HL Deb 26 June 1947 vol 149 cc419-53

6.Where, by or under a scheme made under Part IV of this Act, such an undertaking or part of an undertaking as is specified in subhead (b) of paragraph 1 of this Schedule is transferred to a body constituted or specified by or under that scheme, the scheme shall incorporate in relation to that undertaking the provisions of Section forty-seven of this Act and of the Ninth Schedule to this Act subject to the adaptations and modifications set out in the subsequent provisions of this Part of this Schedule.

7.The following references shall throughout the said Section forty-seven and the said Ninth Schedule be construed as follows—

  1. (a) references to a goods vehicle shall be construed as including references to any vehicle registered under the Roads Act, 1920;
  2. (b) references to the Commission shall be construed as references to the said body;
  3. (c) references to a notice of acquisition, and to the giving of such a notice, and to the transfer resulting from or effected by such a notice shall be construed as references to a transfer by or under a scheme.

8.At the end of subsection (1) of the said Section forty-seven there shall be inserted the following proviso— 'Provided that, where the vehicle is a trolley vehicle or a tramcar, paragraph (a) of this subsection shall have effect as if, in the case of a trolley vehicle, the words "one-seventh" or, in the case of a tramcar, the words "one fourteenth" were substituted for the words "one-fifth," wherever those words occur.'

9. In subsection (3) of the said Section forty-seven for the word 'five' there shall be substituted the word 'seven.'

10. In paragraph (a) of subsection (4) of the said section forty-seven for the words 'vehicles authorised to be used under A licences or B licences' there shall be substituted the words 'public service vehicles, trolley vehicles or tramcars.'

11. The provisions of subsection (5) of the said section forty-seven shall apply where the rights of the hirer under a hire purchase agreement vest in the said body by reason of a transfer by or under the scheme.

12. The reference in subsection (8) of the said section forty-seven to this Act shall be construed as a reference to the scheme.

13. The said Ninth Schedule shall have effect as if—

  1. (a)for sub-paragraph (2) of paragraph 2 of that Schedule there were substituted the following sub-paragraph:—
  2. (b) the paragraph of that Schedule providing that in certain circumstances only two of the last three financial years shall be taken into account were omitted."

The noble Viscount said: This is a very important addition to the Schedule, and I move that it be inserted. It enables us to extend the compensation provisions, as provided for in this Schedule, to passenger transport undertakings. Your Lordships will notice, if you refer to Clause 47, which relates to other vehicles, that this proposed Part II is based upon that provision, with certain amendments relating to passenger vehicles. Some very important extensions of the compensation provisions, as formerly anticipated, are provided for in this Amendment of mine. If your Lordships will look at the top of page 58 of the Bill, Clause 47, you will see that from the compensation to be paid in respect of any goods vehicle vesting in the Commission there shall be deducted where one or more complete years have elapsed between the date when the vehicle was registered under the Roads Act, 1920, and the date of transfer, one fifth of the said cost in respect of the first year… The deduction applied to those vehicles is a fifth.

In these cases we have made the deduction substantially smaller. In the case of trolley vehicles the deduction is only one seventh; and the deduction in the case of tram cars is only one fourteenth. The proposal is, therefore, that much smaller deductions shall be made than the deduction of one fifth. This relates to buses. If your Lordships will look again at page 58 of the Bill you will see that there is compensation provided in respect of cessation of business, based on a sum calculated on the average net annual profit. Here again we are extending the scope of compensation and enabling it in some cases to be as much as seven times tile net annual profit. The other provisions are really in order to make it apply to this class of vehicle, except that I must refer now to the last paragraph of all, which relates to the new part of the compensation scheme—namely, subparagraph (b) of paragraph 13 of the proposed Part II of the Schedule. That relates to the years that can be taken for the calculation of the profit.

If your Lordships will refer to the long Amendment in my name on page 9 you will see a new proposal. In the case of passenger vehicles it is provided in the scheme that the annual profit for the three years ending 1948 can be taken. These years are expected to be very good years. People have had to crowd into buses and have had to wait in queues; the buses have done extremely well. It is no doubt a very generous gesture to enable the bus companies to take three years which it is fairly certain should be exceedingly profitable years. I would like to refer to my Amendment on page 144, line 34. This relates to haulage vehicles. It has been contended that, owing to some special circumstances, there might be one year in the three years which can be taken for the ascertainment of the net annual profit which for some reason was a specially bad year, and this provides for that case. It is another very liberal concession, I think, that, by reason of abnormality of circumstance in any one of the three years, that year may be disregarded and you may take the average of the two good years, thereby enhancing the amount of the net annual profit.

There are a number of Amendments on the Paper and I must be allowed to speak with a certain measure of frankness on some of them without referring to them individually. They all have the result of increasing the amount of compensation in one way or another. I suggest that the scheme of compensation here provided is understood to be a very generous scheme. I am not a pundit on Stock Exchange matters; it is a column in the newspapers which I rarely look at. But in this particular case I was advised that if the column was looked at it would be rather significant. I did not look at it myself, and the figures I now quote are those provided by my Department. It appears to have leaked out in the negotiations that the Minister was in rather an expansive mood, and I will tell your Lordships what the result was. It was at the beginning of June that this Amendment of mine appeared on the Order Paper. These are some of the effects. In the B.E.T. Omnibus Service the average price for 1946 to November 8, was 91; in May 1947, it ran to about 97. Then there came, apparently, an indication of favours to come, and it jumped up to 103. Then came the publication of my Amendment on the paper, and the price immediately jumped to 110. That does not look as if anybody thought it was going to do him much damage. Here is another important company—the Bristol Company. I see that their average last year was 91; at the beginning of May, 1947, it was 95; and then, at the first indication of this Amendment at the beginning of June, it crept up to 99. On June 18, after the period during which this had been printed, it was 108. So they seem to have had the same anticipation.

The whole list bears out the contention that the compensation is quite adequate; that whatever may be said as soon as this Amendment of mine was published the people who are concerned with Stock Exchange prices thought that shares were worth a good deal more than they were before, which does not look as if they thought it was a hard and flinty Amendment. As a matter of fact, I do not think it can be contended that the scheme of compensation is unfair. I think it is a very fair scheme of compensation, and you could not have better evidence of that than in the terms of the values attached to the different concerns to whom it applies. There it is, and I think I am quite entitled, just for once, to quote these estimates in our own support. I may say that we are so satisfied that this scheme of compensation is fair—and, in fact, I think it is almost generous in some respects—that I shall not be able to accept any of the Amendments which seek to increase the amount. I beg to move.

Amendment moved— Page 143, line 17, at end insert the said new paragraph.—(Viscount Addison.)

5.42 p.m.

THE EARL OF ROTHES moved to amend the proposed Amendment, by inserting after paragraph 7: (8)In subsection (1) of the said Section forty-seven the words 'three twentieths' shall be substituted for the words 'one fifth' wherever those words occur.

The noble Earl said: I have listened with great interest to the words that have fallen from the noble Viscount the Leader of the House, more particularly as I happen to be a director, as I think I have already disclosed to your Lordships, of the B.E.T. If I may say so with great respect, I always understood that the noble Viscount opposite did not place great reliance on Stock Exchange prices. But, quite apart from that, perhaps the noble Viscount is not aware that our annual report, which happened to be a fairly satisfactory one, was published almost concurrently with his Amendment, and I think that may have influenced, slightly more than his Amendment, any market prices that were influenced.

