ELECTRICITY BILL.

HL Deb 29 July 1947 vol 151 cc613-71

2.48 p.m.

Amendments reported (according to Order).

Clause 1

Main functions of Electricity Boards.

(6) In exercising and performing their functions the Electricity Boards shall, subject to anti in accordance with any directions given by the Minister or Secretary of State under this Part of this Act—

1. (a) promoted the use of all economical methods of generating, transmitting and distributing electricity;
2. (b) secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity;
3. (c) avoid undue preference in the provision of such supplies;
614
4. (d) promote the simplification and standardisation of methods of charge for such supplies;
5. (e) promote the standardisation of systems of supply and types of electrical fittings;

and shall also promote the welfare, health and safety of persons in the employment of the Boards.

VISCOUNT SWINTON moved, in subsection (6), to insert after paragraph (b): (c) minimize and where practicable void payment of contributions to the cost of electric lines from persons requiring supplies provided such persons enter into agreements to consume or pay for definite amount: of electricity on reasonable terms. The noble Viscount said: My Lords, this is a very short and modest Amendment which I hope the Government will see their way to accept. The noble and learned Viscount, the Lord Chancellor, told us in a very frank speech the importance which the Government attached to developing electricity in rural areas, a view shared by all sides of the House. Your Lordships will remember we all agreed that we should put into the Bill a provision that in constituting the area boards the Minister should have regard to persons with agricultural knowledge. Your Lordships may say that these general clauses are rather in the nature of a pious aspiration of what these great nationalized undertakings are going to do. Of course they are not going to give us cheap and abundant electricity. That was only in the Election manifesto. The Lord Chancellor has made it plain that that is now out of date, and electricity in future will be neither cheap nor abundant.

There are a certain number of what I suppose we ought to call exhortatory provisions, which exhort the Central Authority and the boards to do certain things, but we do not say a lot about agriculture, and I would like in these exhortatory provisions to insert these words: Minimize and where practicable avoid payment of contributions to the cost of electric lines from persons requiring supplies provided such persons enter into agreements to consume or pay for definite amounts of electricity on reasonable terms. That leaves a pretty wide latitude, but I think it would be wise to put this in, because one of the things which in the past has handicapped the rural areas, whether in electricity or telephones, is the connexion charge. I am not saying you can get rid of it all at once. The thing must vary with the different areas; it is more practical in some than in others. It may interest your Lordships to know that the words I have put down are, I think I am right in saying, exactly the same as the agreement entered into between the electricity companies and the farmers in this country. They were quite agreeable on both sides—and it seemed to me a very fair thing—that they should all go forward with this, not only as a sort of gentleman's agreement, but as set out in the concordat. I do not think the nationalized undertaking ought to do less for agriculture than free enterprise (or controlled enterprise, as it was in electricity) was prepared to do. I beg to move.

Amendment moved— Page 3, line 18, at end insert the said new paragraph.—(Viscount Swinton.)

THE LORD CHANCELLOR (VISCOUNT JOWITT)

My Lords, let me make it quite plain at the outset that I have never said that electricity may not become cheaper, and that electricity may not become abundant. But not having the gift of prophecy, I refuse to prophesy that either of these happy events will happen. All I do say is that if you pass this Bill there is a good chance of electricity being cheaper and more abundant than it otherwise would have been. Whatever system of electrical supplies you have you will have a rise in the cost of coal, and I think we must all face up to the fact that, whatever Party is in power, and whatever the system may be, there will never again be cheap coal if it means sweated labour in the mines. All you can do is to produce your coal as scientifically as you can, and that is the desire of all of us.

Then there is this question about putting in these words. I say at once that I think this is an imaginative and up-to-date approach to this problem. It has been tried, as your Lordships know, in Dumfriesshire; it has been pressed by the National Farmers' Union; and it is at the present time, I believe, the subject matter of an inquiry by the Electricity Commissioners. I think there is much to be said for it. But, after all, this is typically a matter which we ought to leave to those bodies—the Central Authority and the area boards—with whom we are charging this task. If they think this is a practicable way of dealing with it, no one will be more pleased than I shall. If they think it is not practicable at the present time, or not practicable at all, then it is for them to decide. It seems to me that this is a typical illustration of a matter of good business management. I have no doubt that the up-to-date companies to-day—and there are many of them—have been considering this sort of thing. This must be considered now by the bodies which we have, for better or for worse, put in charge of this industry. If I may say so, I do not think it is for us to lay down this principle. I think it is for us rather to trust these bodies, with full authority, to do what they think best; and I sincerely hope that in considering what line they should pursue they will look favourably at the suggestion in this Amendment. At the same time, I do feel it is for them and not for us, and I think it would be a mistake to put it in the Bill.

LORD HARLECH

My Lords, I would like to say a word or two on this Amendment. I am sorry that the noble and learned Viscount thinks that this would be out of place in the Bill. Once you get a board with a large staff, and a whole series of priority duties, those are the things which engage the very busy people who are on a new corporation like this, and they forget all these pious undertakings in Parliament unless they are in black and white in the Bill along with the other things. I am sorry that the noble and learned Viscount cannot agree to some form of words in this respect. There is no doubt that one of the major grievances of the agricultural industry is not only the introduction of double summer time but also the ordinary summer time. The milking in the dark is prolonged for weeks and weeks all through the winter into the spring, which is a terrible hardship and, incidentally, causes great difficulty in all those larger dairy farms which have not got electric light, and the rest of it.

Speaking as a milk producer, I want to say that we in this country are still far behind Canada and Switzerland, and some other countries, in the eradication of diseases conveyed by milk. Some progress has been made, and is being made, but I am satisfied that we shall never get milk, particularly in the hot summer months, free from bacillus, and all the rest of it, unless the bigger dairy farms of the country are properly electrified. In the interests of health, and in the interests of farming, that should be very high on the priority list before this new electricity corporation. I am very sorry that words cannot be inserted in this Bill, if only in a tentative form, to make that one of the premier targets to be aimed at.

On Question, Amendment negatived.

Clause 3:

Constitution of Central Authority and Area Boards.

(3) Every area board shall be constituted as follows—

1. (a) the chairman and not less than five or more than seven other members shall be appointed by the Minister from amongst persons appearing to the Minister to be qualified as having had experience of, and having shown capacity in, electricity supply, local government, industrial, commercial, agricultural or financial matters, applied science, administration, or the organisation of workers; and
2. (b) there shall be one other member who shall be the person for the time being holding the office of chairman of the consultative council established under the following provisions of this Part of this Act for the area of the area board:

Provided that, until the consultative council has been established, an area board shall be deemed to be properly constituted notwithstanding that the Board does not include the member referred to in paragraph (b) of this subsection.

(4) A person shall be disqualified for being appointed or being a member of the Central Authority or any area board so long as he is a member of the Commons House of Parliament.

(5) The Minister shall appoint one or more of the members of the Central Authority to be deputy chairman or deputy chairmen of that Authority, and shall appoint one of the members of each of the area boards to be deputy chairman of that Board.

3.0 p.m.

THE LORD CHANCELLOR moved, in paragraph (a) of subsection (3), after "Minister," to insert "after consultation with the Central Authority." The noble and learned Viscount said: My Lords, may I say this, and this only? I have never pretended that the area boards are perfectly free. On the contrary, it is quite obvious to anybody who studies this Bill that there is a very severe limitation placed upon them by the Central Authority. But that fact seems to me to be no reason whatever why we should place them still further under the control of the Central Authority, and therefore I suggested to your Lordships that if it is a question between the Central Authority and the Minister it is much better to have the Minister. Your Lordships did not think so, and I suggested a compromise, which was that it should be the Minister who appoints, but he appoints after consultation with the Central Authority. I think that idea commended itself to your Lordships. I beg to move.

Amendment moved— Page 6, line 27, after ("Minister") insert ("after consultation with the Central Authority").—(The Lord Chancellor.)

VISCOUNT SWINTON

My Lords, I think the noble and learned Viscount has completely carried out the pledge he gave.

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved to insert at the end of subsection (3): "and, during any period before the vesting date, an area board shall be deemed to be properly constituted if the chairman and three other members have been appointed." The noble and learned Viscount said: My Lords, in Committee the Government accepted an Amendment to provide for the vesting date to be not less than three months after the establishment of all the area boards and the definition of their areas. It was finally included in an Amendment to Clause 14, but on consideration we found that that provision might cause difficulties. For instance, supposing there were one appointment still to be made to only one area board, the vesting date would have to be postponed, and that really would be unreasonable. The minimum number of members of an area board will eventually be seven, including the chairman of the consultative council. The chairman of the consultative council is not required to be appointed by the vesting date. But even if the chairman of the consultative council is not counted it would be necessary to make 84 appointments—that is six times fourteen—by a date three months before the vesting date, and if there had been only 83 appointments the vesting date would have to be postponed.

Since it is the intention that the regulations relating to the quorum of area b cards shall provide for the area board quorum being fixed at four members, it seems reasonable to provide, as is done in this Amendment, for the area board to be considered as sufficiently established before the vesting date if it consists of four members--namely, the chairman and three other members. The Amendment only covers the period up to the vesting date, and it will be incumbent on the Minister to fill the remaining vacancies on any area board up to the minimum number of the chairman and not less than five other members before the vesting date. I beg to move.

Amendment moved— Page 6, line 41, at end insert the said words.—(The Lord Chancellor.)

On Question, Amendment agreed to.

LORD HAWKE had an Amendment on the Paper, to insert, after the second "shall" in subsection (5), ("after consultation with the Minister"). The noble Lord said: My Lords, a clerical error has crept into this Amendment, which as it stands is meaningless. The words should be "after consultation with the Central Authority," and with your Lordships' permission I would move the Amendment in that form. The Minister now appoints the area board in consultation with the Central Authority; he appoints the chairman in consultation with the Central Authority, and I am proposing what I think is reasonable, that in appointing the deputy chairman he should also consult the Central Authority. I beg to move.

Amendment moved— Page 6, line 46, after ("shall") insert ("after consultation with the Central Authority").—(Lord Hawke.)

THE LORD CHANCELLOR

I am afraid I am not able to accept this Amendment now. I confess that in the very few minutes I had to look at this Amendment I was very puzzled by it as it appeared on the Paper. It obviously had no meaning, and therefore was quite unworthy of the noble Lord. Whether or not I shall be given any instructions to look kindly towards this Amendment if the words "Central Authority" are substituted I really do not know, but at the present moment I have no instructions about that aspect of the matter. If the noble Lord will withdraw his Amendment now I will find out what view those who control me have about it, and I will communicate with him.

VISCOUNT SWINTON

My Lords, I quite agree that the Amendment ought now to be withdrawn, but I hope that my noble friend will put it down on Third Reading in the right form. I am sure the Lord Chancellor will agree that we all came to an understanding that the Minister should appoint after consultation. The whole idea is that they should work as a team and work together, and if they are to consult as to who shall be chairman they must consult as to the deputy chairman. I should have thought this Amendment would have been accepted out of hand.

LORD HAWKE

I apologize to the noble and learned Viscount for having puzzled him, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 9:

Compulsory purchase of land.

>9.—(1) The Minister may authorize any Electricity Board to purchase compulsorily any land which they require for any purpose connected with the discharge of their functions, and the Acquisition of Land (Authorisation Procedure) Act, 1946 (except Section two thereof), shall apply, in relation to any such compulsory purchase. as if the Board were a local authority within the meaning of that Act and as if this Act had been in force immediately before the commencement of that Act.

3.7 p.m.

VISCOUNT MAUGHAM moved to insert in subsection (1): Provided that nothing in this section shall authorize the compulsory purchase of any land which, at the date of the first notice for the purposes of the compulsory purchase of such land, is used or authorized to be used by any gas or water undertakers for the purposes of their undertaking.

