that whole-time directors ought to be treated as officers, and there we are on common ground. I do not think that every director should be entitled to compensation; on the other hand there may be special cases. I understand the noble Lord to say that although they did not come into the definition of "officer" under Clause 55, if there were a case of hardship, some compensation could be paid out of these funds with the Minister's approval.
LORD CHORLEY: That is right, under Clause 29.
VISCOUNT SWINTON: And that would be covered without putting in the provision, "with the Minister's approval." In fact the undertaking given would suggest that the Minister's approval is already in under Clause 29. I am very much obliged.
LORD LLOYD: In view of the noble Lord's assurance, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
3.24 p.m.
LORD HAWKE LORD HAWKE moved, in subsection (5), to leave out "reserves applicable for the purpose of maintaining payments of interest and equalizing rates of dividend, the Central Authority shall, if the Minister
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authorizes them to do so, pay to the stockholders' representative an additional amount equal to the total amount of the said reserves" and insert:
"funds properly applicable for the purpose payments of interest or of dividend, the Central pay to the stockholders' additional amount equal to of the said funds."
The noble Lord said: On Clause 26 I moved an Amendment to allow companies before vesting date to make up dividends to the maximum rate permitted from funds properly applicable to such purposes without any recourse for permission to the Minister. I withdrew the Amendment on the assurance that the Government agreed with my sentiments and would put something in on Report stage. We now come in Clause 27 to the next stage. After the vesting date the company has disappeared, and the shareholders' representative has to disburse for the final period the appropriate dividend. Here I am proposing that the Central Authority should hand over to him sufficient funds, if they are available and properly applicable, to pay a dividend at the maximum rate and that he show d do so without having to ask the permission of the Minister, which seems to me unnecessary. I beg to move.
Amendment moved—
Page 44, line 2, leave out from beginning to ("so") in line 6 and insert the said new words.—(Lord Hawke.)
THE LORD CHANCELLOR: What I said about a similar Amendment is on record. I have not looked it up but my recollection is fairly plain. I said this: I have not at the present moment authority to dispense with the approval of the Minister, but if the noble Lord would withdraw his Amendment I would see if I could get the authority. I think that is the position and the noble Lord must not put it one stage further, that this represents the considered view of the Government. If I remember rightly, I agreed that if he withdrew his Amendment I would be his advocate in trying to get the authority which I did not then have. I think the same thing applies here. If he accepted it in that case, I think he ought to accept it in this case. But it must be quite plain that I have not the authority at the present time. All I can hold out is the hope that I shall obtain authority, and I will do the

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best I can to get it. If the noble Lord will treat this as he treated the last Amendment, I will deal with it on the same basis.
LORD HAWKE: I apologize for having overstretched the promise. I have not looked up the noble and learned Viscount's exact words; they have not been printed yet, and my imagination supplied the rest. I withdraw my Amendment on precisely the same conditions as the one on Clause 26.
Amendment, by leave, withdrawn.
LORD CHORLEY: The next two Amendments are consequential on the Amendment moved by my noble and learned friend.
Amendment moved—
Page 44, line 2, leave out ("reserves") and insert ("funds").—(Lord Chorley.)
On Question, Amendment agreed to.
Amendment moved—
Page 44, line 6, leave out ("reserves") and insert ("funds").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The purport of these Amendments I explained yesterday in moving an Amendment to Clause 17. There are two that go together. The object is to make rather more efficient the machinery for the provision of funds for paying the final dividend. These provisions are really consequential on the Amendment which the Committee accepted yesterday. I feel that these should be accepted too, and I beg to move.
Amendment moved—.
Page 45, leave out lines 13 to 16 and insert:
("(a) there shall be ascertained and certified as soon as possible after the vesting date by an auditor appointed by the Minister the net revenue of the company for the final financial period.").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This Amendment is consequential and I beg to move.
Amendment moved—
Page 45, line 17, after ("ascertained") insert ("and certified by the said auditor").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The same applies to this. I beg to move.
Amendment moved—
Page 45, leave out lines 27 to 34 and insert:
"(c) the said net revenue shall not, except to the extent (if any) to which it exceeds the amount ascertained and certified under paragraph (b) hereof, be subject to apportionment as between the company and the Electricity Board concerned under the foregoing provisions of this Part of this Act relating to the apportionment of the cash and investments of composite companies.
The provisions of subsection (1) of this section relating to the appointment of an auditor, except the requirement as to consultation with the stockholders' representative, shall apply to an auditor appointed under this subsection and there shall be paid to the auditor by the Central Authority such remuneration (whether by way of salary or fees) and such allowances as the Minister may with the approval of the Treasury determine."—(Lord Chorley.)
On Question, Amendment agreed to.
LORD LLOYD LORD LLOYD moved, in subsection (12), to leave out all words after "Provided that," and insert:
"where any body has not made the payments permitted under Section twenty-six of this Act in respect of the last complete financial year before the vesting date the said expression means that year together with such part of the financial year during which the vesting date occurs as precedes the vesting date."
The noble Lord said: I think this Amendment is really parallel to an Amendment which has been moved to fix the vesting date as not earlier than April 1. I do not wish to go further than that. I think the noble and learned Viscount said that he would accept this Amendment at the same time as he accepted the other. I beg to move.
Amendment moved—
Page 45, line 38, leave out from ("that") to end of line 41 and insert the said new words.—(Lord Lloyd.)
LORD CHORLEY: I am very glad to confirm what the noble Lord has said. We do accept this Amendment. We would, however, like to make a small alteration, which I am sure the noble Lord will accept. We propose to insert after the word "payments" in the second line of the Marshalled List the words "of interest or dividend," which makes the matter more complete. If the noble Lord will accept that, we shall be glad to accept the Amendment.
LORD LLOYD: I shall be very glad to accept that suggestion, and I am grateful to the noble Lord. I beg leave to withdraw the original Amendment.
Amendment, by leave, withdrawn.
LORD LLOYD: I beg to move the Amendment in its new form.
Amendment moved—
Page 45, line 38, leave out from ("that") to end of line 41, and insert ("where any body has not made the payments of interest or dividend permitted under Section twenty-six of this Act in respect of the last complete financial year before the vesting date the said expression means that year together with such part of the financial year during which the vesting date occurs as precedes the vesting date").—(Lord Lloyd.)
On Question, Amendment agreed to.
Clause 27, as amended, agreed to.
3 33 p.m.
Clause 28 [Income Tax provisions]:
LORD RENNELL LORD RENNELL moved to leave out Clause 28. The noble Lord said: My Amendment is to leave out Clause 28. I think from the expression on the noble and learned Viscount's face that he anticipates the reason for the Amendment. It has fallen to my lot on one or two Bills to pick out gems of obscurity in drafting. My first and best was in the Coal Industry Nationalisation Act, and we shared that pleasant pastime on the Companies Act. This one falls in the same category as that of the Coal Industry Nationalisation Act. In other words, I am sure we should all like to have Clause 28 in, if we knew what this Clause 28 meant. By and large, I am afraid I do not understand any of it. In addition to its obscurities, there is at least one statement in the clause which, so far as I am concerned, is very surprising. Subsection (1) of Clause 28 says that "this section shall be construed as one with the Income Tax Acts." The end of subsection (2) refers to certain payments that are ordered to be made in Clause 27—which in itself is not a model of clarity—and then there is the rather surprising statement that after the payments referred to in Clause 27 have been made, and Income Tax deducted, the balance, I think it is, "notwithstanding anything in the Income Tax Acts," shall be paid over to the Central Authority.
Clause 27, if I read it aright, says that as soon as possible after the vesting date, there shall be ascertained by an auditor,
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"(a) the net revenue of the body for the final financial period;
(b) the total gross amount paid by the body by way of interest or interim dividend on any securities in respect of the final financial period."
Having ascertained that, the stockholders' representative shall pay the sum he receives in money interest payments, debentures, etc., in money distributions as described later on, and in paying the balance, if any, to the Central Authority. Clause 28 says that the amounts "shall, notwithstanding anything in the Income. Tax Acts, be paid over to the Central Authority for their own use and benefit." Do I understand from that that the Central Authority gets a gross payment without deduction of tax, instead of the balance which is due to be deducted for tax being paid to the Inland Revenue in the usual course of events? If so, why?
The next point which I cannot fathom at all—no doubt the noble and learned Viscount who is going to reply will have a ready explanation—is subsection (3) of Clause 28. There is a small passage about half way down page 46 which is first-class as a model of obscurity; in fact, it is almost worthy of being put is that catalogue or collection of classes to which I referred on another occasion. Subsection (3) says:
"(a) If the payments of any interest of money, annuity or other annual payment charged with tax under Schedule D made by a body to whom this Part of this Act applies … together exceed—the total income of the body … plus (ii) the total of the assessments…."
then
"the said rule 21 shall have effect as if a payment of a gross amount equal to the excess had been made by the Central Authority, as if that payment were a payment of interest of money charged with tax under Schedule D not payable out of profits or gains …."
What does that mean? It is really in order to obtain elucidation, which I am sure the noble and learned Viscount will be able to provide immediately, that I have moved to omit Clause 28. I beg to move.
Amendment moved—
Leave out Clause 28.—(Lord Rennell.)
LORD HAWKE: In supporting my noble friend Lord Rennell in this Amendment, I would say that I regard this as a great test of the versatility of our Civil Service. We all know that we

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must have men who can master these difficult subjects, and possibly for certain reasons enwrap them in this difficult language. But they should be sufficiently versatile to be able to brief the Government Ministers who have to answer questions as to what they really mean. If I can understand the noble and learned Viscount's explanation in due course, I think it will be a great tribute to the versatility of that Service.
THE LORD CHANCELLOR: I do not mind at all explaining this matter. The only thing I object to is this. Of all the men in this House who understand it, or who could understand it if he troubled to read it, the noble Lord, Lord Rennell, comes first. He takes a kind of sadistic joy, as we pass from one Bill to another, in making me explain the complications of the Income Tax Acts. I must confess that I have had considerable experience in regard to the Income Tax Acts and, aided by the Civil Service, about which we have heard, I venture to tell your Lordships that I do not think this is really very difficult. May we start with the ordinary case of a company? A company pays Income Tax upon its profits. It pays dividends to its shareholders. It deducts from the dividends which it pays to its shareholders Income Tax at the appropriate rate. It therefore has the aggregate of the sums it has deducted in its own hands. So long as it is a body it can stick to that sum of money which has borne tax. That is the ordinary and simple case that every child understands.
The complication here is this. You are dealing with the final period of the final dividend. If the company had remained in existence this situation would have prevailed. But the company is brought to an end, and what is being dealt with here is not notionally a sum of money derived out of profits, but a sum of money dealt with by the Bill. The position is this. Under Clause 27 a sum of money has to be paid to the stockholders' representative. I am speaking from memory, but I think with sufficient accuracy if I say that to arrive at that sum of money you first of all ascertain what is the net revenue of the company. You then deduct from that the gross dividends and interest they have paid during the year of office. I
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will call the first a and the second b. You then pay over to the stockholders' representative a minus b. Observe what that sum of money is. It is a statutory sum. It is not the ordinary case of a sum derived from profits, and unless you specially provide that that sum should be treated as what it really is—namely, a sum which is derived out of the profits of the company, which bears tax or has borne tax, you get into this trouble. That is what you pay over to the stockholders' representative. I am firmly convinced that the difficulty in regard to Income Tax legislation is due to the fact that we will not use algebraical symbols. It is extraordinarily difficult to express unless you do use algebraical symbols, and you have to do it by this verbosity of language.
Having paid over a minus b he then has to pay, not, be it observed, the dividend with all the consequences of paying the dividend, but such a sum as is equivalent to the last dividend. Now you have a minus b minus the payments which he has made. In making those payments he is told to deduct tax just as he would deduct it if he were a company paying a dividend. The whole complication arises from the fact that this clause is notionally placing him in the position of a company paying a dividend, whereas in fact he is paying a statutory sum and he is told he is to deduct tax. Now presumably be has something left in his hands. He has to hand to the Central Authority the balance which he has in his hands after making these payments. In the ordinary course, if you did not have any special provision, that sum would be paid to the Revenue because they are paying sums to people and making deductions; the money out of which you make those payments has not borne tax and you have to hand over that money to the Revenue. In this case the money is to be handed over to the Central Authority. But do not let it be thought that the Central Authority get any of this money, because the Central Authority themselves have to pay tax, and so this money goes to the Central Authority as one of the receipts upon which they have to pay tax.
That is the position explained very simply. I think the whole complication arises from the fact that, instead of having a simple payment of a dividend, with

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the consequences about which we all know, you have what is equivalent to the payment of a dividend, but unless you specially provide for it in this clause you would get very different results. Therefore, we provide in this Bill that all the moneys paid shall be treated as though you are paying a dividend out of profits which have paid tax. In those circumstances, you hand back the balance to the Central Authority, who now stand in the shoes of the old company. That, simply explained, is the position under this clause, and I hope that I have been able to make it plain to your Lordships. If your Lordships want a more detailed, snore accurate and more elaborate explanation. I will gladly read out to your Lordships that which the civil servants have given me.
VISCOUNT SWINTON: Is it not delightful and simple when you know how it is done! I once had the privilege of meeting Einstein and, although I did not understand a word he said, I felt it was all crystal clear. I am deeply indebted to the noble and learned Viscount for this explanation which even I was more or less able to follow. As during the Recess he will obviously not have much to occupy him I suggest—assuming that we are to have a further legislative programme in the King's Speech—that he might take these simple clauses in future Bills and translate them into basic English and simpler mathematics.
LORD RENNELL: I am very grateful to the noble and learned Viscount and I think I have understood what he said. But if he will bear with me for a moment there is a very small point which I think is germane. The moneys which the stockholder is to get have been derived from the profits, if any, of the company during the year prior to vesting. In the normal course of events they are all taxable if they are profits, and the dividend is distributed after deduction of tax because the profits have already paid tax. If that is so, and the stockholders have received their dividend with tax deducted because the company has paid tax on its operations, why should not the Central Authority receive what is left over, tax deducted, instead of receiving it en bloc and then paying tax itself?
THE LORD CHANCELLOR: They will. If I understand it aright, the Central
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Authority will receive everything which the stockholders' representative has in his hands after he has made this distribution and he pays the whole. thing lock, stock and barrel over to the Central Authority. When they come to deal with the Inland Revenue they will have credit for the fact that part of this money has already borne tax.
LORD RENNELL: In ether words the Central Authority will receive the net amount and it will not have been grossed up before it is paid to the Central Authority. Frankly that is not the way I read subsection (2), hut I am sure that is right. The only other thing I have to say—and I do not wish to press the point—is that I view with a certain amount of misgiving and horror the suggestion of the noble and learned Viscount to modify the Income Tax legislation by the introduction of algebraical formulae. No doubt it will be very much more comprehensible to him, but I rather wonder whether it would be made any more lucid to the other unfortunate payers of Income Tax. With that, I beg leave to withdraw my Amendment.
VISCOUNT MAUGHAM: As a matter of fairness, I should like to say that I entirely agree with the noble and learned Viscount, the Lord Chancellor, that this clause might be understandable by anybody who can understand arithmetic if letters such as a, b, c, and even x were occasionally introduced. In other respects I only want to say that I congratulate the noble and learned Viscount upon his explanation of this very difficult clause, although I do think, having heard his explanation, that the clause itself might have benefited if what we now know is its true meaning were made clear.
Amendment, by leave, withdrawn.
Clause 28 agreed to.
Clause 29:
Re-opening of transactions resulting in dissipation of assets.
29.—(1) This section shall apply in any case where on or after the tenth day of January, nineteen hundred and forty-seven, anybody to which this Part of this Act applies, being a company, have—
(a) made any payment to any person without consideration or for an inadequate consideration:
and the payment, sale, disposal, acquisition. agreement or variation thereof, or other transaction was not reasonably necessary for the

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purposes of the body or was made with an unreasonable lack of prudence on the part of the body:
Provided that this section shall not apply:

(i) to any payment or other transaction to which Section twenty-six of this Act applies;

(ii) to any payment or other transaction made or entered into for any charitable purpose; or

(2) The Central Authority may, at any time before the expiration of a period of twelve months beginning with the vesting date, make an application to the arbitration tribunal in respect of any transaction to which this section applies, and all parties to the transaction, and all persons who were directors of the body at the date when the transaction was entered into shall be made parties to the application.
(3) Where the arbitration tribunal is satisfied that the transaction in respect of which an application is made is a transaction to which this section applies, then, unless it is shown by any of the parties to the application that the transaction was 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, the tribunal shall determine the extent of the net loss or liability …
(7) This section shall, in relation to a composite company, only apply to transactions entered into by the company in their capacity as authorised undertakers, and the company, and not the directors, shall be made parties to applications under this section.
3.48 p.m.
THE LORD CHANCELLOR: This is our usual "which" instead of "whom" or "whom" instead of "which." I beg to move.
Amendment moved—
Page 47, line 12, leave out ("which") and insert ("whom").—(The Lord Chancellor.)
On Question, Amendment agreed to.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved, in subsection (1), to leave out the words "was not reasonably necessary for the purposes of the body or was made with an unreasonable lack of prudence on the part of the body," which immediately precede the proviso, and insert "would not have been made but for the anticipated coming into operation of some provision contained in this Act." The noble and learned Viscount said: We have here rather a difficult question. It is again only a question of how we can make clear what it is that the authorities can claim in respect of what is called dissipation of assets. We are dealing with a company which is supposed to have made away
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with some of its funds to various people otherwise than in the ordinary course of business, and in particular methods which are described in Clause 29 (1), paragraphs (a), (b), (c), (d) and (e). I will mention the first as being an example of the way in which assets might be dissipated. If a company has made any payment to any person without consideration or for an inadequate consideration, then, as we find later on, the directors liable may have to repay that sum. But after having specified five different ways in which dissipation may result, the draftsman has quite reasonably and properly put in an omnibus clause which is in these terms:
"and the payment, sale, disposal, acquisition, agreement or variation thereof, or other transaction was not reasonably necessary for the purposes of the body or was made with an unreasonable lack of prudence on the part of the body:"
It has occurred to a great many people, as I know, that that phrase "was not reasonably necessary for the purposes of the body" is a phrase which is not very happy, because the tribunal or the person who is to determine that question may have different views on what is "reasonably necessary." That fact has to some extent been realized by the framers of the Bill, as appears if we compare with it a phrase on the next page, page 48, line 8:
"Where the arbitration tribunal is satisfied that the transaction in respect of which an application is made is a transaction to which this section applies, then, unless it is shown by any of the parties to the application that the transaction was 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, …"
That "unless" allows for various things to be done.
This shows what is the real point of these improper transactions, which is that there may be unwise and perhaps not over honest directors. I will not say they are common, but they may exist: men who have entered into the transactions mentioned in Clause 29 (1) for the purpose of evading the provisions of this Bill. It is that test of whether the payments made or the transactions entered into are unfair or improper that is the subject of the present Amendment. I am not going to pretend that the words of the Amendment may not in some cases create some difficulty; in fact, such a phrase as the one on the following page, which I have

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already read, will also create some difficulty. There may be borderline cases in which it is difficult to tell whether a particular payment is reasonable or not, and there may be similar cases in which you cannot be quite sure that a property or rights have been acquired for an excessive consideration, and whether that was "reasonably necessary for the purposes of the body."
My submission is that we should assimilate so far as we can the phrase which I want left out in Clause 29 and in substance take in what is meant on page 48: that the transaction should have been one which would not have been made but for this Bill being on the stocks and the strong possibility that it will become law within a short time. That is the substance of this Amendment. I agree that it is difficult; but I submit that the clause as altered by the Amendment is an improvement on the clause in the Bill. It is less likely to lead to trouble, because directors are prima facie to be taken as being honest and as not having entered into a transaction which was "unreasonable," which showed an unreasonable lack of prudence or which did something with the object of evading the Act. That is all that I want to establish. I am in favour of guilty directors being dealt with in accordance with what they have done.
Amendment moved—
Page 47, line 28, leave out from ("transaction") to end of line 30, and insert ("would not have been made but for the anticipated coming into operation of some provision contained in this Act.")—(Viscount Maugham.)
LORD LLOYD: He is a very bold man who ventures to speak immediately after an ex-Lord Chancellor on what is essentially a legal matter, and it is with diffidence that I do so, but there are one or two points I would like to add. The matter seems to turn on those words "not reasonably necessary," and "unreasonable lack of prudence." I agree that there are a great many safeguards in this matter before any man can be brought before the tribunal. The Central Authority have to prove that the transaction was in fact one of those listed in paragraphs (a) to (e) of subsection (r); and they have then to prove, not two things, as was suggested by the Solicitor-General in another place, but one thing only: that the transaction was "not reasonably necessary"; or that it was
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made with "an unreasonable lack of prudence." I think there was an idea that they had to prove both those things. There are safeguards, but nevertheless we may ask what is "reasonably necessary" and what is "unreasonable lick of prudence"? lit seems to me that a lot of things which are extremely desirable are not necessary. Therefore I feel that more cases than may be imagined might be brought before this tribunal.
I believe that this clause is having a very frustrating effect, not only on the electricity industry but on other industries threatened by nationalization. Suppose the Central Authority are able to convince the tribunal that a thing might not have been reasonably necessary—and, after all, to say what was reasonably necessary is very difficult. Not only directors, apparently, can be parties to the transaction, but other people also; in fact anybody quite outside the electricity business is liable to be haled before this tribunal, with all that that involves. It is having a most frustrating effect in industry. I can give the example of the Dursley Gas Company. They could not supply all their consumers and wanted some more gas in bulk from the Gloucester Gas Company. The Gloucester Gas Company were not particularly kern, but they said they would supply it. Then there arose the question, who was to pay the capital costs to run the mains to connect those two undertakings? On account of this clause, neither company was prepared to take the risk. The end of the story was that the Ministry said they wanted gas from the Gloucester Company and the Gloucester Company said they would supply it, provided they could get an undertaking from the Ministry—which has now been given—that by so doing they would not be prejudiced in the event of nationalization of the gas industry. Enterprise and initiative is being frustrated. Therefore, while I cannot improve on the legal arguments I should like to put that side of the picture, as I believe it to be a very important one. I support the Amendment moved by in noble friend.
THE LORD CHANCELLOR: I confess I thought we had get Clause 29 very clearly drafted indeed. The noble Lord who spoke last apologized for speak rig on a legal matter, but he is perfectly capable of reading the King's English and

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of understanding this clause. What have you got to do if you are going to hold these directors liable? First of all, you have to find these directors; and you have to find that the transaction falls among those mentioned in paragraphs (a) to (e) in subsection (1). Then you have the conjunction "and" followed by further alternatives. Subsection (1), after paragraph (e), says:
"… other transaction was not reasonably necessary for the purposes of the body or was made with an unreasonable lack of prudence on the part of the body."
It is not at all easy to define or apply those words.
Then comes a proviso which takes certain things outside the operation of the clause altogether. It says:

"(i) to any payment or other transaction to which Section twenty-six of this Act applies;

(ii) to any payment or other transaction made or entered into for any charitable purpose; or

(iii) to any payment or other transaction … which has been approved in writing by the Minister … ."