VISCOUNT ADDISON

I am sorry to interrupt the noble Earl, but may I make a correction? I see that the figure 100 per cent. was given as the average here, but these are the averages of pre-Election prices, based on 100 per cent. These are the inherences of the prices based on what occurred after the publication of the Amendment. The result is the same, but the precise form of words should have been different.

THE EARL OF ROTHES

In spite of the hard words that have fallen from the noble Viscount, that he does not feel inclined to consider these Amendments, I feel that they are of such importance that your Lordships will allow me at any rate to state my case. Perhaps I should say, in mentioning these Amendments, that they all deal with undertakings other than those owned by municipalities. It may clarify the matter if I say that to start with. The first point that is raised is the question of depreciation. I apologize to the noble Viscount, but I did not quite catch what he said then. I thought he said that the rate of depreciation for buses was to be less than that for hauliers' vehicles; I thought they were both to be one-fifth.

VISCOUNT ADDISON

The depreciation in the case of a trolley vehicle is one seventh, and in the case of a tramcar it is one-fourteenth.

THE EARL OF ROTHES

I think a bus is one-fifth and a haulier is one-fifth.

VISCOUNT ADDISON

Yes.

THE EARL OF ROTHES

For the purposes of this depreciation the Government have taken one-fifth and it is the same for buses as for hauliers. In fact, in most of this Schedule they have taken the basis for hauliers and applied it to road passenger transport. I think it is only right to say that there is a considerable body of opinion which is doubtful whether that is the right basis on which to rely for the passenger transport section of the industry. When the final pay-out comes to be made it will probably be found that a much larger sum has been paid out for the road passenger transport section than for the goods section. Be that as it may, I would ask your Lordships to bear in mind, when considering these two sections of the industry, that there are fundamental differences between them—differences both as regards circumstances and conditions of running, and the lives and maintenance of vehicles—and since the basis for goods hauliers is being taken, that your Lordships should bear that in mind when considering the basis of compensation for the road passenger transport.

Your Lordships will appreciate that we feel there are places in which the two must be brought into line, and other places in which, owing to these differences, they ought to be brought into proper perspective. The life of a bus is quite definitely longer than that of a haulage vehicle. It is run to a fixed timetable, and it is, therefore, possible to ensure regular and constant maintenance. Before it goes on the road at all it requires a certificate of fitness from the Traffic Commissioners; and even then it is liable to examination by the Traffic Commissioners' officers at almost any time. They can order it off the road if it is not found to be in order. A bus is more robustly built. I think the care and skill that is put into the building of a bus body is well known. It was quite a common experience during the war for the industry to find itself running buses as old as fifteen or eighteen years. Even now, there are buses in first-class condition, twelve years old or more, running on the road. To a large extent this has been made possible by the regular and careful major overhauls that take place, and during the overhauls it not infrequently happens that the bus body may be entirely rebuilt or an engine completely refitted. I think I have said enough to persuade your Lordships that the life of a bus is quite definitely longer than that of goods carrying vehicles, but, in case I have not done so, I would add one final word as to the wear and tear Income Tax allowance. For the seven years up to April, 1947, it was 31¼ per cent. on goods vehicles, and 25 per cent. on buses—a differential 25 per cent., the precise differential that we are asking for in this Amendment; namely, three-twentieths for buses against one-fifth for hauliers. I beg to move.

Amendment to proposed Amendment moved— After paragraph 7, insert the said new paragraph.—(The Earl of Rothes.)

VISCOUNT BRIDGEMAN

I should like, if I may, to support my noble friend Lord Rothes in the Amendment which he has just moved. As your Lordships will have heard, my noble friend explained the technical and commercial reasons why we thought these alterations of the percentages were well founded. There is a perfectly clear commercial case, which we have done our best to demonstrate, to show that the lives of buses are longer, and the stability of the passenger services as opposed to the stability of the road haulage services, is greater, and that therefore, as a commercial matter, it is right that the depreciation rate should be more favourable and that the multiple of the full profit should be more favourable than in the case of road haulage. Now that is something which should be considered purely as a technical matter. It is not a political matter. It is true that it is connected with the Stock Exchange, but not, I think, in the way which the noble Viscount, Lord Addison, tried to make the Committee believe. One should disclose an interest, and although I work in the City I am not a member of the Stock Exchange, nor have I bought any of the stocks about which we are talking this afternoon. But if we are to suppose in this Committee that a proposal put forward on technical grounds is bad merely because that proposal has been well received in the market, then I think is is a matter into which we shall have to look more closely.

I suppose that Stock Exchange values are conditioned by two things. The first and the less important is the amount of stock available in the market for intending buyers. The second is the view that the market takes on the information it has at its disposal—and that information may be good or it may be bad—of the commercial state of a company. Let us leave aside nationalization for the moment. Suppose you have a company, whatever it may be, that is not going to be nationalized, and information reaches the market that that company has done extremely well. The market hears that the state of maintenance of the company's equipment is extremely good and the value of the company is higher than had at first been believed. That is the position in which we shall find ourselves if the case of my noble friends and myself is made out. It is a case which rests on technical considerations, and presumably the Minister and his advisers have looked into the question of the life of these buses. If their value is greater to the extent represented by our Amendments as opposed to the Amendments put forward by the Government—then we are right and they are wrong. But if our calculations are wrong, I hope the noble Lords opposite will address themselves to the question of the extent to which we are wrong. But do not let us obscure the issue by pointing to what the Stock Exchange have done, nor assume that because of a movement of Stock Exchange prices something must necessarily be wrong.

Lord Addison has referred to the last paragraph of his Amendment dealing with "the last three financial years." Here, we have two separate things. We have the question as to whether the depreciation should be at this figure or that, and that depends on the arguments we have been putting forward with regard to the increased durability of equipment. Then we have this other question, which is quite a different one, as to whether there is some overriding reason why one year should be abnormal. As we see it, that has nothing to do with the condition of buses or lorries. It is due to the state of the weather or the state of trade, or to something of the sort which we feel applies in equal measure to buses and lorries. If, in the opinion of noble Lords opposite, it does not, we hope that it may be explained where we have gone wrong. But we do not think that we have. After all, the weather at the beginning of this year, which fell on the just and the unjust alike, was, if I may say so, prayed in aid by the Government because things did not go quite right in the fuel and power industry. But the weather affected lorries and buses, the road haulage and the passenger services, in equal measure. Therefore it is our contention that the Amendment to the Ninth Schedule which we are waiting to see come up for consideration, in so far as it affects road haulage does apply on its merits equally to the passenger services. For these reasons I would like to give strong support to the Amendment and to express the hope that some of the points which I have put forward may be answered.

