Lords Sitting of 11 March 1947

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.

  FOOD PRODUCTION AND FOREIGN EXCHANGE.
  EARL, FORTESCUE: My Lords, on be-halt of my noble friend, Lord Llewellin, who is unable to be present to-day, I beg to ask the question of which he has given private notice—namely, to ask the noble Viscount who leads the House if he can now reply to the request made by my ' noble friend Lord De La Warr during the debate on food production on February 19 last for the publication of the information prepared in 1945 on the potential saving of foreign exchange by increasing home food production.
  THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON): My Lords, His 'Majesty's Government have no objection to the publication of this information and appropriate arrangements are being made for its issue as a White Paper. I should like to take this opportunity of correcting a statement I made during the course of this debate. As. noble Lords will see when the calculation; are made public, the £80 millions was based on pre-war prices as I stated in Column 830 of the Official Report, and not, as I subsequently stated in Columns 831 and 832, on 1945 prices.
  EARL FORTESCUE: I am very grateful to the noble Viscount.

THAMES RIVER WALK.
LORD BROUGHSHANE: My Lords, I beg to ask the question standing in my name.
[The question was as follows:
To ask His Majesty's Government whether their attention has been called to the danger of the public losing the centuries-old right of way along the banks of the Thames between Teddington and Cricklade, a distance of about
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135 miles, by reason of the towpath being no longer used for the towing of barges; and will any necessary steps be taken to secure that this ancient right of way along the banks of the Thames, through some of the most beautiful river scenery in England, shall be preserved for public enjoyment?]
LORD HENDERSON: My Lords, the Government are not aware that there is any danger of the public losing any rights of way which they may possess along the banks of the Thames referred to. On the contrary the Thames Conservancy Hoard, who are by Statute under an obligation to provide navigational facilities from Teddington to Cricklade, recently held a conference for the express purpose of considering how the future maintenance, repair, and upkeep of the towing paths could best be achieved. That conference, which was attended by representatives from thirty-eight local authorities concerned, considered and approved in principle a resolution that the towpaths should be converted at public expense into a river walk from Teddington to Cricklade, and the public given the right of access thereto. A special committee was set up by the conference to consider the matter further and report direct to the local authorities, after which another con. ference will be called. The noble Lord will therefore see that while the public now have very limited rights of access over the towpaths except for towage purposes, if the proposals now under consideration are ultimately carried out, their position in this respect will not only be preserved but will be greatly improved.
LORD BROUGHSHANE: I am mud obliged to the noble Lord for his reply to my question, but does he not think it would be a good thing for the Government to ask to be represented on this committee? I understand that the position is very complicated, as old rights of way along the towpath exist but there are small stretches omitted. In the public interest it would be desirable that the Government should have a representative on that committee, who would report to them as to what legislation or other steps might be necessary to secure those rights.
LORD HENDERSON: I will convey the suggestion of the noble Lord to my right honourable friend, the Minister of Town and Country Planning.
LORD STRABOLGI: Is not my noble friend rather surprised at this advocacy of the public interest from the other side of the House?

COMMITTEE ON ROAD SAFETY.
EARL HOWE: My Lords, I beg to ask the noble Earl the question standing in my name.
[The question was as follows:
To ask His Majesty's Government whether steps can be taken in the near future to broaden the basis of membership of the Committee on Road Safety, in order to make it more representative of bodies and persons with practical knowledge and experience of road construction and the operation of vehicles thereon.]
THE POSTMASTER-GENERAL (THE EARL OF LISTOWEL): My Lords, the membership of the Committee on Road Safety consists of representatives of the Government Departments concerned, the Police and the Royal Society for the Prevention of Accidents. It is the view of His Majesty's Government that it is well constituted for the task which it has been asked to do and which it will bring to completion in a few months' time by the presentation of a final report. In these circumstances, apart from any other considerations, delays would arise if the membership of the present Committee were extended, but His Majesty's Government have, however, accepted a recommendation of the Committee that a Road Safety Committee should be retained as a permanent feature of the organization of the Ministry of Transport, and will, at the appropriate time, consider broadening the present Committee's basis of membership.
EARL HOWE: I thank the noble Earl for his reply.

RAILWAY ROLLING STOCK.
LORD QUIBELL: My Lords, I beg to ask the Government the question that stands in my name.
[The question was as follows:
To ask His Majesty's Government what steps if any they propose to take to secure the fullest possible use of railway rolling stock, and more particularly a mot e prompt return to service of railway wagons held up for days, and in
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some cases for weeks, without turning a wheel.]
LORD WALKDEN: My Lords, I am obliged to my noble friend for raising this question which enables me to make a general statement on the supply and movement of railway wagons. Since the beginning of the war, wagons, whether railway or privately-owned, have been pooled and operated as a common stock under day-to-day control of a body known as the Freight Railway Rolling Stock Control which allocates wagons according to varying needs and priorities. Ability to secure the fullest use of the available stock depends upon an adequacy of locomotives, the maintenance of the wagons in running condition and the speed of turn-round of the wagons. The condition of both locomotives and rolling stock has suffered from intensive use during the war and lack of adequate replacement. The speed at which replacements can now be effected and repairs executed depends on the supplies of materials and labour available for these purposes, and special efforts have been, and are continuing to be, directed to improving the repair possibilities and the output of new stock.
The shortage of engines has sometimes hindered the movement of wagons. Some hundreds of "austerity" locomotives built for war service are now being brought back from the Continent and are put into service as they are repaired. A number are also being repaired in Belgium before being shipped back to this country for our own railways. Replacement of outworn wagons is proceeding as quickly as possible, and the Government have ordered 50,000 wagons of a standard r6-ton type, as against the old Io-ton type. Delivery of these began towards the end of last year and it is hoped to obtain about 30,000 in the course of this year. By all these means the present shortages of locomotives and wagons should be adjusted. The fact that in some places numbers of wagons may be found standing in sidings over extended periods may be accounted for by the large arrears of repairs, or some wagons may have been condemned and be awaiting breaking up. Constant pressure is maintained upon consignees to ensure quick unloading and release of wagons and so reduce the turn-round time.
LORD QUIBELL: In thanking the noble Lord for that reply, may I ask him