That is all we were talking about yesterday—the desirability of getting a thing franked, as it were, by going to the Minister and telling him what you propose to do, and getting his approval. You have to get a transaction falling within those mentioned in one of the paragraphs from (a) to (e) and the words after the first or second "or" following the conjunction "and." Then subsection (2) says:
"(2) the Central Authority may, at any time … make an application to the arbitration tribunal in respect of any transaction to which"—
I am seeking to amend this by adding "in the opinion of the Authority"—
"this section applies."
Because the tribunal will not be seized of the matter at that time. It goes on:
"and all parties to the transaction, and all persons who were directors of the body at the date when the transaction was entered into shall be made parties to the application."
So the tribunal first of all becomes seized of the matter.
Subsection (3) says:
"Where the arbitration tribunal is satisfied that the transaction in respect of which an application is made is a transaction to which this section applies"—
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that means to say, falling within subsection (1) but not within the proviso. Even then, where they are satisfied of the fact, the person accused has a right to get out if he can show that the transaction falls within the category . mentioned in subsection (3), because that subsection contains these words:
"unless it is shown"—
the onus is now on him—
"by any of the parties to the application that the transaction was 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."
I claim that if we want to prevent the dissipation of assets—and I am quite sure we all do—there is a scheme in my form of words which is not unfair. I certainly do not want to hit anybody who ought not to be hit, and I think that by my scheme and form of words I have brought that about. I have considered very carefully the alternative words which the noble Viscount, Lord Maugham, has suggested. In many cases in this Bill and in other Bills I have accepted his suggestions and therefore I was very ready to accept this one; but, on the whole, it seems to me that the words and the scheme we have got in the clause are better. You might have—it is very unlikely, but you might have—a dissipation of assets in the sense of this clause, not arising from the anticipation of this Bill at all. You might have a very improvident transaction (perhaps the director was drunk when he entered into it) in which he bought something at a gross over-value or sold something at a gross under-value—nothing to do with this Bill at all. That director should be responsible for so doing, for he is dissipating assets in every sense of the word; and yet, because the dissipation was not because of this Bill or anything to do with nationalization, under the proposed Amendment he would be exempt from the provisions of the clause. But he is a man who is virtually for the time being the guardian of property which is going shortly to become the property of the Central Authority.
For that reason, I do not think I can accept the suggested words. I prefer the words as we have them here, and I claim that any fair-minded man looking at this scheme will be satisfied that we have really been at pains to devise some scheme which gives ample security to the honest man against being hit. I cannot accept this Amendment.
VISCOUNT SWINTON: I am not going to criticize the legal side of this business. It may well be that this clause is drafted so as to apply the onus of proof as fairly as it can be. I am not so much concerned with the chance that an individual will be wrongly charged under this Bill, still less that he will be wrongly convicted; he may be had up, but I think probably he will not be convicted unless he ought to be convicted. It is easy to be wise after the event and to say that something was done with an undue lack of prudence, but it is an extraordinarily difficult thing for a Judge or an arbitrator to put himself in the position in which the man was at the time he had to take his decision. There are quite a number of things which turn out one way or the other. Sometimes a thing is done which may have seemed rash at the time but which has turned out well, and everybody is thankful that it was done; sometimes it turns out badly. In difficult times in business, as in politics, the hardest thing but the most important thing to do is to take a balance of risk. The worst thing that can happen, either in the conduct of your business or in the conduct of an administration, if I may say so, is to do nothing for fear of doing something wrong. You can be excessively prudent as well as excessively imprudent.
What is worrying me about this business is not exactly where the legal onus is put, but what is going to he the effect of all this in the transitional period on getting things done. I am afraid that the effect will be to slow down just at the time when we ought not to slow down, and everybody knows to-day that there is nothing like enough electrical equipment installed in the country. Every sort of ingenuity has to be exercised in improvizing and making ad hoc provisions and ad hoc arrangements. If a man is in charge of his business, he will go and do those things and make those arrangements and take his chance. They involve expenditure, they involve risk; they may very often, sometimes certainly, involve loss, but loss which is quite a right thing for an undertaker to suffer as the servant of the whole of the public whom he is serving in his area. If those businesses are continuing undertakings that will go on. But what is going to be the position of an undertaker who, when in any doubt, sees all this chain of possible
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offences? We talk about them here and the Lord Chancellor explains them to us and we understand them, and they do not look very frightening to us. On the other hand, the man outside, when he sees this great chain of possible offences a ad pitfalls into which he may unwittingly fall and for which he can be had up after the event, is not going to say: "If I am an honest man I shall not be convicted"; he is going to say: "I am not going to take the chance of being summoned before the tribunal in order either that civil damages should be recovered from me, or that I may be convicted. I am no longer going to be responsible for the business. I must play for safety." And, if he goes to his lawyer, I think the lawyer is bound to advise him—or if he came to the Lord Chancellor or to me I would be bound to advise him—"do not think you ought to take that chance. At any rate, you cannot take that chance without going to the Minister and the Ministry and having it cleared up."
That may be the only way out; I do not know. But what I am sure of is this: if it is the only way out, and it is the only safe way out, then there should go out from the Government spokesman the clearest possible declaration to all those concerned in these businesses that we want them to carry on, we want them to improvise, we want them, if necessary, to take risks, and that they can come to the Ministry. And I hope to goodness the matter will be devolved into the different regions of the country, and that they will have an immediate answer and be told to go ahead. Unless that assurance is given, and is acted upon with a promptitude not always found in Government Departments, then I am quite sure that people—and they could not be blamed—will play for safety, and things will not be done which the consuming public—the industrial and domestic consumers—badly want done, and which those who have to take over these under-takings equally want to have done.
THE LORD CHANCELLOR: May I respond to what the noble Viscount has said, because I think this is of the utmost importance, and I do agree with him? It is of the utmost importance that people should not be petrified into inaction in this matter. Development must go on, and everything must go on, so far as it can in these very difficult days. Therefore, it is of the utmost importance that

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people should take their problems round to the Minister. They will be frightened to act in these matters—at least I should be. If I were a trustee and I were in difficulty, I should go to the Courts and ask what I ought to do; and that relieves me of all responsibility. If I am in doubt, I put it on to the Court. So let these people who have to act go to the Ministry and get their authorization. I have been at pains to inquire as to how this matter is going, and what sort of delay there is. I gather that there has been some delay about gas, but with regard to electricity I am assured that there has been no hold-up and that the answers have come through quite promptly. The Minister does want to be co-operative about this, because it is essential that he should be; and the only way of doing it is that people should take their problems to the Ministry, and the Ministry (as they can do in ninety-nine cases out of a hundred, and probably in nine hundred and ninety-nine cases out of a thousand) will, quite promptly—if I may use a modern vulgarism—"O.K. the transaction."
VISCOUNT RIDLEY: Before we conclude discussion on this Amendment one must appreciate the necessity of a clause such as this to deal with the dissipation of assets and I understand that proviso (iii) of subsection (1), the appeal to the Minister, was put in really to help the industry in the way the Lord Chancellor has suggested. I can, however, say from experience, that in the only case I have come across in the form of one of these companies we have not yet succeeded in obtaining an answer from the Ministry. No doubt there are other cases where the matter has been very promptly dealt with, but in my experience we have had one question on which we thought we ought to be covered, and in three months we have not yet received an answer. I am not saying that this is a very important matter generally, but I am saying that does add to the difficulties and to the doubts in industries.
On the one hand, you feel you must be covered, and properly covered, by this appeal to the Minister and, on the other hand, you feel you must be getting on. You must, in effect, make forward commitments which are quite proper and which it is necessary for the Central Authority to take over when they take
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over the undertaking; and you naturally wish to be satisfied, as the Lord Chancellor said, being in a sense a trustee, that for the future owner of the industry everything has been done properly. The case I mentioned was not of vital importance to the industry, but it was a matter which could be described in the terms of the next Amendment, I think on line 35, which refers to matters in the ordinary course of business. I wonder whether the Lord Chancellor could agree that something on the lines of that Amendment could be put in, because I feel that that is really of more help than the Amendment which is now proposed.
VISCOUNT MAUGHAM: I do not want to say much in reply because, after all, the position has been excellently explained, if I may say so, by those who have spoken after me. What the Lord Chancellor says is quite right. In a case of difficulty there can be an application to the Minister, and I thought the statement of the noble and learned Viscount in regard to his position as a trustee was an excellent example of what happens in cases where trustees are asked to do things which are a little doubtful. But when we hear from the noble Viscount who has just spoken that this is occasionally taking a good deal of time—and time may be quite vital in cases of this sort—for that reason I cannot help thinking that the Lord Chancellor laid a little too much stress on the proviso in subsection (3) which allows for an approval in Writing by the Minister.
On the other point, I will add only one thing, because I want it to be on record. Contrary to what the noble and learned Viscount, the Lord Chancellor, says, other people may think that, in view of the provisions of this Bill, a dissipation of assets is discreditable to those who are going through with it and ought to be stopped. I have no sympathy with them. The people I am sympathetic with are the directors who have thought it necessary to take a particular step with regard to purchasing, we will say, some machinery urgently wanted, or which they think is urgently wanted, or to do something else which involves a substantial use of funds. When such a director is challenged by the Central Authority, and an application is made to the arbitration tribunal, he is willing to face the proposition that he acted, as he

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thought, in good faith; he thought he was acting honestly and properly, and he never anticipated that it was going to be the subject of a claim for a large amount of money. I object to the answer to him about this: "We do not care whether you were honest or not. We are of opinion that your act showed an unreasonable lack of prudence, or it was not reasonably necessary for the purpose of the body." That is not the position in which an honest director should be placed, in my opinion, and I strongly protest against it.
Then the Lord Chancellor, with great skill, says that at page 48 you find, a provision under which, even if he is held prima facie liable for his transaction though perfectly honest, he may even then get off. The subsection says
"unless it is shown by any of the parties to the application that the transaction was in the ordinary course of business"—
it may not be in the ordinary course of business, it may be something in the nature of an emergency which has never happened before—
"and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision."
I am not saying that there is no value to be attached to those words. All I am saying is that they are wholly inadequate protection in the case of a director who is acting with complete good faith, who is called upon to spend money under certain emergencies which call for immediate action, and who takes a step which someone—who very likely is not a technical man at all—thinks unreasonable, in the circumstances of the case, and that, therefore, the director should be made liable. Those are the contentions which I have laid before your Lordships, and I am very confident that they are not without foundation. I would strongly urge in the interests of the Bill as a whole—because this is not in my view a. thing which can be left out of sight—that the Lord Chancellor should consider whether some modification in the language of Clause 29 might not be made at a later stage. But, having regard to what has happened, I do not propose to press this Amendment, and I beg leave to withdraw it.
LORD LLOYD: There is just one other point which [would like to make. It is with reference to the position of gas companies. The noble and learned Viscount
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stated that the electricity companies could appeal to the Minister in writing and that that was their defence. That is in the Bill. I appreciate the noble and learned Viscount's point. But what is the position of the gas companies? There is nothing specifically in writing to protect them. Would he be able to give us an assurance that the gas companies if they write to the Minister, will be exonerated? Secondly, in view of the delays that have occurred, would the noble and learned Viscount speak to his right honourable friend with a view to seeing if some special service could be set up in the Ministry to deal with this particular aspect of the case—that is, people writing to ask whether transactions are in order or not?
THE LORD CHANCELLOR: I cannot, I am afraid, deal with gas. I have often wished that I could. But after all, when you do get a Gas Bill—if and when you do—you will no doubt have some date, just as there is in connexion with this Bill, January to, 1947—which I think was the date of the introduction of the Bill. You will have some date of that sort I should think. At the present time, the gas people are quite untrammelled. They are not controlled and they can do as they like. I cannot do anything about them.
LORD HAWKE: There is one other small point I would like to mention helm e we pass from this Amendment. The noble and learned Viscount has been telling electricity directors that they must consult the Minister in making difficult decisions in the days that are before us. He will, I hope, realize that that is likely increase very considerably the traffic to the Ministry. I suggest that special arrangements will have to be made to enable decisions to be made quickly at a low level, otherwise decisions will never be made properly.
Amendment, by leave, withdrawn.
4.24 p.m.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved to insert in the proviso to subsection (1):
"(iii) to any reasonable payment made by way of a gratuity or otherwise in respect of services previously rendered by any persons, who are or have been officers of the body."
The noble and learned Viscount said: This is an Amendment which I do not think will be objected to—in principle at any rate—on behalf of the Government. They have made a statement in another

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place which shows that they are in favour of it, and I rather gather that words of the kind proposed in the Amendment will simplify the making of reasonable payments by way of gratuity.
It is not always appreciated that companies, especially large and important companies, are constantly making payments by way of gratuity, or which are in substance gratuity, without any legal obligation to pay—for instance, payment of workmen during holidays, payment without any contractual obligation to pay, payments to men who are sick, or who have left their employment owing to sickness and who have no right to compensation under one of the Acts. Many companies do, in such cases, constantly make payments, and of course there are numbers of other gratuities which are paid in respect of services previously rendered. For instance, if a man has served a concern faithfully for many years and is not entitled to anything more than a small pension, the directors may well think it proper to add to his pension.
When this matter came up in another place Mr. Glenvil Hall (as reported in Column 322 of the OFFICIAL REPORT for June 24) said (referring to an honourable member):
"He will be glad to know, and the House will be delighted to know, that it will still be possible for those directors to do as many of them will desire to do—that is to make provision for old and valued servants in this way. There is nothing to prevent them from doing it before the vesting date, and neither the Minister nor anyone else will raise any objection even if it does, to that extent, dissipate the assets of the particular undertaking."
I rather gathered that the honourable gentleman thought that that was plainly possible under some clause in the Bill—and he mentioned Clause 48 (1). I am in grave doubt as to whether this is really clear, as to whether there is something which, beyond doubt, enables these payments to be made. Even if I am wrong, as I may be, and there is something which might by some doubtful implication authorize the payments, I think having regard to what I have said, and the undoubted propriety of payments of this sort, that words of the kind mentioned are proper to be inserted in this place. I beg to move.
Amendment moved—
Page 47, line 35, at end insert the said subparagraph.—(Viscount Maugham.)
LORD LLOYD: This is the alternative Amendment on Clause 29 to which I referred when speaking on an earlier Amendment. I think that the case for this Amendment has been put with admirable clarity by my noble and learned friend Viscount Maugham, and I should like to support it.
VISCOUNT RIDLEY: I understand that the statement by the Minister which has been quoted by the noble and learned Viscount would, in fact, be enough to cover this, under the approval which the Minister could give if asked formally to do so.
VISCOUNT MAUGHAM: He might not be there.
VISCOUNT RIDLEY: In practice we, at any rate, have taken it that it is proper for us to continue paying gratuities of this sort. There is, however, one question which I would like to ask in this connexion. I ask it here because I cannot see where else in the Bill the point can be covered. Can we be satisfied that the practice of companies who have treated their staffs and workmen in this sort of way will be continued by the area boards and the Central Authority? I am not referring to ordinary pension schemes, which are provided for, or to the compensation clauses, but to the habit of undertakings of giving extra pensions and certain gratuities to people who have been with them for a long time. I cannot ask for a specific answer to my question now, but I hope that this matter will be considered.
LORD TEYNHAM: I should briefly like to support this Amendment. I think it is covered by the assurance given on the Amendment moved to Clause 27, mentioned by the noble Viscount, Lord Ridley, and in another place I find it said that an Amendment of this sort may make a difference between a company treating their employees generously and saying that they must stick to the letter of the law. The Minister in charge of the Bill said to that, "We will certainly consider all these arguments." And I feel sure the noble and learned Viscount will be able to say this will apply in this case.
VISCOUNT MAUGHAM: The assurance is no good. In justice to the undoubted legal view, I must repeat once more, for the tenth time, that an assurance as to what will be the effect of a particular

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section or sections of an Act of Parliament cannot be referred to as evidence before an arbitrator or court of law. You are not even able to say what the Minister said on the hearing of a Bill. And therefore, with the greatest respect to my noble friend, I do not think it right to ask the question whether the assurance of the Government covers what is wanted. We want words to cover it.
THE LORD CHANCELLOR: I am sorry, but if that doctrine prevailed we should never get through any Bill. It is quite true that an assurance is not part of an Act of Parliament, but it is a novel doctrine to me that in considering what to do with a Bill you have no right to consider assurances given on behalf of tire Minister. I think that Mr. Glenvil Hall's statement on Clause 27 was perfectly accurate and I think my statement was accurate; and it is applicable here, too. Of course the noble and learned Viscount, Lord Maugham, is perfectly right in saying that companies frequently give gratuities and sums of money which they are legally not compellable to pay and it is eminently sensible that they should, because by so doing they create a happy feeling among their employees and they gain the reputation of being good employers.
Some people who do not understand these things believe that the directors, who are trustees for their shareholders, are not entitled to pay sums of money unless they are under a legal liability to do so. That is a complete misapprehension. It is often in the interest of the shareholders that they should be generous to employees. Therefore 1 feel, particularly in the case of companies who have been doing this in the past, that you cannot possibly say that the transaction was not reasonably necessary for the purposes of the body or that it was made with an unreasonable lack of prudence. I do not think any tribunal would look at you if you tried to argue that. I agree that one must be careful of the other side of the picture. Where there are companies very shortly to fade away, and for the time being they find themselves in possession of assets which are to be handed over to the Central Authority, there is the temptation for some of the less thoughtful of them to distribute money all round to good friends who have served them well and loyally in the past. I
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regret to say that some people are not hesitant about cheating a railway company although they would not dream of stealing anything from ordinary people. Similarly, there are some who think that if they can help the old employees, although it does mean that the Central Authority will have a little less, that will be all right. I am not suggesting that thoughtful or honest men will take that line, but there is that danger.
Therefore, frankly, I am reluctant to put in this express clause. It does seem to me almost an invitation. On the other hand, I feel quite satisfied that reasonable payments, made as they are normally made, would not be objectionable would not come under this ban imposed by Clause 29. But, again, if anybody is frightened by reason of the amount which is paid being rather more titan usual, or fears that he might possibly be charged and these things alleged against him, do let him go round to the Minister. We have set up a special department on these matters. I am sorry to hear what the noble Viscount, Lord Ridley, said and I will look into this case; but so far as I can find out answers have been coming back in four or five days. The Minister has not the least desire that the present practice of paying reasonable gratuities should be discontinued; on the other hand, we must avoid the danger of people being rather more generous with other people's money than they are with their own. I think it would be a bad thing to insert the actual words of this Amendment in the clause.
VISCOUNT MAUGHAM: I am surprised at the statements made by tie noble and learned Viscount. In the first place, I repudiate his suggestion that I said you are never to rely on any statement made by a Minister in the progress of a Bill. That is not what I said Dr intended. But I do repeat—and I think to some extent the noble and learned Viscount agreed with me—that what I said is absolutely irrefutable. If you want a provision to authorize certain things, you must have it in the Bill, not-withstanding all the Minister may say. I take my stand on that as a matter Of constitutional law. In this case of gratuities is it proper to say that the directors. who want to give a gratuity to an old servant can go round to the Minister and. get his approval in writing?

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I suppose there are thousands of cases in which it will be necessary for gratuities to be given by the great number of companies affected by this Bill. I think the Minister would be little pleased with the result of a debate on this clause if there were thousands of applications. Many would be for quite small sums. Fifty pounds may be a matter of the greatest importance to a poor man. Is it reasonable in this year of our Lord, with all the things the Minister has to do under this Bill, to suggest that if you are in difficulty about paying £50 to an old servant you can go round to the Minister and seek his approval for the transaction—thereby causing him to spend an hour in seeing whether or not it is a proper case? It does seem to me that is not a proposal which really ought to meet with the consent of this Committee. I am in great difficulty here. The Committee is at this hour not a very full one. It may be that it would not be right to take the course of insisting on this clause in this particular form, but I reserve the right to raise this question again after consideration on Report. I would urge the noble and learned Viscount, the Lord Chancellor, to see if he cannot meet me to some extent in what I cannot help thinking is a very proper case. In the meantime, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
4.40 p.m.
LORD WOLVERTON LORD WOLVERTON moved to insert, after proviso (ii) to subsection (1):
"(iii) to any payment or other transaction made or entered into in the ordinary course of business."
The noble Lord said: I think that I can move this Amendment very quickly, as its object has already been discussed at great length. The noble Viscount, Lord Ridley, thought that the alternative clause might achieve all that is desired. All that we really want to cover is that if decisions have to be taken quickly there should not be any delay. As we know there has been certain delay, and it is vital that there should not be. There is also the question of the arbitration costs, which are bound to occur since many of the companies will have to go to arbitution. It is for those reasons that I hope the Government will be able to accept this Amendment. I beg to move.
Amendment moved—
Page 47, line 35, at end insert the said subparagraph.—(Lord Wolverton.)
THE LORD CHANCELLOR: I am sorry, but I cannot accept this Amendment. The scheme of the clause, as I pointed out before, is this. The tribunal have to be satisfied that the person comes in one of the (a) to (e) categories, and that the transaction is unreasonable or was made with an unreasonable lack of prudence. Then you have the provisos: If the tribunal are satisfied that the man comes within one of the enumerated classes, and is not within the provisos, you will find that even then he comes under the (a) to (e) categories unless it is shown that the transaction was in the ordinary course of business, "and was in no way connected with any provision made by this Act." The effect of the noble Lord's Amendment is to take out those words, "and was in no way connected with any provision made by this Act."
I will give the noble Lord a simple illustration. It is the ordinary course of business to buy a horse for a delivery van, or something of that sort. Suppose that you buy a horse, and you generally give £1,00 for a horse, although on this occasion you give £1, 000. Buying a horse is the ordinary course of business. Surely it is much better to have this test—whether you made a payment to a person for inadequate consideration, or you acquired any property for an excessive consideration. If the tribunal come to that conclusion, and they then come to the conclusion that one of these other points is satisfied, they leave it to you to show that the transaction was a reasonable transaction, and in the ordinary course of business, and was not connected with the passage of this Act. That is the scheme, and I venture to think it is much better than that suggested by the noble Lord, which would lend itself to abuse. I do not like always to be pointing out the possible abuses, as though I were dealing here with the most dishonest set of men. We all know that we are dealing with an honest set of men. Nevertheless, in passing an Act of Parliament we should certainly look to see what results the words might lead to. That is why I cannot possibly accept this Amendment.
LORD WOLVERTON: In view of what the noble and learned Viscount has said, I beg leave to withdraw the Amendment. The only point is that people will have to write in to the Minister for permission for every single thing.
Amendment, by leave, withdrawn.
LORD RENNELL LORD RENNELL moved to insert after proviso (ii) to subsection (1):
"to any payment or other transaction made or entered into in connection with a submission to arbitration under this Act or any proceedings before any tribunal established by regulations made under this Act."
The noble Lord said: I have listened with great interest to the analysis of the noble and learned Viscount of this clause, which seems to be giving us so much trouble. There is one set of payments referred to in my Amendment, and I do not know how the noble and learned Viscount would propose to provide for them. It may be that he will consider they are ordinary and normal payments, but ex hypothesi a company which may have to go to arbitration, or can be called to arbitration, cannot beforehand make provisions by asking the Minister whether expenditure under this is authorized.
THE LORD CHANCELLOR: Would the noble Lord tell me what sort of arbitration he has in mind?
LORD RENNELL: The arbitration referred to in the latter part—namely Subsection (3) of Clause 29. The company may be called to arbitration, or asked to go to arbitration, on one of these payments. Where and how will the company be authorized to make payment for its inevitable expenses in such an arbitration? If the company itself takes the initiative of providing technical evidence, and making its case, is it the thesis of the noble and learned Viscount that they shall go to the Minister beforehand to ask whether those expenses are authorized expenses? I beg to move.
Amendment moved—
Page 47, line 35, at end insert the said subparagraph.—(Lord Rennell.)
THE LORD CHANCELLOR: Quite frankly, I had not visualized this case at all. I do not see how anybody can say that the company is a party to an arbitration. It is very unlikely that it would be. The normal parties would be the directors. I had not visualized the company coming in on this. However, I
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agree that under the word "parties" might. If they are subject to any such claim, could any reasonable person say that the expenses which they incurred, and the payments which they made their solicitor and counsel, can possibly come within the description "not reasonably necessary for the purpose of the body," or that they are made with an unreasonable lack of prudence? A ma n who is his own lawyer has a fool for a client. If the company is sued most certainly the company ought to instruct competent people to appear for it; that means to say, paying adequate slims of money. There can be no doubt at all, I should have thought, but that expenses so incurred are reasonable in every respect and, therefore, would not come within the clause at all. Of course, If you went to a junior, or even a senior barrister, and marked his brief "£1,000,000," that would be a pretty good dissipation of the assets and would be a little unreasonable. Therefore, it is a question of degree. I always thought when I was at the Bar that it was good thing that people should litigate on a generous scale, and I should be most unhappy to set any different principle now.
LORD RENNELL: I quite see the point but if the noble and learned Viscount will look at subsection (1) of Clause 29, at those very words he has quoted so frequently, there are three possibilities. There is "the payment, sale" and so on. Payments of this sort cannot come under that. Nor can they come under the third head, "or was made with al unreasonable lack of prudence," assuming, of course, that they did not make the brief £1,000,000, as has been suggested. Therefore, they can only come, I presume, under the wording, "or other transaction was not reasonably necessary for the purposes of the body." Those purposes I read as being the general purposes for which the company was constituted—namely, to conduct electrical undertakings, or whatever it was that the company was doing prior to being taken over. It is not one of the purposes of that body to go to arbitration. It seems to me that there is a gap there. If the noble and learned Viscount will look into the matter, I shall be happy to withdraw the Amendment at this stage. I thin]: there is something more in this point than there perhaps appears to be.
THE LORD CHANCELLOR: I will gladly look at it, but my impression is that this will all happen after the vesting date, and on the vesting date the body is dead. I do not believe the body will be there at all. Therefore, I do not think there is anything in this point. However, I will gladly look into it.
LORD RENNELL: Not all the bodies will be dead, because in our discussions yesterday it was agreed that some would remain partly alive. If they are dead then obviously that body cannot be party to an arbitration. In that case, am I to understand that the whole of the costs of that arbitration fall on the directors? I presume that is correct. If, however, a part of that body remains alive—those holding companies of which we spoke yesterday—that part might be a party to an arbitration and would not cease to exist.
THE LORD CHANCELLOR: Anybody who is alive can be a party to an arbitration, but nobody who is dead.
LORD RENNELL: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: The next Amendment is to make plain what should have been there all the time. Here I am referring to the stage when the Central Authority have got the matter in hand, and I am proposing to put in the words "in the opinion of the Authority." I beg to move.
Amendment moved—
Page 48, line 2, after ("which") insert ("in the opinion of the Authority").—(The Lord Chancellor.)
On Question, Amendment agreed to.
4.52 p.m.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved, in subsection (2), to substitute "may" for "shall" in the phrase "shall be made parties to the application." The noble and learned Viscount said: This Amendment is only to substitute the word "may" for "shall". I am so old a hand in these matters, especially in actions against directors, that I know that, even though they owe you money, you very often do not sue because they may be bankrupt; they may be people who have left the country and in some cases they may have died and left small assets. You have to
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leave some discretion in the plaintiff as to whom he shall select, out of the people who are prima facie liable, as the defendants in an ordinary action. I think it makes no difference here, as it is really only a matter of drafting, but I would suggest that you do not want the Central Electricity Board to sue people who are no good as defendants. I beg to move.
Amendment moved—
Page 48, line 5, leave out ("shall") and insert ("may").—(Viscount Maugham.)
THE LORD CHANCELLOR: This is a very small point, but I will certainly look at it again. I confess that my present feeling is that it ought to be "shall," and for this reason. It is quite clear that the Amendment contemplates the possibility of some directors not being made parties to the application, but what one wants to consider for a moment is in whom is the discretion to determine who should be parties to the application? If it was the Tribunal there would be no objection, but of course it cannot be the Tribunal because the people are going to be taken before the Tribunal. Therefore it must be the Authority who will be in the position of the plaintiff. If they are to determine, I think it would be open to some objection because it might be said that they arbitrarily picked on some directors and left some out. There might be a sense of grievance. Although it is perfectly wise to leave out the kind of directors who are men of straw and cannot pay—which is what the noble and learned Viscount has in mind—if you make this change it might be that the Authority would be empowered to use their discretion rather differently and leave out those directors, for instance, who they thought were not to blame. I think they should all be put before the Tribunal and the Tribunal should sort them out. Therefore, I am a little disposed to think that "shall" is better than "may." But it is not a matter upon which I care very much, and I do not suppose the noble and learned Viscount does either. I will look at it again to see whether my present impression is the correct one.
VISCOUNT MAUGHAM: In those circumstances I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: The Amendment at page 48, line 27, although