LORD GIFFORD

Except on one point with reference to the Stock Market, I wish to speak quite shortly in support of this Amendment. Perhaps the noble Viscount, the Leader of the House, might remember that before this announcement was made there was no scheme of compensation at all for passenger road transport operators. It was entirely at the discretion of the Minister. Surely that must have made owners of this stock very nervous and very worried as to what they were going to get, especially as their fellow stockholders, the holders of railway stocks, were particularly disappointed. In my view it is entirely the uncertainty, or rather the quelling of the uncertainty, which caused that slight rise which has been mentioned. As my noble friend Viscount Bridgeman has said, this particular Amendment is a purely technical matter. It is well known that the depreciation of passenger road transport vehicles is very much less than that of road haulage vehicles. That can be proved up to the hilt. Surely no further proof is needed than the fact that the Income Tax Commissioners, who are not easily bamboozled, do give a preference of slightly more than the amount asked to the passenger vehicle. Therefore it seems to me that it is a matter of complete equity that some such scheme of depreciation as is contained in this Amendment should be agreed to. It is quite certain that that is the amount that the bus does, deteriorate, and the Income Tax Commissioners have accepted it. Therefore I do not see why His Majesty's Government are not able to do so as well.

VISCOUNT ADDISON

I see that the estimate provided in the scheme of compensation is ten years' depreciation. The result of the Amendment put forward by noble Lords opposite would be fourteen years. That is really the difference between us. I am advised that ten years is a very liberal and fair period to accept. I should imagine—though I do not know the details of their business—that the London Passenger Transport Board do not have many buses running that have not been dealt with within ten years. I think that that is a reasonable period.

VISCOUNT SWINTON

There is a rather interesting parallel there. I think from my general knowledge it has always been accepted that the depreciation of a lorry, of a road vehicle, is heavier than the depreciation of a bus. I think it is the universal practice of the Income Tax people to accept that. What the noble Lord appears to have done here is to have singled out trams and trolley 'buses and said that those are to have a more favoured and longer life. But he still leaves the life of the buses exactly the same as the life of the lorries. That is entirely inconsistent with all Income Tax practice. I say that it is and I challenge the noble Viscount upon it. Perhaps he will verify this.

It seems to me that if you had said:" I am going to give you for your business £x, or such valuation as an arbitrator may fix," then there would have been nothing to say because the whole thing is taken over at what is considered fair valuation. But here we are considering something that is in the Government's own structure. I would much rather have had a different structure, the ordinary structure by which we buy a business on the basis of what it is likely to go on making. This is being bought on an entirely different basis by splitting the thing up into the purchase of physical assets and the purchase of good will or compensation for good will. If you are going to do it on that basis you ought to do it fairly on that basis. The noble Viscount is really saying that these people are getting quite a lot of money because Stock Exchange values have gone up. Incidentally this is a dangerous argument because, as you bring the money rate down the value of securities is apt to go up. The noble Viscount had better not base himself too much on the Stock Exchange position, otherwise he will have great difficulty in resisting proposals for maintaining the value of- his new Government stock.

VISCOUNT ADDISON

It is a useful argument.

VISCOUNT SWINTON

It is a specious argument and quite irrelevant, because he has elected to split the business up and offer to buy the physical assets separately from good will. The Government ought not to have it both ways. They say, if the Inland Revenue regard a fair depreciation of a lorry as five years and five years is taken in the Bill, the lorry owner ought to accept that, because that, after all, is what you have been making in Income Tax. But as the Government themselves say that a bus has a much longer life, I think you ought to take that into consideration. And you ought to allow for depreciation what is the recognized amount.

LORD LATHAM

Is the noble Viscount quite sure that the rates of depreciation allowed by Inland Revenue for lorries or passenger vehicles are necessarily related to any given term of years? He ought to check that up.

LORD GIFFORD

I understand that the general tribunal for war damage claims take the life of 500,000 miles for a bus, which is approximately twelve years.

LORD LATHAM

Yes, but the War Damage Commission is not the Inland Revenue, which is what the noble Viscount prayed in aid.

LORD GIFFORD

But the terms he gave for Inland Revenue are perfectly correct.

LORD LATHAM

I am not saying they were not. I am arguing that there may be a difference in rate for goods vehicles from that allowed and accepted by the Inland Revenue for passenger vehicles, but dispute that either rate is necessarily related to the life of either type of vehicle.

VISCOUNT SWINTON

Of course it is. The rate of depreciation depends on how soon you have got to renew. That is the Whole purpose of depreciation.

LORD LATHAM

No. If I may say so with every respect, the noble Viscount is getting into a most contentious field in the doctrine of accountancy—as to what in fact is the principle of depreciation. He overlooks the fact that the rate of depreciation may be based on diminishing value and not necessarily on the life of the article depreciated.

VISOUNT SWINTON

But the whole object here is agreement about replacement. I know that there are various theories of accountancy upon what depreciation should be related to, but I will not go into a long accountancy argument with the noble Lord, who would probably beat me on that, because he makes his living out of me—I employ him to audit my accounts—

LORD LATHAM

No objection to that.

VISCOUNT SWINTON

What the Government are proposing to do here is buy two physical assets, lorries and buses. In taking over the value of these things, they say, we are going to see, putting it quite crudely, how worn out it is and how much it is still worth. They are going to treat lorries—which wear out much more quickly than buses as everybody knows, whatever system of accountancy you apply to it—and buses both exactly the same. That is wrong. Everybody knows a bus has a longer life than a lorry and you have to take into account in making payment.

LORD LATHAM

I shall not go into the disputatious field of what depreciation should accomplish. It does not necessarily follow that, if a lorry wears out more quickly than a bus, a bus has a longer utility life than a lorry, because the standard required for a bus by the public who use it is considerably higher than the standard required for a goods vehicle. I would venture to submit that if experience were taken, and a comparison made between the accepted life of passenger vehicles in reference to the life of goods lorries there would be found to be little or no difference. Maybe it would be found that owing to the rising standard of requirements by the users of buses the effective life of a bus is in fact less than the effective life of a lorry.

VISCOUNT ADDISON

I am delighted to have the expert support of my noble friend who knows much more about depreciation than I do. The Government Amendment allows ten years for depreciation of buses. The rate of expenses of a company in keeping its vehicles well upholstered and painted to meet the demands of passengers must be different from the demands made on a lorry. This has been gone into with great care. For example, a tram car which does not have the same wear and tear on its engine as a bus is allowed a longer period and that is quite reasonable. Noble Lords must not lose sight of the fact that this is not only payment for materials taken over, there is also payment of a percentage of the net annual income and the bus companies are allowed to pick three very plum years, the last three years to 1948, in which people have crowded on to buses and the companies have been unable to renew their fleets. They were especially profitable years. They are going to do very well out of that plum.

THE EARL OF ROTHES

I do not want to follow the noble Lords who have spoken into the highly technical field as to how many years of depreciation there should be. The noble Viscount started this argument by saying that he bases the compensation for passenger road vehicles op the terms laid down for hauliers. All right, I say that the life of a bus is longer than that of a goods carriage vehicle and therefore, accepting his basis for hauliers, there ought to be a similar basis accepted for passenger vehicles and there ought to be a lower rate of depreciation. No argument from the other side of the House has dealt with it at all.

My second point is that the noble Viscount keeps on saying that these three years are very good years for bus companies. With great respect that is not the point. The point is not the total of the sum but the figures going into the sum. It is no use saying you will not get the answer you want, and therefore you are scratching out another "O" because that is not reasonable. With very great respect, I do not think I have received a satisfactory answer at all, in view of what the noble Viscount has said. As it is possibly an occasion for privilege in your Lordships' House, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.11 p.m.