The noble and learned Viscount said: My Lords, at the outset I should apologize to the Lord Chancellor. An Amendment somewhat similar to this but not, I think, quite so accurate, was put down in my name at an earlier stage and my noble friend Lord Simon moved the Amendment, eliciting from the Lord Chancellor a somewhat elaborate reason why, in his opinion, the Amendment was not well founded and ought not to proceed. The reason why I wish to apologize to the noble and learned Viscount is that closer examination of the speech he made to your Lordships on the subject has shown what is not really surprising, having regard to the great complexity of the subject, two errors of some importance. I had intended to visit the Lord Chancellor personally and state to him what happened, but on the occasions I have tried I ascertained he was so busy with other matters that he would not welcome any expenditure of half an hour or thereabouts in being informed from a legal point of view of this very troublesome matter. Therefore, if he should say—as I can quite understand he may say—that he wishes to look into it further I shall at once give way, because I do not think it is fair to discuss before your Lordships at length at this stage of the proceedings a very very troublesome point of law.

At any rate, I should explain exactly what it is, which I think I can do in a very few words. The noble and learned Viscount, the Lord Chancellor, on the information given to him, no doubt, was of the opinion that the present position was that compulsory purchase of land was permissible even though the land should belong to gas or water undertakings without statutory authority. I am very anxious that gas and water undertakers, whether statutory or not, should not be within this general clause. The Lord Chancellor rightly pointed out that these statutory undertakers were already outside the clause, and he told us that non-statutory gas or water undertakers were, at present, not protected by any provision in any existing Statute; and that, I think, was a mistake. Those undertakers under the existing law are free from compulsory purchase by Section 24 of the Electric Lighting Act, 1909, which is, in fact, repealed (your Lordships will find it, I think, on page 121 of the present Bill.) Section 24 is the one which at present protects gas and electricity undertakings from compulsory purchase although they have no statutory authority. They are ruled by statutory orders of various kinds; some of them are to be utility undertakings, and they are, at the moment, protected.

The noble and learned Viscount made one other slip, if he will allow me to say so—it is the easiest thing to do; I have made many myself—he suggested that Provisional Order procedure was as extinct as the dodo as the result of the Acquisition of Land (Authorisation Procedure) Act, 1946. But that cannot be absolutely accurate, for it was a dodo that by subsequent orders could be revived and allowed to flap its wings; and the Provisional Order, in fact, can be used by Section 26 of the Act of 1919, which empowered the Electricity Commissioners to exercise, by special order. the power of the Board of Trade to authorize by Provisional Order, the compulsory purchase of land. That left alive the restriction in Section 24 of the Icon Act; and that is the reason why it to be repealed by the existing Bill.

I would urge upon the noble and learned Viscount that he might consider the matter further. The gas undertakings of this country are in some danger unless the Amendment before your Lordships' House is accepted. Some of the water undertakings in Scotland, I am told, and practically all the gas undertakings in the land, are undertakings that have no statutory authority. And that is also true of a large number of gas undertakings in this country. For the m the position is that electricity undertakers (who have often settled down alongside the works of the gas undertaking) might very well want to extend their powers by acquiring the adjoining land, and that is a thing of which certain gas undertakings are very much afraid. I should imagine the same thing is true of water undertakings. Therefore there is an overwhelming reason why gas and water undertakings who, by accident, do not happen to have statutory authority, because they could get all they wanted without statutory authority, ought to be protected every bit as much as those who have statutory authority.

Whether the Lord Chancellor wants me to argue the whole point now, or prefers to consider whether what I have said with reference to the law is correct, is a matter which he must decide. The law is one which prohibits compulsory acquisition of land, of gas and water undertakings, whether with statutory authority or not, and that is not to he changed. I would strongly urge that, as a matter of protection, it is far better to keep that provision in force. Commercial concerns are customers of the electricity supply authorities, whoever they may be, but gas and water undertakings are competitors with these electricity authorities who will, in future, be the Electricity Commissioners, and therefore they ought: to be protected. I shall certainly urge noble Lords to vote in favour of the Amendment, which simply retains the status quo. I beg to move.

Amendment moved— Page 14, line 38, at end, insert the said new words.—(Viscount Maugham.)

THE LORD CHANCELLOR

My Lords, if I ask for time to consider this matter it is only because if I have made any error in my law I should naturally like to put it right. I am very conscious of the fact that I may have made some such error, and I am glad that the noble Viscount, Lord Maugham, says he is in the same boat. I very often do make errors of law, and if I have done so now I shall be the first to acknowledge it. On the other hand, I think the principle behind this is quite plain and is one which makes it impossible for me to accept this Amendment, either now or on any subsequent occasion. The noble Viscount is quite right in his description of the Act of 1909. Section I of that Act conferred certain powers to make Provisional Orders, and by, I think, Section 24, a limitation was put upon the generality of the powers conferred by Clause I. In particular it said that nothing therein should enable any Provisional Order to be made adversely affecting any gas or water undertaking. Your Lordships will observe that those words are wide enough to cover both statutory and non-statutory undertakings. It is really rather ancient wording because it is now quite certainly a fact—I hope this is not an error of law—that, so far as a local authority is concerned, by reason of the Act of 1946 they are empowered—.there was an Amendment made in the Act of 1946 to the Act of 1909—now compulsorily to acquire gas and electricity undertakings by the procedure which is now appropriate, that is to say the Authorisation Procedure Act. So that we have now got to this position: a local authority, notwithstanding the provisions of the Act of 1909 restricting the making of Provisional Orders, can under the Act of 1946 compulsorily acquire land of gas or water undertakings. That is so far.

The position as I see it to-day is this: so far as you are dealing with a statutory undertaker, they can insist on the special Parliamentary procedure and, without going at length into that, your Lordships know that it is something not unlike a private Bill. That is what they contend. So far as the non-statutory owners of gas and water undertakings are concerned, they have the protection, no more and no less, which every landowner has if his land is going to be taken—namely, they can insist on a local inquiry and they can insist on their objections being taken into account. If, notwithstanding, the Minister decides to approve the suggested order, then the order has to go; so there is no absolute protection. But, on the other hand, although there is no absolute protection, before approving an order in regard to the land which is actually being utilized by a gas undertaking—and usefully utilized for the benefit of the public—can one conceive that the Minister in his right mind would approve such an order if the effect of it would be to put a gas or water undertaking out of business?

But, when you are dealing with land which a gas or water company is authorized to take but have not yet taken, or perhaps never will take, it seems to me impossible to say that an electricity authority cannot with Ministerial approval have the right compulsorily to acquire that land. I cannot see why the Central Authority or the area board should be in any worse position than any local authority; any local authority can acquire it compulsorily. Why on earth should you put the Electricity Authority or the area boards in a worse position there? To that I have no answer. Although I am very sorry if I have misstated the law, yet I am quite satisfied that the essence of this thing is that you must trust these bodies and the Minister not to act in a stupid way and, for instance, let an electricity authority come and nestle against a gas undertaking and thereupon compulsorily acquire all their gasometers. That would be ridiculous and no Minister would approve it. There should be no absolute bar any more than there is for a local authority and, accordingly, I am unable to accept this Amendment.

VISCOUNT SWINTON

My Lords, I hesitate to intervene, and in fact I will not intervene at all on the matter of law, because it would be a pure impertinence for a very ex-junior counsel to put himself between these two most eminent jurists. But on the practical side of what will happen here, I am bound to say, speaking for myself, that I do not think the danger is great enough for us to wish to divide the House, although I think it is very desirable that the matter should have been raised and explained as fully as it has been.

The Act of 1946, whether we like it or not, has made a difference in this matter, but I agree that even though we passed the Act of 1946, if we were running into great danger here or going to do something obviously unfair, we ought not to be prevented, by something we did in 1946 advertently or inadvertently, from doing something better here. Is there a real element of danger here? On this I would carry Viscount Maugham with me. So far as land is just land which is not being used for the public purpose, it seems to me that a non-statutory undertaking ought to be treated like any others who are landowners; I do not really see why they should have a special protection. On the other hand, where, of course, they are, so to speak, servants of the public—not that all good landlords are not servants of the public—and where they are concerned in providing gas or water, then obviously we must be very careful that we do not risk a public service.

But in fact, I do not think there is any danger of that here, because any Minister, whatever his political complexion—even a Communist Minister, if we ever have one!—if for instance he is the Minister of Health will, I suppose, still have the function of looking after water supplies and being their guardian and trustee. If the Minister is concerned with something else, he will still have to look after, for instance, gas, and so on. He is going to look after that, or he will get into great trouble, local and general. He is going to look after it whether the undertaking which is providing is technically statutory or non-statutory, and therefore, in reality, I would have thought that we were not running into great danger. After the extremely sound legal arguments we have heard here, I thought we might not have to divide.

VISCOUNT MAUGHAM

My Lords, I am sure that the gas and water undertakings will be by no means satisfied with the explanation given by the noble and learned Viscount, but, in all the circumstances, I think I cannot do otherwise than withdraw the Amendment.

Amendment, by leave, withdrawn.

3.27 p.m.

Clause 13 [Bodies to whom Part II of Act applies]:

THE LORD CHANCELLOR moved to insert in subsection (1): Provided that any company who are not authorized undertakers, a power station company or an electricity holding company but who hold securities of, or rights in respect of monies owed by, authorized undertakers or power station companies amounting to a substantial proportion of the assets of the first mentioned company, may serve on the Minister, not later than two months after the passing of this Act, a notice stating that they wish to be treated as an electricity holding company, and the Minister may, on the service of such notice, if he thinks fit, by order direct that this Act is to have effect, and be deemed always to have had effect, as if the company were an electricity holding company, and the Act shall have effect accordingly.

The noble and learned Viscount said: My Lords, this Amendment gives a company the option to come in. So generous, will you please observe, are the terms which we are offering that we have been approached by at least one company which is not technically a holding company because they do not own 75 per cent.—it is something rather smaller; they have asked us: "Please may we come in?" Therefore, I move this proviso in order that such a company may serve a notice and may come in and get this rare and refreshing fruit which we are proposing to offer. It is purely optional; they may serve a notice if they are so minded; whether they would be wise to be so minded or not is for them to decide. I beg to move.

Amendment moved— Page 16, line 35, at end insert the said proviso.—(The Lord Chancellor.)

VISCOUNT SWINTON

My Lords, I must congratulate the Lord Chancellor that there is joy in the Cabinet over one capitalist coming into their camp. There must be a great many others who have gone into the other camp.

On Question, Amendment agreed to.

VISCOUNT SWINTON moved, after Clause 13, to insert the following new clause:

Special provision for electricity holding companies.

.—(1) This section applies to any electricity holding company who shall, not later than three months after the passing of this Act serve on the Minister notice in writing stating that they wish this section to apply to then by reason of the fact that they were, at the date of the last audited balance sheet of the company, before the first day of July, nineteen hundred and forty-seven, either directly or indirectly, the beneficial owners of extraneous assets specified in general terms in such notice and being property situate outside Great Britain, or being property situate within Great Britain which is not reasonably required for the efficient and economical administration or operation of the undertaking of any authorised undertakers or power station company:

Provided that no such notice as aforesaid shall have effect unless accompanied by a certificate signed by the auditor of the company and stating that the company was at such date as aforesaid the beneficial owner of the extraneous assets specified in the notice.

(2) Every company to which this section applies shall be deemed not to be an electricity holding company for the purposes of the provisions of this Act.

(3) If, not later than three months after any company to which this section applies shall have served a notice under subsection (1) of this section, the Central Authority shall, by notice in writing to the company, require that all such, if any, of the property of the company as is reasonably required for the efficient and economical administration or operation of the undertaking of any authorised undertakers or power station company shall vest in the Central Authority, then the beneficial interest of the company in all such property shall, on the vesting date or one month after the date of such notice, whichever shall be the later, vest, by virtue of this Act and without further assurance, in the Central Authority.