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it appears under the name of the noble and learned Viscount, Lord Maugham, is in fact a Government Amendment. I am glad to find myself in such good company or rather sheltering under his umbrella. It is purely a matter of drafting and therefore I am sure your Lordships will agree with it. I beg to move.
Amendment moved—
Page 48, line 27, leave out ("subsection (1) of").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential on an Amendment to Clause 17. I beg to move.
Amendment moved—
Page 49, line 3, leave out from beginning to ("the") in line 5, and insert ("In the case of a composite company").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 29, as amended, agreed to.
Clause 30:
Provisions as to foreign investments.
(3) If any such body contravene or fail to comply with the provisions of this section or any regulation made thereunder, all persons who were directors of the body at the time when the contravention or failure occurred shall be jointly and severally liable to make good any loss suffered by the Central Authority in consequence of the contravention or failure.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved to leave out subsection (3) and insert the following new subsection:
"(3) The Minister or the Central Authority may at any time before the expiration of a period of twelve months beginning with the vesting date make an application to the arbitration tribunal in respect of any transaction as to which the Minister or the Central Authority claims that this section applies or as to the failure to dispose of any investments and all parties to the transaction, and all persons who were directors of the body at the date when the transaction was entered into or when the investments should have been disposed of must be made parties to the application. Where the arbitration tribunal is satisfied that the transaction in respect of which an application is made is a transaction to which this section applies or that there has been a failure to dispose of any investments then the tribunal shall determine the extent of the net loss or liability caused to or imposed on the body by the transaction or by the failure to dispose of the investments and shall make such orders against all or any of the parties to the application (other than the
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Minister or the Central Authority) as it thinks just, having regard to the extent to which they were respectively responsible for the transaction or for the failure to dispose of the investments or benefited from the transaction or the failure as the case may be, for the payment by them to the Central Authority of sums sufficient to enable the net loss or liability or such part thereof as the tribunal thinks just, to be made good or met."
The noble and learned Viscount said: This is a somewhat lengthy Amendment which it is proposed to insert in substitution for subsection (3).
THE LORD CHANCELLOR: I will accept it in principle.
VISCOUNT MAUGHAM: I was myself going to suggest that perhaps the drafting might be amended in some respects. I beg to move.
Amendment moved—
Page 49, line 16, leave out subsection (3) and insert the said new subsection.—(Viscount Maugham.)
THE LORD CHANCELLOR: As the noble and learned Viscount himself will realize, it is a very difficult matte: to draft this subsection. I think the drafting is defective and I should like to have an opportunity, if I may, of working on the subsection and polishing it up. When I say that I mean my draftsmen. In principle, I can accept the Amendment. Your Lordships will see that it makes two alterations. First: of all, it takes these matters out of the purview of the Court and puts them before the Tribunal. Secondly, it fills up a gap of which I was conscious in my subsection in regard to letting out the director who is not in any way to blame. Those principles I accept. If the noble and learned Viscount would not press the Amendment now—although if he does I will accept it—but will allow me to have a look at it, when I have succeeded in drafting something I will show it to him and I am sure we shall be able to agree.
VISCOUNT MAUGHAM: I shall be quite content to take that course, and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
4.58 p.m.
On Question, Whether Clause 30 shell stand part of the Bill?
VISCOUNT SWINTON: I would like to ask the noble and learned Viscount to

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give us some indication as to the effect of this clause, particularly in the light of the debate we had yesterday, both as regards the prohibition of purchase and the obligation to sell. It was common ground yesterday that the Central Authority and the area boards did not wish to have anything whatever to do with extraneous assets, and extraneous assets included primarily assets outside this country. As the Lord Chancellor has explained to us, the last thing in the world the Government wanted to do was to acquire these assets, and we discussed at great length what was the best way of enabling the companies who own such assets to carry on in the possession and management of their assets. I made a proposition to your Lordships to which we shall return at a later stage, but I would like to comment upon the provisions of this clause as it stands. Even if the Bill stood without any concession with regard to these holding companies—and it was admitted that concession there must be, whichever way the concession is to be made—why was it necessary to make these provisions?
The first subsection says:
"It shall not be lawful for any body to whom this Part of this Act applies other than a composite company to acquire any foreign investments."
"Composite company," as your Lordships know, is a term meaning only those companies which are engaged in gas or water as well as electricity. Is it really necessary to put that prohibition upon a holding company which already has a number of foreign investments? Suppose it has an extremely favourable opportunity to acquire something which is very germane to one of its foreign undertakings, as a matter of good business it would obviously be good sense and good business to acquire it. Treasury permission is required and would no doubt be given. And observe, the Government do not at all want to take it over; they do not want to have anything whatever to do with these foreign assets. Surely it is enormously important that these companies, trust companies as they are in effect, should not be precluded from making such wise, sound, profitable investments—investments indeed which may become very good breeders of trade.
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The next subsection I find even more difficult to understand. It says:
"Every such body shall, within such period as may be prescribed, supply to the Minister and the Central Authority particulars in the prescribed form of all foreign investments of the body, and shall dispose of those investments in such manner and within such period as may be prescribed."
But why? Why should they be forced to dispose of those assets "at such time and in such manner" as the Minister may prescribe? We agreed last night that the last thing the Minister wants is to have anything to do with these foreign assets and that what the holding company wants is to retain the assets and manage them. We have to find the most convenient way of doing that. But why should we then have a provision in the Bill that the undertaker who does not want to part with his assets vis-à-vis the Minister who does not want to receive them should be under an obligation to sell them "at such time and in such manner" as the Minister prescribes? And then the Bill goes on to say that anybody who contravenes this goes to prison—or whatever it is. I do not want to save him from going to prison; I want to save the trade of this country and to save this important foreign trade from a most unnecessary and uncalled for interference.
Subsection (4) says:
"… foreign investments' means any assets the transfer of which is governed otherwise than by the law of any part of Great Britain."
That includes, your Lordships will observe, not only any assets in a foreign country but any assets in the Commonwealth. I think it is a most extraordinary thing that we should in this Bill—which as the noble and learned Viscount, the Lord Chancellor, tells us has nothing whatever to do with business carried on abroad or in the Commonwealth—butt in (if I may use such a crude expression) and say that these people who have acquired these investments in foreign countries or in the Commonwealth should be forced to sell them. Subsection (5) says:
"If it appears to the Minister to be necessary or expedient for the purpose of securing the disposal of foreign investments of any body under this section, to postpone the vesting date in relation to that body, he may direct that the vesting date for the purposes of this Act shall be"—
such as he chooses to fix. I do not think that is relevant. It would be a very extraordinary way of doing the thing.

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But why should not these people be left in possession of these assets which the Minister does not want to take over and which they wish to retain?
VISCOUNT MAUGHAM: I should like to say a word, particularly with regard to subsection (4). At first I was not certain that that was not really worded so as to include Colonial and Dominion investments, by error, because I cannot understand why under this Bill it should be suggested that an English holding company was acting unwisely or contrary to the interests of the State in holding, or continuing to hold, investments in Canada, Australia, New Zealand or South Africa, as they have clone for many years past; and the total amounts involved are many millions. Everybody knows that a great many of these companies are quoted on the Stock Exchange, and many people here who hold investments in South African shares or, let us say, nickel shares, are unable to tell you off-hand whether the companies are English or Dominion ones. It really makes no difference.
During my time at the Bar a number of companies which were registered here and had assets in South Africa were transferred to Johannesburg simply in order to avoid a certain amount of Income Tax which they were justified in doing—but they remained substantially the same companies. I am quite unable to see why the clause is worded as it is. The phrase in subsection (4), "any assets the transfer of which is governed otherwise than by the law of any part of Great Britain" shows, I think, beyond doubt that companies, however English they may be in other respects, which are registered in a Colony or a Dependency, or of course, abroad, are governed as regards transfer by the law of the land in which the company is supposed to be situated, which is of course the place of the registration of the company. If that is not in doubt, then the very serious doubt I have is whether, for some reason not well explained in public, it is thought improper to allow companies to which the subsection applies to continue to hold investments, many of them of the greatest value and interest, in these English-speaking countries such as the Dominions and Colonies. I venture to think that some explanation should be given of the curious wording of this clause. If it remains as
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it is I can conceive of some very strong observations being made in our Dominions in regard to so strange a provision.
THE LORD CHANCELLOR: I think there is some misunderstanding about this clause. I want first to correct a mistake I made yesterday. When I was referring to what happened about these assets, what we conveniently call the extraneous assets, I spoke of the block of flats to which the Earl of Lytton was referring, and one of the foreign assets to which Lord Rennell was referring, as being extraneous assets of a like case, but they are not. I ought to have called your Lordships' attention to Clause 30, which contains the provision that a company can be ordered to dispose of its foreign investments before the vesting date.
The reason for it is this—and it really rather simple. As the noble and learned Viscount, Lord Maugham, stated just now, foreign investments in a company registered in a foreign country or in a British Dominion are governed by the law of that foreign country or that Dominion, and all questions such as their transfer, and that sort of thing, are governed by the law there in force. Suppose you had a holding company which was knocked on the head on the vesting day and destroyed and ceased to exist under subsection (11) of Clause 14 about which we were talking yesterday; what would be the position of its foreign investments if it held them up to the moment before it died? There is a grave danger of those foreign investments being bona vacantia because, unless the foreign countries by their law are going to recognize their transfer by operation of our law, those investments will belong to no one, and on the register in that foreign country or Dominion you will still see the name of this holding company inscribed. When the Central Electricity Authority come along and want to deal in those things, it is quite possible that the foreign country will say, "We are very sorry, we know nothing about you; we do not recognize you at all. So far as the company whose name is here as the holier of this stock is concerned, it is dead End these things belong to no one." Thai is a risk against which we have to guard, Therefore, to guard against that risk, it is necessary that those things shall be disposed of some little time before the vesting date.

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Having said that, I come back to what I said yesterday. It is quite right that the Minister does not want these things, but what the noble Viscount, Lord Swinton, forgot for the moment—we are all apt to forget these things—is that all the companies who own these investments are themselves coming to an end, and we have to deal with this problem. These unfortunate companies—or rather these fortunate companies—who are being taken over are coming to an end; death stares them in the face, it may be on April 1 next or April 2, though I think April 5 is a Monday, and then something has to be done about it. What we want to do about it is this. As I said, we must take them over lock, stock and barrel, because the Stock Exchange price, if we are going to adopt that method of valuation—I am not going back to our old discussion on that point—applies only to the undertaking as a whole. You cannot allocate a particular part of the price so arrived at to particular assets; we have only a global figure to deal with. We do not want these foreign assets and, therefore, having taken them over, we are perfectly willing that they should be disposed of in any way that seems best to the company concerned, always providing they are disposed of in such a way as not to dissipate the assets. I have no doubt that what I said yesterday in regard to this point will be fresh in your Lordships' minds. Although I was in error in not referring to Clause 30, the principle is the same.
VISCOUNT SWINTON: I am greatly indebted to the Lord Chancellor for having explained why it is necessary, in the opinion of the Government, to put in this clause, because unfortunately some Governments might not recognize the legislation in this country as conveying a title. We see how interesting and unexpected and unfortunate are the ramifications of these activities, and so we have to go through the unfortunate process of forcing these companies to realize their investments, or, in default of a better solution, to sell them back to themselves, and to buy them back at an inflated price—by "inflated price," I mean a higher price than the Government would have given for them, as was plainly shown yesterday. If the situation might be so complicated and so injurious that
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that could not be done before the particularly hopeful day on which we expect to start this new adventure—on April 1—the vesting may even be postponed.
I think all your Lordships were here when we had our discussion last night, and I will not go back to it now, but we shall have to return to it at the next stage. What the Lord Chancellor has now said, I am sure you all will agree, emphasizes the vital importance of finding a really satisfactory way of letting these companies with foreign assets continue in existence. Then this clause would be quite unnecessary.
VISCOUNT MAUGHAM: Personally, I am much obliged to the Lord Chancellor. The explanation which he has given us of Clause 3o removes from my mind a very unpleasant idea on the subject of the Government's view of Colonial and Dominion securities, which apparently does not exist in real life, and all that is necessary is something in the nature of machinery. It was not uncommon, and I believe it is not very uncommon now, for assets to be found belonging to a company which has been wound up, and my recollection is that in those cases, although prima facie they would vest in the Crown if there was nobody else on earth to claim them, we did discover a way of reviving the company and so being able to transfer and divide up the assets among the shareholders. I have not been able, since the noble Lord spoke, to find the exact words in this Bill which relate to the winding-up of these companies and their extinction—because there may be a winding-up without an extinction of a company as a living entity which can hold property and can dispose of it in the proper way. I am inclined to submit—in fact, I do submit—to the Lord Chancellor this consideration: that those in charge of the Bill should see if there is not a much easier way of disposing of the whole matter than that contained in Clause 30, namely, by words in reference to the liquidation of the company, to keep alive the companies in question as living corporations for the limited purpose of holding such securities as are here in question and, it may be, any other securities which the Central Electricity Board will not touch with the end of a barge pole. That, I venture to think, would certainly not be beyond the ingenuity of the gentlemen who have been in charge of the draftsman-

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ship of this Bill, and I hope that that course may be taken before we get to the next stage.
Clause 3o agreed to.
Clause 31:
Establishment of Electricity Arbitration Tribunal.
(7) The arbitration tribunal may, at any stage in any proceedings before them, refer the proceedings for hearing and determination to a person or persons appointed by them for the purpose, and where any proceedings are so referred, the person or persons to whom the proceedings are referred shall be deemed to constitute the tribunal for the purposes of those proceedings, and shall have all the powers and duties of the tribunal in relation to the hearing and determination thereof.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM had given Notice that he would move to leave out subsection (7) and insert:
"The Arbitration Tribunal may, for the purpose of obtaining any information which the Tribunal may require, direct any member of the Tribunal or any officer or person appointed by them to hold an inquiry, but nothing in this Act shall authorise the Tribunal to delegate any of their judicial duties as arbitrators."
The noble Viscount said: This is a very small matter, and I rather think there is something in the Lord Chancellor's Amendment which, to some extent, deals with the question, is there not?
THE LORD CHANCELLOR: My intention was to draft an Amendment to cover this point.
VISCOUNT MAUGHAM: And that is the Amendment on the Paper, is it not?
THE LORD CHANCELLOR: Yes.
VISCOUNT MAUGHAM: I have read it, and though to my mind it is not exactly the same as mine, I think it will do very well. Therefore I shall riot move my Amendment.
THE LORD CHANCELLOR: This and the succeeding Amendments are the Amendments which I have had drafted to carry out in substance the point with which the noble Viscount has been dealing. I beg to move.
Amendment moved—
Page 51, line 13, leave out ("the proceedings for hearing and determination").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: I beg to move.
Amendment moved—
Page 51, line 15, leave out from ("purpose") to the end of line 19, and insert ("any question arising in the proceedings, for inquiry and report, and the report of any such person or persons may be adopted wholly or partly by the tribanal and, if so adopted, may be incorporated in an order of the tribunal").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 31, as amended, agreed to.
Clause 32:
Procedure and enforcement of orders of arbitration tribunal.
(4) An appeal shall lie, with the leave of the Court of Appeal or of the House of Lords, from any decision of the Court of Appeal under the last foregoing subsection, and such have may be given on such terms as to costs or otherwise as the Court of Appeal or the House of Lords may determine.
(7) In relation to proceedings which, under the last foregoing section, are required to be held in Scotland, this section shall have effect subject to the following modifications
(b) in subsection (6) for the reference to the Lord Chancellor there shall he substituted a reference to the Secretary of State.
THE LORD CHANCELLOR: The next Amendments are merely drafting. The position is this that the Appellate Jurisdiction Act and the Administration of Justice (Appeal) Act, 1934, already provide what is to happen with regard to an appeal to the House of Lords—namely, if the Court of Appeal give leave, that all right; otherwise you can come and apply to the House of Lords. It is undesirable in practice to keep repeating i hat in every new Bill. It is already provided for in the law of the land.
Amendment moved—
Page 52, line 1, leave out subsection (4).—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: This Ls a drafting Amendment. I beg to move.
Amendment moved—
Page 52, line 17, leave out ("(3) and (4)") and insert ("and (3)").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: This is consequential. I beg to move.
Amendment moved—
Page 52, line 17, leave out ("respectively").—(The Lord Chancellor.)
On Question, Amendment agreed to.
5.23 p.m.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved, in paragraph (b) of subsection (7) to leave out "Secretary of State" and insert "Lord Advocate." The noble Viscount said: I rise with some trepidation to move an Amendment which may be thought to involve the arcanum of Scottish law, into the precincts of which Englishmen do not usually step. The substance of it is very simple. The subsection to which it applies relates to modifications, for the purposes of Scotland, in some provisions contained in the earlier part of Clause 32, and the paragraph which it is thought may be improved is the one at the bottom of page 52, which supplies for the reference to the Lord Chancellor, reference to the Secretary of State.
The duties of the Lord Chancellor in England under the clause in question are duties in connexion with the framing of rules or regulations—I have forgotten which they are called—in regard to certain arbitrations, and whatever may have been the case in the past, nobody would be more competent at the present time than the Lord Chancellor to frame rules or regulations of that kind in England. But, when we come to Scotland, I venture to think—and I hope the Government will appreciate the fact—that the proper person to frame rules of a legal character in reference to arbitrations should be a lawyer, and Ministers, however skilful and able they may be, are really not people who hitherto have ever been employed to draft rules or regulations of this kind. There happens to be in Scotland a high official who is always, in my experience, both a lawyer of eminence and yet a person whose conduct can be called into question. That is not the case in regard to the person suggested in the clause—namely, the Secretary of State—so far as legal training is concerned, and the only person who is equivalent in a sense to the Lord Chancellor for Scottish purposes is the Lord Advocate. I may say that I have not been alone in forming that opinion, because several noble Lords who are well acquainted with Scotland, and some of them with the Lord Advocate himself, have told me that this is certainly the
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right Amendment and will satisfy opinion on the other side of the Border. I beg to move.
Amendment moved—
Page 52, line 45, leave out ("Secretary of State") and insert ("Lord Advocate").—(Viscount Maugham.)
LORD MORRISON: The noble and learned Viscount commenced by saying that he moved this Amendment with some trepidation, but I can assure him that his trepidation is nothing compared with my task in attempting to persuade him that this is not a helpful Amendment. As he pointed out, the Bill sets up an arbitration tribunal, and subsection (6) of Clause 32 says that the rules are to receive approval by the Lord Chancellor. In subsection (7), where it is laid down that in the case of Scotland for the reference to the Lord Chancellor there shall be substituted a reference to the Secretary of State, the noble and learned Viscount wishes a reference to the Lord Advocate to replace that for the Secretary of State. This question was raised and discussed in another place as to whether it was appropriate that the Secretary of State, who may, in accordance with Clause 32 (8), have a right to be heard before the Tribunal in certain cases, should approve the rules to be made by the Tribunal determining its procedure.
The suggestion was then made that the rules should be approved by the Lord President. This suggestion, however, could not be accepted because the Lord President is not answerable to Parliament. He is opposed to accepting functions of this kind, and is not, in fact, furnished with the staff necessary for their discharge. The proposal in the Bill, that the rules should be approved by the Secretary of State, is in accordance with the general practice of leaving to the Secretary of State, as regards Scotland, functions not appropriate to the Lord President of the Court of Session, which are entrusted in England to the Lord Chancellor. There is an exact and recent precedent, which I might point out to the noble Viscount, for this proposal in Clause 106 of the Transport Bill.
Nor is there anything unusual, if I may point this out, in asking the Secretary of State to undertake a quasi judicial duty in a sphere in which he has interests as a departmental Minister. Under the Fire