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if he is aware that in one case, of which I have particulars that could not be challenged, about ninety wagons were standing for five weeks, and in that time never turned a wheel? Moreover, instead of demurrage charge after the first three days being a penal payment, the standard charge of Is. 9d. per day rather encourages people to keep wagons instead of turning them round more quickly. Information I could give would be of a very startling character. Demurrage ought to be a penal charge and increase rather than diminish, so that these wagons should come into effective use. If that had happened, we would not have experienced the crisis we have experienced during these last two or three weeks.
LORD WALKDEN: I must confess I am rather surprised at the startling information which my noble friend has just given the House. If he will be kind enough to give me particulars I can assure your Lordships that the case will be carefully inquired into immediately.

POLISH RESETTLEMENT BILL.
2.42 p.m.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I beg to move that this Bill be now read a second time. The Bill contains some thirteen clauses, which is an unlucky number, but, notwithstanding that fact, I think that in the main the Bill will prove uncontroversial. I say "in the main" because Clause 9 is a clause which may give rise to some controversy, and will certainly give rise to some discussion. But even with regard to Clause 9 I hope that the area of controversy, if controversy there be; will in the main be confined to subsection (8). I will in due course deal separately with that clause. Before I proceed to discuss the Bill in detail, may I give your Lordships a picture of the general position with which we find ourselves confronted and with which we have to deal?
We are all aware of the very gallant services which our Polish Allies rendered to us during the war. We are aware, too, of the obligation to which we have been put by those services, and we are all anxious to see that that obligation should
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be carried out and honoured, both in the spirit and in the letter. At the present time we have, or have had, responsibility in some form or another for something like 217,000 Polish troops. Of these, 131,000 are now in the United Kingdom, 25,000 are in overseas theatres, and 6i,000 have either been repatriated to Poland or at least have emigrated from this country. Our immediate responsibility is, therefore, in respect of the 131,000, and our prospective liability extends to the 25,00o, making a total in all of rather over 155,00o. Our policy with regard to these Poles has been that we must give them a fair opportunity of making up their own minds whether or not to go back to Poland. We must not compel them to go, and certainly we must not prevent them from going. We should give them every opportunity of forming for themselves a correct appreciation of the situation, and making up their own mind as to whether they should or should not go home.
Those who decide to stay here have been placed in a Polish Resettlement Corps. That is a quasi-military organization, and persons serving in it are subject to British Military Law. They are not armed. They are receiving training, and our desire is to pass them through the Corps so that they may be absorbed into civilian life as soon as possible. For this purpose they are receiving training and instruction in the English language. That accounts for some 8o,000 in that Corps. Rather less than 23,000 have opted for repatriation or emigration, and we shall get them out in accordance with their desire as soon as we can. Some 20,000 have not yet given a decision, but have had the various alternatives fully explained to them, and some 7,000 have not yet been approached. I sincerely hope that the 20,000 will soon make up their minds one way or the other, and I think it is only fair to us that they should. We shall press on with the putting of the alternatives before the 7,000, and I hope that they too will come to an early decision, freely arrived at, one way or the other.
Up to the present time the financial matters concerning the Poles in this country have been dealt with by an Interim Treasury Committee, consisting of a comparatively small number of our civil servants, responsible, of course, to the Government and to this House. Under this Committee there have been working

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a body of Poles, and the chief Polish representative on the Committee was Count Raczynski, formerly Polish Ambassador in London at the time when the London Government ceased to receive recognition. The number of Poles so working has been progressively reduced from 15,000, the number at which they started, to 600, and down to the present number of 400. An expenditure of nearly £11,000,000 has been incurred on behalf of the Poles in this country, with, in addition, an expenditure of over £3,000,000 for Polish refugees abroad. The time has now come to wind up the work of the Interim Treasury Committee, and to distribute amongst the various organs of government in this country the work which that Committee have been doing.
That brings me to the various clauses of this Bill. Clause 1 brings within the scope of the Ministry of Pensions all those Poles who have served with our Forces and who have sustained injuries in the war in consequence of service under British command. It is proposed that they shall receive pensions on the same basis as British soldiers or their dependants. The cost for 1947–1948 is expected to be of the order of £600,000. I believe that would be a diminishing charge. I would only say in regard to that clause that we have limited it to the Poles who received injuries in consequence of service under British command, and though I have the most profound sympathy for those Poles who received war injuries under other conditions, I must warn your Lordships that the financial situation of this country to-day is such that we cannot possibly play Lady Bountiful to a large number of people, however deserving their case may be.
Clauses 2 and 3 deal with allowances from the Assistance Board. These allowances have in the past been paid by the Interim Treasury Committee, and have been paid at a somewhat higher scale than those paid by the Assistance Board. It would not be right to continue to pay them more than is paid to our own kith and kin. They will be treated on exactly the same footing in the future. The number of persons who have been receiving either full or supplementary relief from the Interim Treasury Committee is about 2,500, and the monthly cost is of the order of £30,000. The Poles earning wages will in future be expected to contribute out of
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their wages towards their keep, so long as they are in camps. I need merely add that at the present time most of these Poles, together with their wives, children and other dependants, are being looked after in camps.
Clause 4 deals with the health services. The Interim Treasury Committee took over from the London Polish Government the various arrangements they had made in regard to providing convalescent homes for their service men. In addition to such homes there were training centres for the disabled, and there were medical dispensaries in various great cities. The Interim Treasury Committee administered these institutions at an average cost of about £250,000. These institutions will now become the responsibility of the Ministry of Health, and in view of the large number of Poles now in this country they may have to be extended. Clause 5 provides for the temporary recognition of doctors and pharmacists. The Defence Regulation dealing with this matter expires next December, and accordingly this clause extends only to that date. Thereafter any necessary provision will be made by legislation covering the whole field of the Defence Regulation.
Clause 6 deals with education services. We arc anxious to continue these services and to find as many places as possible for the Poles in British universities, but we really cannot give them any preference over our own students. Your Lordships will know how short accommodation for our own people is at the universities. Accordingly, we propose to support a Polish University College, where the curriculum will be upon British lines, so as to qualify the Polish students to partake in the British way of life, either here or in the Dominions. It is expected that the number of students will be about 1,30o. The students will be confined to those in the Polish Resettlement Corps and will receive grants of from £180 to £240 a year exclusive of fees. In addition to this scheme, there are a number of primary and secondary schools established in England and Scotland which have been the responsibility of the Interim Treasury Committee and which will in future become the responsibility of the Ministry of Education.
Clause 7 deals with emigration and places the responsibility upon the Ministry of Labour and National Service to continue the work previously done by