(4) There shall be paid by the Central Authority to the company by way of compensation for the property vested in accordance with the last preceding subsection such sum as may be agreed between the Central Authority and the company or, in default of agreement, as shall be determined by arbitration under this Act as the fair market value of the beneficial interest of the company in such property.

(5) Not later than two months after any company to which this section applies shall have served a notice under subsection (1) of this section, either the Central Authority, or any person employed by the company wholly or mainly in the administration or operation of any one or more authorised undertakers of power station companies, may serve upon the other and upon the company a notice in writing requiring that any agreement for personal services made between the company and such person, and in force at the vesting date, shall apply and have effect as though such person had been employed by an electricity holding company, and thereupon the employment of such person by the company shall, for the purposes of the provisions of this Act, be deemed to be employment by an electricity holding company.

(6) Any question arising under this section as to whether any property is reasonably required for the efficient and economical administration or operation of any authorised undertakers or power station company, or as to whether any person was employed wholly or mainly in the administration or operation of any one or more authorised undertakers or power station companies, shall be determined, in default of agreement, by the Minister."

The noble Viscount said: My Lords, I hope the Lord Chancellor will be in an equally accommodating mood upon this clause. If he does not take instructions but consults his own good sense and his own fairness and judgment, I am quite sure that he will be equally accommodating. I am not going again through all the very long discussion which we had on a previous occasion when the whole case for the holding companies was deployed. I undertook then to try to find a simpler solution which would obviate all the very complicated chain of Amendments which my noble friends and I had put upon the Paper, and I have succeeded in this one single simple clause. Your Lordships will see that there are no consequential Amendments to it anywhere in the Bill.

This is a simple solution. It is fair to everybody; it has none of the complications of the original Amendment and, if I may say so, it has none of the injustices which I am sure the Lord Chancellor himself intensely disliked but felt bound to defend because he could not see a convenient alternative. Here is a convenient alternative, and I am sure that he would admit that his own original proposal—the proposal in the Bill—is inconvenient as well as unjust. That it is inconvenient nobody could possible deny. In the first place the Minister is made to acquire a number of assets which he does not in the least want to acquire. In the second place, the shareholders would have to go out and create a new entity, register a new company, and buy back the assets they never wanted to part with, and which the Minister never desired to acquire.

As we proceeded through the Bill and reached, I think, Clause 30, we discovered that there were more difficulties in the way. As the Lord Chancellor explained to us, foreign courts and, indeed, Commonwealth courts, would not recognize the title given by this Act of Parliament, and all these assets might become, in foreign or Commonwealth countries, bona vacantia; nobody could claim them—the Minister would not get them, the company had to part with them, and the Minister had to direct them to be sold. It was a very cumbersome and stupid business, we all agreed—the Chancellor no less than others of your Lordships. It was unfair, too, because nobody has ever denied that the company would have to buy back a, proportion of its assets, with which it should never have parted, at a higher price than the Government gave for the part which they had bought.

The new clause on the Paper has been very carefully vetted and I understand that, so far as it goes, everybody is agreed that it gives the Minister exactly what he wants. It transfers to him what he wants, at the price which the Government themselves have laid down in the Bill. We are all agreed what ought to be taken over, and about what are called extraneous assets. What ought to be taken over are the electricity assets in the United Kingdom—that is, the authorized undertakings and the power stations and anything else which is reasonably required for the generation and distribution of electricity in this country, and the operation of that business. The rest are extraneous. Let us see, just for a moment or two, how effectively that simple operation is achieved by this clause, for which I thank and pay tribute to a much more ingenious and skilful draftsman than myself. Subsection (1) gives the holding companies the right to claim the retention of extraneous assets. The onus is on them. They have to say, "We have these extraneous assets and we wish to claim them and to carry on." Your Lordships will see that we have safeguarded that further by saying that their notice must be accompanied by a certificate from an auditor.

Then the very simple little subsection (2) has this effect: it means that the company will not be treated as a holding company, but will be treated like anybody else who holds electricity assets; that is to say, the Central Authority or the area boards will get them exactly as the Bill lays down—every one of them. It will get the quoted assets at the Stock Exchange quotation and it will get any assets that are unquoted at the price the Bill lays down—namely, an agreed price or a price to be settled by arbitration, on the rather odd formula "as near to what they would have been if they had been quoted." The Government has the right under subsection (3), to claim any ancillary assets. There cannot be many that fall between the two stools, but if they say: "There is something else which we would like to take over," they can give notice that they want to take it over. If your Lordships will look at subsection (6), you will see how fair we are to the Government. There may be a dispute as to whether something is an ancillary asset or not. I must admit that the ordinary course would be to put up an independent arbitrator, but we have been content here to leave it to the Minister, and to say that, if there is a dispute as to whether a thing is reasonably ancillary or not, the Minister can take the decision himself. Then the price of these ancillary assets—and there may not be many of them, I understand—is an agreed price or a price settled by arbitration as being the far market value, which, as the Lord Chancellor said, is what you would have to pay if you had sold the assets and were buying them back again.

Lastly, in regard to subsection (5), your Lordships will remember that really the Lord Chancellor last time did not defend this curious transaction on any ground except that he had to have it in order to get the staff. Any people who are the staff of the subsidiary companies, a power company or an authorized undertaking, of course, will go over, and the benefit of the contract of service will go over, and it was for that reason that the Lord Chancellor advanced this extraordinary proposition last time. If I may call it so, here in subsection (5) is the David and Uriah subsection. The contracts of service with the holding companies can be assigned subject, of course, to whatever rights the individuals have. We must not override those. That relieves the Lord Chancellor of the last vestige of an excuse for rejecting this clause and it also relieves him—and it must be a great relief to the House and to himself—of this disagreeable necessity, if necessity it was, of emulating the late King David in one of the most disreputable episodes of his career. I think this is a simple, a practical and a fair proposal. I beg to move.

Amendment moved— After Clause 13 insert the said new clause.—(Viscount Swinton.)

THE EARL OF LYTTON

My Lords, may I say a word in support of the Amendment which has been moved? When we were discussing this measure in Committee, the Lord Chancellor took exception to my description of the offer which he had made to meet the case which we had put to the Committee. I think I had described it as amounting to little more than a suggestion that holding companies with non-electrical assets might save the Minister the trouble of finding a purchaser hereafter for those assets which he did not want, by selling them before the vesting date, and the purchase price which they obtained would then vest with the Central Authority. The Lord Chancellor accused me of wishing, not only to be compensated for my assets, these extraneous assets, but desiring also to keep them in my possession. Of course, that was not my suggestion at all, and I think the difference between us arose from the Lord Chancellor's contention that the purchase of shares at Stock Exchange values represented full payment for these extraneous assets. Our contention is that it is nothing of the sort.

Let me make plain to your Lordships just what it is for which the holding companies are asking. In so far as they possess any electrical assets they want the Central Authority to take all of them. It is their desire that anything that the Central Authority may require for the purpose of generating or distributing electricity they shall be at liberty to take. The holding companies do not wish to withhold anything that may be needed for the purposes of this Bill. But in regard to the extraneous assets which are not wanted, which, as the noble and learned Viscount, the Lord Chancellor, has told us over and over again, are not needed, and which, if taken over the Central Authority would be obliged subsequently to sell, the holding companies wish to have the option of retaining them. That wish was not met by the suggestion made by the noble and learned Viscount during the Committee stage, and it has not been met by any suggestion put forward by the Government at any time during the discussions on this Bill, either here or in another place. We do not want to part with the assets which the Minister or the Central Authority would not want. We wish to keep them and keep them without payment. There is no suggestion that we should, first of all, receive payment, and then keep the assets.

It is quite possible, as the Amendment provides, to distinguish between these two electrical assets—those which are wanted and will be handed over, and the non-electrical assets which are not wanted and which will be retained, and compensation will be paid only for what is taken. Nothing will be paid for what is left. This Amendment seems to me to give the Government all that they want, and to leave the holding companies all that they, in their turn, wish to retain. For that reason I give my full support to the Amendment.

LORD RENNELL

My Lords, I too, would like to support the Amendment. I think that it has the merit of simplicity, and that it does get the Minister and the Government out of a great difficulty of having to do something which they admit themselves that they do not wish to do—that is to take over assets which they do not want. The Amendment has the further merit, which perhaps may not be so popular, of taking over the assets which the Board do want for the value of those assets instead of taking over the whole holding company, including those assets, for something that is probably less than the total value of the assets of the holding company, and then selling the assets which are not wanted. If that is the real reason it is a discreditable reason, and I would not expect the noble and learned Viscount, the Lord Chancellor, to refuse to accept this Amendment for the insertion of this clause on such grounds.

But I think that the grounds on which this Amendment are valid and good are grounds which have appealed to others in another place, for I see that in the course of a debate which took place in another place on this subject of holding companies Mr. Gaitskell himself expressed considerable doubt—or perhaps I should just say doubt; for I do not wish to exaggerate—of the wisdom of taking over holding companies. I think that he added that, if sufficiently cogent arguments could be put forward for maintaining the holding companies while taking those assets which the Central Authority do want, he, speaking for His Majesty's Government, might be open to persuasion. It is because of the very cogent arguments put forward here in your Lordships' House by the noble Viscount who has moved the Amendment that I ask the noble and learned Viscount, the Lord Chancellor, to consider whether this is not a solution of the difficulties, and if it will not obviate the Government being involved in the accusation which is bound to be made that the real purpose of taking over holding companies and acquiring things which the Board do not want, is for the purpose of obtaining things which the Board want at a cheaper price than is justified.

THE LORD CHANCELLOR

My Lords, if I may say so, your Lordships have been very good in that you have not repeated all the arguments relating to this matter which we had at such very great length on the last occasion. I propose to follow the good example which has been set, and to treat the arguments which were put forward on the last occasion, if I may do so, as having been here restated and repeated. I am sorry to say that I cannot accept this Amendment. I did not know until quite a few minutes ago what form this Amendment was likely to take, though, of course, I knew that there was likely to be such an Amendment. I understand that representatives of the holding companies have had discussions with officials of the Minister. That was very much wiser than having them with me because the Minister's officials were able to speak authoritatively. On the other hand, it puts me in a slight difficulty in that I do not fully appreciate the arguments which the representatives of the holding companies advanced. But I can only say that so far as I am concerned the Amendment is quite impossible.

I know that your Lordships attach importance to it. I appreciate, as I always do, to the full, the strength and cogency of the arguments advanced by the noble Viscount, Lord Swinton, both on the last occasion and on this. If you regard the system of taking over on Stock Exchange valuation as a bad system, then, of course, this Amendment must commend itself to you, because the effect of the Amendment is to get rid of the Stock Exchange basis of valuation, root and branch. You have only to say that you have got a hat or a dog, or whatever it may be, which is not necessary for the purpose of the electricity part of your business, serve a notice, and, thereupon, the Stock Exchange method of valuation ceases to apply, and you have got to have arbitration. On the last occasion when we discussed this, I ventured to suggest that, having regard to difficulties of the franchise and that sort of thing, these arbitrations were almost impracticable, and that you could not arrive with any sort of approach to scientific accuracy at a figure. The Amendment gets rid of the Stock Exchange valuation basis. Whether, for that reason, it endears itself to some noble Lords, I do not know. I rather gathered from the noble Lord, Lord Rennell—who I think, to a certain extent, let the cat out of the bag—that that was the reason why he liked it so much. That is the reason why we do not think it is a good Amendment.