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Services Bill, for example, an appeal by statutory water undertakers lies to the Secretary of State, in certain circumstances, as the Minister corresponding to the Minister of Health, although he is also, as the Minister corresponding to the Home Secretary, interested in fire service administration. The fact is, that a ministerial Pooh-Bah like the Secretary of State must be prepared to assume a variety of hats, and comport himself according to the hat he happens to be wearing; and his capacity for behaving impartially in accordance with the hat for the time being on his head is not seriously questioned in Scotland. There is, therefore, no reason to suppose that, in this one instance, the Secretary of State will not behave with complete impartiality; or that there would be any conflict of duties, any more than there might be in the case of the Lord Chancellor, who in England approves the rules of the Tribunal, and may ultimately have to deal with appeals from its decisions.
The proposal to give the duty to the Lord Advocate is wholly unprecedented, and the Lord Advocate is not, any more than the Lord President, furnished with the staff necessary to undertake administrative and executive work. The Lord Advocate is a Law Officer of the Crown like the Attorney-General and the Minister responsible for public prosecutions. He has, generally speaking, no other executive functions. Further, as the Secretary of State's legal adviser, and as the person who might well represent the Secretary of State before the Tribunal, he is no more a disinterested party than the Secretary of State. 1 beg to submit therefore that it would be better—and I hope that the noble and learned Viscount will agree—that the clause should remain in its present form.
THE EARL OF SELKIRK: I do very much regret the answer which the noble Lord, Lord Morrison, has given for a number of reasons. It was he who used the title Pooh Bah. I might have used it if he had not done so. I think that it is rather a pity that where a number of offices are combined into one an excessive burden should be put on to that office. It is quite untrue to say that the Secretary of State occupies the same position in Scotland as the noble and learned Lord Chancellor in England. How it is that we have succeeded in getting along in Scotland without a Lord Chancellor I do
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not know, but we have succeeded in doing so for some reason or other. This is essentially a legal matter, the regulations are essentially legal in character, and the Lord Advocate is not the legal adviser to the Secretary of State. He is the .e al adviser on Scottish affairs to the Prime Minister, which is an entirely different thing. I would challenge the noble Lord to give examples. There may have been one or two in the Transport Bill. We went through it pretty thoroughly, but I will not say that a few things may not have slipped in which should not have clone so. I think that, as a matter of tradition, the Lord Advocate is the proper officer, in a purely legal matter, to handle such cases as those which would normally be handled in England by the Lord Chancellor, apart from those which would be handled by the Lord President of the Court of Session. I regret the noble Lord's answer, which I think is wholly wrong according to the traditions of the high office of Lord Advocate. I very much hope that the noble Lord will reconsider this.
LORD MORRISON: May I point out that I said I was advised that this would be wholly unprecedented.
VISCOUNT MAUGHAM: As I have Amid, I do not regard myself as an expert in this matter. I feel that there is great weight in what the noble Earl who has just spoken has said to your Lordships, and it is within my knowledge that number of other Scottish Peers take the same view. But, in the circumstances in which I am now placed, I beg leave to withdraw the Amendment.
Amendment, by leave. withdrawn.
Clause 32, as amended, agreed to.
Clause 33 agreed to.
Clause 34:
Determination of questions as to application of Part of this Act.
34.—(1) The Minister shall, within the prescribed period, serve a notice on every body who in his opinion are a power station company or electricity holding company to whom this Part of this Act applies and, unless that body serves on the Minister, within such period (not being less than twenty-eight days) after the service of the notice as may be prescribed, a counter notice in the prescribed form (which is not withdrawn) stating that in their opinion this Part of this Act does not apply to them, this Part of this Act shall be deemed to apply to the body.
5.35 P.m.
LORD ROCHDALE LORD ROCHDALE moved, in subsection (1), after "within the prescribed period," insert "not being later than six months before the vesting date." The noble Lord said: Clause 34 deals with the cases where there may be some doubt as to whether bodies are or are not going to be taken over under this Bill. The clause says that the Minister shall within the prescribed period serve notice on every body who in his opinion are a power station company or electricity holding company, and so on. My Amendment would seek to add after the words "within the prescribed period" the further words "not being later than six months before the vesting date." During discussions on Clause 1 and Clause 14 earlier in the Bill the importance was stressed of seeing that the members of the British Electricity Authority and the area boards should be appointed as early as possible in order to give them an opportunity of getting down to the work of preparing plans for the time when they will assume their responsibilities, and from the assurances that were given and from what was said on all sides of the House, it would appear that that principle was generally agreed. This Amendment is really, I suggest, a natural corollary or development of that principle.
The Amendment aims to give adequate time for any disputes to be settled which may arise as to whether any electrical generating power companies or electrical holding companies shall or shall not be liable to be taken over under the Bill, the point being that we want to get these disputes settled in adequate time. In other words, it is to ensure that in making their plans the Central Authority or the area boards may be quite clear in their own minds as to whom they have to include in their plans and whom they have not to include. As the clause stands at present, the procedure is that the Minister initiates the process by serving on those companies notice that he considers that they are power station companies or holding companies and should be taken over under the Act. The only time factor that is introduced into the clause as it now stands is the time factor within which those companies have to make a counter-appeal if they wish to do so. There is no date laid down by which the Minister has to make his initial demands, Whilst I have no doubt that in the interests of all
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concerned the Ministry will, perhaps, go out of their way to see that these settlements are made as soon as possible, there is nothing, as the Bill now stands, to stipulate the exact time.
I feel that it is only fair to all concerned, and particularly to those who have to operate the concerns on the vesting date, that the matter should be in black and white in the Bill, and that this notice should be served at the earliest possible moment. This is not a backdoor way of attempting to postpone the vesting date. It is a serious attempt to improve the administrative arrangements and to make it easier for those who have to assume these very great responsibilities on the vesting date. I beg to move.
Amendment moved—
Page 53, line 31, at end insert ("not being later than six months before the vesting date").—(Lord Rochdale.)
LORD CHORLEY: I regret that we cannot accept this Amendment. The difficulty is that, if the Minister were tied down in the way in which this Amendment would tie him down, it would be quite impossible for him to take over companies of the existence of which he is not at present aware. There may well be companies of that kind—holding companies—and if the Minister were tied down in this way he would not be in a position to deal with them. I am sure that the noble Lord will appreciate that, and I hope that in the circumstances he will see fit to withdraw this Amendment. The noble Lord did say that he had no doubt that the Ministry would do their best to see that this matter was carried through with expedition. I can assure him that that is very much in the Minister's mind and that every effort will, in fact, be made in respect of these particular power station and holding companies to deal with them within the time. But the noble Lord will, I am sure, appreciate that there may be a few such concerns which cannot be dealt with under his Amendment, and in the circumstances I hope that he will withdraw it.
LORD ROCHDALE: I do appreciate the difficulties that the Minister would have, possibly, in ascertaining the facts relating to some of these companies. While I said that I thought it likely that the Minister would be as expeditious as possible in this matter, I added that I hoped that something would be put into

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the Bill in black and white to draw attention to that very fact. However, in view of the assurances which the noble Lord has given, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 34 agreed to.
Clause 35 [Power to obtain information]:
LORD CHORLEY: It is my turn to score two easy boundaries. I beg to move.
Amendments moved—
Page 54, line 28, leave out ("which") and insert ("whom").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: I beg to move. Amendment moved
Page 54, line 35, leave out ("which") and insert ("whom").—(Lord Chorley.)
On Question, Amendment agreed to.
Clause 35, as amended, agreed to.
Clause 36:
General duties and powers of Central Authority and area boards in financial matters.
36.—(1) It shall be the duty of the Central Authority so to exercise and perform their functions under this Act, including their functions in relation to area boards, as to secure that the combined revenues of the Central Authority and all the area hoards taken together are not less than sufficient to meet their combined outgoings properly chargeable to revenue account taking one year with another.
(2) Without prejudice to the powers of the Central Authority under Part I of this Act to exercise, by means of directions given to area boards, a general control aver the policy of those boards in financial as in other matters, such directions may require area boards—

(a) to submit for the approval of the Central Authority periodic estimates of revenue and expenditure;

(b) to obtain the approval of the Central Authority in the case of expenditure properly chargeable to capital account and in other classes of cases where it is desirable in the opinion of the Central Authority to secure co-ordination between different area boards in matters involving expenditure.

5.42 p.m.
LORD HAWKE LORD HAWKE moved in subsection (1), to leave out "the duty" and insert "the policy." The noble Lord said: As the Bill stands it is the duty of the Central Authority to see that their total revenue plus that of the area boards amassed together is sufficient to defray the expenditure chargeable to revenue account taking one year with another. Clause 45
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defines this revenue, but I will not enter into any details of that sort. If my Amendment were accepted, it would become the policy of the Central Authority to see that their own revenue and that of each area board was sufficient to cover their respective charges to revenue each year. The point at issue here, is whether the Central Authority and the area board; should have a fixed target or a nebulous target. The Bill, as it stands, is complete nebulosity. My Amendment is not designed to be unduly restrictive, but at the same time I submit that it gives the Authority and the boards a definite target. and, of course, a definite target to all their employees.
The type of man whom the Minister would be well advised to get into those area boards, and I think he will do so. is the man who has taken a pride in producing a good balance sheet and good figures. But I do not think that such a man is going to take very kindly to coming in under this clause as it is now written. There is a psychological aspect about it. It is not good for morale or the esprit de corps of these immense bodies that there should not be any definite responsibility to balance their accounts. And this system of communal responsibility does not really work in this wicked world. Communal responsibility means there is always the next fellow. There is always another area board and nobody quite knows whether they are in one year or not.
I think the Government may well say that they want power to have these things run at a deficit. So far as I can see that would be for two reasons. They might wish that some rural area, for instance, should be subsidized in effect, or they might, for reasons of higher financial policy, wish to go in for deficit financing. Dealing with the second point first, fie proper place for deficit financing, and I admit that nowadays deficit financing is sometimes wise and necessary, is on the Budget at the highest level. If it has to be spread about the country, then it should be done by a provision in the Budget providing an aid to the revenue bodies that there should not be any of the Electricity Authority, but that would not alter the target because that would be taken in as part of its revenue. In this way, if a certain area board is lo be run at a loss, it is perfectly proper that the Central Authority should make

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them a definite promise that they will be assisted in their revenue to the extent of a fixed sum, and thus their targets will be preserved. It seems to me that by that means we shall always have a body of men who are striving to make both ends meet and who are willing to take the unpleasant decisions which are often necessary in pursuit of that object. The noble Viscount, Lord Hall, said yesterday that the area boards would be powerful and independent bodies. Without an Amendment of this sort they cannot possibly be powerful independent bodies. I hope I have made the case clear and that the Government will be able to do something in respect of this Amendment. I beg to move.
Amendment moved—
Page 55, line 10, leave out ("the duty") and insert ("the policy").—(Lord Hawke.)
THE LORD CHANCELLOR: I listened to the noble Lord, as I always do, with interest and profit, but I am bound to say that the arguments he adduced seem to me to be arguments I should adduce to answer his Amendment. His Amendment is to leave out the word "duty," which is becoming rather an unpleasant word nowadays and is apt to be shirked, and substitute the word "policy." I vastly prefer the word "duty," and if he is talking about nebulosity, the light of the star which is Duty is fading into the Milky Way when you get to Policy. I want it frankly and definitely stated that this has to be run to make both ends meet. I am quite prepared to say you need not necessarily show every year complete accounts, but over a period of years, or to use the phrase commonly used, "taking one year with another"—by that I mean rather a longer time than one year—over a definite limit of time, say two or three years, this scheme must be made to pay. People will have to pay for their electricity enough to prevent this being a general charge on the Budget and I want that quite clearly to be enshrined in the Act. The word "duty" is a better word than "policy" and, that being so, I would very much rather have the word "duty."
LORD HAWKE: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD HAWKE: I beg to move the next Amendment to omit all words in subsection (1) after "secure that" and insert other words.
Amendment moved—
Page 55, leave cut lines 13 to 16, and insert ("the revenues of the Central Authority and each of the area hoards are each not less than sufficient to meet their outgoings properly chargeable to revenue account").—(Lord Hawke.)
THE LORD CHANCELLOR: The issue here is whether the board or the industry should be the financial unit under the new set-up. No doubt each system has its own advantages, but in our view the balance of advantage lies with the adoption of the wider unit of the industry. We have had much discussion on that, and I think, notwithstanding the arguments on the other side, that a proper degree of competition between boards is just as possible if the Central Authority have over-all responsibility for balancing budgets as if that responsibility falls on individual boards. The medium for comparison of trading results is the annual account. Under the Bill each board must . publish accounts for its area. After all, let us remember they are nationalizing and not regionalizing this industry. All that is really essential is that the industry as a whole should pay its way. There may be certain areas which are rather the weaker brethren, and they might have to be helped by some of the other areas. Just as I said yesterday that sometimes the rural electrification might have to be helped by the urban, so I visualize a circumstance in which there might be one area which has to be helped at the cost of the other areas. I think that is right.
Although the Central Authority are the focal point of financial responsibility, there is nothing to prevent them requiring the area boards normally to work within a balanced budget scheme. It is to be expected that they will do so. But the Bill allows exceptions to be made where desirable. The effect of omitting the words, "taking one year with another" would be to leave undefined the period over which a balance as between revenue and expenditure is to be struck, and it would, therefore, presumably be the financial year of the board. Each board, presumably, would be compelled in practice to budget year by year for a surplus; and, moreover, if

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overtaken in the course of the year by some unexpected change, they would have to make immediate changes in tariffs or expenditure. I think that would have the effect of introducing an unnecessary degree of rigidity into the scheme, which must remain flexible.
For that reason, I would much prefer to keep the words we have, and so long as there is an understanding on the part of everybody concerned that this industry must be made to pay its way, I would like to allow the little latitude that comes from my words, "taking one year with another." That was the scheme which we deliberately adopted in the days of the Coalition in our Economic White Paper in regard to the Budget; and just as it was right there with regard to the Budget, so I think it is right here. I quite agree that we should not use this as a kind of escape hole, to think that this industry can carry on without regard to adequate and proper finance.
VISCOUNT SWINTON: It is very desirable that we should have this discussion. I think the issues are pretty nearly balanced. As regards the first, we should none of us have any doubt that, by and large, this industry has to pay its way. That is common ground to everybody. I do not dissent from the proposition that you should take one year with another. On the other hand, we must not live in unsatisfied hope in this business. Taking one year with another does riot mean hoping that something will turn up. It does mean a genuine financial structure under which you pay your way, and, indeed, create a reserve. Provided that you are wise and prudent in your accounting and in your forecasting, then I think "taking one year with another" is probably the right thing to do.
Then comes what I think is much more difficult. I leave out the Central Authority, because they can pay their way only by collecting money from the area boards. Though the Central Authority are the entire controllers of finance, the area boards are the entire finders of finance. They buy the current and finance the Central Authority in that way; and they also, as we shall see in later clauses, have to contribute in such way as they are directed by the Central Authority to the reserves and the finances of the Central Authority. The Central Authority have to budget for themselves,
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as for their subsidiaries, so as to pay their way.
There is, further, the much more difficult question of whether these area boards should pay their way individually or as a whole. The Committee will have observed that the noble and learned Viscount, the Lord Chancellor, has made it very plan to-day that the real control is in the Central Authority. There is a little tendency, when it is convenient, on one Amendment to emphasize the importance and the individuality of the area boards, and on another Amendment to emphasize the superiority of the Central Authority. In this particular case one has no doubt where they stand. I am not sure that the noble and learned Viscount did not use the word "subsidiaries"; at any rate, he meant it, because they are going to do in this matter exactly what they are told. They are going to be told whether dually they are to make a profit or loss, and one is to be "milked" for the benefit of another, as well as for the benefit of the parent company. I think it is probably right.
There are two conflicting principles here. One is that each of these area boards should do the best they can aril, within such powers as they have, be is efficient and enterprising and show is much initiative as they can. I must not mention the profit motive in this particular connexion; I have to call it "excess of revenue." Probably in the next Bill we have it will have another pseudonym. The same old cast appear, but they always appear with a new name. But the incentive—the carrot in front of the donkey's nose—the natural carrot, and the one to which nearly all donkeys, whether Socialist or Tory, respond, is the incentive of doing a bit better. If you put each of these Boards on their own, not in competition in the sense that each can compete with the other, but in the sense that if they make a profit they can have some of it for themselves, then you will have the best incentive to these different Socialist boards to do their best. Inevitably, if one is efficient, or slack, or not so enterprising, and knows that its losses are to be made up out of its neighbour's profits, and not out of charging the customer more—the customer who can give a kick—there will be less incentive to these bodies to do their best.
On the other hand, I think it would be hard if you had an area which needs

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development which, because it is a country area and naturally sparsely populated, has to bear all the costs itself. I am not thinking only of the amenities of the people in the country because I am fonder of the country than I am of London—though I do not get there very much—but because it is important that the most effective way we can save dollars is by doing more in our own country. We shall not do that unless we bring efficiency into the rural industries, and the amenities which electricity brings. The companies have made a fine effort to do this. It was not the failures of the companies to bring electricity to the country districts but very often, I regret to say, the conservatism or the innate Socialism of the farmer who did not take it. You may have an area which is an industrial area and yet which needs developing. You have an area which is rich industrially and rich in the density of its population. .It may well be that some levy will be made upon the richer district—where you can sell more electricity because of density—for the benefit of the other.
On the whole, therefore, I come down on the same side as the noble and learned Viscount, the Lord Chancellor, on this. I am with him on having to pay your way; I am with him on making it one year with another; and on the whole I am with him in not forcing each of these individual authorities to pay its own way. But having said that, let me add this. If we do deliberately take away that extra incentive from these local bodies and jumble the thing up a bit more in the way of taking from one to give to another, it does become a subsidy: and the one thing you must not have in any of this is a concealed subsidy. It must be perfectly clear what is done. People must know what they are being charged, and they must know where they are contributing to somebody else as well as to themselves. It therefore becomes all the more important that when we come to the accounts clause we should get it into a form upon which we all agree, as we did on the Transport Bill. We must clearly put upon them the responsibility of showing, in the plainest possible way, the financial results of all these operations—what happens to the money and how it is being spent. On the whole, I come clown on the side of the Government on this.
THE EARL OF LYTTON: We are really discussing two matters here: first, whether you will take one year with another or whether the board should be confined to a single year; and second, the question of whether the area boards should balance their accounts singly or whether they should be taken as a whole. May I take the first point? As your Lordships know, I have not always agreed with the noble and learned Viscount, the Lord Chancellor, about this Bill, but in this matter I think he is right. I would like to assure my noble friend Lord Hawke that the procedure adopted in the Bill is in fact that which is a common practice in these undertakings to-day, and I very much doubt whether any business man would undertake the responsibilities of this Bill if he were not able to take one year with another. It is always the practice of an electricity undertaking to have a policy extending over two or three years. They may make large profits one year and put a certain amount to reserve in order that they may have some money to take out of reserve for a lean year. That being their policy to-day, I think it is reasonable that that policy should be continued. I really doubt whether any area board would agree to function unless they had that limit.
With regard to the second point, of course we have so far had no example of a nationalized industry; but even now the noble Lord who moved this Amendment, and who is living in London, is in fact paying more for his electricity in order that the Central Electricity Board may supply it more cheaply to the outside districts. If you were to insist that the operations of each area board should be confined to their own area you would defeat the whole object of nationalization. You would then be merely having regional arrangements, and would defeat the object of the Bill, which is that the industry should be conducted as a national industry, and as a whole should provide for the needs of the rural workers, so long as the total transaction is a business-like one. Like my noble friend Viscount Swinton I feel that on the whole the Lord Chancellor is right in resisting the noble Lord's Amendment. I would like to assure the noble Lord that from my own experience the policy laid down in the Bill is one which will work and is in

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accordance with the business practice of the industry.
VISCOUNT RIDLEY: I would like to say a little on this Amendment concerning the division of the accounting between the area boards and the Central Authority. I feel also that the proposal to leave out "taking one year with another" is not a wise one for the reasons just quoted by the noble Viscount, Lord Swinton. Part III Of the Bill deals with the financial arrangements of the area boards and their relationship with the Central Authority. In a speech made either to-day or yesterday, the noble and learned Viscount the Lord Chancellor said he wanted to see as much independence as possible given to area boards, and I am sorry to say one feels a little disappointed that in this Part of the Bill there is a strong indication that the area boards are to be treated as appendages or, as was said in the debate yesterday, puppets of the Central Authority, I believe very firmly that that is wrong.
I will not accept the distinction between nationalizing the industry and regionalizing it, which has been quoted as an argument in favour of the Bill on this point. I would say that the Bill nationalizes, in the sense that it tramfers to public ownership; and beyond that it is a question of organizing the industry in public ownership in the best possible way. I do not see that the conflict is one of principle at all. I would support this Amendment for the reason that the area boards have, in fact, been drawn as large units: indeed, it is said by some that they are too big. They contain, so far as possible, balanced areas of supply, both urban and rural, in so far as it is possible to divide the country into such units. They should be units which are able to support themselves as, roughly speaking, do those units at the present time. One imagines that present undertakings are operating in that way, and if one looks at the records one would find something not very different from what this Amendment proposes.
Further, I believe that any subsidy which may be required as between one area and another, if such a case should arise—and one must admit that it is a possibility—should be made openly and for the purpose of definite assistance between one part of the country and another. It should be declared and made
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known in the published accounts. I would be the last to say that that would always be a wrong policy to adopt, but I feel strongly that matters of this sort ought it to be made quite clear. I remember that when we were discussing the Transport Bill recently there was a point which to my mind was very similar, and that was the Amendment providing that the Minister should not give any directions to the Commission which would prevent them from earning their revenues. That is not the same wording as that we are now discussing, but it is exactly the same point. It is probably right that development should be undertaken in certain areas, particularly rural areas, and that the inspiration, if not direction, should be derived from the Central Authority through the Minister; but that should not prejudice the earning capacity of the undertaking. It is right that directions of that sort should be given.
It is rather difficult to confine the discussion to this Amendment because those that follow it on this Part of the R11 all point in the same direction. But I look upon this as one of the important ones, as the first step in making it possible to keep the boards on their owns feet, to make them able to compete with each other in the service they can give to the public so that people can take pride and satisfaction in each board doing their work economically, efficiently and cheaply in a way which can be seen from their accounts. For those reasons I support this Amendment and hope that something can be done on these lines.
LORD HAWKE: Any humble Amendment of mine which can have produced. such an eloquent explanation as we have had from the noble and learned Viscount, and such eloquent speeches from other members of your Lordships' House, is one which I do not regret putting down. I must confess that I remain unconvinced as regards regionalization, but I beg leave to withdrawn my Amendment.
Amendment, by leave, withdrawn.
LORD ROCHDALE LORD ROCHDALE moved, in subsection (2) (b) to leave out "in the case of expenditure," and insert "of programmes of development involving capital expenditure and of expenditure otherwise." The noble Lord said: I feel the great danger is that of over-centralization, and the need for matters to be continually referred back

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to higher authority for decision, with a consequent slowing down of progress and loss of efficiency. Particularly is this a danger during the early years, when the individuals concerned will not be able to be sure how far their own authority goes and how the thing is going to work. During the Second Reading I went out of my way to draw attention to this matter, and although then I was not thinking particularly about matters of capital expenditure, as we are in this case, the principle holds just the same. I believe that the noble and learned Viscount, the Lord Chancellor shares the fears on this point; I read that into the remarks he made when mentioning the appointment of members to the area boards. At the same time, I find it a little difficult to know when it is right that the channel of communication should be from the Minister through the Central Authority down to the area boards, and when it should go direct. That is obviously a matter of opinion. I do not know what is the criterion on that matter in the present Bill.
As I read this clause, the Central Authority may require the area boards to obtain their approval in the case of every single item of capital expenditure chargeable to capital account. I feel that that is ridiculous. I may have exaggerated the matter in putting it in this way, but the fact remains that unless something is clearly stated in the Bill there will be a very dangerous tendency towards greater and greater centralization, and for more and more matters of relative detail to be referred back. There is also introduced a very dangerous way of escape for those who might not be able to act on their own judgment, and who, rather than "blot their copy-book," prefer to refer things back rather than take decisions themselves on matters of detail.
This Amendment is not intended to limit the over-all powers of the Central Authority. It seeks to lay down that they may require to approve programmes of development which involve capital expenditure, but it makes it quite clear that it is the intention that so far as possible the area boards should have the maximum degree of freedom on matters like this. I would draw your Lordships' attention to the previous paragraph, where it says:
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"to submit for the approval of the Central Authority periodic estimates of revenue and expenditure."
I think in this Amendment it is exactly on a similar basis as regards capital expenditure. I beg to move, and I hope that His Majesty's Government will see their way to accept the Amendment.
Amendment moved—
Page 55, line 24, leave out from ("Authority") to ("properly") in line 25 and insert the said new words.—(Lord Rochdale.)
LORD RENNELL: I would like to say how much I support what the noble Lord, Lord Rochdale, has said. I think there is a great danger of centralization. That is being borne in on us in various directions, probably most urgently in the centralization that is permitted in the administration of coal. I am not referring to production or anything of that sort, but to the capital expenditure and estimates. I think many of the Committee will know that certain difficulties have already arisen, and are likely to arise to a greater extent still, by that centralisation. I very much hope that this Amendment will be accepted.
THE LORD CHANCELLOR: I have very much pleasure in accepting this Amendment.
On Question, Amendment agreed to.
Clause 36, as amended, agreed to.
Clause 37:
Fixing and variation of tariffs.
37.—(1) The prices to be charged by the Central Authority for the supply of electricity by them to area boards shall be in accordance with such tariffs as may be fixed by the Authority from time to time, and different tariffs may be fixed for different area boards.
6.18 p.m.
VISCOUNT RIDLEY VISCOUNT RIDLEY moved to add to subsection (1):
"and in fixing the tariff for an area board the Central Authority shall take into account the cost of production of the electricity generated at the generating stations within the area of that area board and supplied to that board."
The noble Viscount said: I have my name to two Amendments on this clause. I do not believe them to be contradictory. They deal with different aspects of the same thing, but I wish to make it clear that they are complementary to each other. In the first one I have tried to perpetuate some of the advantages which

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I believe to be in the present system. There was some discussion in another place on this clause, on the form of tariff which was to be used for charges between the Central Authority and the area boards. There was a very inconclusive debate, which did not cover the point I have made here, which is that we should continue the system whereby, in each area, the costs of generation are directly reflected in the price of the electricity sold. That has always been a feature of the industry and it has had one very important effect, of course, in areas where, owing to the proximity of a coalfield in the early days, industry has settled—heavy industry in particular. Their current has been cheap, and that has been part of a system Which has caught up with the present distribution of the heavy industries in the country.
It is on industrial grounds really that I am moving this Amendment. At the present time, under the 1926 Act, the Central Electricity Board buys from the companies who have generating stations at the cost of generation, and sells back to them, roughly speaking, at the same cost plus the overheads of the Central Electricity Board, which include, of course, the cost of the Grid transmission system. But there is a particular subsection which says that the companies owning selected stations are protected in the charge which is made to them by the fact that it should not exceed that cost at which they would have generated themselves had they had a station in operation in their own area. Therefore, in effect, at present the cost of electricity, as between the distribution companies and the power companies who are distributors as well on the one hand, and the Central Electricity Board on the other, is directly reflected in the cost of generating in that area.
I do not know that there is anything in the real objects of the Bill which would counteract the proposal that that system should continue. I would particularly refer to the need that there is, which is recognized by the Government, for rebuilding and developing industries in what are known as development areas. Those are practically all coalfield areas. It is those areas in which heavy industry has settled, where there is a shortage of work and factories and employment, that one would hope that the cost of electricity would he less, and it needs to he less as
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one of the inducements for industrial development. It does not seem to be right that the advantage of being on a coalfield and having a short haul and, therefore, cheaper coal should be, as it were, distributed throughout the country in areas where it is riot really needed.
One must remember that a very high percentage of the current used in this country goes to industry; it is something of the order of sixty per cent.; in fact, I think it is more. The alternative for an industrial plant of any size, if the undertaking finds the electricity expensive, is to generate its own electricity, which it is entitled to do, to combine with a neighbouring firm and to share the generating plant with them, or to use other forms of power. Gas can be used for driving machinery, and it is even still possible to Use steam. All those are alternative sources of energy which are subject to the local price of fuel in the district. It is for that reason that electricity ought to have the same sort of ratio of prices in one district as in another.
I do not want to confuse this with anything relating to the old question of undue preference as between one consumer and another, because that is a phrase which is used in referring to dealings between some undertaking and a number of individuals. The area boards can hardly be looked upon as individuals in this case. They are the agencies through which electricity is to be distributed to the places where it ought to go. It is my strong belief that it ought to be so adjusted as to have some relation to the actual value and cost of fuel in any area. It should have some relation to the need for cheapness of electricity in that area as compared with others, in such a way that it fills in part of the industrial picture, and fits in with the at present devised location of industry—the steel works, the heavy chemicals, aid other plans sited in places because of such factors as the transport of raw materials, the transport of coal and local supplies of coal, fuel, and current. We do not want to upset that rather delicate a ad rather complicated balance of affairs, and so I hope to see this sort of arrangement perpetuated.
I think I have said enough to explain the object of this Amendment. It is following on the same idea of keeping each area as separate as possible and as