LORD HACKING moved to leave out paragraph 9 of the proposed Amendment and insert— 9. In subsection (3) of the said section forty-seven, for the words 'not less than twice nor more than five', there shall be substituted the word 'seven'.

The noble Lord said: I have already declared my interest in passenger transport undertakings, and, on behalf of those undertakings in which I am interested, I think I can say that we are grateful to the Leader of the House for the concessions he has already made in connexion with the new Part II. I am not going to say that they go far enough, but we are grateful for small mercies.

With regard to the general position, which I must not discuss on this particular Amendment, I agree with every detail referred to by the Earl of Rothes and Viscount Bridgeman, but my proposal is to leave out the "two to seven" years and make something more definite, to give compensation which is based on the three years average profits on a certain fixed number of years—namely, seven. Various explanations have been given in the Committee as to why the Stock Exchange prices of certain undertakings went up when the noble Viscount Addison published his particular Amendment. There have been many reasons given for that increase, but let me add just one more, and that is that it may have been the feeling of the people who are interested in these particular shares that seven years would be granted, and not two. The Amendment of the noble Viscount, the Leader of the House, is that it should vary from two to seven and that the Commission should decide whether or not the years in between should be two or seven, which are multiplied by the average profit over the three years. I would assert that you are much more likely to do away with these fluctuations on the Stock Exchange if the Leader of the House had to say here and now that the number of years which is going to be fixed as the purchase price is going to be seven.

I do not think for one moment that the noble Viscount will accept my Amendment. On the other hand, it is only right that I should put the position to him if only as an argument against this peculiar rise in the price of shares. There may be another reason why the price of shares went up, especially in connexion with an undertaking in which I am interested—Bristol Tramways—and that is that the noble Viscount decided he was going to take over the manufacturing side of that particular undertaking: I hope he has not definitely decided that. Whatever the reasons for the increase of the price on the Stock Exchange, that does not affect my argument. My ambition is to have something more definite in the Bill than at present exists. "Two to seven" gives little security to those people who are concerned with those undertakings. If we knew exactly what the compensation was going to be in advance, it would naturally place us in a very much stronger position. How do we know what the compensation is going to be under the terms of the new Part II which has been moved by the noble Viscount? It may be that only two years are going to be paid. If that is so, we are put in a very difficult position, as in that event the Stock Exchange prices would come tumbling down once again. I want something more definite. I hope that the noble Viscount will be able to meet us in some way, I doubt whether he will, but, at any rate, nothing will be lost in making an attempt and I can always hope for the best.

Amendment to the proposed Amendment moved— Leave out paragraph 9 and insert— (" 9. In subsection (3) of the said Section forty-seven, for the words 'not less than twice nor more than five', there shall be substituted the word ' seven'. ")—(Lord Hacking.)

VISCOUNT ADDISON

I congratulate the noble Lord on what he has said. We all know him to be frank and we are glad to see the concern that he has shown that the shares have jumped up eleven points. He has a fair amount of faith in this business. I am glad the noble Lord acknowledges that we did put seven, but these concerns must vary. You could not have a statutory obligation. You must leave the people room for estimating the different circumstances which affect the value. No doubt, there could be a good case for seven years, but there is a case to be made and therefore I think we must leave it open. We make it a minimum of two and I put a maximum of seven, which, I think, is quite a handsome gesture.

LORD HACKING

In the circumstances I do not press the Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

THE EARL OF ROTHES moved, at the end of paragraph 9 of the proposed Amendment, to insert: Provided that in the case of an undertaking the activities of which in the period over which the average net annual profit is ascertained consisted to a predominant extent in the operation of regular passenger road transport services according to time tables approved by the licensing authority for public service vehicles, for the words twice nor more than five' there shall be substituted the words 'seven'.

The noble Earl said: I should like just to say a few words on the other Amendment, because it really is the most important one of them all.

VISCOUNT ADDISON

This is really covered by an Amendment of Lord Hacking; it amounts to the same thing.

THE EARL OF ROTHES

The noble Lord moved for a fixed seven for all buses. My Amendment tries to define a certain class of buses, but not all. The point is this—and I would like to agree with the noble Lord, Lord Hacking—that we do welcome this widening of the range from two to seven. It is an important point and an improvement on the whole matter being left to the complete discretion of the Minister. When you have a wide range, the question arises: "Who gets two and who gets seven, and why?" From Clause 47 I had gathered that it is the intention of the Government to employ the highest multiplication factor of "seven" in cases of undertakings which show stability of profit, and I suggest that the pavement type bus and the regular long-distance express coaches are, beyond any doubt, the staple end of the industry. Therefore, it is reasonable to ask that the highest multiplication factor of "seven" should be applied to the more staple end of the industry.

After all, as I have already pointed out, the conditions and the circumstances of running as between buses and goods hauliers are quite different. The buses are under the Traffic Commissioners; they are licensed and they cannot have a competitor unless he goes to the Traffic Commissioners, whereas the goods haulier can do almost as he likes. If it really is the case, if I am correct in saying that the staple end of the industry is intended to get the highest factor, then I think there is a good deal to be said for the pavement type buses of the description given in our Amendment. I would earnestly ask the noble Viscount, the Leader of the House, either to accept this Amendment or to give me some indication, because the industry really needs it, as to what type of undertaking is going to be given seven. It is a very wide range and it is a very difficult thing to decide. If no indication can be given, then I think a quite unnecessary condition of extreme uncertainty is bound to exist.

Amendment to the proposed Amendment moved— At the end of paragraph 9 insert the said proviso.—(The Earl of Rothes.)

VISCOUNT ADDISON

I think that, if the company to which the noble Lord is referring have a good case, they will make their case. It will be open to them to do so, and, if they make a good case, I have no doubt they will get a longer term of purchase. But you could not discriminate between them in the Bill; it must be left open to them to make their case.

VISCOUNT BRIDGEMAN

I would like to take the matter a little further. Does the noble Lord really think there is any need for so wide a range as the range between two and seven? If I understood him aright, he has just admitted that a large number of companies do make the case for the use of seven as the multiplier. But does he really think there will be cases in which so low a multiplier as two will be justified? If not, why should we have such an unnecessarily wide range as the present range between two and seven?

VISCOUNT SWINTON

I should like to reinforce that. I see the difficulty of being too precise, but surely you are making the worst of all worlds; you are encouraging uncertainty, on the one hand, and gambling, on the other, if you do not really mean to have two. If nobody is to have two, there cannot be any sense in putting in two. It does seem to me that if you have a range of two at one end and seven on the other, the most capable businesses will receive seven. I find it difficult to see who will receive two. Why encourage speculative gambling by putting in two, when nobody will come down to that?

LORD GIFFORD

There was a range fixed by the road hauliers from two to five, and after due consideration His Majesty's Government have agreed to raise the five to seven. Surely, on their own argument, the bottom figure should have been raised from two to four. The road hauliers, we know, are less stable in their profits, and everything like that. We have had all those arguments, and I do not intend to repeat them; I think they are generally accepted. Surely, if the top figure is to be raised from five to seven, on the Government's own reasoning they should raise the lower figure from two to four.