The substance of the thing is this: There are, substantially, eleven holding companies who will be caught under the terms of the Bill—there is one other that wants to come in though it is not caught. The amounts involved of these extraneous assets, whether they be foreign securities or internal assets, are really quite small. They are not substantial at all having regard to the value of the electricity undertakings, and most of them, oddly enough, consist of some sort of transport undertakings which of course will be taken over under the Transport Bill. And there remains very little else—some foreign securities which are quoted and valued and therefore can be assessed quite easily, but very little else. We feel that we must maintain the clause as we have it. We believe that this Stock Exchange method is a fair method of taking over. We are, therefore, not prepared to accept an Amendment which knocks that method on the head and substitutes an entirely different method. of valuation, and does it for the reason, ostensibly, that there are some extraneous assets involved, which are quite small really. We say the right thing is to accept our Stock Exchange method. Then if you want to get your extraneous assets, the Minister has said he is willing to help you, by means of a sale, or anything of that sort. I do not wish to waste your Lordships' time by saying anything more upon this—always provided, of course, that your Lordships do not think that I am treating the Amendment with any disrespect—because the arguments were put forward at great length, and dealt with, on the last occasion. I merely say I regret that we cannot accept this Amendment.

THE MARQUESS OF SALISBURY

My Lords, I am extremely sorry to hear he speech of the noble and learned Viscount. He said he did not wish us to think that he and the Government are treating this Amendment with disrespect, but I do not think they have given it what I call objective consideration. One thing is agreed, that these holding companies represent assets some of which the Government require under this Bill and some of which they do not require. It seems a perfectly simple process to put these securities into two categories, those representing the assets the Government want and those representing the assets they do not want. The extraneous assets should not come within the purview of this measure at all. Then we are left with those assets they want and those quoted on the Stock Exchange are to receive Stock Exchange valuation, but those not quoted on the Stock Exchange are to be calculated on an arbitration.

THE LORD CHANCELLOR

Will the noble Marquess forgive me, on a point of accuracy? This Amendment means that if there are any extraneous assets, the Stock Exchange valuation principle goes by the board for all assets.

THE MARQUESS OF SALISBURY

I do not speak with great authority on these subjects, but I cannot see that. I frankly

Resolved in the affirmative and Amendment agreed to accordingly.

cannot see that. Certain securities represent the assets which are not required by the Government and that does not in the least affect those other securities which represent assets required by the Government. The assets which are not quoted on the Stock Exchange are to be taken on arbitrated value. The Lord Chancellor said it is quite impossible to get an arbitrated value. I do not agree at all. It is something which is constantly done. The Lord Chancellor poured scorn on the noble Lord, Lord Rennell, because he said the only reason for refusing this Amendment was that the Government wanted to get all the assets. The Lord Chancellor said that might be true and that was the reason the Government refused this Amendment. I thought that a very cynical remark. We are trying in this country to give value for money and the Government ought to do that, and to say that this method was a method of getting something below market price is not a very reputable thing to do. I am afraid this must be taken to a Division.

On Question, Whether the proposed new clause shall be there inserted?

Their Lordships divided: Contents, 65; Not-Contents, 14.

CONTENTS.
	Elibank, V.	Gifford, L.
Aberdeen and Temair, M.	Long, V.	Gisborough, L.
Cholmondeley, M.	Maugham, V.	Grenfell, L. [Teller.]
Reading, M.	Mersey, V.	Hampton, L.
Salisbury, M.	Monsell, V.	Harlech, L.
Willingdon, M.	Ridley, V.	Hawke, L.
	Samuel, V.	Hazelrigg, L.
Airlie, E.	Simon, V.	Kenilworth, L.
De La Warr, E.	Swinton, V.	Llewellin, L.
Doncaster, E. (D. Buccleuch and Queensberry.)	Wimborne, V.	Lloyd, L.
		O'Hagan, L.
Fortescue, E. [Teller.]	Ashton of Hyde, L.	Polwarth, L.
Grey, E.	Balfour of Inchrye, L.	Rennell, L.
Howe, E.	Barnby, L.	Rochdale, L.
Iddesleigh, E.	Braye, L.	Rushcliffe, L.
Lindsay, E.	Broadbridge, L.	Selsdon, L.
Lucan, E.	Broughshane, L.	Sinha, L.
Lytton, E.	Butler of Mount Juliet, L. (E. Carrick.)	Soulbury, L.
Manvers, E.		Stanmore, L.
Perth, E.	Cherwell, L.	Teynham, L.
Rothes, E.	Courthope, L.	Tweedsmuir, L.
Selkirk, E.	Denham, L.	Windlesham, L.
	Fairfax of Cameron, L.	Wolverton, L.
Bledisloe, V.	Fairlie, L. (E. Glasgow.)

NOT-CONTENTS.
Jowitt, V. (L. Chancellor.)	Hare, L. (E. Listowel.)	Lucas of Chilworth, L.
	Henderson, L. [Teller.]	Marley, L.
Addison, V.	Holden, L.	Morrison, L.
	Kershaw, L.	Nathan. L.
Ammon, L.	Lindsay of Birker, L.	Walkden, L. [Teller.]
Chorley, L.

3.59 p.m.

Clause 14:

Vesting of assets of electricity undertakings.

The vesting date shall be not less than six months after the establishment of the Central Authority and not less than three months after the establishment of all the area boards and the definition by order made under Part I of this Act of all the areas for which those Boards are established.

THE LORD CHANCELLOR moved, at the end of subsection (1), to insert "and shall not be earlier than the first day of April, nineteen hundred and forty-eight." The noble and learned Viscount said: My Lords, I beg to move the insertion of the words, "and shall not be earlier than the first day of April, 1948." This carries out an undertaking I gave. I had hoped I might be able to go one better, but I have not been able to do so. I may tell your Lordships, that, unless something stupendous happens, we expect the vesting date to be some time in the month of April, 1948.

Amendment moved— Page 18, line 21, at end, insert the said words.—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, the next is a drafting Amendment. I beg to move.

Amendment moved— Page 22, line 30, after ("section") insert ("and Section seventeen of this Act").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 15 [Provisions as to undertakings of local authorities]:

THE LORD CHANCELLOR

My Lords, this is a drafting Amendment. I beg to move.

Amendment moved— Page 23, line 7, leave out ("which vests") and insert ("rights, liabilities and obligations which vest").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, this also is a drafting Amendment. I beg to move.

Amendment moved— Page 23, line 9, leave out ("held or used") and insert ("rights, liabilities or obligations held, used, acquired or incurred").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 17 [Composite companies]:

THE LORD CHANCELLOR

My Lords, this Amendment is little mare than drafting. It is necessary in order to make it clear that questions arising under Clause 15 (2), which is applied by Clause 17 (4) to composite companies, should be decided by arbitration. I beg to move.

Amendment moved— Page 27, line 31, after ("Minister") insert ("and any question whether any property is or was (for the purposes of the said subsection (2) as so applied) held or used partly in the said capacity and partly in other capacities shall, in default of agreement, be determined by arbitration under this Act "—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 18:

Disclaimer of agreements and leases.

18.—(1) Where any Electricity Board in whom are vested the rights, liabilities and obligations of any body to whom this Part of this Act applies, being rights, liabilities and obligations under an agreement made or varied on or after the nineteenth day of November, nineteen hundred and forty-five, are of opinion that the making or the variation of that agreement was not reasonably necessary for the purposes of the activities of the said body or that the agreement was made or varied with an unreasonable lack of prudence on the part of the said body, the Board may, by notice in writing given to the other parties to the agreement before the expiration of three months from the vesting date, disclaim the agreement:

VISCOUNT MAUGHAM moved, in subsection (1), after "not," to insert "expedient or." The noble and learned Viscount said: My Lords, it is my fate in connexion with these nationalization Bills to be constantly moving Amendments at the request of nervous people who are afraid that the words of the Bill may bear a meaning which would be very adverse to common sense. On some occasions I have been perfectly right, and I have succeeded in getting words added which have made tine matter clear. This is an example—it is quite simple, and is not a legal question at all—and I appeal to your Lordships to realize what I am going to say. The notion of the Government was that after November 19, 1945, certain persons whose rights were probably going to be acquired as the result of a future Bill—meaning this Bill—would try to get benefit by making agreements, or varying agreements, which agreements or variations were not really necessary for the purposes of the activities of the undertaking, whatever it was. To take an example, a director of a company might make an agreement with a relative under which the relative was to get some benefit which the director would not ordinarily have given him but for the notion that the undertaking was going to be taken over by the Government. Or, again, properties might be paid for at exorbitant prices.

The words chosen are these. The Bill refers to the Board being of opinion that the making or variation of the agreement in question was not reasonably necessary for the purposes of the activities of the said body or that the agreement was made or varied with an unreasonable lack of prudence. This is the difficulty. What do the words "not reasonably necessary" mean? Take the case of an electric lighting company which in the ordinary course of business acquired some adjoining property for the purposes of extension of their business, or acquired land for a factory for the workmen, or did any one of the numerous things that an electric lighting company might do in complete good faith, having an eye to the future, and in particular to the future of their undertaking. Are those things that are reasonably necessary? It will be said: "They are not necessary, because it was not necessary for you to extend your undertaking, or to make the calculation that property, contracts, or so forth, ought to be made having regard to the future. Strictly those things are not necessary. You could go on with your undertaking." It might also be said: "It would not hurt the existing activities of your body not to have done these things, and it was not reasonably necessary for you to do anything of the kind." I have not attempted to give all the illustrations which will occur to many of your Lordships who are accustomed to business concerns, and I do not think I need take up your Lordships' time in considering them.

The word which I suggest will remove the doubt which I know exists in the minds of a good many companies at the present moment, is simply the word "expedient." I do not in the least object to people who are managing a business of this sort having to establish that an agreement was either expedient or that it was not in the least degree owing to lack of prudence—in other words, that it was both expedient and prudent. I do not think an ordinary director or manager of a company would object to having to prove that, but if before this Bill comes into force—and, after all, we do not know when it will actually become law—one of these companies is offered a very good deal of some sort, I am told that the directors will not touch it if it is in the least degree one which involves a considerable amount of money and some risk. All your Lordships will know that to take risks is of the essence of successful trading, and that you cannot be certain, if you are buying property, that it will turn out just what you hope, or that a contract will necessarily be a contract which six months later you will be glad to have made. Prices may have gone up, but, on the other hand, they may have gone down. You have to take the risk.

In those circumstances, I do not think it is fair that these companies should be exposed to the serious risk of the Electricity Board saying ex poste facto, in the light of the then known facts, that the agreement made or the variation of it was not reasonably necessary for the purposes of the said body—which is one of the things which will make the companies liable—or that the agreement was made or varied with an unreasonable lack of prudence. I am not worrying about the second alternative; it is the first that I am worrying about. Therefore, I suggest that the word "expedient," if I may steal the words from the Bill, is reasonably necessary to prevent injustice. I beg to move.

Amendment moved— Page 28, line 40, after ("not") insert ("expedient or")—(Viscount Maugham.)

LORD HAWKE

My Lords, I hope that the noble and learned Viscount may be able to accept the Amendment of my noble friend. I hope that he will not give us the same answer that he gave in the Committee stage when we were dealing with a similar clause in connexion with the dissipation of assets. I have looked back in horror in my mind, on second thoughts, at the answer he gave there. He said that development must go on, and it is, therefore, of the utmost importance that people should take their problems round to the Minister. They would he frightened to act in these matters—at least I should be—and I do hope a solution for all these things is not going to be for the board to have a cosy chat with the Minister, because I am convinced that the Minister and his senior officials will simply not have the time to give the necessary decisions, or perhaps absolutions, to the board. Wording such as my noble friend has suggested might help boards to make up their own minds, without going round to the Minister.

VISCOUNT RIDLEY

My Lords, I would like to say a word in support of this Amendment, because I believe there is some real doubt in the minds of those who are concerned with this. I would briefly refer to Clause 29, which the noble Lord has mentioned. In that case the Lord Chancellor's answer was that the Minister could give his blessing to any such transaction, but in this clause he is not mentioned in that connexion. I think the difference is, first of all, that there is a question of the earlier date—that is to say it refers to an agreement or a lease made before the Bill itself was published. I think it also involves a third party, who may be quite an innocent third party, in proceedings before the Tribunal. In the same way as in Clause 29, referring to dissipation of assets, one cannot but agree that there should be something to prevent wilful misbehaviour by those so inclined; nevertheless I think we must agree that this clause should be drawn in such a way as to allow proper business enterprize to go on for the time being. I feel that the latter part of Clause 29 may have something to do with Clause 18, because Clause 29 (4) refers to disclaimer of leases. True, that is only leases made after the later date of publication of the Bill. I do hope that this Amendment will be accepted to make clearer the intention that it is only to catch people who wish to do something which is harmful to the industry.