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independent as possible, and I believe that the more of that that we can put in this Bill, the better it will work. I beg to move.
Amendment moved—
Page 55, line 34, at end, insert ("and in fixing the tariff for an area board the Central Authority shall take into account the cost of production of the electricity generated at the generating stations within the area of that area board and supplied to that board").—(Viscount Ridley.)
THE LORD CHANCELLOR: The noble Viscount will not be surprised to hear that, in view of the discussion we have had on Lord Hawke's Amendment, which has just taken place, I am not prepared to accept this Amendment. I quite understand the noble Viscount's idea, and I understand that there is a strong case for it. There are the two schools of thought, I agree, but I really dealt with this in the last Amendment when I said that what we were doing was nationalizing and not regionalizing. That puts it in a nutshell. I do not think we can, in considering what price an area board shall pay for its electricity, have regard to the considerations which the noble Lord would desire.
The cost of generation—though I speak as a child in these matters—I suppose, depends upon the size of the station and, I suppose, the modernity of the station, the age of the station and the nature of the fuel, whether oil or coal—we had that consideration in regard to Bankside recently—and also, no doubt, the distance from the coalfields. All these are factors. I do not think we should be right in a national system, where they are all taking their supplies from the Grid, where they may be either exporting or importing supplies, to let these comparatively fortuitous considerations, some of which I have mentioned, enter into the fixation of prices. Therefore, the noble Lord will not mind, I am sure, if I content myself with saying that, because we have had a full discussion on the previous Amendment.
VISCOUNT RIDLEY: I hardly expected that the Lord Chancellor would welcome this Amendment, but I felt that it was a view to be put forward. There is one point I should like to raise. With respect, this Amendment is not quite the same in purpose as the last Amendment
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which we discussed, because its object is to provide for the consumers of the area boards the current at what is to be now the economic price for that area. It is not primarily designed to have any effect on the relationship of the area boards, themselves vis-à-vis the Central Authority. To that extent, it is, I submit, a little different in principle from the earlier Amendment. However, I feel that in the circumstances that is as far as we can go with it. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.30 p.m.
VISCOUNT RIDLEY VISCOUNT RIDLEY moved, in subsection (1), at the end to insert:
"Provided that the tariffs shall he framed so that the prices and methods of charge shall be in accordance with principles to be formulated from time to time by the Central Authority in a scheme which shall be submitted by them to the Minister and laid before each House of Parliament and the tariffs from time to time in force shall be published in such manner as the Central Authority think best adapted for ensuring their publicity."
The noble Lord said: This is a little different again, because it does not put upon the Authority any duty to vary the tariffs between one area and another. It states, in short, that they must be made known. The methods of charge are to be in accordance with the principles formulated from time to time, and submitted, and published, and so on. It is perhaps a matter on which we can hope that we may all much more easily come to have the same view. It is less contentious, and perhaps there is less question of principle in it. It seems to me that, whilst it has not been possible to carry out the suggestions made even in the last Amendment governing the differences of tariffs between the different areas and the hoards, it is still perfectly practicable—and indeed it is allowed in the Bill—that the Central Authority should charge different tariffs for different areas.
If that is so—and I am glad that it is so—it rather reinforces the suggestion in this Amendment that the tariffs should be published so that each area should know where it is, and know what its board is paying for the current. The public, as consumers, can then judge for themselves what sort of a job the area board are making of handing the current on to them. We can thus have some-

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thing of the proper competition between one area and another, a competition between area boards trying to achieve the best results. I think it would be an encouragement for them to do that and, if it is found to be right in practice that central boards should sell at different rates in different areas, that could be made perfectly clear. It could, in fact, be used rather in the way which we were leading up to in the Amendment we discussed not so very long ago—that is to say that each of the boards should stand on its own feet financially.
It is possible that in order to achieve that the Central Authority might decide to sell at slightly different rates between one area and another, so that anything which is done in that is an important part of the make-up of this business; it is part of the annual report, if not part of the accounts, if I may put it that way, although it has been decided that it shall not be part of the accounts, because the separate boards are not to have separate covering of their expenses. But it is part of the policy of the undertaking, and should really be made well known and clear. I hope very much that the Lord Chancellor will be able to agree to this Amendment, and I beg to move.
Amendment moved—
Page 55, line 34, at end insert the said proviso.—(Viscount Ridley.)
VISCOUNT SWINTON: I would like to say a word or two in support of this, because I entirely share the Lord Chancellor's view with regard to the last Amendment, as I did over the whole of Clause 36. Equally, I think that must lead us to the conclusion that this is a right and proper Amendment, because this Amendment, while giving a complete power to charge different charges, lays down that it should be made abundantly plain how those charges are arrived at and what they are. It is, of course, entirely in accord with what has been laid down in the Act of 1926. It has nothing whatever to do with regionalizing as compared with nationalizing; it is entirely informative.
Your Lordships may remember that in the Electricity (Supply) Act of 1926 in Section 11 it was laid down as follows:
"The price to be charged by the Board"—
that is the Central Electricity Board—
"for electricity supplied directly by them to authorised undertakers shall be in accord-
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ance with such tariff as may be fixed by the Board from time to time, and the tariff shall be fixed so that over a term of years to be approved by the Electricity Commissioners the receipts on income account shall be sufficient to cover the expenditure on income account"—
and other expenditure. The section goes on:
"The tariff shall be so framed as to include as part of the charge and show separately—

(a) a fixed kilowatt charges component;

(b) a running charges component;

And then it goes on to say that the charges
"shall be ascertained in accordance with s itch principles"—
and this is very important—
"as may be approved by the Electricity Commissioners; or the tariff may be framed in such other manner as may be determined by an order of the Electricity Commissioners, but such an order shall not come into force until it has been laid before each House of Parliament."
Then it says in subsection (3):
"The tariff fixed under this section may it the Board think fit, be different for different areas."
This Amendment is slightly less particular than that section, which was universally accepted and has worked very well. It provides, as my noble friend has said, that
"the prices and methods of charge shall be in accordance with the principles to be formulated from time to time by the Central Authority in a scheme which shall be submitted by them to the Minister"—
and the Minister is given power and indeed the duty to approve—
"and laid before each House of Parliament and the tariffs from time to time in force shall be published in such manner as 1 he Central Authority think best for ensuring their publicity."
It is, therefore, entirely in order to give the knowledge, which I think we all agree should exist, of what are the principles upon which this tariff for bulk electricity is based, and to give clear publicity to the price at which it is sold. There are some things on which we have differed. The one thing which the Lord Chancellor and I have agreed upon completely all the time has been the importance of clear it publicity and clear information. I remember the Lord Chancellor saying once of another great Socialist though his Socialism was slightly more gradual.
THE LORD CHANCELLOR: Mine is twenty years.
VISCOUNT SWINTON: I was referring to the inevitability of gradualness. The Lord Chancellor ambles faster along the primrose path of Socialism than Mr. Sidney Webb, but they both agreed that when we have Socialism, whether we have it gradually or quickly, we must live in a glasshouse so that everybody can see us. This is the application of that principle, that we should live in a glasshouse and that everything should be absolutely clear.
THE LORD CHANCELLOR: I entirely agree with the last observation—I do not mean about Mr. Sidney Webb and myself, but about the necessity of full publicity. I am quite certain that publicity is our safeguard in all these matters. I am quite certain that it is the fact that we have publicity which prevents corruption creeping in, and I think the more we have the light of day on all these transactions the better. Therefore I would not have the slightest objection to the last three lines of this Amendment: "the tariffs from time to time in force shall be published in such manner as the Central Authority think best adapted for ensuring their publicity." That is perfectly sound and right.
But I am a little frightened about the rest of the Amendment, and for this reason. If it were, as the noble Viscount, Lord Swinton, who has just spoken said it was, a question of the Minister approving, it would be rather a different matter, and I would very readily consider, if noble Lords thought it desirable, a provision whereby the principles on which the Central Authority propose to fix tariffs were referred to the Minister for his approval. At the present moment they are not, and the Minister has no power to do anything about this, save that general power that your Lordships remember in one of the earlier clauses, enabling him to give general directions if it is in the national interest so to do. Apart from that, he has no power to approve tariffs. It may be desirable that he should have that power, or it may not. There is this to be said against his having that power. The Bill fairly and squarely puts the obligation on the Central Authority to make ends meet, and enables them to charge what they like, and they might say, "If the Minister has to approve what we are going to charge, we are not in a position to
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fulfil our functions." That is one argument. The argument in favour of having the Minister approving is that you thereupon get more direct Parliamentary control. A principle that I believe in very strongly in connexion with these matters is this. Just as you must have very great publicity so you must have Parliamentary control. Then you can have members of Parliament discussing these matters in the light of full knowledge, and the Minister can be pulled up if he is doing anything wrong, and taken to task. I think that that is a real safeguard, and thank goodness it is a great feature of our democratic system.
If you had it that the approval of the Minister was necessary, Parliament would be able to tackle him about the tariff and, possibly, say that he ought never to have approved. I cannot say, here and now, which of these two things is right, and I would readily invite your Lordships to consider this matter. If you feel that the Minister should have power to approve tariffs, I will gladly take the matter up with the Minister. That is a proposal which I am very willing to consider. I do not want to have these tariffs laid before Parliament or going before Parliament for approval or quasi approval. A tariff is a very very complicated thing and it may, of course, have to be moved quickly. We have provided in this Bill that it may have to be altered from time to time. I agree that there should always be the fullest publicity about what is being done and, of course, you can have the whole matter discussed in the House. But I am reluctant, under the new dispensation, to go back to the words "in accordance with principles to be formulated from time to time."
I have never looked at one of these tariffs but I have little doubt that they are very very complicated, and I doubt if one would be understood easily by an ordinary member of the public. I should think that they are probably matters which can only be readily understood by experts, and people who are not experts would have difficulty in formulating principles. I think it would probably be very much easier to have a tariff framed and when you have got it to have discussions on it. We shall have consultative councils, consumers' organizations, and the newspapers—if they are able to extend to more than four pages by then—and everyone else all discussing

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these matters. If your Lordships like the publicity part of the Amendment I have not the smallest objection to it. If your Lordships like to consider the desirability of the Minister giving his approval I will gladly consider that with you. But I think I would rather have it in the way I have outlined than in the form of the Amendment.
VISCOUNT SWINTON: The Lord Chancellor has met us very fairly on this. Let me say as regards to the laying of the thing before Parliament, that I would agree that that is not necessary. If the thing is to be discussed in Parliament, there are ways and means of discussing it. But I am not sure that the discussion would be of a very expert nature except in the case of a few participants like the noble Earl, Lord Lytton. I have been at some pains to discuss the matter with experts, and they do lay tremendous stress upon this—that the principles on which the tariffs are formulated should be laid down. In the past Parliament carefully laid down, on the advice of the greatest experts of the day, that the principles on which the board fixed its tariff should be clearly stated and presented. That was done on the best expert advice. I believe that all the greatest experts in the country, whether producers or distributors, were quite unanimous with regard to this. The 1926 Act lays down that there shall be these two factors. I have been careful in the Amendment not to fetter the discretion of the board because, though probably to-day every great expert would agree that these two principles are the right principles on which a bulk tariff should be framed, times change and practices change, and other and better principles may emerge in the future.
THE LORD CHANCELLOR: Would the noble Viscount allow me to interrupt just to put to him this question for the purpose of eliciting information? Could any intelligent person look at a tariff if it was published without seeing what the principles were?
VISCOUNT SWINTON: Oh yes. Most emphatically. A tariff would merely give you the cost and so on. That was why it was considered so important to know the principles upon which a tariff
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was based. Again, I am not speaking as an expert. I am not an electrical expert though I have had a great deal to do with electrical business. I believe that the noble and learned Viscount the Lord Chancellor will find that there is almost complete agreement in the industry—the noble Earl, Lord Lytton, will bear this out I think—as to how important it is that the principles upon which the board frame their tariff should be known. I do not want to press the Lord Chancellor on this now. Obviously we are very nearly at one about it. I withdraw at once the idea that his should be laid before Parliament. But I do attach great importance to publication of the tariffs. And I am advised that almost more important than publication of the tariffs is the publication of the principles. I would be entirely guided by the Lord Chancellor as to whether the Minister should approve, or whether it should be left to the Cent-al Authority. But I believe that we should have these two things, a laying down of what the principles are, and publication of them, approved by the Minister if you will (that I leave entirely to the noble and learned Viscount the Lord Chancellor) and then publication of the tariff itself.
THE LORD CHANCELLOR: I think we can easily come to terms on this. I am afraid that I am not instructed upon it now, but I will gladly get instructions and see if I can find an Amendment which will meet the wishes of noble Lords. I am glad that the noble Viscount does not press for submission to Parliament. I am sure that would hamper the Central Authority too much. For a really intelligent understanding of the tariff, he tells me it is necessary to have the principles stated. I think that the statement of the principles should come within the ambit of my publicity department. I will take this matter up with the Minister and find out what I can do between now and the Report stage to meet this.
VISCOUNT SWINTON: I think it would be better to withdraw this Amendment now and have an agreed clause put down on the Report stage.
VISCOUNT RIDLEY: May I just add a. word to what has been said. I, too, do not attach a great amount of importance to submission to Parliament, but I would be very keen to have the Minister's

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approval, and I most certainly agree that publicity is wanted. I feel it is of great importance that the principles on which tariffs are made and founded should be well known and understood. I do not think that understanding them is necessarily a matter of very great difficulty. In the 1926 Act the principles of what is now in operation are set out in Clauses to, 11 and 13, and they are not very difficult to understand. It is not, in my view, essential to dress this up in a lot of technical verbiage. I feel certain that the noble and learned Viscount the Lord Chancellor fully appreciates the points which we are desirous of making and that he will be able to put down a satisfactory Amendment for the Report stage. In the circumstances I beg leave to withdraw the Amendment.
VISCOUNT ELIBANK: Before we pass on I should like to make reference to two points with regard to the clause as whole. First of all I should like to refer to the statement of the noble and learned Viscount, the Lord Chancellor, last night to the effect that as much independence as possible should be given to the area boards. For that reason it was agreed that the Minister should appoint representatives of the boards with the approval of the Central Authority. But when I look at Clause 37 and read it in association with Clause 6 it seems to me that the area boards are tied hand and foot. The noble and learned Viscount said we were not regionalizing in this Bill but nationalizing, and certainly these two clauses are full nationalization with a vengeance. If you look at Clause 37 (1) you see that the Central Authority shall fix tariffs for bulk supplies and has power to fix retail tariffs of area boards. If any variation is desired, it has the power to vary the tariffs in the area boards.
The Bill gives full power to the Central Authority to do all these things and yet there is no appeal from the Central Authority. At a later stage my noble friend Viscount Swinton is going to move an Amendment for an Appeal Tribunal, and I have risen to draw particular attention to the very wide powers given to the Central Authority to fix tariffs without any proper provision for appeal. Under the Bill, as I understand it, any grievance about tariffs is taken to the consultative council. The consultative
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council can no doubt consult with the area boards, but if they are not satisfied they go back to the Central Authority who are the people who primarily fix these tariffs. I hope that when it comes to the Amendment of my noble friend on Clause 57, the Government will give very serious consideration to it, not only from the point of view of the consumer, but from the point of view of the whole set-up of the Bill.
Amendment, by leave, withdrawn.
Clause 37 agreed to.
Clause 38:
Investigation into and modification of provisions of Act of 1943 regarding price of electricity supplied under s. 16 (1).
38.—(1) The Secretary of State shall, before the expiry of the tenth year after the passing of the Act of 1943, cause an investigation to be made into the working of the provisions of subsection (1) of Section sixteen of that Act and of the Fourth Schedule thereto regarding the price to be charged by the North of Scotland Board for electricity supplied under the said subsection and shall cause a report of the result of the investigation to be laid before Parliament.
6.52 p.m.
LORD MORRISON LORD MORRISON moved, in subsection (1), after the first "The," to insert "Minister and the." The noble Lord said: Subsection (1) of Clause 38 at present provides that the Secretary of State shall cause an investigation to be made, but as any order resulting from the report of the investigation is required to be made by the Minister and the Secretary of State, both of whom are concerned with the relations between the Central Authority and the North of Scotland Board, it has been thought appropriate to provide that the inquiry shall be initiated by the two Ministers jointly. I beg to move.
Amendment moved—
Page 57, line 1, after the first ("The") insert ("Minister and the").—(Lord Morrison.)
On Question, Amendment agreed to.
Clause 38, as amended, agreed to.
Clause 39 agreed to.
Clause 40:
British Electricity Stock
(2) Subject to the provisions of this section, and of the Third Schedule to this Act, British Electricity Stock shall be issued, transferred, dealt with and redeemed upon such terms and in accordance with such provisions as may be

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prescribed by regulations made by the Minister, with the approval of the Treasury, and any such regulations may, in relation to any such stock, apply with or without modifications any provisions of the Local Loans Act, 1875, or of any enactments relating to stock issued by a local authority.
VISCOUNT BUCKMASTER VISCOUNT BUCKMASTER moved, in subsection (2), after "transferred," to insert "and." The noble Viscount said: It may be for the convenience of your Lordships if I speak at this time on the three Amendments standing in my name. The purpose is to secure that a stock issued under this Bill shall not merely be redeemable stock in the sense that it can be redeemed at Government option but shall be a stock which has a date by which it must finally be redeemed. This does not seem to me to be an unreasonable request. It does not touch the basis of compensation. I am not concerned to argue whether this basis be just or unjust, or whether the compensation be too great or too small, merely that it should be certain. If compensation be effected in an undated stock then the holder of the stock can by no means be certain that he will avoid financial loss. The latest loan issued by the Chancellor of the Exchequer now stands at approximately 10 points below its issue price, it being stock redeemable solely at the Government's option. We cannot be sure that the fall in the gilt-edged market has been arrested. It may even be accelerated when a thousand millions of home railways stock is put on the market. I hope I am not unduly optimistic in believing that the noble and learned Viscount has some sympathy with this Amendment and I trust he may feel able, to accept it. I beg to move.
Amendment moved—
Page 59, line 7, after ("transferred") insert ("and").—(Viscount Buckmaster.)
THE LORD CHANCELLOR: I think the noble Viscount has taken a convenient course in discussing the three Amendments together, although nominally the first is the only one before us. Clause 40 (2) provides that the terms upon which British Electricity Stock is issued, transferred, dealt with and redeemed, shall be prescribed by regulations. The noble Viscount by his Amendment wants to restrict the power to make regulations in regard to redemption to fixing the date of redemption. There are other matters
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in relation to redemption, such as the manner and the amount of the payments to be made, the establishment of a redemption fund, etc., which must be provided for in the regulations. I take it that the real object of the noble Lord is to ensure that only dated stock is issued.
VISCOUNT BUCKMASTER: Stock with a final date by which it must be redeemed.
THE LORD CHANCELLOR: That is what I mean. Then I can tell the House that the Financial Secretary to the Treasury has already indicated during Committee stage in the House that dated stock will, in fact, be issued. There be none of this redeemable stock or stock redeemable only at the option of the Government on some unspecified date.
VISCOUNT SWINTON: I am very glad that statement was made because some of us were puzzled by the provision of Clause 20 (1) (c) which says:
"any stock issued as aforesaid in respect of securities guaranteed by the Treasury shall be of the same nominal amount, shall carry interest at the same rates and payable at the same dates, and shall be redeemed at the same dates and by the same procedure and by payment of the same amounts, as in the case of the securities."
That, of course, stands completely and carries its own exceptional rights but every other stock issued to existing share. holders would take its own chance.
VISCOUNT BUCKMASTER: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 40 agreed to.
[The sitting was suspended at seven o'clock and resumed at half past eight.]

EDUCATION (EXEMPTIONS) (SCOTLAND) BILL. [H.L.]
Returned from the Commons, agreed to.

ELECTRICITY BILL.
House again in Committee.
Clause 41:
Apportionment of liabilities in respect of stock, borrowed moneys, etc., as between Central Authority and area boards.
41.—(1) The Central Authority may require any area board to contribute, to such extent as may be determined by the Central

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Authority, towards the satisfaction of the obligations of the Central Authority in respect of—

(a) the redemption of British Electricity Stock or the payment of interest thereon;

(b) the repayment of sums to the Treasury under the next following section or the payment of interest thereon;

(c) the making of payments under Part II of this Act by way of compensation to local authorities; or

(d) the repayment of any sums temporarily borrowed by the Central Authority or the payment of interest thereon;

and the area board shall comply with that requirement.
LORD ROCHDALE LORD ROCHDALE moved in subsection (1) to leave out "to such extent as may be determined by the Central Authority, towards" and insert "rateably in proportion to the book values of the assets for the time being vested in the Central Authority or the area board as the case may be." The noble Lord said: This clause deals with the extent to which the Central Authority may require area boards to contribute towards the satisfaction of the obligations of the Central Authority in regard to the matters which are detailed in the subsections of Clause 41; that is to say, for the redemption of British Electricity Stock, the repayment of sums to the Treasury under the next following clause, and various other similar items. It seems right to me that the area boards should be required to contribute in the way outlined, but as the clause now stands it says that the apportionment between the area boards shall be as determined by the Central Authority; in other words, it may be laid down in a perfectly arbitrary way.
Personally, I feel strongly that we should know the true financial position of each of the area boards year by year. In saying that, I want to make it quite clear that this has nothing whatever to do with the question that was debated earlier on as to whether the electricity industry budget should be on a national or on an area basis. But we do want to know the true position of each of those boards financially, however they may be dealt with afterwards. For that very purpose it seems that there should be capital items in the accounts of each area board comparable to the actual assets taken over by the board in respect of which the Central Authority has actually issued stock. All this Amendment seeks to do
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is to ensure that that shall be so, and it proposes to do this by relating the indebtedness of the Central Authority to the book values of the assets that have been taken over by the area boards.
It may be argued that to arrive at these book assets might be difficult, but I do not see any serious difficulty in the way. I suggest that the book values could be taken either from the existing book values which occur in the statutory accounts that all other undertakings have to submit to the Electricity Commission now (that would be one way of doing it, and to support that point of view I would like to remind your Lordships that the rate of depreciation each year is a rate that has been approved by the Electricity Commissioners), or the book values could be entirely new book values, which presumably must be made out if the old ones are not acceptable for the purpose of arriving at the appropriate demands on each area board for Income Tax purposes. Whichever method is adopted I do not think matters from the point of view of it being accepted that it should not be difficult to have proper book values for the assets taken over by each area board. I suggest that this is a really important provision. After all, we are asking no more than we should of an independent private company which bought certain capital assets. They would enter them into their accounts at the cost which they paid for them. Unless this is done, I see that it is going to be difficult, if not impossible, to have a true financial picture of the results of the year's working of each area board. I beg to move.
Amendment moved—
Page 59, line 24, leave out from ("contribute") to ("towards") in line 25, and insert the said words.—(Lord Rochdale.)
LORD TEYNHAM: I should like very briefly to support this Amendment, which has been so clearly set out by the noble Lord, Lord Rochdale. It is really one of administration. I think it is necessary so that we can know the true financial position of any of the area boards. I think that is explained if the Central Authority are to be responsible for capital and interest charges in connexion with British Electricity Stock issued. This Amendment will provide for a proper apportionment of these stock charges between the area boards in relation to the book value of the assets actually taken over by the boards. I do not think it