LORD HACKING

I would like to support this plea. This is a rather different Amendment from mine, but it has the same ultimate effect of trying to get more than two years' purchase price. It seems to me to be a desirable thing, if you are increasing the maximum from five to seven, that you should increase the minimum from two to at least four. I know the noble Viscount the Leader of the House says that you cannot have a hard and fast rule, because some undertakings may be very different from others. He may be referring to the small passenger undertakings. They are crippled in one way, as the result of having made only a small amount of profit on the average of two to three years; if you cripple them again by the purchase price of years, they will be crippled twice. If it is possible for the noble Viscount to increase the minimum it will go some way towards meeting our objection.

VISCOUNT ADDISON

I have no authority whatever to say more than I have said. I will give consideration to the noble Lord's point. I cannot say more than that.

THE EARL OF ROTHES

Will the noble Viscount give consideration to some possible definition as to who should receive seven?

VISCOUNT ADDISON

No.

THE EARL OF ROTHES

I must say that I feel that very few of the points I have raised have been answered on this Amendment.

On Question, Amendment to the proposed Amendment negatived.

VISCOUNT ADDISON

I might save the time of the Committee by saying that we have great difficulty in understanding the next Amendment which is to insert the words "transferred by the scheme" in paragraph 10 of the new Part II of the Schedule after "tramcars." Perhaps the noble Earl would be willing to talk it over with us and we will see if we can arrive at some understanding. The same remark applies to the next Amendment. We really do not understand what is meant.

VISCOUNT SWINTON

Does that apply right down to the end of the page?

VISCOUNT ADDISON

Yes.

THE EARL OF ROTHES

We shall be pleased to discuss them later.

6.25 p.m.

THE EARL OF ROTHES moved, at the end of paragraph 13 of the proposed Amendment to insert— (b) in paragraph 4 thereof the words the Transferor' were inserted after the word 'property' where that word secondly occurs (c) in paragraph 5 (3) (b) thereof the words 'of the Transferor' were inserted after the word property'.

The noble Earl said: This is the question of the abnormal year. I would very briefly like to say this about the abnormal year—

VISCOUNT ADDISON

May I interrupt the noble Earl? I think the particular point about the abnormal year is understandable, but it is dealt with by my Amendment on page 9 of the Marshalled List. I think that is the correct place for it. There the abnormal year is specifically provided for.

THE EARL OF ROTHES

I had an Amendment down to leave out subparagraph (b) of paragraph 13, of the noble Viscount's Amendment dealing with the abnormal year.

VISCOUNT ADDISON

The effect of that would be that everybody would be able to get the three best years. I think the fair way of dealing with it is by this new Amendment of mine, which is put down to meet the difficult cases.

LORD HACKING

Does that mean that if there is an abnormal year, then the two years' average can be taken in the case of passenger undertakings, in the same way as road haulage undertakings?

VISCOUNT ADDISON

My Amendment to the Ninth Schedule, page 144, line 34, applies to all these undertakings. Passenger undertakings have three very good years.

LORD HACKING

Is that quite certain? One of the years is 1948. Nobody knows what is going to happen in the financial year 1948. It may be that that will be a bad year, for reasons outside anybody's control. If that is so, the passenger undertakings will perhaps have two good years, and one bad year, and if you are to make concessions for one bad year in the case of the haulage undertakings, I do not see why you should not do the same for the passenger undertakings.

LORD GIFFORD

As the noble Lord, Lord Hacking, has said, no one knows what will happen in the year 1948. The road hauliers have been given the opportunity of disregarding an abnormal year. Surely, road passenger transport is in exactly the same position? It might not mean a thing, but if, through lack of fuel, or something of that kind, there is an abnormal year, I cannot see why there should be the slightest difference in treatment. The road passenger operator ought to be able to take that into account in the same way as the road hauliers. I cannot understand the argument put forward by His Majesty's Government.

VISCOUNT ADDISON

The noble Lord must be of a sanguine temperament. There is obviously a great shortage of buses, and I cannot imagine that that shortage will be overcome by 1948.

THE EARL OF SELBORNE

It is not only a superfluity of buses that makes for a bad year. There may be a shortage of fuel, as my noble friend Lord Gifford has mentioned. All sorts of things are liable to occur. In these days in which we live, under our beneficent Government, we are encountering difficulties which we have never encountered before, not even in the war years. Therefore, we cannot regard present circumstances as so secure as they used to be before the war. I think my noble friend would be making a mistake if he ruled out the possibility of other abnormal events affecting bus companies in the same way as they affect hauliers.

VISCOUNT SWINTON

The Amendment by the noble Viscount the Leader of the House later on, will give something, and we do not wish to look a gift horse in the mouth. We have another stage to this Bill. The noble Viscount will have an opportunity of expounding to us how good or bad this horse is. When that has been put through its paces, if my noble friends are not satisfied and think something more should come in, it can then be discussed. I think we shall deal with it more intelligently if it is put down on Report, particularly as there are one or two other things which they have agreed to talk over with the Government.

THE EARL OF ROTHES

In that case, I beg leave to withdraw the Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

6.30 p.m.

THE EARL OF ROTHES moved to amend the proposed Amendment by inserting after paragraph 13: 14. For the purpose of the Income Tax Act, 1945, the transfer effected by the scheme shall not be deemed to be a sale.

The noble Earl said: The industry has been left in uncertainty over very many points in this Bill, and I do think it might be considered fair to ask whether an assurance could be given that a transfer under a scheme is not a sale for the purpose of the Income Tax Act, 1945, in order to ensure that no tax is payable on the balancing of physical assets. I beg to move.

Amendment to the proposed Amendment moved— After paragraph 13, insert the said paragraph.—(The Earl of Rothes.)

VISCOUNT ADDISON

This is clearly a matter which must be dealt with in the Finance Act. We cannot isolate a particular group of sales like this, and I am sorry I cannot possibly accept it.

VISCOUNT BRIDGEMAN

It may be quite true that we cannot have a provision of this sort in the Bill and that it should go into a Finance Act. But I do not think that answers the question, which was whether or not these particular payments were going to attract Income Tax. If we could have an answer to that question it would clarify the matter very much, and we would be obliged.

VISCOUNT ADDISON

This must be a matter which can only be dealt with in accordance with the Income Tax laws in the Finance Act. We cannot deal with it here.

VISCOUNT ELIBANK

It does not seem fair to have forcible taking over of these buses or hauliers, and then to say they have got to pay Income Tax on the sale. That is the effect of what the noble Viscount is suggesting.

VISCOUNT ADDISON

It is not.

VISCOUNT ELIBANK

The noble Viscount says that it may attract Income Tax. He will not go further and say that it will not.

VISCOUNT ADDISON

All I say is that this is not the place for a provision of this kind, whether it is good or bad. It is a capital asset, and not an Income Tax asset. Whether it is a good or bad Amendment, we cannot possibly put it into this Bill.