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the Interim Treasury Committee. Clause 8 removes the limit on the number of alien soldiers who may be employed in the British Forces. Clause 10 is the Interpretation Clause, Clause II is the Scottish Application Clause, and Clause 12 deals with Northern Ireland. Therefore, with the exception of Clause 9, it is fair to say that the object of this Bill is to distribute amongst a variety of Government Departments the work temporarily done under the Interim Treasury Committee at the cost of the British taxpayer. Every single provision deals very largely with finance and each single provision is, therefore, a matter which this House will approach with considerable circumspection.
I turn now to Clause 9, and here I find myself in some difficulty. I was given some friendly advice the other day by the noble Viscount, Lord Simon, who said that I must never more use the gambit of saying, "I very much dislike this Bill or this clause, but, on the other hand, I commend it to your Lord-Lordships."
VISCOUNT SIMON: I hope my noble friend will continue to do so.
THE LORD CHANCELLOR: My evil example has spread. In dealing with the Summer Time Bill yesterday my noble friend Lord Ammon adopted the same gambit. But the long and short of the matter is that in these wholly exceptional times I am afraid we have to face the fact that we must have these measures and provisions which, in more spacious and happy days—I will not say "happy" days; I will content myself with saying "more spacious" days—none of us would have looked at for a moment. So it is with this Clause 9. It is quite unprecedented, but then the situation which gives rise to it is quite unprecedented too. We have never had a situation like this before. I say quite frankly, therefore, that although I dislike intensely the machinery of the clause, I have been unable to devise one that is any better, and I commend it to your Lordships as being a real endeavour to make the best of a bad business.
Many of these people, be it observed, do not speak our language. They have come in their military formations from Italy; they have not served in this country at all and many of them cannot speak
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a word of English. They come here as soldiers, and there is a mass of them. It would have been easy to say, "We will subject them to British law as we have done the Polish Resettlement Corps." But if you subject them to British law, then you must have instructors in the English language, because most of them do not speak one word of English, and you have to get from the Army authorities a sufficient number of men who can help to administer the law. The dilemma in which we are is this. It is not merely that they do not speak the English language and that therefore British Military Law would mean nothing to them at all, it is also that the Service authorities cannot possibly spare the large number of men who would be required to look after them.
Therefore we have reluctantly had to abandon that idea, and what we have done in relation to these people is that we have, as it were, incorporated for the time being into the British law the Polish law. It is quite common to find in matters of contract that a particular contract is to be governed by a particular law, and very often a foreign law. When that happens in English Courts, the Courts have to do the best they can to ascertain as a matter of fact what that foreign law is, and then to apply it. Although that is done quite commonly in contractual matters in that way, it has never been done in this way before. With regard to these Poles we have incorporated into the British law, as it were, the body of Polish Military Law, and we have taken that Polish Military Law as it existed on January 1945. After all, that is the law under which these Poles have been living for years past, that is the law which their officers have been administering, and that is the law which, so far as they understand any law, they are much more likely to understand, than British law.
We have said, "That shall be the law which applies to you", but we have made this whole scheme subject to the control of a person skilled in military law—a distinguished General or somebody of that sort. He will be in supreme command and everything that is done will be clone under his control, although he will have the right to delegate and to entrust to the existing officers of the Polish Corps the administration of the law. He will have supreme authority, subject to the