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should be difficult to ascertain these book values; in fact they must be found for the purposes of Income Tax. The Amendment is really designed to improve the efficiency and administration of the organization as outlined in the Bill. I do strongly support this Amendment.
THE LORD CHANCELLOR: The effect of this Amendment is to take out the words on page 59, line 24, "to such extent as may be determined by the Central Authority," so that the subsection will read:
"The Central Authority may require any area board to contribute towards the satisfaction of the obligations of the Central Authority … ."
Instead of having the completely flexible system which the Bill proposes, you are going to have—for reasons which the noble Lord very plainly described—a more or less inflexible system. It is to be dependent upon book values. I do not like this Amendment. I do not like it first of all because it brings an element of inflexibility into what ought to be a very flexible system.
May I tell the noble Lord that you need not assess book values to deal with Income Tax? You cannot get out of paying Income Tax by the simple method of not dealing with your book values. That is one reason why I object to this Amendment. I think we have agreed to-day in all parts of the House that this must be run on a national and not on a regional basis. There have been a few voices raised in protest, but broadly speaking that is agreed. I am not certain myself that book value of assets is a good basis. At any rate, it is not the conclusive basis at which I should look. First of all, in looking at what is the hook value of assets you have to remember this. At the present time you will probably find among these companies—if my experience goes for anything—the book value of assets dealt with in wholly different ways. There is no standard which you have to apply, and the trouble is that very different systems apply.
If I wanted to put in the front rank the book value of assets, I should want to be assured that all the companies with whom I was going to deal dealt with their book value of assets on more or less the same basis. After all, the area boards will inherit, amongst other things, accounts of the various constituent com-
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panies and they will find, unless I am very wrong, that the book value of assets is dealt with on quite different bases. If I were to impose upon all the area boards an obligation to get the book value of their assets on the same basis that objection would go; but on the other Land it is a difficult accountancy proposition and it would take a good deal of time. Until that is done I do not think it is fair to place too much reliance upon the book value of assets.
VISCOUNT ELIBANK: May I interrupt? I think the basis upon which those accounts are kept is laid down by the Central Electricity Authority and they are all kept on the same lines.
THE LORD CHANCELLOR: I wish I could feel that the noble Viscount was right, but I am assured by those who know—I have no knowledge myself at all—that you will find the widest possible variations.
VISCOUNT ELIBANK: There ought not to be.
THE LORD CHANCELLOR: Perhaps there ought not to be, but I am ass fired there are; I do not knew, but I am told there are. Anyhow, do not let us exaggerate this matter. If you get a more Dr less uniform system, that that is one of the matters to which you have to have regard is, to my mind, quite plain. I have not the shadow of a doubt but that if you, get a uniform basis, or still more if there is a uniform basis to-day, it is one of the matters which the Central Authority should take into consideration. But I think there are other factors too which they should take into consideration: for instance, the revenue-earning capacity of the assets, or perhaps the tariff structure in particular areas.
There are various other matters which should be taken into consideration, and my objection to this Amendment there fore is, first of all, that it makes inflexible that which essentially should be flexible; and secondly, that it singles out one or two important considerations, disregarding other more important considerations. From that point of view I object to the Amendment. If it is a question of publicity, your Lordships all know where I stand; the utmost publicity must be given to the area hoards over the publishing of their accounts. If anyone says he does not know how any area board stands in

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this matter I can only say he must learn to read accounts. I have no half-way house about this. I am complete and absolute in my determination to see that there is the most full disclosure of all the relevant facts. Therefore I ask the noble Lord to assume that there will be that disclosure; and, that being so, I ask him not to make that which should be flexible, inflexible, and not to pick out one item when there are other items perhaps of equal importance which should be considered.
VISCOUNT SWINTON: I am bound to side here with the noble and learned Viscount, the Lord Chancellor. We must not lay down, I think, an absolutely hard and fast rule. I have been greatly worried about this. There is to be a discretion; this thing is to be run as a whole; and it is, possibly, to be subject always to the most minute particularity in every form of accounting, as the Lord Chancellor has said. Your Lordships have acceded to the proposition that each area board is not necessarily to run in exactly the same way and on exactly the same financial lines, and that one may bear a larger share of the contribution to the Central Fund expenses than another. But once we have accepted that proposition—and I think we accepted it rightly in an earlier clause—then I agree with the Lord Chancellor that we cannot lay down that there should be a mathematically proportionate contribution to general reserves or particular reserves or towards the expenses which the Central Authority have to carry. I think we must see, when we come to the accounts clause, that we get this as clear as we possibly can.
It is common ground that we should know exactly whether each of these businesses, in each of its activities, is making a profit or a loss. To do that you have to arrive in some way at the capital employed in the business. I should have thought that for the purposes of Income Tax, although the basis need not necessarily be uniform, the Income Tax authorities must know what is the capital structure in order to ascertain the profit made. After all, you make a profit on something—on your capital; therefore you must know, in each of these businesses, in order to assess them for Income Tax, what profit they have made. And that does not mean just an excess of revenue
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over outgoings; it does mean a relation to capital generally employed in the business.
I do not want to carry this further at this stage. I would advise my noble friends not to press this Amendment. I think really we are in general agreement that when we come to the accounts we must concentrate on making perfectly sure (as I think we did in regard to the Transport undertaking, which incidentally is very much the same; you may be making a loss on the railways, but making a profit on the roads) that we know how we stand financially on each undertaking that we conduct. It would be wise to concentrate, with the most meticulous care, upon the form of the accounts which are laid down, and leave a pretty broad discretion to the Central Authority and to the boards what contributions are to be made to this or that fund.
LORD ROCHDALE: In view of what has been said about this Amendment—and I must say I appreciate much of what the noble and learned Viscount has said upon this point—I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Clause 42 agreed to.
Clause 43:
Reserve Funds of Central Authority and Area Boards.
(2) The Central Authority and the area boards shall contribute to the central reserve fund such sums at such times as the Central Authority may determine and the management of the said fund and the application of the moneys comprised therein shall be as the Central Authority may determine:
Provided that—
(a) no part of the said fund shall be applied otherwise than for the purposes of the Central Authority and area boards; and
(4) If an area board establish an area reserve fund, they shall, from their surplus revenue, contribute to the said fund, to such extent as the Central Authority may approve, and the management of the said fund and the application of the moneys comprised therein shall be as the area board may determine:
Provided that—

(a) no part of the fund shall be applied otherwise than for the purposes of the area board; and

(b) the power of the Central Authority to give directions to any area board shall extend to the giving to them, with the

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approval of the Minister, of directions as to any matter relating to the establishment or management of the area reserve fund or the carrying of sums to the credit thereof, notwithstanding that the directions may be of a specific character.

8.47 p.m.
LORD RENNELL LORD RENNELL moved in subsection (2) to leave out "determine" where that word first occurs, and insert "approve." The noble Lord said: I feel rather sad that the Amendment which I am going to move is being moved to-day instead of yesterday. Had it been moved yesterday, after what we heard about the independence of the area boards, I have no doubt that the noble and learned Viscount the Lord Chancellor would have accepted it. However, since the Lord Chancellor has to-day decided that the area board is subsidiary to the Central Authority, I have very little hope of my Amendment being accepted.
The object of the Amendment is to endow the area board with that elementary independence which an independent institution is entitled to exercise—namely, to decide what to place to its own reserves. I hedge that round by giving the Central Authority the power to approve or disapprove the reserves so created, instead of determining or giving orders; because if there is one test of the financial independence of an institution, it is whether or not somebody can tell it what to do about its excess revenues—about the importance of placing them to reserve or otherwise. This independence is not permitted to the area boards. The object of my Amendment is to give back to the area boards the independence which they can have and which to-day we are told they have not got. I beg to move.
Amendment moved—
Page 60, line 30, leave out ("determine") and insert ("approve").—(Lord Rennell.)
THE LORD CHANCELLOR: As the noble Lord fully anticipated, I regret to say that I cannot accept his Amendment. May I say just a few words about area boards since he has given me the opportunity? I do not say that these area boards are independent; I am conscious of the fact that if you have to buy your electricity from a gentleman who has the right to fix the price at which you have to buy, you lack a certain element of independence.
VISCOUNT SWINTON: It is a ring!
THE LORD CHANCELLOR: That's the very reason why I want the area boards to have a little independence from the Central Authority. That is why, those being the circumstances, I object to the provision that the Central Authority should appoint the area boards. I wart the area hoards, when they are told that they have to pay, at any rate to be able to express themselves forcibly and tell the Central Authority exactly what trey think of them. I think that is, at any rate, some use. If the area boards are to be appointed by the Central Authority when they start off on their little exposition of the true position, the Central Authority would be able to say to them: "If you talk any more like that, you will not be appointed again." That will not do at all. That was why I was anxious that they should, at any rate, not be appointed by the Central Authority. Do not let it be said that I think these area boards are as free as the wind. I admit quite frankly that they are not; but there is no reason why we should make them even more enslaved
VISCOUNT SWINTON: Is the technique the Lord Chancellor has just described—"If you talk like that you will not be appointed again"—the technique the Minister is going to apply?
THE LORD CHANCELLOR: Oh, no The technique I have been describing is always employed by the silent people those who do not talk. Therefore, For the reasons I have given and for other reasons of which the noble Lord is wet aware, I regret to say that I cannot accept his Amendment.
LORD RENNELL: Having regard to the noble and learned Viscount's very clear exposition of the independence or otherwise of the area boards, which m ill entirely satisfy all your Lordships, I beg leave to withdraw.
Amendment, by leave, withdrawn.
LORD ROCHDALE LORD ROCHDALE moved to insert at the beginning of the proviso to subsection (2):
"(a) the contributions to be made by the area boards in any financial year shall be determined rateably in proportion to the book value of the assets for the time being vested in each area board and to any surplus revenue accrued to the area board in that year."
The noble Lord said: In view of whit was said on the last Amendment that I

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moved, I will be quite frank and say that I am moving this Amendment for information. Subsection (2) (b) gives the Minister considerable power of direction with regard to the Central Reserve Fund, and enables him to give directions "as to any matter relating to the establishment or management" of the Fund, and so on. It seems to be perfectly right that the area boards should contribute to the Central Reserve Fund, and I have no doubt that there will be no objection to that. But a certain amount of doubt might easily arise in the event of there being no general basis, no clear published basis, as to how the apportionment of the contributions is to be arrived at. With the normal trading concern, as I see it, reserves could be built up only in one way, and that is from the surplus profits.
If that were to be the only criterion in this instance—that is to say in the case of the area boards—then I can quite easily see cases where a smaller board, and possibly a more efficient board, would be paying into the Central Reserve Fund considerably more than a larger board which was running with less efficiency; in other words it would he putting a premium on inefficiency. If, on the other hand, the basis were to be not the profits that have been earned at all, but the size of the board concerned, then that would not take into account the fact that certain boards, owing to the locality in which they operate, may find it much more difficult to make profits than other boards. Area boards who have to operate with a high proportion of agricultural consumers are obviously going to find it more difficult to make ends meet than those who are operating with a very high proportion of industrial consumers. All that this Amendment seeks to do is to suggest, whatever may be the formula to be arrived at, that it should take into account the size of the concern, on the one hand, and its efficiency and profit-making capacity on the other hand. I must admit that I am not by any means wedded to the wording of this Amendment but, as I pointed out earlier, I have put it down in order to find out what is in the back of the Minister's mind. He must have something in the back of his mind, because he has reserved to himself such a considerable power of direction. I beg to move.
Amendment moved—
Page 60, line 33, at end insert the said paragraph.—(Lord Rochdale.)
THE LORD CHANCELLOR: I do not know what is in the back of the Minister's mind. What is in the front of his mind is this. The Bill provides that the Central Authority shall be able to tell the area boards what each of the area boards are to contribute towards the Central Reserve Fund. There is a risk—it will be a theoretical one, I think—that that power might be rather oppressively used. It might be oppressively used, in the case of a particular area board who were doing well and showing themselves thoroughly efficient, to make what I think is called excess revenue. It is conceivable that the Central Authority might come along and say: "You shall contribute a good deal." I do not think that that is likely, I sincerely hope that it is not. That being so, it was felt right to guard against that and protect the area boards from such a risk—which as I say is a remote one—and that the Minister should have power, altogether apart from the clause which gives him power to give general directions in the national interest, to control the operations of the Central Authority in this connexion, and if he thinks that they are being too harsh to any particular area board to be able to say so. In view of these considerations we cannot accept the Amendment.
LORD ROCHDALE: I fully appreciate what the noble and learned Viscount has said as regards the powers that the Minister has retained, and the reasons. But I must say that I had hoped for a little more enlightenment as to the basis on which he was going to work. Perhaps we shall hear more of that later on. In the circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
VISCOUNT SWINTON VISCOUNT SWINTON moved, in proviso (b) of subsection (4), to leave out "with the approval of the Minister." The noble Viscount said: Perhaps I may remind my noble friend Lord Rennell of what I think was in the front of his mind when he put down this Amendment. I think the object is that the Central Authority and not the Minister shall have to tell the boards about their reserves. I beg to move.
Amendment moved—
Page 61, line 15, leave out from beginning of line to the second ("of").—(Viscount Swinton.)
LORD MORRISON: I think that the noble Viscount, Lord Swinton, is perfectly correct. The Amendment would permit the Central Authority to give directions to the area boards in regard to area reserve funds without seeking the approval of the Minister. These directions, I would point out, relate to the establishment and management of the funds, but not to their application, and the Minister's approval would be used only to ensure that a proper standard of management was observed. It is not clear what objection there can be to this, and I hope that the noble Viscount will not press the Amendment.
VISCOUNT SWINTON: I understood that the object of the last Amendment was that the Minister could, so to speak, act as arbitrator and guardian, so that one local authority was not dealt with too harshly in order to subsidize another. This is something different. Here is a question of how the fund is to be administered. I would have thought that if any direction were to be given it should be given by the Central Authority and not by the Minister. However, I do not press this. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 43 agreed to.
Clause 44 agreed to.
Clause 45 [Sums which are to be chargeable to revenue account]:
LORD MORRISON: This is a drafting Amendment, to bring the phraseology into line with that of Clause 22. I beg to move.
Amendment moved—
Page 62, line 15, leave out ("expressed") and insert ("to be deemed").—(Lord Morrison.)
On Question, Amendment agreed to.
Clause 45, as amended, agreed to.
Clause 46:
Accounts and audit of Central Authority and area boards.
(2) The form of the said statement shall be such as to secure the provision of separate information as respects the generation of electricity, the distribution of electricity, and each of the main other activities of the Electricity Board concerned.
(3) The accounts of the Central Authority and of every area board shall be audited by auditors to be appointed in respect of each financial year by the Minister.
(5) So soon as the accounts of the Central Authority have been audited, they shall send a copy of the statement of their accounts referred to in subsection (a) of this section to the Minister together with a copy of my report made by the auditors on that statement or on the accounts of the Authority and shall also send copies of the statements of accounts of every area board to the Minister together with any reports on those statements of accounts as aforesaid.
9.2 p.m.
VISCOUNT SWINTON VISCOUNT SWINTON moved, at the end of subsection (2) to insert "and to show as far as may be the financial and operating results of each such activity." The noble Viscount said: Now we do come to an Amendment of great importance but on which I am sure we shall be in complete agreement. The noble and learned Viscount said: "The one thing we are in more agreement on than any thing else is that there shall be absolute and complete disclosure of the whole financial position of each undertaking:" I have no criticism of subsection (1) of this clause. Subsection (2), however, dealing with the form of the statement of accounts says that it
"shall be such as to secure the provision 01 separate information as respects the generation of electricity, the distribution of electricity, and each of the main other activities of the Electricity Board concerned."
That is all right so far as it goes, but information does not necessarily mean a clear statement as to whether or not in those transactions a profit or a loss has been made. We had a great deal of discussion on the Transport Bill, not because there was any difference of opinion, but in order, on a question where it was extremely difficult to apportion capital assets, to see that we put in words which would show that a clear financial statement was issued with regard to every operation. We proposed trading accounts and separate profit and loss accounts, and it was agreed that the requisite words be inserted. They were put down by the Leader of the House, Viscount Addison. Clause 95 of the Transport Bill says:
"The said annual statement shall be so framed as to provide, as far as may be, separate information as respects the principal activities of the Commission …"
That is what we have here, and the Leader of the House proposed to insert this:
"and in combination with periodical statistics and returns rendered by the Commission to show, as far as may be, the financial and operating results of each single activity,"
which are exactly the words I propose in this Amendment. I feel sure they will be generally agreed. I beg to move.
Amendment moved—
Page 62, line 31, at end insert the said words.—(Viscount Swinton.)
LORD MORRISON: The noble Viscount has described with great accuracy the circumstances in which he came to place this Amendment on the Paper. Clause 46 (2) was amended in the Commons so as to require the annual accounts of the Central Authority and of each area board to give separate information in regard to
"the generation of electricity, the distribution of electricity, and each of the other main activities of the Electricity Board concerned."
The Amendment now proposes to amplify this to require "the financial and operating results" of each such activity to be shown "as far as may be." Similar phraseology is used in the Transport Bill and there is no objection to its acceptance here.
LORD RENNELL: I think the very brief statement which the noble Viscount who moved this Amendment made is really all that need be said. It is an essential principle of the operation of an industry of this sort, as a whole, that the separate activities of generation on the one hand and of distribution on the other should be shown separately, and that the financial results should also be shown separately. As it is obvious from the spokesman of the Government that that end has been achieved, I think it is unnecessary to detain your Lordships any longer, except to express great satisfaction on behalf of noble Lords on this side of the House for the way in which the Amendment has been accepted.
On Question, Amendment agreed to.
LORD DE L'ISLE AND DUDLEY LORD DE L'ISLE AND DUDLEY moved to add at the end of subsection (3):
"Provided that a person shall not be qualified to be so appointed unless he is qualified to act as auditor of a company (not
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being a private company) under any enactment for the time being in force relating to the qualification of an auditor of such a company as aforesaid."
The noble Lord said: The Amendment which stands in my name seeks substantially to do with the audit of the accounts of the Central Authority and the area boards what subsection (1) does with the form of account. That subsection provides that the accounts "shall conform with the best commercial standards." My Amendment seeks to make it obligatory that the audit of accounts of the Central Authority and the area boards shall be carried out by a qualified accountant. This matter has been raised once or twice on other nationalization Bills, but I would like to point out to your Lordships that we have now—or I hope we shall shortly have—a standard to which we can refer. The Companies Bill is now before another place and, therefore, we cannot yet discern its final form. However, on the assumption—which I do not think it unwarranted—that the clause will not be amended, I would like to refer your Lordships to Clause 22 (1) of the Companies Bill. It says:
"A person shall not be qualified for appointment as auditor of a company unless either

(a) he is a member of a body of accountants established in the United Kingdom and for the time being recognised for the purposes of this provision by the Board of Trade; or

(b) he is for the time being authorised by the Board of Trade to be so appointed either as having similar qualifications obtained outside the United Kingdom or as having before the eighteenth day of July, nineteen hundred and forty-five, practised in Great Britain as an accountant."

Those are the standards demanded of a person thought fit to audit accounts of public companies. It seems to me proper that qualifications should be demanded of persons called upon to audit this very important (as it is to be) nationalized industry. Accountants—and I have the honour to be one—are young in professional life. We have not the same antiquity as the law, or perhaps as medicine, but I think it has come to be recognized that accountants play an important part in the life of our nation. I do not think it is too much to demand that the Government should recognize (as they recognize the other older professions in Acts of Parliament) that when profes-

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sional advice and help is required proper qualifications should be demanded. May I recall to your Lordships that I take no narrow view of these matters; in fact, I was one of those who moved that in the case of private companies such a qualification should not be demanded, because I thought it was perhaps an unnecessary approximation to the closed shop. But in this case I think a qualification is demanded, and I think the proper qualification as set down and admitted by His Majesty's Government in the Companies Bill should also be written into this Bill which is now before us. I beg to move.
Amendment moved—
Page 62, line 34, at end insert the said proviso.—(Lord De L'Isle and Dudley.)
LORD MORRISON: After the eloquent speech of the noble Lord I regret that I am unable to accept his Amendment; and I do not propose to follow him into the argument with regard to the closed shop. I desire to give what I think he will agree are three excellent reasons why the Government find themselves unable to accept the Amendment. It has been the Government's policy to reject similar Amendments in relation to other nationalized industries. There are three arguments. The first is that the Minister has no intention of appointing any persons to such important duties if they are not properly qualified to carry them out. If he did he could, and no doubt would, be criticized in Parliament. The second reason is that the Companies Act of 1929 makes no provision for qualifications of auditors of companies. The present Companies Bill may be altered before it is enacted. The third reason is that the accounting profession are sponsoring a Bill to define the qualifications of a practising accountant, and meanwhile it might not be wise to attempt a definition in relation to public corporations. For those reasons I hope the noble Lord will not press his Amendment.
VISCOUNT MAUGHAM: Before the noble Lord replies, may I make a suggestion to the noble Lord who has just spoken? I can conceive that there are certain objections, especially at this time with the Companies Bill not yet an Act of Parliament, why this precise form of Amendment is open to objection. I can quite follow that, but whether an auditor is appointed by a Minister or by anybody else, I think that in an important matter
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such as this it is essential, and in accordance with practice, that the qualifications of such an accountant should be mentioned. "An accountant" foes not mean anything without a statement of qualifications. There is nothing here about his ever having passed an examination. So far as I know a chimney sweep is an auditor if he is willing to audit. I strongly urge on the noble Lord, assuming that he does not object to this, to say that between now and the Report stage he will see if it is not possible to lay down some rules under which the country will be satisfied that these very important accounts, both of the Central Authority and the area boards, shall be audited by experienced accountants who have a real knowledge of the business I hey profess to perform.
THE EARL OF IDDESLEIGH: I too heard with the very greatest surprise the rejection of the very reasonable Amendment which my noble friend has moved on this subject. It is suggested that we should trust the Minister to ensure that accounts are audited by a proper person. I am always very suspicious indeed when either House of Parliament is told that they should trust the Minister to make sure that something is done. The whole basis of our constitutional history is trust of the Minister, and ought it not to be our constant endeavour in legislation to ensure against the almost incredibly remote chance (but still the chance) that the Minister may do something wholly improper—as Ministers have done in the past and as, for all we know, Ministers may do in the future?
What does my noble friend ask? He asks not that the accountant of these bodies should have particular qualifications, but merely that the accountant should have the same qualifications as those to which the accountant of any public company is subject under the law in force for the time being. It astonished me to hear the noble Lord suggesting that there was anything unreasonable, anything but the plainest common sense in that provision. Noble Lords may point out that when these accounts are presented to Parliament it will be relevant for Parliament to challenge the accounts. But, contrary to what has been suggested by the noble Lord, it will not be proper for Parliament to challenge the competence of the accountant employed by the Minis-