THE LORD CHANCELLOR

My Lords, I confess that I should have thought these words were quite clear enough as they stood. The word is not "necessary", it is "reasonably necessary", and it is linked up with the phrase "or that the agreement was made or varied with an unreasonable lack of prudence". It is quite obvious, is it not, that what you are hitting at there is an unreasonable agreement, and "reasonably necessary" I should have thought was quite wide enough. Why I object to this additional word is that these words have become almost common form. They were put in the Coal Act without the word "expedient"; they are in the Transport Bill without the word "expedient", and if I put in here the words "or expedient"—which, in my view, are wholly unnecessary—I shall get some ingenious counsel getting up in court and saying: "Ah! when Parliament wanted to say 'expedient' it put in the word, and therefore in the Transport Act and the Coal Act you must not give any such construction at all." To adopt a form of words in this Bill which differs from the Coal Act and the Transport Bill might give rise to the ingenious form of argument I have just mentioned to your Lordships. Therefore, I regret that I cannot accept this Amendment.

VISCOUNT SWINTON

My Lords, I can understand the Lord Chancellor's difficulty, but on the other hand I can tell him without any doubt that business is actually being held up. I would Lot make that statement if I did not know that it was true. He has said that "reasonably necessary" ought to cover everything, but the phrase is "reasonably necessary for the purposes of the activities of the said body ". But observe that the date which is put in here is rot the date of the introduction of this Bill; it is the date when some responsible Minister said that this particular industry was going to be nationalized. I think it was said that the gas industry was going to be nationalized. I do not know whether it is or is not, but I know that people in the gas industry are being held up from doing things because of the words in this Bill. There have been a lot of conflicting statements about iron and steel, and I am certainly not going to probe them now, but what is in these Bills undoubtedly has an effect upon other industries which are expecting that they may come within the ambit. Let us leave out iron and steel but take gas, about which a definite announcement has been made.

I know of a company which had made some extremely successful laboratory experiments for a particular process of manufacture which has hitherto been conducted entirely in the United States; they found the experiments going on quite successfully and decided to set up a factory. That was well within their Articles of Association, but it is not "reasonably necessary" for conducting the business of a gas undertaking. They therefore decided that this was a chance they had better not take, and that project is not being pursued. Inevitably, when you engage in these things this sort of legislation will have a stopping effect, and I hope the noble and learned Viscount will consider what he can do to make the further, and what I may call the secondary, damaging effects of this legislation as little as possible at a time when we are all trying to get together to improve the productive output of this country and, in particular, to produce things which will be paid for in dollars.

VISCOUNT MAUGHAM

My Lords, I should like to say a word with reference to the contention put forward by the noble and learned Viscount, the Lord Chancellor, as to the problem of making these words "reasonably necessary" clear to the intelligence of the ordinary human being. In my opinion, the contention was not well founded in law. It is not a good argument to say that because in other Acts of Parliament, with other contexts dealing with other circumstances, the phrase used is "reasonably necessary," we should use the phrase here in this connexion. Of course, the noble and learned Viscount is guessing when he says that in the other Acts the words have a well-known meaning. They have not. It may well be that in the other Acts some contracts will be invalidated, on the ground of their not being "reasonably necessary" in such a case as that which the noble Viscount, Lord Swinton, has just mentioned. How can we tell what they will say with regard to the meaning of the words in the other Acts, unless we can say that there is no foundation for the view that "reasonably necessary" is an equivalent to "expedient"?

I am willing to express the opinion quite definitely that "expedient" is not the same as "reasonably necessary"; and that there are cases in which the circumstances would be treated by a tribunal as "expedient" when they were unable to say that it was "reasonably necessary." A thing has to be necessary as well as reasonable, or the word "necessary" would not be there. I cannot help thinking that this notion of slavish adherence to words used in another Act is unprecedented and unsound as a matter of law. I would strongly urge your Lordships to take the view that with this Bill before us we should make this important clause clear and intelligible so that he who runs may read. This is not the case at present.

On Question, Amendment negatived.

Clause 20:

Compensation to holders of securities of bodies other than local authorities.

(2) For the purposes of this section the value of any securities of any such body which were quoted in the Stock Exchange Official Daily List on all six of the following dates, that is to say, the first, fourth, fifth, sixth, seventh and eighth days of November, nineteen hundred and forty-six, shall, subject as hereinafter provided, be deemed to be the average of the mean of the quotations therefor appearing in the said list on those dates, such addition, if any, being made to that average as is necessary to make it a complete multiple of one penny:

Provided that where— (b) the average mentioned in the foregoing provisions of this subsection is less than the average of the mean of the quotations for the securities appearing in the said list on all the alternative dates on which a quotation therefor so appeared; the value of the securities for the purposes of this section shall be deemed to be the average of the mean of the quotations therefor appearing in the said list on the alternative dates.

4.24 p.m.

THE LORD CHANCELLOR

My Lords, I am grateful to the noble Lord, Lord Rennell, for calling attention to what I think was a defect in the drafting, and I have put down this Amendment to put the matter right. I beg to move.

Amendment moved— Page 31, line 45, after ("shall") insert ("if redeemable").—(The Lord Chancellor.)

LORD RENNELL

I am much obliged to the noble and learned Viscount for his Amendment.

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, I beg to move this Amendment.

Amendment moved— Page 32, line 1, leave out from ("redeemed") to ("and") in line 2, and insert ("in the same manner and at the same times").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE EARL OF LYTTON moved to add to the proviso in subsection (2): And provided also that if it shall be proved to the arbitration tribunal that owing to circumstances arising out of the late war the valuation of the securities or any class of the securities of any body to whom this part of the Act applies on the basis of the said quotations on either of the said dates or the alternative dates would be inequitable the arbitration tribunal may fix such other dates as they may think just and any date or dates so fixed by the arbitration tribunal shall be substituted for the said dates and alternative dates. The noble Earl said: My Lords, when the Lord Chancellor was answering an Amendment which I moved to Clause 26 of this Bill he was good enough to exonerate me from any suspicion of trying to seek an advantage for the companies in which I was interested. I hope he will not consider it improper or have occasion to revise the opinion he then expressed if I seek by this Amendment to ensure that certain classes of undertakers who may have already suffered loss of income by reason of their sacrifices in the war, should not also lose part of their capital by being bought out under this Bill at a date when their Stock Exchange quotations still reflected the losses imposed upon the company by their war sacrifices. I mentioned cases when we were in Committee and the Lord Chancellor agreed to look into the matter; but as he has not put down any Amendment to deal with it, I have put down this one to bring the point once more before your Lordships.

The dates selected in this clause for Stock Exchange quotations are all either in the year 1945 or 1946, and those are years when the Stock Exchange quotations reflected either gains or losses which might have been incurred during the preceding years of war. Some of the quotations would have been increased by reason of war gains, and some of them may have been diminished by reason of war losses. I pointed out in Committee that there were cases where companies have suffered very severe war damage at the hands of the enemy, and in consequence have been obliged to reduce their dividends, to raid their sinking funds, and to adopt other expedients—with the approval of the Electricity Commissioners —and the result was still reflected in the price at which their shares were quoted in 1945 and 1946.

I was rather shocked when the noble and learned Viscount, the Lord Chancel or, speaking of this clause in Committee, said that it was obviously true that they were paying too much in some cases and too little in others, but that there was no alternative. Does he really think it just to take one roan's property and pay him less than its value if at the same time you are taking property from someone else and paying more than its value? That is what this clause means. I am not concerned here with whether Stock Exchange quotations represent the fair value of shares or not. I am not concerned with whether it is just to take assets and pay for shares. We have expressed our opinions on that matter already and, if need be, we shall have another opportunity on the Third Reading of saying mare about it; but that is not involved in this Amendment. All that this Amendment seeks to do is to give the right to anybody to whom this Bill applies—and that includes also the Minister—to represent to the arbitration tribunal that if quotations on the dates selected in this Bill reflect either war gains or war losses and therefore not the values which represent the normal trading conditions of the company, then the arbitration tribunal may fix other dates. In other words, it seeks to correct the very inequality which the Lord Chancellor admitted was inevitable under the scheme in this Bill but for which he could find no remedy. I beg to move.

Amendment moved— Page 32, line 30, after ("dates") insert the said further proviso.—(The Earl of Lytton.)

THE LORD CHANCELLOR

My Lords, I have not been able to find whir: I said on the last occasion, but I think that the gist of my remarks was this: that whatever system you devise, it not: being possible to arrive with complete scientific accuracy at the rates of payment, it is inevitable that you must pay some people too much and you must pay other people too little. It is no good deploring the fact; it is inherent in the fallibility of human justice. When you are dealing with a thing that you cannot assess with precision, that is bound to result. I cannot accept this Amendment and I do rot think I should be asked to.

If you assume that the Stock Exchange valuation is a fair basis to take, that is a matter of argument which we have had before. There is no suggestion, I think, that these dates are not fairly selected. I am not one of those who believe for one moment that the price at which securities are quoted on the Stock Exchange reflects merely the dividends they pay. I am quite satisfied that the very intelligent people who invest and advise on investing in shares study the balance sheets and reports of these companies with meticulous care. They know perfectly well whether these concerns are following a conservative policy, whether they are building up reserves, and that sort of thing. To suggest that those great trust companies who largely invest in these shares do not follow these matters is really to insult them. They understand perfectly well that the story of the dividend that is paid is only one factor, and by no means the most important factor, in the strength and stability of a company. Therefore, I cannot accept that we should take any other dates than these which we have already specified.

There is one further element which I would like to point out. By the Amendment which your Lordships have made to-day, you have said that a holding company which holds any extraneous asset at all—as I said before, it has only to be a coat and hat—can be deemed under your clause to be not a holding company and, that being so, that company is washed out. Thereupon you have to assess the value. In the vast majority of cases, those undertakings are not quoted on the Stock Exchange; consequently, you have to provide for arbitration. I would most respectfully say to the noble Earl that, having put that clause upon us, he ought not to have it the other way as well and select further dates so that, if it suits him, he may resort to the method of Stock Exchange valuation. For these reasons and for other reasons which we discussed before, I regret I am unable to accept this Amendment.

THE EARL OF LYTTON

My Lords, with regard to the matter of the dates which the noble and learned Viscount has raised, this Amendment, with all respect to the noble and learned Viscount, is not concerned with Stock Exchange values. Does the noble and learned Viscount really think that during the war years, if one company was making large profits and one company was incurring losses, the Stock Exchange quotations on those two companies in no way reflected the gains or losses which were the result of the war? It is obvious that they did. If some companies were making large profits as a result of the war, the value of the shares of those companies went up, and, in another case, where a company was making losses in consequence of war sacrifices, the price of those shares went down. By choosing a date which does not reflect the normal procedure and policy of the company—or, as the Lord Chancellor said, the relative conservative and wise or rash and speculative policies—those factors are not involved at all. By choosing a date in 1945 or 1946, when the effects of the recent war were still felt in Stock Exchange quotations, you are making shareholders who suffered temporary war losses suffer permanently by taking their shares at a price which reflects those losses, and you are enabling those companies which made war gains to enjoy a permanent benefit by taking their shares at an inflated value due to their war gains. That has nothing to do with the Amendment which we have just been discussing, which has nothing to do with Stock Exchange values, I have tried to remedy the point by means of this Amendment. I do not think the Lord Chancellor has answered the case.