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Secretary of State—and the Secretary of State, of course, is amenable to Parliament. The effect of subsection (5) of this clause is to make it legal for any person duly sentenced under the preceding subsections to be detained in a British prison. As I have said, quite frankly, I would have preferred to set out the British law, but I believe it to be impracticable for the reasons I have given—first of all, because none of these people understands it, and many of them do not speak our language, and secondly, because we have not the officers to enforce it. I submit to your Lordships that in the circumstances the only sensible thing we could do was to continue with the existing law, about which they do know something, taking the precaution of putting at the head of the whole organization some British officer who would exercise control.
I now come to another subsection which gives rise to even greater difficulty. There is not a shadow of doubt but that the legal position of these Poles is obscure. It may well be that the administration which has taken place since we withdrew our recognition of the London Government is irregular and invalid. It may even be that those who have been dealt with under the law would have rights of action in respect of illegal imprisonment and the like. It is not for me here and now to express a definite opinion one way or the other, and I merely say that the matter is one of ambiguity and of doubt. It is an ambiguity and doubt which we must regularize and put straight.
We recently brought to this country from Italy, as I have said, a large number of Poles, complete with their military formations. They have not been subjected to the ordinary restrictions and control which govern the entry of aliens into this country. It would not be fair to them, and it would not be fair to the people of this country, that this ambiguity should be allowed to continue. Accordingly, we think we have no option but to regularize retrospectively that which has been done since January 1945, by enacting that Section r of the Allied Forces Act, 1940, shall be deemed to have been in force as though the Polish Forces had still been recognized by the Government of Poland. The difficulty which justifies this wholly exceptional and indeed unprecedented procedure is that tire existing Government of Poland have
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refused to recognize these Forces, and on the other hand it is at least doubtful whether the bulk of these Forces are willing to go back to their own country.
Now those are wholly unprecedented circumstances. None of us can conceivably like a provision such as this, but in view of those circumstances I ask your Lordships to say that we are taking the only practical course which is open to us. Although it will be very easy to criticize our proposals and to point out that they are wholly unprecedented, I shall be very interested to hear any practical suggestions which may he made of any other way in which we can deal with this problem. Those are the circumstances of this Bill, and I beg to move that it be now read a second time.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
LORD FARINGDON: Might I ask a question of the noble and learned Viscount? There is a provision for the imprisonment of Polish troops in British prisons. What is not clear to me is whether the Polish. Resettlement Corps will run their own detention camps, or whether British military detention camps will be used for this purpose.
THE LORD CHANCELLOR: I could not tell the noble Lord which course it will take, but I will find out and let him know.
3.3 p.m.
VISCOUNT SIMON: My Lords, it is customary in this House, after a Minister has introduced a Bill on Second Reading, to thank him for the explanation which he has given, and we all do feel grateful on those occasions; but I must say, having spent a little time examining this most complicated Bill, that I think we owe a double measure of thanks to the noble and learned Viscount for what he has just said. Certainly I do not want to occupy time in mere criticism, although l think it very necessary for your Lordships' House to consider what we really are doing. We shall all agree with the noble and learned Viscount's first observation, that we owe and feel the deepest gratitude to those gallant Poles who threw themselves into the fight on the side of liberty and who rendered such very distinguished service. There is no difference at all 'between us on that point. We shall further agree that it is right that not only the Government,

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but the people, should be prepared to make such provision as is proper on such matters as are dealt with in Clauses i to 8 of this Bill, to meet the needs of these people who are on British soil or who are serving the British cause elsewhere.
The noble and learned Viscount, the Lord Chancellor, said more than once that we should not, after all, treat these people better than we treat the ordinary subjects of this country—that they should not be given, as it were, preferential treatment. Well, we would agree with that, because there has been much gallantry shown by our own people as well. But perhaps he will explain to the House—at the moment I am not quite clear on the matter—whether in fact these earlier provisions in the Bill do not involve an element of preference. Take, for instance, the provision which is made in respect of need arising from unemployment. The British subject who may get that help is a person, of course, contributing to the unemployment fund, week by week, on a card. I do not know—I am only asking for information-but I should rather suppose that that is not so in the case of these people, and hardly could be so. Therefore the assistance which is being given to them—although I do not think we should object to it—has an element in it which is rather different and rather more open-handed than that which our own subjects get. I think the same thing would be true, although I speak subject to correction, about some of the other provisions in the first half of the Bill. Nevertheless, I do not myself see how it could have been done otherwise; and therefore, subject to one point, I would suggest to your Lordships that we ought to be satisfied with this Bill.
The point about which I should like the noble and learned Viscount to tell us a little more is this. With reference to one of these provisions, he said that the Poles who were here would be expected to contribute out of their wages. That is not the way, of course, in which our law deals with the British subject. The Chancellor of the Exchequer does not say to the taxpayer, "Now I expect you to contribute out of your wages." He has a much more effective and summary way of securing that that contribution is made. I do not know whether these Poles are at present paying any Income Tax, or whether they will pay any. They will
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certainly be very fortunate inhabitants of this country if they do not. Possibly one might learn whether or not in such matters as that, and in respect of the contribution which they should make for accommodation provided, it is not merely expected that they will make contributions but that provision will be made to see that they do. I am sure that in saying this no one will think I am seeking to make a niggling criticism. It is important for us to know what is really meant by the clauses which are in the Bill, and there is nothing in them, so far as I can see, which to that extent says that there really shall be what I call equality of treatment.
Now I come to the clause which the noble and learned Viscount, the Lord Chancellor, particularly selected for a not unusual combination of denunciation and advocacy. Indeed, in the present case he excelled all previous form, because he told us about Clause 9—I took down his words—"I dislike it intensely." He went on to say that it was wholly objectionable and was admittedly dealing with unprecedented circumstances. In fact, the Lord Chancellor ought to be depicted as the walrus. "I weep for you," the Walrus said, "I deeply sympathize"; but it did not alter the fact that he collected the oysters.
I wish shortly to call the attention of the House to what Clause 9 does. It is certainly very unusual in Parliamentary history that the Bill, as originally introduced in another place, did not contain this clause at all. The Bill, as introduced, contained a clause to which I have already referred, and which (subject to the comment I have made) I should have thought would be generally all right. Then suddenly, on the Committee stage of the Bill in another place, there was introduced not this Clause 9 but a different Clause 9. Indeed, I think I am right in saying that the clause we now see in the Bill is the fourth attempt of the Government to produce an enactment on this subject. It was originally put on the Order Paper in the House of Commons in a quite different form. It was withdrawn; it was redrafted; it was moved in Committee; and it was again withdrawn. The Home Secretary wrote down a third version which he suggested should be substituted on Report. The present clause however, is not that version, but a fourth version which was finally adopted in