THE EARL OF SELBORNE

It is desirable that there should be certainty about this matter, because it is the Government who are producing a new situation from which certain legal results may or may not follow. No doubt the noble Viscount, the Leader of the House, is right in saying that this is a matter which should properly be dealt with in the Finance Bill, but can we have an assurance from the Government that either the matter will be dealt with in the Finance Bill or else some statement will be made authoritatively by the Government as to what, in their understanding, the legal position will be. Surely it is desirable in the interests of everybody that those companies and the shareholders of those companies should know how they will be affected in this respect by the legislation which the Government is introducing.

VISCOUNT ADDISON

I will certainly inquire into that and gladly furnish the noble Lord with a statement. But he must remember that these are capital assets which are changing hands.

THE EARL OF ROTHES

I am very grateful to the noble Viscount who has at last softened his heart a little, and I beg leave to withdraw my Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

On Question, original Amendment agreed to.

Eighth Schedule, as amended, agreed to.

6.34 p.m.

Ninth Schedule:

Meaning of "Average Net Annual Profit" in Relation to Road Transport Undertakings.

4. When the amount of the profit or loss for any of the said three years has been ascertained, such adjustment, if any, of the amount thereof shall be made as may be just, having regard to the extent and nature of the property held in the year for the purposes of the undertaking as compared with the extent and nature of the property which vests in the Commission by virtue of the notice of acquisition, not being property duly disclaimed by the Commission.

5.—(1) The amount of the profits made in the said three years, ascertained and adjusted as aforesaid, shall then be aggregated, and the amount of the losses made in the said three years, ascertained and adjusted as aforesaid, shall also be aggregated.

(2) If there are no profits to be aggregated, or the aggregate of the profits does not exceed the aggregate of the losses, the average net annual profit shall be taken to be nil.

THE LORD CHANCELLOR moved, in paragraph 3, to leave out "such deductions shall be made" and insert: the amount of any liability to Excess Profits Tax or the Profits Tax (computed, in the case of Excess Profits Tax, without regard to any post-war refund as defined in Part IV of the Finance (No. 2) Act, 1945) shall be taken into account and such sums shall be debited. The noble and learned Viscount said: This Amendment is designed to make it clear that in ascertaining the average net annual profit in reference to which compensation to road transport undertakings for cessation of business is to be assessed, the amount of any liability to any Excess Profits Tax or Profits Tax shall be taken into account. There is little doubt that normal accounting practice would be to deduct these liabilities but it is undesirable that the point should be left in any ambiguity. I beg to move.

Amendment moved— Page 143, line 41, leave out "such deductions" and insert the said new words.—(The Lord Chancellor.)

VISCOUNT SWINTON

I must say that we have had a singularly brief explanation upon what looks to me to be a very odd Amendment. Nothing was done about this in another place. The Bill went all through the Committee and all through the Report and this was not one of the things which suffered so much from the guillotine. If there is a doubt about this business, it is a doubt which ought to be resolved on its merits. On the face of it this seems to me to be a very bad Amendment indeed. What it does is to say that win n you are assessing the value of the business for the purpose of taking over you have got to deduct the Excess Profits Tax during the Excess Profits Tax period. Now there are two criticisms of that. You can only do that where Excess Profits Tax has been paid, and where the business has attracted Excess Profits Tax. If you have a company it is attracting it, and if you have an undertaking which is not a company it is not attracting it. You may, therefore, have two people, one a limited company and the other a private partnership carrying on a bus business. When you come to assess the profits upon which this is to be based, one of them has his Excess Profits Tax deducted and the other does not get it deducted.

Another thing is that you have very varying standards. I am not an expert in bus undertakings, but I do know a good deal about other lines of the business. One of the most unfair things about the Excess Profits Tax—except in the sense that we wanted nobody to make a profit out of the war —is that where you have a business which is old and established and which had a large pre-war profit, it was entitled to make a big profit during the war. On the other hand, you may have a new expanding business. I was concerned in one myself which was doing extremely well, but because we had no pre-war standard we were on the 6 or 8 per cent. basis. That was a business which was of great value to the Government during the war. The moment the war was over, and Excess Profits Tax went, of course it was able to make a much greater profit than it had been allowed to make during the war years. It was a very odd case as a matter of fact, because it was amalgamation of a number of businesses and the amalgamation was so carried out that we could not take the individual businesses at what they had been doing. But that is by the way.

It is quite notorious that if you have a high-pre-war standard you get a low Excess Profits Tax. A new business might be much more efficient, but there, if you had a low pre-war standard you bear a high Excess Profits Tax. In those cases it would work entirely differently in accordance with whether it was a limited company or not, and whether it had a high or low pre-war Excess Profits Tax standard. But observe what is now going to happen. You are going to take over these businesses when Excess Profits Tax has been abolished. I thought we were trying to see what was a fair price to pay for these businesses. You are putting them out of business, and you are then going to compensate them, presumably in relation to what they would have done had they been able to continue in business. I understand that that is what compensation means. In all ordinary walks of life when you have two people making a deal you put a fair valuation on a, business. How do you always assess that? You look at past profits and you look at future prospects. It may be that some of these bus companies did much better during the war and one year after the war than they are likely to do in the future. But when you get away from these artificial ways of handling business, and have either an agreement to purchase or a valuation by arbitration in default of an agreement, the things are worked out together. Now in the future the Government are gong to take over these businesses and run them.

This Commission will be subject to taxation like an individual; but it will not pay E.P.T. any more, because E.P.T. has been abolished. You are taking over a business which will not be subject to E.P.T. in future. But compensation will be settled with a man as if he were subject to E.P.T. It seems to me very unfair. Even in the war period, when the Minister of Transport set a ceiling on what these people were able to make under control, he gave them a high scale They were able to make more than they would have on the E.P.T. standard.

If the Minister of Transport thought in the war that that was what they ought to be doing, it seems wrong to take a different and lower standard now. I can quite imagine that there must be some cases in which if you paid on so many years' valuation of profits without taking into account E.P.T., some people might get too much, too generous compensation. But surely the right way to assess that is this. You have a margin of two to seven years; I should have thought that in deciding how many years' purchase you are going to pay, if the parties cannot agree the matter goes to arbitration. Then it is for the arbitrator to decide. He could say: "You have, it is true, the right to choose these three years, and to be assessed on them; on the other hand I claim that those years are good years. Had you been carrying on in business you would not have done so well in the next three years and you never did so well before. A fair price for you is x pounds, and that, for you, is five years' and not seven years' purchase."

Is it possible to have a firm decision on this now? It seems to me that from bringing this E.P.T. business into it when E.P.T. has come to an end and when it must work inequitably as between different classes of companies, and still more between companies and non-companies, much injustice will result. The Government may be producing other similar measures and if this were to be set as a precedent I honestly do not think we ought to be asked to accept the clause in this form; certainly not with such scanty explanation as we have been given.

THE EARL OF SELBORNE

This is an extraordinary proposal, and I hope your Lordships will not agree to this Amendment. The Amendment seeks to influence the amount of compensation that is to be paid by the amount of E.P.T. that has been paid during the war. As the noble Viscount, Lord Swinton, has said, it is notorious that E.P.T. was most unfair in its incidence. I think there is general consent among many people, on both sides of both Houses, that E.P.T. in many respects was a most unfortunate and indeed disastrous tax. Our present Chancellor of the Exchequer had, I think, the good will of everybody, irrespective of Party, when he abolished this tax. The only justification for E.P.T. was a moral one. It was vitally important that the men who were being asked to offer their lives in fighting the war should be assured that other people were not to be allowed to profiteer out of the war. That was a great moral issue; and this was the way in which Parliament, at the commencement of the war, attempted to deal with this moral issue. But at best it was a rough, crude and makeshift plan, and it was never very carefully thought out. In practice it was found to be, in many respects, extremely unfortunate and extremely inequitable. The Government are asking us now to perpetuate this in- equity in the compensation terms of this Bill.