THE LORD CHANCELLOR

I am sorry the noble Earl does not think that I have answered the question. The only way in which you want to value securities instead of valuing assets is by availing Yourself of the Stock Exchange method; otherwise, there is no point in valuing securities. Therefore, it is not accurate for the noble Earl to say that this clause does not deal with the Stock Exchange basis. It can only be addressed by that method.

On Question, Amendment negatived.

Clause 22: (5) Any payment made by the Central Authority or the local authority under the foregoing provisions of this section which would, but for this Act, have been debited or credited as a capital payment, shall be deemed to be a capital payment, and any other such payment shall be deemed to be an annual payment.

LORD O'HAGAN moved in subsection (5), after "payment" where that word occurs a second time, to insert "or any payment made in respect of the liability for the redemption of a loan or the repayment of an advance." The noble Lord said: My Lords, in rising to move this Amendment, I think the House will probably appreciate that this is a matter of vital concern to the urban district councils, of whom there are well over 100 whose electricity undertakings will, under the Bill, be vested in the proposed electricity boards. Clause 22 makes provision for the repayment by the electricity boards of sums which the urban district councils will have to continue to disburse out of their rates in respect of sinking fund charges on outstanding electricity loans.

I think perhaps I may most easily make the case that has been put before mc by taking a simple example. If a local authority, for instance, have borrowed, say, £100,000 for the purpose of their undertaking for a period of years, they will continue to be liable for the payment for some years to come of, say, £6,000 per annum in respect of the repayment of principal of the loan and, say, £3,000 per annum in respect of interest. In the Bill as it was introduced in another place, arid even as it passed the Committee of that other place, it was expressly provided that the payments to be made by the Central Authority, so far as they represented( principal, should be by way of capital payment. It was necessary so to provide as regards net interest, as Income Tax was in the ordinary course to be deducted from the payment of interest and the local authority would pay the amount net. Therefore, under the Bill as introduced, taking what I have said above as an example, the Central Authority would pay to the local authority £6,000 net in respect of the principal and £3,000, less Income Tax, in respect of interest.

That is as matters stood after the Bill passed through the Committee in another place. The Bill, however, was re-committed in another place, and these subsections (2) and (5) of Clause 22—the clause to which this Amendment is proposed—were added. The words that I have already quoted "by way of capital payments" do not appear in the new clause, but instead the words "capital payments" have been related to the conditions which will apply before the transfer of the undertaking. Therefore, I think it is clear that Clause 22 must be read as distinguishing between payments which at the present moment are (a) debited as capital payments in the books of the local authority, and (b) other payments, such as payments of interest, which, in the books of the local authority, are debited as annual payments. No question arises as to these latter "other payments" but, as regards the first matter, I am advised—and I hope I am wrongly advised—that it is quite clear that repayments of principal by a local authority annually or half-yearly are debited as annual payments and not as capital payments.

Therefore the position would seem to be that, if the Bill is passed in its present form, the Central Authority will be entitled to deduct Income Tax, not only on the interest of the hypothetical figure of £3,000 which I mentioned but also for instalments of the principal of £6,000 per annum. This will mean that the local authorities, instead of being properly compensated in respect of the loss of the undertaking, will suffer in respect of serious financial loss by having to pay instalments of principal gross, and only receiving from the Central Authority such amounts less tax. I trust that the noble and learned Viscount will be able to give us an assurance on this matter. because this point has only been appreciated at a comparatively late stage, and. I hope very much that this argument which has been put forward really will be answered by the noble and learned Viscount. I beg to move.

Amendment moved— Page 37, line 10, after the first ("payment") insert ("or any payment made in respect of the liability for the redemption a loan or the repayment of an advance")—(Lord 0'Hagan.)

THE LORD CHANCELLOR

My Lords, I have had a strange experience. I looked at this Amendment before I came here, and I thought it was a bad one. I look at my instructions, and my instructions are that I am to oppose it. However, I must say, having heard the noble Lord's argument, that I confess he has converted me. I think there is substance in what he has said, and I will take it upon myself to accept it.

LORD O'HAGAN

I would like to thank the noble and learned Viscount, if I may.

On Question, Amendment agreed to.

4.43 p.m.

Clause 25:

Compensation to composite companies.

25.—(1) Every composite company shall be entitled to be paid by the Central Authority, by way of compensation for the vesting in that Authority or in any other Electricity Board of property and rights of the company, and in lieu of any other compensation in respect of that vesting, an amount calculated as follows:— (c) the amount of the compensation shall be an amount bearing to the aggregate value of the said securities the same proportion as the said average net revenue of the electricity undertaking bears to the said average net revenue of the company's undertaking as a whole.

LORD CHORLEY moved, in paragraph (c) of subsection (1), after "be," to insert: the aggregate of the following amounts—(i). The noble Lord said: My Lords, this is an Amendment which has been tabled to comply with an undertaking given by my noble and learned friend in answer to an Amendment moved in Committee by Lord Wolverton, to pay companies compensation for severance as assessed by arbitration. The Amendment now proposed will give the companies compensation at the fiat rate of 5s. per thousand units of electricity sold in 1946, that is to say a payment as related to the size of electricity undertaking itself. This flat rate is the equivalent of the global sum of £5,000,000 to be given to local authorities, and a global sum itself would not be possible here as the option given under Clause 17, subsection (1), makes it uncertain how many companies will actually be affected. I hope that your Lordships will agree that this Amendment substantially meets the point which was raised by the noble Lord, and that it is acceptable. I beg to move.

Amendment moved— Page 38, line 17, after ("be") insert ("the aggregate of the following amounts— (i)").—(Lord Chorley.)

LORD WOLVERTON

I thank the noble Lord for this Amendment. It brings it in line, I understand, with the local authority compensation.

On Question, Amendment agreed to.

LORD CHORLEY

The next Amendment is consequential. I beg to move.

Amendment moved—

Page 38, line 22, at end insert— ("(ii) an amount, by way of compensation in respect of the severance of the electricity undertaking from the remainder of the company's undertaking, consisting of a sum of five shillings for each complete one thousand of the units of electricity which, in accordance with the figures accepted by the Electricity Commissioners for the purposes of Section seven of the Electricity (Supply) Act, 1922, were sold (within the meaning of that section) by the company during the year nineteen hundred and forty-six.").—(Lord Chorley.)

On Question, Amendment agreed to.

Clause 26 [Control of dividends, interest and other Payments]:

LORD CHORLEY

My Lords, there are several Amendments here which, with your Lordships' consent, I should like to take together. First of all there is the one which has been called, then the one at line 16, the one at line 20, and also in Clause 27 on page 45, line 2, and also on page 45 at line 4. This group of Amendments deals with net revenue, and it has been tabled with a view to fulfilling a promise which was made by my noble and learned friend in Committee. I do not think I need explain them in detail. I just beg to move.

Amendment moved— Page 40, line 15, leave out ("with the approval of the Minister").—(Lord Chorley.)

VISCOUNT SWINTON

My Lords, I think I suggested the words "in accordance with the normal practice." I am much obliged to the noble Lord.

On Question, Amendment agreed to.

Amendments moved—

Page 40, line 16, after ("applicable") insert ("in accordance with the normal practice"').

Page 40, line 20, leave out ("with the approval of the Minister").—(Lord Chorley.)

Clause 27 [Final payments of dividends and interest]:

LORD CHORLEY

My Lords, I have already mentioned the two Amendments to this clause, which I now beg to move.

Amendments moved—

Page 45, line 2, after ("applicable") insert ("in accordance with the normal practice").

Page 45, line 4, leave out ("if the Minister authorises them to do so").—(Lord Chorley.)

On Question, Amendments agreed to.

4.48 p.m.

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, any body to whom 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 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:

1. (i) to any payment or other transaction to which Section twenty-six of this Act applies;
2. (ii) to any payment or other transaction made or entered into for any charitable purpose; or

LORD RENNELL moved to insert in the proviso to subsection (1): (iii) to any payment or other transaction made or entered into in connexion 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: My Lords, this raises a point which was discussed in Committee arid provides for payments which may be made, and to which Clause 29 will not apply. In connexion with the submitting of a question to arbitration, it has been pointed out that, when a matter is submitted to arbitration, it would obviously be considered reasonable—and the Lord Chancellor said that would be so—that the expenses during the arbitration should be met. But there also arose the question of expenses in anticipation of an arbitration, and, in order to make sure that this should be considered proper, I beg to move the insertion of the paragraph which is printed on the Order Paper. I do not think I need elaborate that. There was a good deal of discussion on it in Committee, but I think it only right and reasonable to all concerned that the obtaining of expert opinion and legal assistance in anticipation of an arbitration would be right and proper payment to exclude by the Amendment. I beg to move.

Amendment moved— Page 48, line 38, at end insert the said paragraph.—(Lord Rennell.)

LORD CHORLEY

My Lords, as the noble Lord has said, we undertook to look into this matter after there had been tome discussion about it on the Committee stage. That has been done and we are advised that these words are really quite unnecessary. In order to reopen a transaction under the clause the matter would not only have to be brought under one or other of the heads (a) to (e), but it w mid also have to be shown that the 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." Expenses in connesxion with and preliminary to arbitration an all part of arbitration, and are allowed in taxation of costs as being part of the whole process of securing an arbitral award. It seems quite beyond question that the authority could hardly claim that they were in fact not necessary for the purpose of the body, and even more difficult to maintain that they were made with an unreasonable lack of prudence on the part of the body. I do not think it would be possible to discharge the burden of getting them out of the part of the clause before (e), because there again it is necessary to show that there was excessive consideration or that the transactions were of an onerous nature, or something of that kind. I hope that in the circumstances the noble Lord will not desire to press this Amendment.

LORD RENNELL

My Lords, I car riot say that I am quite happy about the reply. I am not disputing the wording of the part of the clause preceding the proviso. We had considerable argument about that, and I expect that wording is sufficient to cover most ordinary payments. I would like to point out—and I think I am right in saying this—that by the time the transaction has to be reopened, the company, in fact, will have ceased to exist. There will not, therefore, at that point be any assets out of which to pay expenses except those which are properly payable by directors who are being accused of doing something which they ought not to have done. Obviously, a company, after it has ceased to exist, will not have any assets to pay for arbitration. But I can visualize many cases which might arise before the company has been wound up and taken over. The directors who are in doubt about the result of certain actions and decisions on their part ex abundanti cautela might take technical and legal opinion, which would involve the company in considerable expense, against such time as the transaction might be reopened after the company ceases to exist. I want it to be quite clear that expenses of that kind will be considered reasonable even if there is no arbitration, or if no reopening of the transactions is to take place. Therefore, I am not quite happy about it being understood in the preamble to which the noble Lord has referred.

LORD CHORLEY

The whole of this clause is of course concerned only with the reopening of transactions. Only on that basis can the matter arise at all.

VISCOUNT SWINTON

My Lords, surely, the point is this. I had hoped that it was covered by the noble Lord when he said that you ought to be able to take counsel's opinion before the company is wound up. Clearly, a board have to consider what the position is to be under the Bill—whether they can come to an agreement or whether they should go to arbitration. To do that they may have to decide whether they have extraneous assets, and whether that matter is to be dealt with in the way which the Lord Chancellor proposes or in the way which the House has now laid down. As things are now, all sorts of boards of directors—as well as the Government—are sitting down to consider the position under the Bill. Wretched people who are conducting these businesses find themselves in great difficulty and in need of advice. Sometimes they come to me to ask for advice—not that that is worth very much.

Of course, they have to take the best advice they can. They have to take the advice of actuaries, of counsel—generally speaking, of the best authority to deal with their problem. I suggest that either there ought to be words in the Bill or there ought to be a most emphatic statement from the Government which obviously will be binding upon Ministers that in respect of everything which the companies do now—I do not of course mean starting new businesses—for ascertaining and securing their position under the Bill, they may not only have authority to do it, but they shall be told: "The right thing for you to do, in the interests of your shareholders, is to consult the proper authorities, legal and actuarial." We ought to have that stated in quite clear language. Arc we not entitled to have an answer upon this? We can divide upon it of course, but I suggest that it is not treating the House with decency if we are not given an answer now.