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another place. That illustrates what a very difficult thing it is and thoroughly justifies the noble and learned Viscount, the Lord Chancellor, in his observation that it is one of the queerest and most bizarre topics which we have to consider.
I am not going to be captious, but we ought to see what it really does. I quite agree that the Polish Forces must be under some discipline; I suggest that they are in need of a little more discipline than they at present suffer. I dare say some of us have reason to think that might not be entirely without justification. That few of them speak English seems of little present importance considering how some of them get on with English or Scots-speaking. girls. But perhaps not much conversation is needed for that particular kind of social companionship. The question is: who is to provide the discipline? I ask your Lordships who is to provide it and anybody who happens to have a copy of the Bill can see who it is. I do not think that on this point the noble and learned Viscount, the Lord Chancellor, gave us a full explanation. 1 am not speaking for the moment about the law which is to be applied, but about who is to apply it.
On the top of page Io occurs the word "Administrator". So far as the Bill is concerned—Clause 9(1)—the Administrator is to be a person "of British nationality," but not necessarily of British parents. It may be somebody who is naturalized after the Bill is passed. It might even be a Pole, if he has lived here long enough. The Administrator is to be of British nationality, and is to be appointed, I presume, by the Secretary of State for War, if the person appears to him to have a good knowledge and experience of British Military Law. There is a humorous element in that stipulation. He is not going to administer the British but Polish Military Law. Yet the essential qualification for the candidate is not that he should know a single word about Polish Military Law, either now or any past time, but that he should be acquainted with the system which our own Military Law follows.
The noble and learned Viscount said in his speech that it would be some distinguished: 1;ritish General. I dare say that that is right, but it is riot in the Bill. All we are told is that somebody called an Administrator is to be appointed. The next thing I notice is that this unknown
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Administrator X, who is a British subject, and who knows our British Military Law, is given tremendous powers. He can, if the law is applied, inflict any sort of punishment, short of the death penalty. That is excluded because, I understand, the Polish legal system does not in fact impose the death penalty. I do not know whether all penalties which are imposed according to Polish Military
Law are penalties which we recognize as suitable or not. But that is not the point. He has to administer this law and these penalties as best he can, though he is not required to know anything at all about the subject.
Moreover, under Clause 9 (5) the administrator may delegate generally, or in particular cases, to such person or persons as he may think fit, the power to do the things that are within his jurisdiction or power under the preceding subsections. That is really a most astounding provision. I never before dreamed that it was possible: for a British Parliament to enact that: a man suitably selected should exercise judicial functions—and judicial functions of a criminal kind which might involve the imposition of very severe penalties—and be enabled to delegate that duty to any person or persons he might think fit. So far as the language of the clause goes, he might of course—though it is riot intended—delegate it to the door-keeper. I have never heard such a provision in an Act of Parliament. Surely we must: see if something ought not to be done to make good the substance of what the noble Lord said in his speech, which I have no doubt is what really is intended—namely, that in the proper cases this Administrator, who may have a good deal on his hands and who does not know any Polish Military Law, may call. upon a Polish officer who, I suppose, is in some way skilled in Polish Military Law, to undertake the duty.
I would, very respectfully—and I hope the Lord Chancellor will think I am making a reasonable point—submit to your Lordships that we ought not to pass a Bill on the face of which it is said that an unknown General X. is to be appointed as a final authority to try people for breaches of discipline and to apply to them severe punishments, and that he may choose anyone he likes to do if for him. Surely we can have some clarification on that point. I am not seeking to be discourteous, but I wished to call attention to

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these few points in the fourth version of this Bill.
Then comes what is a most troublesome matter—the noble and learned Viscount, the Lord Chancellor, obviously, feels strongly that it is so. It is not a technical matter, it is not what some people might contemptuously dismiss as a "lawyers' matter." One would have thought that it was universally true that before law is applied to any set of people, especially criminal law, Parliament should have some notion of what the law is. You do not deliver foreign law like a pig in a poke. I do not suppose that there is anybody, not even anybody in your Lordships' House—I would even, with great humility, suggest that the Lord Chancellor could not do it who could tell us what Polish law on January 1945, was on this matter.
THE LORD CHANCELLOR: May I be allowed to reply to that? Unfortunately I cannot read Polish, but there is a Polish military manual setting out the Polish law as it was at that date, and that manual is available.
VISCOUNT SIMON: That is very good. It would perhaps be an improvement in this Bill if we did in fact refer to this manual. That would, at any rate, be embodying a definite and known code of law. This leads me to make another suggestion—I am sure that the noble and learned Viscount, the Lord Chancellor, will not resent it; it is put forward purely with a view to seeing if this Bill cannot be improved. I doubt very much whether it is wise in this Bill to say, once and for all, that the law to be applied is the law as it stood on January r, 1945. I did not know that there was a Polish manual of military law of that date or relevant to that date, but of course I accept that there is. I doubt very much, however, the wisdom of the course to which I have just referred. I should have thought that it would be very much better, and more in keeping with the whole scheme of this clause, to say that the law to be applied by the Administrator and those he selects as aids is to be the law as defined or prescribed in an Order in Council, even though the Order in Council, at least in the first instance, simply said that the law to be prescribed is the law in this manual. I hope your Lordships will observe that if we enact—as it is in the Bill now—that the law to be applied is the law on January 1, 1945, we shall not
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be able to alter it without another Act of Parliament, and it may work out very badly.
These people are to live in this country, and they will be in a very curious situation in that, although the war is over, those who are thought to deserve punishment are to be punished for certain kinds of offences by an entirely novel tribunal—namely, an Administrator, or those whom he may chose to select as aids, and the law is to be this law defined in this roundabout way. My humble suggestion is that, instead of this, we should put in the Bill that the law is to be the law as defined in an Order in Council to be made at once. By doing that you will not do any harm to the scheme of the Bill, and you will secure the great advantage that this would not, in fact, be law of which the Government or Parliament or the War Office might really not approve because of some feature in it which they really could not justify. Without going back to Parliament you could then, if necessary, alter your Order in Council, and have a certain flexibility in determining what the law is to be.
If I have made my point plain to the noble and learned Viscount, the Lord Chancellor, and to the House, I do not wish to say anything more about it. But it does seem to me that it is an extraordinary provision to say in this clause, first, that people living in this country, after the war is over, are not to be governed by our own Military Law but by the Military Law of a foreign country, and, second, that that law is to be described as the Law of Poland on January 1945. As a result of that you may find out—I do not say that you will; I do not read Polish law any more than does my noble and learned friend—that you have committed yourself to a system which is in some respects (I do not want to use any strong adjective) not what we should think is proper.
I was challenged to produce a practical suggestion and not indulge in mere criticisms. There may be answers to what I have been saying, but I think it is worth considering. Those are the circumstances we have to consider in connexion with this Bill. It is, as I understand, a permanent Bill, though it is hoped that it will not be in actual operation for a great length of time. Unless I misunderstood this, something was said in the course of the debates in