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ter. It is not unlikely that he would be empowered under the clause as it stands to have the accounts audited within the Ministry. In that event we should be wholly precluded from challenging the competence of the person who audited the accounts. I beg the noble Lord to think again, and to consider whether this is not, after all, a very reasonable provision such as may suitably be inserted in nationalization Bills, both present and future, and whether it is not in the last resort a very proper provision in the interests of the nation.
LORD RENNELL: I have heard with profound surprise the reasons adduced by the noble Lord, Lord Morrison, in declining to accept this Amendment. The second reason, that the present Companies Bill is not yet an Act of Parliament is, surely, entirely irrelevant. The terms of the Amendment do not propose that this Companies Bill shall be taken as a model. It merely proposes that those enactments which are in force for public companies at any time shall be applicable to this authority. And to adduce that, among other reasons—with none of which I find myself able to agree—for declining to insert the provision that these accounts should be audited by a qualified auditor is so surprising that I feel sure the noble Lord will wish to reconsider the matter. I must associate myself absolutely with every word that the noble Earl, Lord Iddesleigh, has said, and protest against the possibility, however remote, of an unqualified auditor being appointed. I am not satisfied, in view of the reasons that have been given for refusing this Amendment, with the assurance that in fact a qualified auditor will be appointed.
VISCOUNT ELIBANK: In the course of his remarks the noble Lord, Lord Morrison, indicated that the Minister intended to appoint qualified auditors. If that is so, is it beneath the dignity of the Minister, to include that in the Bill? As the noble Earl, Lord Iddesleigh, has said, we do not trust the assurances given day after day, and week after week. They may be all right so long as the noble Lord is in his place, or the Government are in their place, but directly they are out of office, or the next Minister comes along, we have only what is in cold print in the Bill. It should not be
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beneath the dignity of the Minister to include this provision in the Bill. "Properly qualified" auditors would probably be a sufficient term to cover the point. I think it is very little to ask that the Government should agree to this.
LORD MORRISON: I do not wish to involve your Lordships in a lengthy argument on this subject. I have carefully noted all the points made. I think perhaps the noble and learned Viscount, Lord Maugham was exaggerating a little when he suggested that the Government might even appoint a chimney sweep to audit the accounts. I should not like to be on the Government Benches if and when that matter was debated in Parliament! As I say, if the noble Lord who moved this Amendment will withdraw it now, I am quite prepared to have it reconsidered and brought up again.
LORD DE L'ISLE AND DUDLEY: After that assurance from the noble Lord, I will not press this Amendment, but I would like to say a word about it. Taking his last reason first, it is perfectly true that a Public Accounts Bill is under negotiation, but I do not think that is an adequate reason, when we are considering legislation, for not putting proper safeguards into this Bill. Going backwards along his reasons, the fact that the Companies Bill is not law, as the noble Lord Rennell has pointed out, is not relevant to this Amendment, which is drafted to cover just that particular point. The first reason I agree with entirely, and I do not think it right that we should accept on this point, any more than we should with regard to the qualifications of a doctor or a dentist, the assurance that a qualified person will be appointed. In view of the noble Lord's assurance—and I hope that we shall arrive at some agreement—I will withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD LLOYD LORD LLOYD moved, in subsection (5) at the end to insert: "and copies thereof shall be made available to the public at a reasonable price." The noble Lord said: The Amendment in my name seems to me to be covered by a subsequent Amendment which has been put down by the noble and learned Viscount the Lord Chancellor. I am very grateful to the Government for giving us this Amendment, and I am prepared not to press my Amendment.
LORD MORRISON: I hope the noble Lord will move his Amendment because I was going to say in reply that on consideration it appears to us that the words of his Amendment are preferable; I was going to accept the noble Lord's Amendment in preference to the Government Amendment.
LORD LLOYD: I am always grateful for an opportunity to do the noble Lord a good turn. I beg to move.
Amendment moved—
Page 62, line 47, at end insert ("and copies thereof shall be made available to the public at a reasonable price").—(Lord Lloyd.)
On Question, Amendment agreed to.
Clause 46, as amended, agreed to.
Clause 47 agreed to.
Clause 48:
Acquisition of non-statutory undertakings.
48.—(1) This section applies to any person, not being a body to whom Part II of this Act applies, who at the passing of this Act is engaged in supplying electricity to the general public and who, at any time after the nineteenth day of November, nineteen hundred and forty-five, has incurred or incurs, in respect of works approved by the Minister for the purposes of this section (whether before or after the execution of the works) expenditure properly chargeable to capital account; and in this section any such person is referred to as "the undertakers," and his business, so far as it consists of the supply of electricity to the general public, is referred to as "the electricity undertaking."
9.23 p.m.
LORD LLOYD LORD LLOYD moved, in subsection (1), to leave out all words after "public," where that word first occurs, up to and including "account." The noble Lord said: This Amendment deals with the clause on the acquisition of non-statutory undertakings. We are very grateful to His Majesty's Government for this clause which, I think I am right in saying, was put into the Bill because it was pressed in another place by the Opposition. It was pressed for two reasons. The first was that these non-statutory undertakings, many of which are small concerns, would be likely, with the establishment of this great Government monopoly, to be forced out of business, quite apart from the fact that, if they remained in business, they might well be ruined, with great hardship to their employees. There was the other consideration, that a good many of them might consider they would do better to
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get out of business while the going was good, which would, if they went out of business before the new Electricity Authority were in a position to supply electricity in those places where they have been supplying it, result in great hardship to their consumers. We are grateful to the Government for this clause, and this Amendment is merely an endeavour to improve the clause.
The Government have gone a long way to meet this point, but this Amendment is designed to remove certain restrictions which still remain in this clause. The words that I seek to leave out are the words which qualify the non-statutory undertakers which are to be taken over; and the qualification is that capital expenditure on works approved by the Minister must have been incurred since November 19, 1945. My objections to this qualification are, first of all, that obviously the Minister could render the whole of this qualification invalid by refusing to give any approval. I am not suggesting for a moment that he would; but he could. The second objection is that this leaves a great deal to chance. A company may wish to get the approval of the Minister, and as the clause stands a company that spends £5 on works which are approved would be qualified. A company which did not spend that money, on the other hand, would be disqualified. Finally, if the Minister refuses approval, there is no appeal.
I suggest to your Lordships that it would be to the advantage not only of these non-statutory undertakers, but also of the public at large, that as many as possible, and certainly as many as want, should come in and be taken over by His Majesty's Government, and that they should be given an opportunity of doing so. As I have said, a number of them may be frightened of being put out of business by this new Electricity Authority which is to be set up. The more prudent of them might well decide to go out of business while the going was good, and that would cause great hardship to their consumers; and, what is more, it would exclude from the three hundred odd non-statutory undertakers quite a number of undertakers who would otherwise wish to come in.
I submit that the small non-statutory undertakers, many of whom have done a

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very good job of work, cannot be as efficient as a larger concern, and I am sure it is in the interests of the public that so far as possible these small concerns should be incorporated in the larger scheme. The Government have objected to taking over more of these non-statutory undertakers on the ground that a great deal of their equipment is not standard, and that these undertakings are not worth much to the Government. I suggest, as against that argument, that that very fact would enable the Government to take them over a great deal more cheaply, and I feel, therefore, that we should do well to eliminate this provision and allow as many non-statutory undertakers as wish to come in, quite regardless of the provision, to be taken over if they so desire. I beg to move.
Amendment moved—
Page 64, line 42, leave out from ("public") to ("and") in line 2 on page 65.—(Lord Lloyd.)
LORD CHORLEY: I was very glad to hear the noble Lord express his gratitude to the Government for having gone so far as to meet this particular matter, because he will not be so disappointed when I tell him that we cannot accept this Amendment. The noble Lord has, quite properly, pointed out the scope of Clause 48. In effect it is to deal with the position of non-statutory undertakings in a biggish way of business who, in order to meet the substantial numbers of consumers who take their current from them, have to embark upon fairly substantial capital works. The relevant date, of course, is the date as from when it was known that there would, in fact, be nationalization of the industry.
The noble Lord's Amendment, in effect, would enable any one of these non-statutory suppliers to insist on being taken over. There are all sorts of people of this kind. Some of them have very small concerns indeed—a mere garage, or a cycle shop, or something of that kind in the country. In some cases they are a one-man show, almost tied together with bits of string. The noble Lord's Amendment, as I say, would enable the owner of a little concern of that kind to insist on its being taken over and merged in the Government scheme, and moreover would, in a sense, put such people in the position of statutory suppliers, a status which has certainly not been theirs in the
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past. In those circumstances the clause as it stands is as far as the Government feel it is proper and reasonable to go, and I am sure the noble Lord, on thinking the matter over, will agree to withdraw his Amendment.
VISCOUNT ELIBANK: Would the noble Lord kindly tell us how far the clause does go, so that we can sum up the whole situation?
LORD CHORLEY: I think the terms of the clause are reasonably clear. It states at the beginning,
"This section applies to any person, not being a body to whom Part II of this Act applies, who at the passing of this Act is engaged in supplying electricity to the general public and who, at any time after the nineteenth day of November, nineteen hundred and forty-five, has incurred or incurs, in respect of works approved by the Minister for the purposes of this section (whether before or after the execution of the works) expenditure properly chargeable to capital account."
The whole point, of course, is in the words "works approved by the Minister." This is capital expenditure. It might well be incurred where possibly a number of new houses have been built or new works have been started, in order to enable consumers of that kind to be supplied.
LORD LLOYD: I am very grateful to the noble Lord for his reply, but I must confess that I am a little disappointed that he cannot meet me on this point. I think that he slightly exaggerated the smallness of these undertakings. Some, I agree, are very small, but there are a number, I believe, who will be excluded from the Bill by this provision to the extent that they did not happen to apply to the Minister for this permission. In some cases they will feel that the risks of continuing in business against the competition of a nationalized undertaking are such that they are better out of it. This will lead to great hardship on their particular consumers. However, I do not consider this matter sufficiently important to press it, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD CHORLEY: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 66, line 40, at end insert ("and for references to the vesting date there shall be substituted references to the date of transfer").—(Lord Chorley.)
On Question, Amendment agreed to.
Clause 48, as amended, agreed to.
Clause 49:
Supply of electricity to railways.
(2) The terms and conditions on which electricity is supplied by an Electricity Board to any railway undertakers for the purposes of haulage or traction shall be determined in accordance with regulations made by the Minister and the Minister of Transport jointly, or, in the case of a supply by the North of Scotland Board, the Secretary of State and the Minister of Transport jointly.
(3) Where electricity is supplied by an Electricity Board to any railway undertakers for the purposes of haulage or traction, that supply may be used, with the approval of the Central Authority, or, in the case of a supply by the North of Scotland Board, with the approval of that Board, on the same terms and conditions, for any other purposes for which electricity may be required by the railway undertakers.
(4) The Central Authority may, with the approval of the North of Scotland Board, provide in the North of Scotland District a supply of electricity to railway undertakers for the purposes of haulage or traction, and a supply provided by the Central Authority outside the said District may, with the like approval, be used in that District.
9.34 p.m.
LORD CHORLEY LORD CHORLEY moved to add at the end of subsection (2):
"and such regulations shall make provision for securing that the charges made for any such supply and the other terms and conditions on which it is provided are such as to avoid financial loss resulting to the Electricity Board from the provision of the supply."
The noble Lord said: The object of this Amendment is to fulfil a pledge which was given by the Minister at the Report stage in another place, when dealing with an Amendment which was moved by the Opposition. Though rather differently placed with the Amendment then proposed, I think it would have had a similar effect. Two points which were made were: first, that the proviso to Section 4 (1) of the Electricity (Supply) Act, 1935, does in fact deal with the question of the supply of electricity to railways being made, so to speak, on the basis of not subsidizing the railway, and that as that Act will be repealed, some provision ought to be made in the present Bill. The same point was made in another way: that there was, or might be, some fear of an understanding between the nationalized electricity undertaking and the nationalized railways
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under which an indirect subsidy might be provided to the railways. That is a matter which ought to be avoided at all costs. My right honourable friend does not think there is any danger of that kind, but he does agree, ex abundanti cautela, and therefore he has tabled this Amendment on behalf of the Government, which I hope your Lordships will accept. I beg to move.
Amendment moved—
Page 68, line 42, at end insert the said words.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD WOLVERTON: The point contained in my Amendment has been made by the Amendment just moved, for which I thank the noble Lord. I will not move my Amendment.
LORD CHORLEY LORD CHORLEY moved, in subsection (3) to leave out from "traction" to "for" ["for any other purposes"] a rid insert:
"the Board may enter into an agreement with the railway urdertakers for the use of that supply, on such terms and conditions a3 may be agreed."
The noble Lord said: This is an Amendment on the same lines as the last one, to give effect to an undertaking given in another place on Report stage. It was thought that the words at present in the clause, "on the same terms and conditions," which refer to the terms and conditions on which electricity should be supplied to the railway companies for traction and haulage, were a little too tight and might with advantage be loosened. That is done in the words proposed: "the Board may enter into an agreement with the railway undertakers for the use of that supply, on such terms and conditions as may be agreed." I beg to move.
Amendment moved—
Page 68, line 45, leave out from ("traction") to the first ("for") in line 3 on page 69, and insert the said new words.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 69, line 4, at end, insert ("Provided that an area board shall not make an agreement under this subsection which involves

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the use of the supply outside the area of that board, unless the agreement has been approved by the Central Authority)."—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The next three Amendments are drafting Amendments. I beg to move.
Amendments moved—
Page 69, line 7, leave out ("for the purposes of haulage or traction") and insert ("under this section").
Page 69, line 13, leave out ("for the purposes of haulage or traction") and insert ("under this section").
Page 69, line 59, leave out ("for the purposes of haulage or traction") and insert ("under this section").—(Lord Chorley.)
On Question, Amendments agreed to.
Clause 49, as amended, agreed to.
Clauses 5o to 53 agreed to.
9.37 p.m.
Clause 54:
Provisions as to pension rights.
54.—(1) The Minister and the Secretary State may make joint regulations for all any of the following purposes, that is say—
(a) for providing pensions to or in respect of persons who are or have been in the employment of an Electricity Board or a Consultative Council, or persons who have been members of the Central Electricity Board or have been employed by any body to which Part II of this Act applies or have been employed whole-time for the purpose of administering the undertaking or any part of the undertaking of any authorised undertakers, but who have not been taken into the employment of an Electricity Board as aforesaid;
(3) Regulations made under this section shall not be invalid by reason that in fact they do not secure that persons having pension rights are not placed in any worse position by reason of any such amendment, repeal, revocation, transfer, extinguishment or winding up as is mentioned in the last foregoing subsection, but if the Minister and the Secretary of State are satisfied or it is determined as hereinafter mentioned that any such regulations have failed to secure that result, the Minister and the Secretary of State shall as soon as possible make the necessary amending regulations.
Any dispute arising as to whether or not the said result has been secured by any regulations made under this section shall be referred to a referee or board of referees appointed by the Minister of Labour and National Service for his or their determination thereon.
THE LORD CHANCELLOR: This is the usual Amendment. I beg to move.
Amendment moved—
Page 72, line 9, leave out ("which") and insert ("whom").—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD HAWKE LORD HAWKE moved, in subsection (1) (a), to leave out "employed whole-time for the purpose of administering the undertaking or any part of the undertaking of any authorised undertakers" and to insert:
"regularly employed by any body, other than a local authority, to which Part II of this Act applies or have been regularly employed in or about any undertaking or business vested by or under this Act".
The noble Lord said: We now come to two clauses dealing with what I may call the displaced persons. Clause 54 deals with pension rights, and I will try to outline what the clause does and does not do. Under this clause the Minister may make provision for pensions to employees of any of these boards, consultative councils and members of the Central Electricity Board; also for the whole-time employees of any body taken over who themselves have not been taken over by the Central Authority. He can establish pensions schemes to cover these matters, and he can continue, amend and revoke existing schemes, and transfer their funds, or wind them up. Any regulations he makes in this respect must secure that persons having pension rights are not worse off. Any dispute must go to a board of referees appointed by the Minister of Labour. The Bill does not provide; so far as I can see, for any pensions for those who draw pensions at the present moment by grace rather than by right; nor for pensions for those who are employed other than by any one particular undertaker. In this particular Amendment we seek to deal with this latter class, though we have an Amendment down later on dealing with the other classes.
As a result of the wording on the Bill, which uses the words "whole-time employees," the following anomalies arise. The expression is not defined, and is not found in existing electricity law. So far as it is known, the expression would cover casual or temporary workers of one undertaking, but at the same time it would not cover employees who are employed by more than one undertaking. Our words are "regularly employed." These words are hallowed by long usage in Statute, and are the words used in Section 16 of

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the Electricity (Supply) Act, 1919. These words have been interpreted to cover employees jointly employed, but they definitely exclude casual and temporary employees. The Act of 1919 actually provides pensions for people who have "been regularly employed in or about the undertaking, or any authorized undertaking." That, your Lordships will see, is substantially our wording.
Benefits are provided for anybody who has suffered loss of employment, or diminution of emoluments, has given up his employment in consequence of being required to perform non-analogous duties, or has been placed in a worse position as to conditions of service. Under that Act the person concerned can go to a referee within five years. Our words provide that the benefits or security given in Clause 54 of this Bill will extend to the same class of persons as receive the security and benefits under the Act of 1919, and, indeed, of 1926. A later Amendment will secure that the benefits are of the same type. There are other arguments which can be used in this matter, and I hope that my noble friend Lord Rochdale, will put them forward to your Lordships. I beg to move.
Amendment moved—
Page 72, line 10, leave out from beginning to ("but") in line 12, and insert the said new words.—(Lord Hawke.)
THE LORD CHANCELLOR: If I may say so with the greatest respect I venture to think that this Amendment is moved under a complete misapprehension. The object here is to enable us to give pensions to anybody who has been employed—nothing about regular; nothing about "whole-time"—by any of the bodies to which Part II of the Act applies. We introduced these words "whole-time" for this reason. There may be people, and there are people, employed by a holding company which is not to be taken over, who are servants of that holding company but who in fact spend their time in working for the subsidiaries of that holding company, giving their whole time not to one subsidiary but to two. We thought we would put in words to deal with the case of a servant of a company which is not being taken over, and that is why we added this phrase. If your Lordships will read the clause with me, I am quite certain you will be satisfied that
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we have done what: the noble Lord waits without his qualifications about "regular" or anything of that sort. The clause reads:
"for providing pensions to or in respect of persons who are or have been in the employment of an electricity board or a consultative council, or persons who have been members of the Central Electricity Board or have been employed by any body to which Part II of this Act applies:"
That is as general as it can be. All you have to do is to have been employee—never mind about regular or any other qualification—by a body to whom Part II of the Act applies.
Then we went on to use the phrase which has given rise to so much misapprehension. The noble Lord is not the only one who has been misled by this phrase, because I confess I was myself. The phrase is this:
"… or have been employed whole-time for the purpose of administering the undertaking or any part of the undertaking of coy authorised undertakers, but who have not been taken into the employment of an electricity board as aforesaid."
I am going to move a manuscript Amendment, which was suggested to me to make this matter plainer, which is to leave out in line 11 the phrase, "the undertaking or any part of the undertaking of any authorised", and put in the words, "undertakings or parts of undertakings of", which I am told makes it plainer. Therefore, I can give the noble Lord the most ample assurance—and I am sure he will agree with me—that I have here a power to pay pensions to anybody who has been employed by any of the bodies to whom Part H of this Act applies. I have added these words about whole-time people for the simple reason that I want to go further than that. I want to be able to include servants of holding companies which are not taken over because, for instance, they may own more than 25 per cent. of extraneous assets. All the same, I think it right to pay a pension to a servant of theirs who has devoted all his time to undertakings which are taken over and which were subsidiaries of the holding company. I hope that with that explanation the noble Lord will rest satisfied.
VISCOUNT ELIBANK: Naturally I accept what the noble and learned Viscount has said in regard to the altera-

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tions which he proposes to make to the clause, but there still remains the point that the Minister and the Secretary of State may make regulations. There is great anxiety on the part of the employees of a company with which I am concerned, and of the whole of the employees throughout the industry. I have had representations made to me that the Bill states only that regulations "may be made" in regard to these matters, and not "shall be made." When the matter was raised in another place, it was stated on behalf of the Minister that he would look again at the clause and introduce in the Report stage a form of words covering the difficulties. That has been done, but actually nothing has been done to implement this undertaking, though something appears to have been done, by what the noble and learned Viscount has said to-night. The fact remains that it is provided that regulations "may" and not "shall" be made in regard to these matters. Employees still feel in a state of uncertainty as to what the position will be if the clause is left as it is.
THE LORD CHANCELLOR: As a matter of fact, the Treasury nearly always use the word "may" instead of "shall." You cannot say "shall" make general regulations for "all or any of the following." It does not make sense. The pensions of ex-Lord Chancellors are authorized by saying that the Treasury "may" pay. It is the same with Judges' pensions. The Treasury always do pay, and noble Lords really need have no concern. The "may" will be treated as "shall." It is a matter of the English language—and the Scottish language. I am afraid I cannot put in the word "shall."
VISCOUNT ELIBANK: I am very glad to hear the noble and learned Viscount's explanation, and I must accept it. But I listened in your Lordships' House only a few days' ago to the noble Lord, Lord Chorley, insisting that the word "shall " should be inserted in a particular case—I think it was in the Agriculture Bill—in order to give security to a certain class of persons. It was actually suggested on this side of your Lordships' House that the word "may" should be used; now, the Lord Chancellor says that the word "shall" is the same as "may." It is difficult to know where we stand.
THE LORD CHANCELLOR: It shows how revolutionary Lord Chorley is!
VISCOUNT ELIBANK: That is not an answer.
LORD HAWKE: I think there is some excuse for the timid gazelle having fallen into the trap where the king of the jungle, the Lord Chancellor, had fallen in before him! Can the noble and learned Viscount assure me that where a man has been employed by different subsidiary companies but has not been employed by the holding companies at all, he will be eligible for a pension?
THE LORD CHANCELLOR: Yes. He is quite all right because he has been employed by a company to whom Part II of the Act applies. There is nothing unfair.
LORD HAWKE: It is difficult to see where the Lord Chancellor's Amendment will precisely meet the point of people who are vitally interested in this matter. Obviously we shall have to consider it between now and the next stage. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: The next Amendment is the one I indicated just now. I have reason to think that it will meet with the Committee's approval. I do not mean that this makes any difference, but I think it may help some people who are in doubt about this matter and make them happier than they would be. I beg to move.
Amendment moved—
Page 72, line 11 leave out from beginning to ("authorised") in line 12, and insert ("undertakings or parts of undertakings of").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next is a drafting Amendment to bring this Bill into conformity with the Transport Bill. Lord Balfour of Burleigh moved the corresponding Amendment in the Transport Bill, and he described it as being in the nature of a drafting Amendment. I will accept the noble Lord's description of this Amendment that it is of that nature. I beg to move.
Amendment moved—
Page 72, line 19, after ("relating") insert ("in whole or in part").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: This again is drafting. I beg to move.
Amendment moved—
Page 72, line 43, after ("rights") insert ("under the scheme, whether such persons as are mentioned in paragraph (a) of the last foregoing subsection or not").—(The Lord Chancellor.)
On Question, Amendment agreed to.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved at the end of subsection (3) to insert:
"and such reference shall be deemed to be an arbitration within the meaning of the Arbitration Acts, 1889–1934, and the provisions of those Acts relating to statutory arbitrations shall apply to such reference and determination."
The noble and learned Viscount said: This proposes to put at the end of subsection (3) of this important Clause 54 words similar to those contained in the Transport Bill. Clause 54, as your Lordships will now be aware, deals with provisions as to pension rights and paragraphs (a) and (b) of subsection (1), and subsection (3) of the same clause, all provide for the making of regulations, and they are, of course, of great importance to people who have claims to pensions. There is, however, no provision under which these regulations can be at all discussed in public, and in the Transport Bill, under Clause 99, subsection (3), there was a provision that a reference mentioned in line 21, page 73, should be deemed to be an arbitration following the terms of the Transport Bill. I venture to think that that was a wise provision arid it would be a wise provision here, because if you refer a question of law to a referee or board of referees appointed by the Minister of Labour and National Service for their determination, it is desirable that you should know what provisions of the law apply to such a reference. That difficulty was got over in the Transport Bill, and I venture to think that the clause inserted by the Amendment will do no harm here and will clear up an ambiguity which I know is rather serious in the minds of some of those people who are interested in these questions of pension rights. I beg to move.
Amendment moved—
Page 73, line 21, at end insert ("and such reference shall be deemed to be an arbitration within the meaning of the Arbitration Acts, 1889–1934, and the provisions of those Acts relating to statutory arbitrations shall apply to
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such reference and determination."—(Viscount Maugham.)
THE LORD CHANCELLOR: The noble Viscount quite naturally wants to get this Bill into conformity with the Transport Bill. Your Lordships will remember what happened in the Transport Bill; I remember it very well and so does Lord Chorley. Such an Amendment was moved in the Transport Bill and Lord Chorley had just made a very eloquent speech against it when Viscount Addison came in and s rid that he had decided to accept the Amendment and to see if he could get his colleagues' approval afterwards, or words to that effect. As a matter of fact, yow Lordships may have seen that Viscount Addison, the Minister and I went out together and we were willing to accept it. However—there is no secret about it now because it is being dealt with to-day and may indeed have been dealt with by now—the other place were not willing to accept this Amendment. Therefore the Transport Bill will come back to your Lordships' House with the other place disagreeing with this proposal and it will be for your Lordships in due course to consider what course to take. I mention those facts because I think your Lordships should know that you should not place any undue stress upon the fact that it makes this Bill conform with the Transport Bill.
May I say this about the merits of the proposal? When I first became in charge of an office, which had nothing to do with law, I took to that office a profound regard for our judicial system and I, for my part, thought that it was natural that in all arbitrations all sensible people would desire arbitrators to have power to state a case for the opinion of the court, so that the court could keep control of the matter and see that the arbitrator; keep straight on questions of law. I stand here quite unblushingly and say that if my rights were concerned, and my rights were going to be subject to arbitration, I should desire that that principle should apply. Of course, I know the courts, and I know the Judges, and there are other people who do not. But when I became the Minister of National Insurance and had to work out the scheme of national insurance, and particularly in regard to industrial injury, which uses the old phrase "arising rut of, and in the course of the employment," I was very surprised to find that the