LORD CHORLEY

I am afraid that I made rather a blunder in speaking twice. I can, of course, speak only once unless I have leave of the House to speak again. If I may have leave of the House I will add a few words.

VISCOUNT SWINTON

You may take it that you have it.

LORD CHORLEY

I thought that I had in fact covered the point which the noble Viscount has made. It does seem to me that it would be quite impossible to say that expenditure of the kind to which he has referred was not reasonably necessary to the body. But I shall certainly be very glad to look at this again, and I hope that with that assurance the noble Lord, Lord Rennell, will withdraw his Amendment.

LORD RENNELL

I shall be glad to withdraw my Amendment on the assurance that this will be looked into again. I think that there is a very considerable gap in the case of companies who to-day take steps to provide themselves against an emergency which might happen in the future, and in future might have the expense of that disallowed, and the full amount charged against the directors. In the circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR moved, in subsection (2), after "shall" insert "unless the tribunal otherwise directs." The noble and learned Viscount said: My Lords, this Amendment has been put down following a suggestion made by the noble and learned Viscount, Lord Maugham. It was a question as to whether or not all directors would have to be parties to the application. It occurred to me that whilst not leaving it to the discretion of the Central Authority we might leave the tribunal with some discretion in this matter. I think that this will go a long way towards meeting the noble and learned Viscount's point. I beg to move.

Amendment moved— Page 49, line 5, after ("shall") insert ("unless the tribunal otherwise directs").—(The Lord Chancellor.)

On Question, Amendment 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.

4.58 p.m.

THE LORD CHANCELLOR moved, in subsection (3), to leave out "be jointly and severally" and insert "subject to the next following subsection, be." The noble and learned Viscount said: My Lords, this Amendment goes with the next at page 50, line 19. These two Amendments go together and they give effect to a promise made to the noble and learned Viscount, Lord Maugham, on the Committee stage. I promised to cover the substance of the long Amendment which he then moved and I think that I have here done it. Accordingly, I beg to move.

Amendment moved— Page 50, line 17, leave out ("be jointly and severally") and insert ("subject to the next following subsection, be").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, I beg to move the next Amendment to which I have just referred.

Amendment moved—

Page 50, line 19, at end insert— (4) Any claim under this section by the Central Authority against the directors of any such body shall be made before the expiration of a period of twelve months beginning with the vesting date and shall be determined by arbitration under this Act, and all persons who were directors of the body at the time when the alleged contravention or failure occurred shall, unless the arbitration tribunal otherwise directs, be made parties to the proceedings, and, if the arbitration tribunal decides the claim in favour of the Central Authority, it shall make such orders against all or any of the said directors in respect of their liability under this section as it thinks just. having regard to all the circumstances."—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 37 [Fixing and variation of tariffs:

THE LORD CHANCELLOR moved after subsection (1) to insert the following new subsection: (2) The tariffs fixed under the last fore-going subsection shall be so framed as to show the methods by which and the principles on which the charges are to be made as well as the prices which are to be charged, and shall be published in such manner as in the opinion of the Central Authority will secure adequate publicity for them.

The noble and learned Viscount said: My Lords, the object of this Amendment is to give effect to an undertaking I give to the noble Viscount, Lord Swinton He was anxious that the tariffs should show the principle on which they are framed. I was a little ignorant at the time and did not know if I could do that. I am with him in his desire for publicity, and I hope he will think that this drafting has made good my promise. I beg to move.

Amendment moved— Page 56, line 33, at end insert the said subsection.—(The Lord Chancellor.)

VISCOUNT SWINTON

It is entirely satisfactory.

VISCOUNT RIDLEY

As I moved the Amendment concerned, I also wish to say that I think this meets it admirably.

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, this is the same point again. I beg to move.

Amendment moved— Page 56, line 39, leave out from ("the") to the end of line 40 and insert ("methods by which and the principles on which the charges are to be made as well as the prices which are to be charged, and shall be published in such manner as in the opinion of the area board will secure adequate publicity for them").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 46 [Accounts and audit of Central Authority and Area Boards]:

LORD DEL'ISLE AND DUDLEY moved to add at the end of subsection (3) the following proviso: Provided that no person shall be qualified to be so appointed unless he is a member of one or more of the following bodies: The Institute of Chartered Accountants in England and Wales; The Society of Incorporated Accountants and Auditors; The Society of Accountants in Edinburgh; The Institute of Accountants and Actuaries in Glasgow; The Society of Accountants in Aberdeen; The Association of Certified and Corporate Accountants, Limited.

The noble Lord said: My Lords, the House may recollect that in Committee stage I moved an Amendment to ensure that persons employed to audit the Central Authority and area board accounts should be properly qualified persons. The Amendment as set down at that stage apparently did not find favour with His Majesty's Government. I understand there is a precedent for this Amendment which I now move, and I hope, therefore, that it will be commendable to the Government. I beg to move.

Amendment moved— Page 63, line 35, at end insert the said proviso.—(Lord DeL'Isle and Dudley.)

THE LORD CHANCELLOR

Although not a member of the profession which the noble Lord adorns, I am at one with him in thinking that it is of the utmost importance to British industry that the accountancy profession should be recognized for what it is and raised in status, and that the accounts of all important companies should be audited and looked after by properly qualified accountants. I have much pleasure in accepting this Amendment.

On Question, Amendment agreed to.

Clause 48 [Acquisition of non-statutory undertakings]:

THE LORD CHANCELLOR

My Lords, this is a drafting Amendment. The clause relating to local authorities refers to the capacity of a local authority as authorized undertakers and other capacities of the authority, and the corresponding phraseology for non-statutory companies is to refer to the purposes of the electricity undertaking and other purposes. I beg to move.

Amendment moved— Page 67, line 38, after ("undertaking") insert ("for references to other capacities of the local authority there shall be substituted references to other purposes of the company").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, this is a drafting Amendment similar to the drafting Amendment we have already made.

The same problem arises in the case of non-statutory undertakers as arose in the case of composite companies, and a similar Amendment is therefore required. I beg to move.

Amendment moved— Page 67, line 42, at end insert ("and any question whether any property is or was (for the purposes of the said subsection (2) as so applied) held or used partly for the purposes of the electricity undertaking and partly for other purposes shall, in default of agreement, be determined by arbitration under this Act").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 54: (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 moved in subsection (3), after "Service" to insert "after consultation with the Lord Chancellor or, where the proceedings are to be held in Scotland, after consultation with the Secretary of State". The noble and learned Viscount said: My Lords, this Amendment is similar to that which was made in the Transport Bill by the other place when they disagreed with our Amendment. It drags me into the thing, perhaps unfortunately for me, but it may be as well that I should be able to keep my finger on the pulse of arbitration and find out how it is going. When I was asked to agree to this I raised no objection, and I hope it will give your Lordships—it sounds rather conceited—some satisfaction about the methods of arbitration and the arbitrator.

Amendment moved— Page 74, line 2o, after ("Service") insert the said words.—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

My Lords, this is a drafting Amendment to bring the drafting of this subsection into line with Clause 55 (5) and also the new subsection (5) to be inserted in Clause 54 by the next Government Amendment. There is no reason for any distinction between the three cases. It might be said that the provision stating that the decision of the referee or board is to be final is no longer necessary in view of the Government Amendment we are coming to. That may be so, but the provision is a common one and makes the position a good deal clearer to the ordinary man. The best course, therefore, seems to be to add these words rather than leave them out in the other two places.

Amendment moved— Page 74, line 21, at end, insert "and the decision of that referee or board shall be final."—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved, after subsection (4) to insert: (5) Subject to any regulations made under this section, the provisions of this Act which vest liabilities and obligations of a body to whom Part II of this Act applies in an Electricity Board shall apply in relation to customary obligations of the body in respect of 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 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, after consultation with the Lord Chancellor, or where the proceedings are to be held in Scotland, after consultation with the Secretary of State and the decision of that referee or board shall be final, and the Electricity Board shall give effect to that decision.

The noble and learned Viscount said: My Lords, this Amendment is submitted to give effect to a promise I made to the noble Lords, Lord Teynham, Lord Hawke and Lord Rochdale, who had an Amendment down with regard to what I may describe as customary rather than legal obligations. I hope the noble Lords will think I have fully met their desire and carried out my promise. I beg to move.

Amendment moved— Page 74, line 33, at end, insert the said new subsection.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 55 [Compensation to office's in connection with transfers]:

THE LORD CHANCELLOR

My Lords, this Amendment is similar to the previous Amendment which has been agreed to. I beg to move.

Amendment moved— Page 76, line 23, at end insert ("after consultation with the Lord Chancellor or where the proceedings are to be held in Scotland, after consultation with the Secretary of State").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved, after Cause 55 to insert the following new clause—

"Arbitration Act not to apply to proceedings before referees or boards of referees.

Nothing in the Arbitration Acts, 1889 to 1934, shall be construed as applying to any proceedings before a referee or board of referees appointed under either of the two last foregoing sections by the Minister of Labour and National Service."

The noble and learned Viscount said: My Lords, we had a long discussion about this. The question was as to whether we should insist on strict and more legal methods or whether we should content ourselves with the Ministry of Labour referee. On the whole your Lordships thought it wiser not to insist on the legal method because people did not want it. It might be foolish, but if they did not want it, you were not going to insist. We must not leave it ambiguous but must state it clearly. By this Amendment the Arbitration Acts do not any longer apply, aril it is to clear up what might be an ambiguity that I move this new clause.

Amendment moved— After Clause 55 insert the said new Clause.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 56 [Application, amendment and repeal of enactments relating to electricity supply]:

THE LORD CHANCELLOR

My Lords, this is a drafting Amendment, made necessary because we accepted the Amendment moved by the noble Viscount, Lord Maugham, to insert "being adaptations and modifications required in consequence of the provisions of this Act." When we accepted that we did not realize that this Amendment would be necessary. I beg to move.

Amendment moved— Page 77, line 44, at end insert ("(including the foregoing provisions of this section) or of the Act of 1943").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 59:

Setting up of Electricity Appeal Tribunal

No member of the Central Authority or of any Electricity Board and no person employed by them shall be qualified to be a member of the Tribunal.

(2) It shall be the duty of the Electricity Appeal Tribunal to approve the maximum tariff fixed for each area and for the supply of electricity for railways and to consider—

1. (a) any representation from any person other than an area board with respect to the prices charged for the supply of electricity by the Central Authority or the Electricity Boards and any representation from any person in regard to any allegation as respects any undue preference or undue discrimination by an Electricity Board;
2. (b) any representation in regard to the matters specified in the preceding paragraph which may be made to the Electricity Appeal Tribunal by a consultative council either upon the request of any person or otherwise;
3. (c) any question which may be referred to it for consideration by the Minister or by the Central Authority.

(3) When the Electricity Appeal Tribunal have considered any such representation or question as aforesaid they shall report to the Minister upon their conclusions and shall make such representations to the Minister in connection with those conclusions as they think expedient.

(6) The Minister and the Central Authority shall provide the Tribunal with such information and other assistance as the Tribunal think expedient for the purpose of assisting them to discharge their functions.

5.10 p.m.

VISCOUNT SWINTON moved, in subsection (1), to leave out "Electricity," where that word last occurs, and insert "Area." The noble Viscount said: My Lords, I would like to explain in a sentence or two the next three Amendments. The first and the third are purely drafting Amendments. The other Amendment, which looks formidable, is really quite simple. Your Lordships passed an Amendment on Committee stage to set up this arbitration tribunal, and there were three matters left over for further consideration. We asked the noble and learned Viscount, the Lord Chancellor, to give us his advice as to whether the tribunal ought to deal with discrimination and undue preference, or whether that should be a matter for the court. He advised us that under the Bill as it stands it was already a matter for the court, and that we would be wise to leave it there. We have taken that advice, and have cut out "discrimination and undue preference."