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another place about the Bill being operative for seven months. I do not, myself, understand what there is in the Bill which reduces the period in that way at all. It may, however, have been a mere flourish or a general expression. But I should like to know, and I think the House would like to know, how long it is expected that this measure will continue in operation. As it stands, it is not a temporary Bill, but a permanent Bill. At the same time, let me say frankly that I see the extraordinary difficulty of deciding what ought to be done. I am certain that the Government are trying to get the best scheme that they can, and, certainly they have tried more than once, because this clause was produced in another place four times.
I gather, from reading the Report of the debate, that when it was introduced in another place challenge was made that it was outside the title of the Bill. I think perhaps some people would have thought that was no very great argument. The Speaker said something to the effect that this Bill was going to another place, that that other place was full of lawyers, and that no doubt the legal authorities, having now seen the red light, would look into the matter before-hand. I do not take any point on that, and I do not think that your Lordships would be debarred from doing what you thought right by arguments about title. I put this as a matter of substance. I say, are not the observations which I have made observations which show that it may be useful to amend Clause 9 in these respects? I greatly sympathize with the noble and learned Viscount, the Lord Chancellor, because he has had to discharge, in what he feels is the only possible way, what must he for anyone trained in our English law, a rather disagreeable task. I do not see how he could have done otherwise, and I am only suggesting that these amendments may be practical amendments to be considered in Committee.
3.28 p.m.
THE EARL OF PERTH: My Lords, we on these Benches welcome this Bill as giving some small expression to the gratitude and the admiration which we feel for the gallantry of the Polish Forces who fought in the recent war often under our command. I do not propose to follow the noble and learned Viscount who has just
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spoken in his criticisms and his proposals with reference to Clause 9 of the Bill. I have read the Report of the discussions which took place on this particular clause in another place, and, frankly, I remain rather confused. I still do, even after the explanation which has been given to-day by the noble and learned Viscount the Lord Chancellor. But I would like to support the proposal made by the noble and learned Viscount, Lord Simon, that the law to be administered should be set out in or prescribed by an Order in Council. That seems to me to be a very practical proposition, for it would give the opportunity of altering the law to be administered should it be found not to be suitable after a certain lapse of time.
But there is another point to which would like to call the attention of the noble and learned Viscount who sits on the Woolsack. It is with regard to the possibility of granting British nationality in suitable cases to those in the Polish Armed Forces who served under our command yet would not qualify by five years' residence in this country. I do not suggest that anything other than a permissive. authority should be given to the Home Secretary, but it seems to me to be harsh—I think the Lord Chancellor will agree—that while a Polish refugee who came here in 1941 would qualify for the grant of British nationality, a Pole who fought under the command of Field-Marshal Alexander in Italy for four or five years would not be able to obtain that nationality.
The point was discussed in another place, and it was very sympathetically received by the Home Secretary. It was so sympathetically received that I rather thought he indicated that an Amendment might be produced in your Lordships' House which would satisfy those who felt strongly on the point. Naturalization should not be granted wholesale or by classes, but in limited cases of that kind such an arrangement would afford a great consolation to a certain number of individual Poles who fought for us. I think, too, that by so doing you would not be creating any dangerous exceptions because, as the noble and learned Viscount, the Lord Chancellor, himself has said, the case of these Poles is unprecedented. Therefore, I hope he will give it very favourable consideration.
3.33 p.m.
THE EARL OF IDDESLEIGH: My Lords, the Bill we have before us this afternoon is, I am convinced, a sincere and honest attempt to do justice to the Polish ex-Service men, and I would concede that in many respects the measure is eminently sensible. There are, however, certain points to which I would like, as briefly as possible, to draw attention. In the first place, I would allude to the five-year limit in Clause I (1), which refers to the pensions payable to ex-Service men and the dependants of ex-Service men who have died as a result of the war. It limits the payment of these pensions to five years, but it gives to the Minister of Pensions, with the consent of the Treasury, statutory power to prolong the scheme of pensions for any period that he may see fit. I have studied the arguments that were used in another place in defence of that arrangement. The idea behind the proviso is that a time may possibly come when with regard to these pensions some more satisfactory arrangement may be made with the Government of Poland which may exist at the time. That seems to me a very illusory hope indeed. As it is, however, it appears to indicate that we cannot approach the Polish ex-Service man with a perfectly frank and unqualified statement that we are going to treat him with regard to disability pensions and dependants' pensions in the same way as we treat our own ex-Service men. I hope, however, that it will be possible to convince him that we are entirely sincere in our desire to treat him on an equal basis with his war-time comrades, and that he may rest assured that the pensions scheme will be continued.
There is also a small point which I would raise—although perhaps it is not so very small—in Clause 5. That clause makes provision for Poles to become doctors in this country. I observe that there is no allusion to dentists or, for that matter, to opticians. As there is a very grave shortage of dentists in this country, and as there are, presumably, some qualified Poles, I should be grateful if the noble and learned Viscount would deal with that point, either now or when we reach the clause on the Committee stage.
I come now to an aspect of the Bill in which I feel that we have been less than generous and something less than just. I am going to venture to put a case to
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your Lordships in the hope that it may have some influence upon His Majesty's Government, who alone can enlarge the scope of the Bill. I do so under a very great handicap because the noble and learned Viscount has, to some extent, prejudiced the House against my remarks by his use of the phrase: "Playing the Lady Bountiful all over the place." May I anticipate him, and give the phrase he is very likely to use in his reply? He will say that "hard cases make bad law." If, in spite of the handicap of those two phrases which are against me in this matter, I still venture to make an appeal to the House, your Lordships may take it as evidence that I feel very strongly that what I am about to say is justified. I wish to deal with the question of the widows of Polish soldiers killed fighting against our common enemies.
Under Clause 1, the dependants' pension is treated on exactly the same basis as the disability and Service pensions. The time-honoured phrase "disablement or death" occurs throughout the clause. It is natural in dealing with British cases that we should lump these two categories together. Whether a man has been killed or whether he has been disabled does not affect the matter; in either case the pension is payable to him or to his widow, orphans, or dependants. I venture, however, to question the justice of lumping together widows' pensions with disablement pensions in the case of the Polish Forces. If a Polish ex-Service man goes to a Government Department in order to claim a pension he must, with perfect justification, be asked: "Were you a member of the Polish Forces under British command; and if you were not a member of these Forces while they were embodied, did you join the Resettlement Corps?" If he has failed to join the Resettlement Corps, or was not in one of the Armed Forces at the time they were embodied, he can have no grievance whatever at being refused a pension. It is his own fault.
But you cannot ask that question of a widow. You cannot ask the widow of a Polish soldier why he did not join a Force under British command or the Resettlement Corps. If you do so you may get a very tragic answer. I am going to suggest to your Lordships that it would have been a just, generous, and great-hearted measure if His Majesty's Government had