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workers representatives—the trade unions in short—were most insistent that there should be no appeal to the courts. It was the fact, the regrettable fact, but it was the fact.
When I went to the employers on this matter, I went in some trepidation, and I was quite certain that they would take a strong line, saying there must be an appeal; but, to my even greater surprise, the employers too said that they thought it desirable that the courts should not come into this at all. It is a fact—as I say, a regrettable fact—that both sides, so far as national insurance is concerned, have taken that view. I still keep in touch with my old office. An the servants of the Friendly Societies, many of whom are being taken over but many of whom are not, have agreed, in regard to pensions and the like, upon of system of Ministry of Labour arbitrations, which are not in any way subject to the courts. I must admit that later experience with regard to the Ministry of Pensions has led me to see that there is something to be said for those who objected to a combination of the two systems, for what has happened there? We have given, under that scheme, a right of appeal by case stated to the courts, and the Judge from time to time pronounces on the cases. This has had a most unfortunate result. He pronounces on some case, a case of principle, and thereupon all those people who have had their cases already decided say, "Well, if only my case had been decided after this principle had been enunciated, how different it would have been. Please try my case again." So I was prevailed upon, rightly or wrongly—at any rate I did so—to set up a new lot of tribunals to determine once again the cases of those people who thought they were aggrieved by the Judge's decision. Those tribunals have been working very hard, trying to deal with the matter satisfactorily.
Now the Judge has given another decision, and has said that those tribunals must be unanimous. Therefore, I have now got another request to start all the work from the beginning again. I have resisted this time, because, after all, you cannot go on doing this sort of thing. Therefore, I do see some criticism. But having said all that, I frankly say I remain of the opinion that if I were the judge of my own rights I should desire this right to go to the court to get
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a case stated. But the problem as I see it is this: ought I to insist that this is such a fundamental principle that I must force it upon people who do not want it? Because these electrical industry men are very well organized in their trade unions, and the trade unions have made it perfectly plain to us that they do not want this principle. Let us remember also that an appeal to the courts on a case stated is a double-edged weapon. It by no means follows that the man is always going to win. Sometimes there might be an appeal by the Electricity Authority, and the man might lose by virtue of this appeal to the court. That is the position.
I can only give your Lordships guidance, and I quite realize that there are different views held as to what we should do. But, so far as I can give your Lordships any guidance at all, it would be this: that although we may well think that this system of case stated to the court to enable the courts to have control is a desirable system—and I have said that I myself would desire it for my own rights—yet I do not feel that it is so clearly right that we ought to thrust it upon all these people who say that they do not want it. They prefer the informality, and, if you will, the irregularity of a Ministry of Labour referee, who deals with the matter, very largely, I suppose, as a conciliator. Probably he has no regard for the rules of evidence and has never heard of them. The proceedings, I expect, are conducted in a most informal way round a table; the referee tries to fix things up, and I am bound to say that very often he succeeds very well. I would venture to suggest to the Committee that we should not make people who do not want this system put up with it. For those reasons I cannot accept this Amendment having regard to what has happened and is happening to-day. I have no doubt that if we did this we should find that in the other place people are just as much opposed to it as they are showing that they are in reference to the Transport Bill to-day.
VISCOUNT SWINTON: I do not think that this is a matter upon which even a lawyer would die in the last ditch. Frankly, I have a completely open mind about it. I do not see that this is a matter in which we need be academic, have a particular article of faith or lay down any sealed pattern rule. With re-

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gard to war pensions, the conciliation method was tried, but apparently people did not like it at all and a judicial tribunal had to be set up. In social insurance—whether because it was because the Lord Chancellor was the first Minister or not I do not know—the people concerned seem to like the informal way. I am sure that the Lord Chancellor has reported accurately on the state of affairs. Indeed I gather that he has taken a sort of Gallup Poll about this business. The people primarily concerned are people who are going to have disputes about pensions and, on the whole, they would like to start with the irregular and not the regular system. I gather that those who under the new dispensation are going to run this industry are quite agreeable also. These are going to be the two sets of people concerned. The others are going to die so they, at any rate, will not continue to have a great interest in the matter.
My advice, for what it is worth, is that we ought not to be adamant about this principle or this precedent. Do not let us assume that this is a precedent necessarily to be followed in all the other cases in nationalized industry. Let the people who are to run it, and the employers and the workers in ordinary industry, decide. Let the partners in industry decide which is the way in which they would like to run this kind of business. I am sure that both Houses of Parliament would say to them: "This is primarily an industrial question for the partners in this particular industry. We do not want any sealed pattern rule. We do not want to force anything upon you. Whatever you may agree is the best way, that is the way you had better follow, and then, if you find you have made a mistake, you can then try the other." After all, even Socialists are open to conviction and change. We will do what, on the whole, the Gallup Poll indicates they want to do.
VISCOUNT MAUGHAM: This is not a matter on which I am in any way a pedant and I do not in the least think anybody, even I, should die in the last ditch on behalf of the Amendment on the Paper. I tell you quite frankly what I feel about it, with I may say a rather large experience of matters of this kind. I feel that in the ordinary case there should be no appeal to the court and everything should be done in the informal
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way round the table which the Lord Chancellor has graphically described. Against that I have no objection what-ever. But what I fear is that in a case like this, with complicated regulations of all kinds, there may sometimes be questions of construction of pension rights and documents, and under the regulation; which are to be made under this clause those questions really ought to be generally decided, once and for all. As I understand it, these particular referees will not give reasons. They will give their decisions on the cases before them. The world will not know what decision they have given and there may be thousands of other people who are not in the least aware of what their rights are.
It is that which I think we might. add to this clause without accepting the provision I have put down on the Paper. I think we might give the Minister power to direct the referees on any particular case to order a case to he stated to the court, or if you like, to some other agreed tribunal, in order that that particular question should be settled, and when it is settled—we do not want any rule about it—there, ought, as a matter of practice, to be a definite statement in some periodical to enable everybody to knew that the question has been decided once and for all. I believe that would save a great deal of heartburning and difficulty. But I frankly admit that that is not the Amendment have on the Paper. I did suggest when this was drafted, that the precedent of the Transport Bill should probably be followed, but I invite those concerned to say whether they do not want a little formal direction to be given to the referees. I would suggest that they should have an opportunity of asking the Minister, in a question of great difficulty, to have a case stated as if it were a case under the Arbitration Act, and for the matter to be decided once and for all. I beg leave to withdraw my Amendment.
VISCOUNT RIDLEY: Before the Amendment is withdrawn, could I ask the noble and learned Viscount, the Lord Chancellor one question on what he said? I understood him to say that there had been discussions between the Minister of Fuel and Power and the trade union representatives on the question of pensions, and they had preferred the method of dealing with them which is laid down in the Bill.

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The alternative method, as posed in the Amendment, does fall in line with what we have had in the Transport Bill, on which the question was raised which I would like to ask. Remembering the number of people who are not in pensions schemes and are not by the nature of their employment members of trade unions, is he satisfied that their interests have been represented in the sense that this method is also suitable to them? I am bound to say that in trying to ascertain from the part of the industry I know which of these methods would be thought to be most suitable for the men concerned, I can find very little preference for one or the other. I would like to feel that not only those represented by trade unions, but other employees of the industry, had been able to express their views, and that their opinions had been considered in deciding which of these two methods to adopt.
THE LORD CHANCELLOR: I do not know what the non-unionist view is. The difficulty about that is that you cannot collect their opinions. I can say, however, that amongst the organized workers in this country there is an overwhelming view about this.
Amendment, by leave, withdrawn.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved to add, after subsection (7), the following new subsection:
"(8) No regulations shall be made under this section unless a draft thereof has been laid before Parliament and has been approved by resolution of each House of Parliament."
The noble and learned Viscount said: This Amendment does not depend at all on the other one. It is simply this. Many of these regulations will be of the greatest importance. It has been the practice of the Government in all these cases to arrange that when important regulations or orders are made, the Houses of Parliament shall have a right, if they choose to exercise it, to examine the matter and, if necessary, to refuse to approve or, in other cases, move to rescind the order or regulation. I think regulations of this sort ought to have some such sanction. I beg to move.
Amendment moved—
Page 74, line 10, at end insert the said subsection,—(Viscount Maugham.)
THE LORD CHANCELLOR: We have a similar Amendment on the next clause, and in that clause, which deals with compensation, I was proposing to accept the Amendment about the regulation being made in draft, with the affirmative resolution of Parliament. Your Lordships will see that that Amendment is to page 75, line 38, and it is also in the name of the noble and learned Viscount, Lord Maugham. That is following the precedent of the Transport Bill. There they accepted this clause in the compensation clause, but did not put it into the pensions clause. With regard to the pensions clause, the position is this. Clause 62 (3), as your Lordships will see, says:
"All orders and regulations made under this Act, not being orders required to be laid before Parliament in draft or orders subject to special parliamentary procedure"—
if we do not pass this Amendment, these words will apply—
"shall be laid before Parliament immediately after they are made and if either House, within a period of forty days … resolves that the order or regulation be annulled"
they shall cease to have effect. So the effect of leaving out this Amendment here would be to make them subject to negative approval. But in the next clause, following the precedent of the Transport Bill, I propose to accept the Amendment which will make them subject to affirmative approval. I hope with that assurance the noble and learned Viscount will accept the later Amendment and not press this one.
VISCOUNT MAUGHAM: I should have called attention to one of the other clauses. I am quite content with what the noble and learned Viscount says, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 54, as amended, agreed to.
LORD TEYNHAM LORD TEYNHAM moved after Clause 54 to insert the following new clause:
"Special provisions as to customary pensions.
The provisions of this Act which direct that liabilities of a body to which Part II of this Act applies shall become as from the date of transfer, liabilities of an Electricity Board shall apply in relation to customary obligations of the body in relation to pensions, notwithstanding that the body was under no legal obligation in respect of those pensions, and if any question arises as to the existence or

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extent of any such customary obligation, the question shall, in default of agreement be referred to a referee or board of referees appointed by the Minister of Labour and National Service, and the decision of that referee or board shall be final, and the Electricity Board shall give effect to that decision."
The noble Lord said: This is a rather long Amendment, but it is really very simple. It provides that pensions which are based on customary practice, and may not be covered by a pensions scheme or a deed, should he continued. I should just like to say that this Amendment is drafted rather on the basis of paragraph 4 of the Schedule of the Local Government Act, 1933. I feel that His Majesty's Government should be able to accept this very reasonable Amendment. I beg to move.
Amendment moved—
After Clause 54 insert the said new clause.—(Lord Teynhanz.)
THE LORD CHANCELLOR: I think this provision is in the Bill already, because "pension rights" is defined. If your Lordships will look at the definition of "pension rights" which begins on page 85 you will see this:
"… and any expectation of the accrues of a pension to or in respect of that person under any customary practice …"
However, I think we had better have something like the noble Lord suggests here. I accept his Amendment in principle; and I will see that the appropriate words are added to the Bill to make it quite plain that persons relying on customary rights are not thereby deprived of their pensions merely because they are not based upon legal rights. If the noble Lord will withdraw his Amendment now, I will see that the proper words are put into the Bill.
LORD TEYNHAM: I am very grateful for the statement made by the noble and learned Viscount, and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 55:
Compensation to officers in connection with transfers.
55.—(1) The Minister and the Secretary of State jointly shall by regulations require every Electricity Board to pay, in such cases and to such extent as may be specified in the regulations, compensation to officers of any body whose property, rights, liabilities and obligations vest by virtue of this Act in the Board and officers employed whole-time for the purpose of administering the undertaking or any part of the undertaking of any authorized
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undertakers, being officers who suffer loss of employment or loss or diminution of emcluments or pension rights or whose position is worsened in consequence of the vesting, or in consequence of the subsequent transfer to another Electricity Board or the subsequent disposal in any other manner, of any such. property, rights, liabilities or obilgations.
(5) Regulations made under this section—.

(a) shall prescribe the procedure to be followed in making claims for compensation, and the manner in which and the person by whom the question whether any or what compensation is payable is to be determined; and

(b) may in particular contain provisions enabling appeals from any determination as to whether any or what compensation is payable to be brought, in such cases and subject to such conditions as may be prescribed by the regulations, before a referee or board of referees appointed by the Minister of Labour and National Service,

and where any such provision is made as is specified in paragraph (b) of this subsection, the decision of the referee or board of referees shall be final.
LORD HAWKE LORD HAWKE moved, in subsection (1) to leave out from "officers," where that word occurs a second time, to "being," and insert:
"who have been regularly employed in or about the whole or any part of any undertaking or business vested or transferred by or under this Act"
The noble Lord said: I return to the charge with very much the same Amendment as I moved to Clause 54. The noble and learned Viscount pointed out to me that I had misread the meaning of Clause 54, but here we have another set of words which are different from those. As a matter of form, I again mace the accusation that he has not power here to compensate part-time officers, and I leave the onus of proof to him. I beg to move.
Amendment moved—
Page 74, line 16, leave out from ("officers") to ("being") in line 18, and insert the sad new words.—(Lord Hawke.)
THE LORD CHANCELLOR: I cannot understand why the noble Lord takes this view, because he understands these thins so very clearly. The part-time officer to whom he is referring is, I presume, a part-time officer of a body taken over under Part II of this Bill. If that is so, then he is plainly covered by the words:
"… as may be specified in the regulations, compensation to officers of any body whose property, .rights, liabilities and obligations vest: by virtue of this Act in the Board… ."

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The part-time officer must be an officer of a body who are taken over, and if he is employed only by a holding company which is not taken over, then we get exactly the same problem as we had before. In order to make this matter plain, and to remove misapprehensions rather than make any change—I do not think it makes any difference—I am moving a manuscript Amendment to line 17, to leave out from "administering" to "authorized" in line 18, and insert the words, "undertakings or parts of undertakings of," I am given to understand that that makes people feel happy about it, but I really can assure the noble Lord that we have covered the matter quite properly.
LORD HAWKE: I would just like to know the precise reason why the Government are so shy of the words used in the 1919 and the 1926 Acts, which are the ones we are using.
THE LORD CHANCELLOR: I thought we had words which quite obviously covered this matter. You cannot say more than that you may pay a pension to an officer of a body who is taken over. That is very simple and about as wide as it can be.
LORD HAWKE: The noble and learned Viscount cannot give any particular explanation why those long hallowed words are no longer to be used in this Bill?
THE LORD CHANCELLOR: No, I cannot. They are not hallowed so far as I am concerned.
LORD HAWKE: We will no doubt have an opportunity of studying the manuscript Amendment and be able to refer to it again on the Report stage. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: I do not think this Amendment makes any difference, but I have reason to believe that it will remove some misgivings. I beg to move.
Amendment moved—
Page 74, line 17, leave out from ("administering") to ("authorised") in line 18 and insert ("undertakings or parts of undertakings of").—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD HAWKE LORD HAWKE moved at the end of subsection (2) to insert:
"(3) If within five years after the vesting date—

(a) any existing officer relinquishes his employment on the ground that he has been required to perform duties which are not reasonably comparable to or are an unreasonable addition to those which as an officer of his previous employer he was required to perform; or

(b) the services of any existing officer are dispensed with by an Electricity Board because his services are not required and not on account of misconduct or incapacity to perform such duties as immediately before the vesting date he was performing or might reasonably have been required to perform; or

(c) the emoluments of any existing officer are reduced;

that officer shall unless the contrary be proved, be deemed for the purposes of subsection (1) of this section to have suffered loss of employment or loss or diminution of emoluments by reason of the vesting.
For the purposes of this subsection the expression existing officer means any person who was on the nineteenth day of November nineteen hundred and forty-five and immediately before the vesting date such an officer as is referred to in subsection (1) of this section and whose services are transferred to an Electricity Board by reason of the passing of this Act."
The noble Lord said: This Amendment is designed to secure that these employees shall have the same right of compensation up to a period of five years after the vesting, as is provided for them in the 1919 and 1926 Acts, should employees fall into a similar predicament. I do not think the Amendment requires any explanation other than that. I beg to move.
Amendment moved—
Page 74, line 35, at end insert the said new subsection.—(Lord Hawke.)
THE LORD CHANCELLOR: The principle of this Amendment is not acceptable to us, but in view of the fact that the noble Viscount, Lord Maugham, has an Amendment to this clause in which he is going to provide for draft regulations and an affirmative resolution, I suggest that the noble Lord can rest quite satisfied that he will have a chance of seeing these regulations in draft. That being so, perhaps he will not wish to proceed with this Amendment.
LORD HAWKE: In view of that assurance, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved to leave out subsection (5) and insert the following new subsection:
"(5) Any dispute between an Electricity Board and an officer as to whether any, or what, compensation is payable under this section, or any regulations made thereunder, shall be referred to a referee or board of referees appointed by the Minister of Labour and National Service for determination, and such reference shall be deemed to be an arbitration within the meaning of the Arbitration Acts, 1889–1934, and the provisions of those Acts relating to statutory arbitration shall apply to such rates and determination."
The noble and learned Viscount said: I do not know what view the Government will take of this Amendment, which is on the same lines as some others which are concerned with relations of officers and compensation. This one relates to compensation to officers in connexion with transfers, and it leaves everything rather vague. The principal part of my Amendment, except the last lines, is really designed to make the matter a little clearer. In the first instance it must be taken that the dispute will arise between the Electricity Board and an officer as to whether any or what pension is payable to him, and I should like the regulations necessarily to prescribe, after stating that fact, what is to happen in the dispute. I say that the dispute ought to be referred to someone or other, and I am willing to accept the view of the Government and follow the other clause where the dispute goes to a referee or board of referees appointed by the Minister of Labour.
Now, so far, there is no reason that I can see why this should be objected to. I think it makes the clause a little clearer and shows the people concerned what it is intended to do in connexion with the claim for compensation if there is a dispute. Then it is interesting to note that the regulations in the Bill to be made under this clause, subsection (5), paragraph (b)
"may in particular contain provisions enabling appeals from any determination as to whether any or what compensation is payable to be brought, in such cases … before a referee or board of referees appointed by the Minister of Labour …"
I am not quite sure that I know what is meant there by "appeals": appeals from what decision? My suggestion is that we should go, after a dispute has arisen between the Electricity Board and an officer, to a board of referees. And then
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in my Amendment I have a suggestion that
"such reference shall he deemed to be a n arbitration within the meaning of the Arbitration Acts."
With reference to what the Lord Chancellor said on the previous Amendment, which contained words rather like that and which I have withdrawn, I do not think those arguments apply to the present case because here there may he a claim for large compensation to an officer. As I conceive it, it is rather like those cases which can be settled easily by informal methods round a table. The claim may be for some thousands of pounds and I do not think it is pleasant to settle that sort of litigation round a table in a private room, I suppose with no public necessarily admitted and it being left to a referee to determine without any appeal from him.
Therefore, I respectfully suggest to the noble and learned Viscount that the provisions in Clause 55 really relate to something quite different from the pension clause, that it is necessary that there should be a decision by a board of referees and that in a proper case them should be power to have a case stated. Large sums are involved here, and I do not think the views of the ordinary trade unions art of much importance with regard to these claims to compensation by officers. It is not a wages claim at all; it is something quite different; it involves different considerations and often large question; of law. Accordingly, I hope that the Amendment which stands in my name and in the names of Lord Rochdale and Lord Wolverton May be accepted. I beg to move.
Amendment moved—
Page 75, line 11, leave out subsection (5) and insert the said new subsection.—(Viscount Maugham.)
THE LORD CHANCELLOR: The noble and learned Viscount asked in particular about these appeals. The theory of the appeal is this: The officer, first of all, states this claim before the Central Authority, and it is only if the Central Authority do not give him satisfaction that he goes before this referee appointed by the Minister of Labour. That is the appeal which they have in mind. They regard the going to the Minister of Labour's referee as an appeal from the

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Central Authority. For the rest, I am sorry to tell the Committee that a precisely similar Amendment is being, or has been by now, I suppose, disagreed with in another place on the Transport Bill.
VISCOUNT MAUGHAM: Is that one on compensation?
THE LORD CHANCELLOR: On compensation. Although it is possible, of course, that a claim might be more serious, and might be a larger claim, in the majority of cases it would be on behalf of workers in the industry—at least I should imagine so; and all I can tell the Committee is what I have said before. They may be right or they may be wrong, but they have a strong feeling that it is better to have the Ministry of Labour left to do that. Anyhow, I am not in a position to accept this Amendment, and I think it should be withdrawn. The other place would disagree with it and I do not think it is an Amendment which we should force upon people unless they want it.
VISCOUNT MAUGHAM: In those circumstances, I must beg leave to withdraw the Amendment. I suppose, however, that if, as a matter of fact, something does happen in another place to the clause there will be an opportunity to reinstate my Amendment?
THE LORD CHANCELLOR: Certainly.
Amendment, by leave, withdrawn.
VISCOUNT MAUGHAM: This Amendment has already been mentioned, and the Lord Chancellor has kindly said that he would be willing to accept it. I beg to move.
Amendment moved—
Page 75, line 38, at end insert:
"(7) No regulations shall be made under this section unless a draft thereof has been laid before Parliament and has been approved by resolution of each house of Parliament."—(Viscount Maugham.)
THE LORD CHANCELLOR: I accept this Amendment.
On Question, Amendment agreed to.
Clause 55, as amended, agreed to.
Clause 56:
Application, amendment and repeal of enactments relating to electricity supply.
(3) All local enactments in force at the vesting date and applicable to any authorised undertakers except enactments applicable to local authorities or composite companies otherwise than in. their capacity as authorised undertakers, shall, as from the vesting date, have effect⁃
(c) with such other adaptations and modifications (if any) as may be prescribed:
10.38 p.m.
LORD CHORLEY LORD CHORLEY moved, in subsection (3), to leave out "(c) with" and insert:
"shall also have effect, as from such date as may be prescribed which may be prior to the making of the regulations but not to the vesting date, with."
The noble Lord said: This clause is one which, amongst other things, gives the Minister power to make regulations for the purpose of clearing up local Acts of Parliament and local regulations and matters of that kind, which deal with this sort of consideration. As the clause is at present drafted, the regulations have to be made before the vesting date, which, on consideration, obviously would lead to all sorts of difficulties, because many of these Acts have not yet floated into the vision of the Ministry, so to speak. Therefore, it is desirable that the regulations should be made, or that there should be power to make the regulations, at a later time. The Amendment has been tabled in order to enable that to be done. I beg to move.
Amendment moved—
Page 76, line 39, leave out ("(c) with") and insert the said new words.—(Lord Chorley).
On Question, Amendment agreed to.
VISCOUNT MAUGHAM: The next Amendment is really little more than drafting. It only makes clear that the adaptations and modifications mentioned have to be required in consequence of the provisions of the Act. I beg to move.
Amendment moved—
Page 76, line 40, at end insert ("being adaptations and modifications required in consequence of the provisions of this Act").—(Viscount Maugham).
On Question, Amendment agreed to.
VISCOUNT MAUGHAM: The next Amendment represents only a desire to bring the provisions here in line with the other provisions, in perhaps somewhat shorter form. The Amendment seeks to add that an order made under the subsection (3) shall be subject to special Parliamentary procedure, which is, of course, laid down in the Act of Parliament relating to such procedure. I beg to move.
Amendment moved—
Page 77, line 35, at end insert ("An order under this subsection shall be subject to special parliamentary procedure.")—(Viscount Maugham.)
LORD CHORLEY: I am happy to accept this Amendment.
On Question, Amendment agreed to.
Clause 56, as amended, agreed to.
Clause 57 agreed to.
VISCOUNT ELIBANK VISCOUNT ELIBANK moved, after Clause 57, to insert as a new clause:
Allocation of assets of certain bodies.
"Where any body, not being a body to whom Part II of this Act applies, have among their objects the promotion or protection of the interests of electricity undertakers or any class thereof, or of the officers of electricity undertakers or any class thereof, and, by reason of the failure of the objects of the body in consequence of the provisions of this Act, the affairs of the body are being wound up, any assets of the body which, after satisfaction of all their debts and liabilities, remain undisposed of may, notwithstanding anything in any enactment or instrument defining the objects of the body or regulating their affairs, be applied in whole or in part in compensating the officers of the body."
The noble Viscount said: On behalf of my noble friend Lord Brabazon of Tara, who is unfortunately unable to be here this evening, I am moving the Amendment which stands in his name. The Amendment is put forward on behalf of the Incorporated Municipal Electrical Association and other associations who will naturally be wound up when the industry is taken over by the Government. They are anxious that their staffs should be fairly dealt with, and they have been advised by counsel that under their Memo-
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randa of Association they could not devote the funds which they still have in their possession to staff compensation. They therefore approached the Ministry of Fuel and Power with a request that a clause should be inserted in the Bill which would enable them to carry out their wish despite the terms of the Memoranda. I understand that the Ministry appreciate the position, and I have been informed that this Amendment will probably be accepted by the Government. I beg to move.
Amendment moved—
After Clause 57, insert the said new clause—(Viscount Elibank.)
THE LORD CHANCELLOR: I have pleasure in accepting this Amendment.
VISCOUNT ELIBANK: On behalf of my noble friend Lord Brabazon of Tara. I beg to thank the noble and learned Viscount.
On Question, Amendment agreed to.
VISCOUNT SWINTON: I understand that it is suggested that this might be a convenient moment to adjourn.
THE MARQUESS OF SALISBURY: The next Amendment is one to which we attach a certain amount of importance and I think perhaps the discussion on it would take half-an-hour or three-quarters of an hour. We are entirely in the hands of the House, of course, but it may be thought a little late now to start on a discussion of that length.

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL.
Leave given to the Select Committee not to sit again till Tuesday next for convenience of Parties.

LONDON PASSENGER TRANSPORT BOARD BILL.
King's Consent signified and Bill reported from the Select Committee with Amendments.
House adjourned at a quarter before eleven o'clock.