As the noble Viscount, Lord Swinton, has pointed out, this may well set a precedent for other bills which His Majesty's Government are likely to introduce or have introduced. You really, can find no logical or moral justification for it at all. As Lord Swinton has said, you may have two undertakings who are doing exactly the same business and have done for the three years, who have a fleet of vehicles exactly the same, whose financial position and prospects are precisely similar, and yet one of these undertakings during the war will have paid a great deal of E.P.T. while the other may have paid very little or none at all. That inequity of the war has gone, and we cannot help it; but to try to perpetuate this inequity in the compensation to be allotted to the firms seems to be quite wrong. Therefore, I do hope that His Majesty's Government will not press this Amendment. If they do I hope your Lordships will not agree to it, because it seems to me that compensation ought to be dealt with exactly on the terms and in the way that Viscount Swinton has pointed out. Surely that is amply provided for in the Bill, and the question whether a company did or did not pay E.P.T. is quite extraneous and should not be entertained at all.

One other minor matter I would point out is that the figure of E.P.T. that is to be taken is the figure without the refund—which appears to me to be even more unjust, because the refund, I think, was introduced during the course of the war in an attempt to mitigate, as far as Parliament could in the circumstances mitigate, the inequalities of the incidence of E.P.T. Therefore deliberately to strike out the question of the refund seems to me to be perpetuating the inequalities of E.P.T. in the most aggravated form.

VISCOUNT ELIBANK

I wish to support the noble Viscount, Lord Swinton, in a very few words, and to emphasize how very unfair it will be if this Amendment is passed. It is notorious anywhere in the City, or anywhere else where E.P.T. applies, that it has operated in the most inequitable and unfair manner. The noble Viscount, Lord Swinton, has pointed out that many companies who had been making big profits before the war were allowed to get off almost scot free, and on the other hand there were companies who had just started up and were doing fairly well who came in and made large profits during the war and then found those profits very much reduced as a result of E.P.T. Not now, but at some time, I will give the noble Viscount a very interesting example of that. I wish to support what has been said about this matter and to ask the noble Viscount whether he will withdraw this Amendment and consider it again before the Report stage in the light of everything that has been said here this afternoon.

THE MARQUESS OF SALISBURY

I was going to say one word and it is this. I think it is clear that nobody in this Committee wants to take advantage of abnormal war profits. On the other hand, there is a case with which we are all familiar, where E.P.T. has been applied to expanding businesses which are expected to earn just as much after the war as they did during the war. It does seem rather unfair—in fact it seems very unfair—that you should attach E.P.T. to this provision in the rigid form in which it is here. I do not think anybody in this committee wants to press this matter to a Division if it can be avoided, and I would therefore suggest to the Government—and it would be very wise if the noble and learned Viscount, the Lord Chancellor, could see his way to do it, although I know responsible Ministers have to be consulted—that this should be taken back for consideration, and the Amendment drafted in a form which takes regard of abnormal profits. Then much public uneasiness would be avoided, and a great deal of unfairness would be avoided too.

THE LORD CHANCELLOR

I gladly respond to that suggestion, but may I say this about it? First of all, I do not think that whether this clause is in or not would make any difference. The Court of Appeal had to decide a case during the war in regard to an agreement which specified that the goodwill was to be calculated on a certain basis, and the basis was described to be certified by the auditors on the basis of ordinary commercial practice—nothing else. The question arose as to whether the auditors in certifying or not ought not to take as a deduction the E.P.T. They decided that they ought. They were supported by the first Court, and in the Court of Appeal; and therefore, in ordin- ary commercial practice, I believe that this would be the case. That particular decision of the Court of Appeal did not come to your Lordships' House.

But it is obviously undesirable to leave this matter as an uncertainty, for this reason: that the arbitrators or tribunal who are going to pronounce on this matter, whether it be in two or three years, must know on what basis they are proceeding. If you say that they shall not deduct E.P.T., then they will give one multiplier; if, on the other hand you say they shall deduct E.P.T., it will be another multiplier. Therefore it seems to me that we should state quite plainly—and here we follow the ordinary commercial practice—whether we do or do not deduct E.P.T. On the merits of the thing, we all know cases in which E.P.T. worked hardly as between one business and another. But if we look at the thing by and large and as a whole, I think we can agree that E.P.T. was a fair tax. It was a fair tax on the whole because it prevented the war profiteer. The relevance of the date we are taking here, where we are using the past as an indication of the future, is that it is a yardstick by which we measure what is likely to happen in the future. That is the relevance of taking the past. You may find that the past had some abnormal features in it. It is notorious that all these passenger undertakings did extremely well during the war —we have only to think of the numbers of unhappy people standing in the buses, and so on. Those were, I hope and believe, thoroughly unhappy conditions which will not repeat themselves.

Therefore, if you are basing yourself at all on what happened in the past (which is relevant) as your standard for the future, it seems to me, speaking for myself, that it is perfectly fair to correct the past, to destroy the abnormalities; and that is why, by and large, it seems to me very much fairer to make it plain that we are going to deduct E.P.T. The noble Marquess, the Leader of the Opposition, has asked me to consult the Treasury and the Chancellor of the Exchequer. I have no authority to say anything at all, and I have not yet consulted the Treasury about this point. I am perfectly prepared to see that the Treasury is consulted, to see whether they say or do not say that I have described it correctly, and I will put to them the arguments that your Lordships have put to me. I cannot hold out the hope that the Treasury will accede to your Lordships' arguments; I feel they are more likely to accede to mine. But I will certainly put it to the test, and I will tell your Lordships what the answer is.

VISCOUNT MAUGHAM

May I say one word? The sentence in the speech which the Lord Chancellor has just delivered that affected my mind was that in which he said that he did not think it would make very much difference in the Bill; and the reason why I think that is perfectly right is that the arbitrator or the Tribunal which here has to determine, according to the terms of the Bill, and including, of course, the Schedules, the fair value of the property in question—in effect the fair value of the goodwill—has to take into consideration every relevant circumstance. If he finds, as he will do if this Amendment is passed, that during the two or three years which he has to consider there was an abnormal deduction called Excess Profits Tax charged by the Government, I am certainly of opinion that he would have to take into account those two abnormal payments of exceptional tax during those two years, and that it would affect his view as to the number of years' purchase which he ought to give.

Accordingly, my opinion is that, in a sense, if the Tribunal acted properly it would make no difference. The person who is the owner of the business to be transferred would be entitled, either on one side or the other, to have those things taken into consideration. The reason why, on my part, if I had any real influence in this case, I would say "Do not insert the Amendment," is simply this: that I am afraid that there are some Tribunals who would be misled by this Amendment and would not allow the consideration that there are those deductions of Excess Profits Duty to sway them into deciding on the years' purchase or any other detail that is involved in fixing the price. It would be wrong to say: "We will not consider E.P.T. We must deduct E.P.T. first, and we will not consider that that sum is deducted when we try to ascertain the true value of the business." That must be, and obviously is, wrong, and it is my fear that that might be the result of this clause. For what it is worth. I should be inclined to support the suggestion that this Amendment should not he moved.