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decided to treat the widows of Polish ex-Service men on an altogether broader basis and if they had said: "While we will confine an ex-Service man's rights to the Forces under British command, and in the Resettlement Corps, we will take a larger view of the widow's pension, and if a Pole was killed while fighting against our common enemies, in whatever Force he may have served, she shall receive the pension which may be represented as being her due."
I have recently been dealing with a very tragic case, which, if I may, I will briefly recount to your Lordships. There was living in Warsaw in 1939 a Polish family consisting of a middle-aged couple, a daughter aged nineteen, and a schoolboy son. On the outbreak of the war, the man was allotted, with some sort of non-combatant military status, work in a hospital in Warsaw. During the Siege of Warsaw that hospital was hit by a German shell and he was killed. The daughter was a gallant girl and old enough to be of some service. She joined the Polish Home Army, and gave he: life for her country; indeed perhaps for more than her country. The widow and the schoolboy tried to carry on in Poland for a time, but, under the conditions of the occupation, the widow felt it wiser to flee the country. She came at last as a refugee to Italy, and from there last summer she reached this country, penniless, with only the clothes she stood up in. There is a bright spot in this story, for the boy has been granted an educational grant. I believe he is a very brilliant young scientist. I rather hope it may be possible to get him into a British university. He has a grant on which with some difficulty—indeed with great difficulty—he can just manage.
The widow, being declared ineligible for any sort of interim grant, got work at very low wages and under very hard conditions in a hospital. The work was of a laborious nature. She had been weakened by the privations she had endured as a refugee, and had not been bred to very hard work. To-day, her health has completely broken down and she is penniless. I do not know whether, under Clause 2 of the Bill, she will be found eligible for any sort of sickness benefit. I hope she may, but I cannot speak with confidence because I am not skilled in that branch of the law, and it would seem to depend to some extent on the view which the Minister of National Insurance
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takes of her case. That is an individual case. I do not suppose there are many like it, but there must be some like it.
There is something hard in saying that we arc riot responsible for the death of a Polish soldier in the Siege of Warsaw. We have not the same direct responsibility, as in the case of Poles killed while actually under British command, but it is very difficult to deny a high degree of moral responsibility of a real kind in such cases when we recall what British policy was in 1939, when we recall the encouragement which we gave to the Poles to resist at Warsaw, and when we recall the gratitude with which we learnt of that resistance, which seemed to us to give time to allow the landing of our Forces in France. It would be open to His Majesty's Government, even at this late stage in the proceedings, to give high-level consideration to the case of the widow and dependants of the Polish soldier. I do not believe that there is such a vast number of persons in the situation of the lady whom I have described as to make it wholly impracticable to broaden the Bill and to treat such women with the ampler justice for which I appeal.
3.46 p.m.
LORD GIFFORD: My Lords, I should like to ask the noble and learned Viscount, the Lord Chancellor, one question: What is the position with regard to members of this Polish Resettlement Corps who are desirous of joining the British Armed Forces? We have been told that the Polish Resettlement Corps is a non-military body, in the sense that it is not armed, but it contains professional soldiers, sailors and airmen, many of them of very high quality and of life-long experience in the Forces of their own country. It seams to me that these men, with little or no experience of civilian life, might be most difficult to adapt into the professional, agricultural, or industrial sphere, but would be extremely valuable to our own Forces. They might also welcome the opportunity of joining our Forces, and might be anxious to volunteer. They would be of great use to us in the Armed Forces, and it would provide the opportunity for them to continue the profession which they had been following throughout their lives. It seems to me that it would be a good thing if this could be arranged, and I rise simply to ask the noble and learned Viscount,