There was then the question of the price to the railways. We have already dealt with that in the Bill, and we have agreed that the price must be one which will not show a loss. The railway price—although it was always, and is still, subject to approval by the Electricity Commissioners—we can leave, as it is provided for in the Bill. I have recast subsection (3) in order to make it more intelligible, and to bring it more into line with the existing practice. That is the matter of individual appeal. I have inserted the local authority, who have a right of appeal to the Commissioners to-day. I propose to provide that the application on behalf of an individual has to be made on behalf of twenty people. That is the practice to-day, and it has been found convenient in cutting out one tiresome purpose. The third case, which seems to be obviously right, is where there is a genuine application by a trade or industry. I think that recasting definitely improves the clause as your Lordships passed it, and I beg to move.

Amendment moved— Page 81, line 1, leave out ("Electricity") insert ("Area").

THE LORD CHANCELLOR

My Lords, if I follow the noble Viscount aright—he will correct me if I am wrong—these are Amendments to the new clause which he inserted on the Committee stage as a result of the Division.

VISCOUNT SWINTON

That is right.

THE LORD CHANCELLOR

That being so, it is his child, and he has the right to dress up his child as he thinks makes her look most attractive. It is not my child, and I take no responsibility for the dress the child wears. I must reserve the right in due course to object to the whole "caboodle"—the child, the dress and all. Meantime, as it is the noble Viscount's child, I do not think I shall serve any useful purpose in resisting any Amendments which he makes to the clause. It is probably better that when it is considered in another place it should be put forward in what he considers to be the most attractive dress. I will not now resist this Amendment, or any other Amendment to the clause, but it must be understood that in not resisting the Amendments I am in no way committing myself to any sort of acceptance of the clause.

On Question, Amendment agreed to.

VISCOUNT SWINTON

My Lords, I beg to move this Amendment.

Amendment moved—

Page 81, line 4, leave out subsections (2) and (3) and insert the following new subsections: ("(2) It shall be the duty of each area board to submit to the Electricity Appeal Tribunal the tariffs from time to time fixed by them and the Tribunal after such enquiry as they think fit may either refuse to confirm any tariff or may confirm it with such alterations if any as they think fit and no such tariff shall come into force until it has been confirmed by the Tribunal.

(3) It shall be the duty of the Electricity Appeal Tribunal to consider— (a) any representation from—

1. (i) any local authority having jurisdiction in the area of any area board;
2. (ii) such number of consumers not being less than twenty as the Tribunal think sufficient having regard to the population of the area;
3. (iii)any consumers who in the opinion of the Tribunal sufficiently represent any particular trade business or interest in the area

with respect to the prices charged for the supply of electricity by the Central Authority or any area board; >(b) any representation in regard to the matters specified in the preceding paragraph which may be made to the Electricity Appeal Tribunal by a Consultative Council either upon the request of any person or otherwise; (c) any question which may be referred to it for consideration by the Minister or by the Central Authority.

When the Electricity Appeal Tribunal have considered any such representation or question as aforesaid they shall report to the Minister upon their conclusions and shall make such representations to the Minister in connection with those conclusions as they think expedient").—(Viscount Swinton.)

On Question, Amendment agreed to.

VISCOUNT SWINTON

My Lords, I beg to move this Amendment.

Amendment moved— Page 82, line 1, leave out ("the Central Authority") and, insert ("every Electricity Board").—(Viscount Swinton.)

On Question, Amendment agreed to.

Clause 62:

Provisions as to prosecutions and as to offences by corporations.

(2) Where an offence under the last foregoing section or any regulation made under this Act has been committed by a body corporate, every person who at the time of the commission of the offence was a director, general manager, secretary or other similar officer of the body corporate, or was purporting to act in any such capacity, shall be deemed to be guilty of that offence unless he proves that the offence was committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to have exercised having regard to the nature of his functions in that capacity and to all the circumstances.

VISCOUNT SWINTON moved to leave out subsection (2). The noble Viscount said: My Lords, this is a point upon which I think the noble and learned Viscount, the Lord Chancellor, can advise us. The subsection which it is proposed to leave out begins by saying that: "Where an offence under the last foregoing section" (or any offence) has been committed, and then says: "shall be deemed to be guilty." The noble and learned Viscount will remember that there was a good deal of "to-ing" and "fro-ing" on a similar clause in the Transport Bill. It is difficult to follow the different provisions of the Transport Bill. The experts who have been advising me have been at it, and they assure me that in the Transport Bill, as it will come back to us with the approval of the other place to the Amendments we made here, the peccant section is omitted. If that is so, it ought not to be in here. I beg to move.

Amendment moved— Page 83, line 6, leave out subsection (2).—(Viscount Swinton.)

THE LORD CHANCELLOR

Lords, like the noble Viscount, Lord Swinton, I am in a complete state of confusion as to what the Transport Bill does or does not contain at the present time. I think all I can do on this occasion is to read out what I am told by those advising me. I am told that a similar Amendment was moved on Report in the other place; and was rejected after the Amendment had been pressed to a Division. That may be on this Bill. Similar provisions to this clause also occur in the Transport Bill (Clause 121), tie Civil Aviation Act, 1946 (Section 47), the Exchange Control Act, 1947 (Fifth Schedule, Part II, paragraph 1 (2)), and other Acts of this Session. It is now the settled practice to insert this provision in all Bills which make corporations subject to criminal proceedings. There is no question of upsetting a fundamental principle of English justice, because the offence must be proved by the prosecution to have been committed by the corporation, and only then are the directors in peril. There are many Bills passed by Conservative Governments which contain provisions in a similar form—that is to say, placing the onus on directors—the Dentists Act, the Betting and Lotteries Act, the Public Health Act, 1936, the Building Societies Act, 1939, and others. For that reason, your Lordships will see that I cannot, as at present advised, accept this Amendment.

VISCOUNT SWINTON

My Lords, with the leave of the House perhaps I might add one word. My feeling about this is that if we put this in the Transport Bill it ought to be in here. On the other hand, if we have left it out in the Transport Bill, it ought to be left out here. Our instructors do not seem to be in agreement. I do not know about the Betting and Lotteries Act.

LORD HENDERSON

It is in the Transport Bill.

VISCOUNT SWINTON

That is what I thought, but I was assured that it was not. The noble and learned Viscount has said that we can look at it between now and Third Reading, and I will withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 64 [Provisions as to regulations and orders]:

THE LORD CHANCELLOR

This is a drafting Amendment. I beg to move.

Amendment moved— Page 84, line 20, after ("orders") insert ("or regulations").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 67 [Interpretation]: net revenue," in relation to any body, means the revenue of that body, after deducting there from all charges which are proper to be made to revenue account, including, in particular, proper provision for the redemption of capital and proper provision for depreciation of assets or for renewal of assets, but not including provision for interest on debentures and debenture stock; securities", in relation to a body corporate, means any shares, stock, debentures and debenture stock of the body corporate, and "holder of securities", in relation to any body to whom Part II of this Act applies, means, except in the provisions relating to the appointment of the stockholders' representative, a person who, immediately before the vesting date, was the holder of securities of that body, or his successor in title;

5.19 p.m.

LORD RENNELL moved, in the interpretation of "net revenue," after "capital" to insert "in pursuance of any obligation to make such provision." The noble Lord said: My Lords, the noble and learned Viscount, the Lord Chancellor, was good enough to give me an analogous Amendment earlier on about irredeemable debentures. I think it appropriate to insert a similar Amendment here for the same purpose. In the course of the discussion on the Committee stage, the noble Lord answering for the Government said that the words "proper provision for redemption of capital" covered the cases where debentures were not redeemable, or where a certain part of the capital had no redemption. All the same, it seems to me to be very much clearer if instead of saying "proper provisions for the redemption of capital," the words of my Amendment, "in pursuance of any obligation to make such provision" are inserted. I beg to move.

Amendment moved— Page 87, line 42, after ("capital") insert ("in pursuance of any obligation to make such provision").—(Lord Rennell.)

THE LORD CHANCELLOR

My Lords, I do not think I ought to accept this Amendment, and I do not share the noble Lord's view that this is on all fours with the previous Amendment. Here we have to consider the words "proper provision for the redemption of capital." If you make a provision for redeeming something which is not redeemable I cannot regard that as proper, and I can only consider the words "proper provision for the redemption of capital" as meaning proper provision for the redemption of capital which is redeemable. I do not think that the Amendment would have the effect which the noble Lord wants. It seems to me that it is restricting and narrowing. The proper provision for the redemption of capital is obviously wider than the proper provision for the redemption of capital sub modo. It seems to me the noble Lord is narrowing the clause in a way I do not think he intends to do, and I think we had better leave the words as they are.

LORD RENNELL

I would not venture to cross swords with the noble and learned Viscount on the interpretation of a drafting point. If he says it is so, it is the third time it has been said in your Lordships' House; and, as in the case of Mohammedan divorce, when it has been said three times it is absolute. I suppose in the circumstances this is absolute, and I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR moved, in the definition of "securities", after "corporate" to insert: and also includes any mortgages of the body which were quoted in the Stock Exchange Official Daily List (within the meaning of section twenty of this Act) on all six of the dates first mentioned in subsection (2) of that section. "The noble and learned Viscount said: My Lords, we have found that there is one company which has an issue of 5 per cent. mortgages, so-called, which is dealt in and quoted on the London Stock Exchange in just the same way as debenture stocks. The Amendment extends the definition of "securities" to cover this particular issue without, however, bringing in the generality of mortgages which are to be recognized by the new boards as liabilities to be discharged. I beg to move.

Amendment moved— Page 88, line 39, after ("corporate") insert the said words.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 68 [Application to Scotland]:

LORD MORRISON moved to add to subsection (2): and for any reference to the Acquisition of Land (Authorisation Procedure) Act, 1946, there shall be substituted a reference to the Acquisition of Land (Authorisation Procedure) (Scotland) Act, 1947.

The noble Lord said: My Lords, Clause 9 of the Bill applies the Acquisition of Land (Authorisation Procedure) Act, 1946, except Section 2, to the compulsory purchase of land by an electricity board which is authorized by the Minister or the Secretary of State as the case may be, This is a formal Amendment to provide that the new Scottish Act, corresponding to the 1946 Act, which it will replace when the Bill now before Parliament becomes law, shall apply in the case of the compulsory purchase of land by electricity boards in Scotland. I beg to move.

Amendment moved— Page 89, line 21, at end insert the said words.—(Lord Morrison.)

On Question, Amendment agreed to.

First Schedule [Area electricity boards]:

THE LORD CHANCELLOR moved, in the provision defining the area of the London Electricity Board, after "Kent" to insert "Middlesex." The noble and learned Viscount said: My Lords, I would like to move this Amendment in manuscript form in order to avoid doing it on Third Reading. The Electricity Commissioners have just discovered that the area of supply of a certain undertaking which will be comprised in the South Eastern area just creeps over the Middlesex border. It would be a great pity to have to split the undertaking between two areas, and this is the right course to adopt to enable the South Eastern area to include this little bit in Middlesex. I beg to move.

Amendment moved— Page 91, line 8, after ("Kent") insert ("Middlesex").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Fourth Schedule [Adaptations end modifications of enactments: Part II—The Hydro-Electric Development (Scotland) Act, 1943]:

LORD MORRISON

My Lords, in Committee Clause 46 (2) of the Bill—which relates to the form of the accounts of the Central Authority and the area boards—was amended by the addition at the end of the words now proposed to be inserted in the Fourth Schedule. The effect of the Amendment now proposed is to apply the same provision to the accounts of the North of Scotland Board. I beg to move.

Amendment moved— Page 113, line 37, after ("Board") insert ("and to show as far as may be the financial. and operating results bf each such activity")—(Lord Morrison.)

On Question, Amendment agreed to.