THE LORD CHANCELLOR

I hope your Lordships appreciate that I must ask for the Amendment now. I will carry out my promise, but I must ask for the Amendment now. If not, we must divide on it. We must have the Amendment now, unless your Lordships prefer a Division, and then we will abide by the result of the Division. I agree with the noble Viscount, Lord Maugham, almost entirely. What I would point out is that if you do not have this in, then of course a tribunal in assessing how many years' purchase to give would have to consider another factor—the abnormality of the years. They would have to take into account the fact of people standing in the buses and so on.

VISCOUNT MAUGHAM

That has got to be considered in any case.

THE LORD CHANCELLOR

Instead of considering the abnormality of the years they can take into account Excess Profits Tax. That is why we maintain that it is very much better to have the Amendment in to clarify the position. We have no authority not to press the Amendment, this being a Treasury matter.

THE MARQUESS OF SALISBURY

I do most earnestly appeal to the Government not to press this to a Division. Again and again during this Committee stage we, on this side, who are in a majority, have refrained from pressing Amendments to a Division with a view to getting a settlement by agreement. We have explained to the Government quite clearly to-night that we do not want to leave the Bill exactly as it is without this Amendment. We are quite prepared to consider an amended Amendment or a new proposal. We are quite prepared to consider this Amendment again on the Report stage, if it turns out that the Chancellor of the Exchequer is unwilling to alter his mind. We are perfectly reasonable about this, and surely it is not quite fair of the Government to force a Division. On this side we, being, as I have said, in the majority, have again and again postponed decisions in order to try to get agreement with the Government. To-day in this particular case where they have put down this Amendment why should they put us in this extremely invidious position?

VISCOUNT ADDISON

In reply to what the noble Marquess has said, may I say that I am willing to hold this over to the Report stage pending examination, as the noble Marquess suggests. But it must be understood that if my guidance and my instructions remain as they are at present we must insist on pressing this Amendment at the Report stage, and it will then be for your Lordships take a decision. It must clearly be understood that I am only taking this back for the time being in order to secure that examination for which the noble Marquess has asked. That does not imply any suggestion that we shall not bring the Amendment forward later.

THE MARQUESS OF SALISBURY

Of course we entirely understand the position as the noble Viscount has stated it. I am very grateful to him and I have no complaint to make of any kind regarding the course which he has now agreed to take.

Amendment, by leave, withdrawn.

THE EARL OF CARRICK moved, in sub-paragraph (2) of paragraph 5, to leave out "nil" and insert "such a sum as may be just having regard to the circumstances particular to each case." The noble Earl said: The purpose of this Amendment is quite obvious and I will not waste the time of the Committee by speaking on it at length. It is designed to remove some injustice and abnormalities that might well occur. It affects very few people.

Amendment moved— Page 144, line 11, leave out ("nil") and insert the said new words.—(The Earl of Carrick.)

VISCOUNT ADDISON

Will the noble Earl forgive my interrupting him? The Amendments in this group all deal with matters which are covered in an Amendment which I have put down myself, That Amendment deals with the whole point. These only cover the same matter. I hope that the noble Earl will not press these Amendments seeing that they are on exactly the same point.

THE EARL OF CARRICK

If I may say so, I cannot agree with the noble Viscount about this. This Amendment affects exactly the opposite kind of man. A particular instance taken is of a man who had a fairly profitable business, who during the war had it completely destroyed, and for the last two years of the war was not able to carry on his business. Now his losses are greater than his profits, but he may have a very fine goodwill.

VISCOUNT ADDISON

The noble Earl's first Amendment, which he has not moved, suggests that a year in which there were special abnormal circumstances not affecting the other two years shall be left out of account. That is exactly the point covered in my Amendment. There is no difference at all. I appeal to the noble Earl not to occupy our time on this. All these points are covered by my Amendment.

THE EARL OF CARRICK

In the circumstances I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

VISCOUNT ADDISON moved to insert after paragraph 5: 6. Where, by the end of the last three financial years, not less than three years have elapsed since the undertaking began to be carried on, and the transferor satisfies the Commission, or, in case of dispute, the arbitration tribunal established under Part VIII of this Act, that in any one of the last three financial years, by reason of the abnormality of the circumstances of that particular year as compared with the circumstances of the other two years, the profit made was to a substantial extent less than, or the loss made showed a substantial fall from, the average profit made in the other two years, then only those other two years shall be taken into account for the purposes of the last preceding paragraph, and accordingly for the word 'three,' wherever that word occurs in the last preceding paragraph, except in the proviso thereto, there shall be substituted the word 'two.'

The noble Viscount said: This deals with the case of haulage undertakings which are, of course, exposed sometimes to special emergencies owing, say, to bad trade, a slump in local trade or bad weather. There might be circumstances existing such as those which prevailed last winter in which it would not be fair to take that as a sample year. This allows for the taking of two other years, and for the average of those two years to be taken. It is not applicable in the same way to 'bus undertakings because they are not subject to the same kind of competition and affected in the same way. People in the cities and towns for the most part have got to go to and fro in bad weather just as at other times. I suggest that the Committee will be well advised to give these people this option which is of course entirely in their favour. I beg to move.

Amendment moved— Page 144, line 34, at end insert the said new paragraph.—(Viscount Addison.)

VISCOUNT BRIDGEMAN

Half a loaf being better than no bread, some of my noble friends and I on this side of the Chamber would wish to welcome the Amendment which has just been moved. I rise to point out that we had an Amendment earlier on the Order Paper which would extend the same provisions as are contained in this Amendment to the passenger transport undertakings. I think it was agreed at that time that if this Amendment were passed—as no doubt it will be—it should be understood that we might revert to the question of passenger transport on the Report stage.

LORD GIFFORD

The noble Viscount, Lord Addison, said that people still had to get to work in bad weather. I would remind him that in the early part of this year during the fuel crisis a very large number of people did not go to work at all and therefore did not use the buses.

On Question, Amendment agreed to.

VISCOUNT ADDISON

The next Amendment is consequential. I beg to move.

Amendment moved— Page 144, line 44, leave out ("the last preceding paragraph") and insert ("this Schedule ")—(Viscount Addison.)

On Question, Amendment agreed to.

Ninth Schedule, as amended, agreed to.

Tenth to Fourteenth Schedules agreed to.

Fifteenth Schedule [Part 1: Enactments repealed as from the passing of this Act]:

VISCOUNT ADDISON

There is an entirely drafting Amendment here. I beg to move.

Amendment moved— Page 151, line 26, after ("ten") insert ("in subsection (1) of Section twenty-four, the words 'upon the railways' "). —(Viscount Addison.)

On Question, Amendment agreed to.

Fifteenth Schedule, as amended, agreed to.

House resumed.

[The sitting was suspended at ten minutes past seven o'clock and resumed at half past eight.]