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the Lord Chancellor, whether, under this Bill, there is any scheme by which these excellent people can volunteer for the British Forces.
3.49 P.m.
VISCOUNT SAMUEL: My Lords, I should also like to ask the noble and learned Viscount, the Lord Chancellor, one question, to which he might perhaps see fit to reply, either now or at a later stage of the Bill. I am informed that Section I (3) of the Visiting Forces (British Commonwealth) Act, 1933, deprives persons to whom these provisions apply of having in any circumstances the protection of the writ of habeas corpus. Clause 9 (6) of this Bill includes that particular subsection among other provisions which may be applied in the casa of the Polish Resettlement Corps by Order in Council. My question is whether it is the case that such persons would, unless special provision is made, be deprived of the protection of the writ of habeas corpus and, if so, whether a modification of the clause would be made by Order in Council adapting the other provisions of that Act.
3.51 p.m.
VISCOUNT CRANBORNE: My Lords, I had not intended to intervene in this debate, but I would like to say a few words as a result of the discussion which we have had. First of all, I wish to say that it is quite clear that everybody in this House welcomes the intention of the Bill: it is in that respect entirely uncontroversial. We all know that we have a deep moral obligation to the Polish Forces. As my noble and learned friend Viscount Simon and the noble and learned Viscount, the Lord Chancellor, both said, they fought in the cause of liberty, and many of them have lost absolutely everything. They have lost their homes, they have lost their sources of livelihood, they have lost their families. They are exiles in a foreign land for the remainder of their lives. I do not know if it has been the experience of other noble Lords, but I have heard tragic stories of individual Poles who have, and have had, nothing to look forward to. Whatever other nations may do, it is clearly up to us, if it is possible and if they so desire it, to give these Poles a new home in which they can settle down. I think that is common ground between us all. It was
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an obligation which was recognized by the National Government, and noble Lords on this side of the House are extremely grateful to the present Government they they also have recognized that obligation.
Other speakers have dealt with the details of the Bill with a great deal more authority than I could hope to deal with them, but I trust the Government will—and I 'am sure they will—take account of what has been said. One or two points were made by my noble friend Viscount Simon. There was the point about the personality of the Administrator. The noble and learned Viscount, the Lord Chancellor, was good enough in his opening speech to give us some indication of what he had in mind. He said, as I understood it, that some personality like a high officer of the British Army would occupy this position. I do not want to press the Government to-day, but if they could put some further description of this Administrator in the Bill I think it might be useful. The same thing applies to the point about officers to whom the Administrator can delegate his powers. I do not think that any of us believes that the sort of Administrator that the British Government would appoint is likely to delegate his powers to an unsuitable person, but we are passing legislation, and if anything can be done to indicate that they should be perhaps high-ranking Polish officers, or some personalities of that kind, I think it would be helpful.
Then there is the point about the widows and orphans of Poles, which was put with such moving sincerity by the noble Earl, Lord Iddesleigh. I am sure that is worth further consideration by the Government. The noble and learned Viscount, the Lord Chancellor, was, of course, right in saying that in our present financial position there are limitations as to what we can do. But do let us go as far as we can, and if it turns out that this is, as the noble Earl, Lord Iddesleigh, indicated, not a very large problem (I do not know what the figures are) it may be worth doing that little extra in order to give a complete sense of fairness to the Poles and show our gratitude for what they have done.
Finally, there is the suggestion of the noble Earl, Lord Perth, about speeding up the naturalization of Poles. I feel great sympathy with what the noble Earl

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said. I know the difficulties. The naturalization laws arc extremely complicated and a little like the laws of the Medes and Persians—not at all easy to alter. At the same time, this is an unusual problem, and if anything can be done it would be generally welcomed. In addition, it would help to do away with the anomalous situation by which these men may continue to be governed by Polish Military Law. The further we can get out of that unhappy situation the better. I wish to say one thing above all to the noble and learned Viscount, the Lord Chancellor. I hope he will believe that in what we have said this afternoon we have had no desire to criticize at all. We are anxious only to help. We know the Government are faced with an extremely difficult task in dealing with the Polish problem and we are concerned only to offer the combined wisdom of this House to the Government. We have a great many experts here on most subjects, and if our experience can be of value it is at the Government's disposal. I hope that the noble and learned Viscount himself, and the Government, will take the comments we have made this afternoon in that spirit, so that we can make this Bill what in essence it is—uncontroversial in the highest sense.
3.57 p.m.
THE LORD CHANCELLOR: My Lords, I am very grateful to your Lordships for the tone and the temper of the whole debate and I can assure your Lordships that all the points you have been good enough to mention will receive our careful consideration. The noble Viscount, Lord Simon, said that we had had four shots at this clause. That may well he true. I myself have had one shot and that was not the first—I think mine was the third because I felt it so exceedingly difficult. I was responsible, I believe, for the idea of bringing in the British Administrator, because I thought it would be desirable to have a British man at the top. If we have had four editions I am perfectly willing to consider a fifth. I do not think that the last word has been said and I am not the least ashamed at the record that we have tried and gone on trying to do what is best. I will certainly look at these matters again.
There are a few points with which I might usefully deal now and many other matters which can be dealt with at a later stage of the Bill. One subject which I
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confess I feel to be most important is the question of the naturalization of Poles. I rather anticipated that this question would come up and I have discussed the matter only to-day with the Home Secretary. We are riot prepared to deal with it in this Bill at all but we anticipate that in the near future we shall have to deal with this question of British nationality. We do think there is a case made out for giving some special concession to these Poles who, as the noble Earl, Lord Perth, said, have fought for years side by side with their British comrades under British leadership, even though they have not been to this country. I can assure the noble Earl, from what I have heard from the Home Secretary, that the point which he has made will not receive an unsympathetic answer when the time comes.
Then the noble Earl, Lord Iddesleigh, put a case which moved us all. I cannot accept—I must say this quite definitely—that we are under a duty to place upon the shoulders of the British taxpayer the. burden of supporting and maintaining some unhappy woman whose husband was killed by a German shell in
Warsaw. That is a case which should enlist oar private charity but we must have one test for what we do for ourselves and another and a different test for the obligations which we are going to impose on our taxpayers. I do not think it would be right that we should accept such a burden as that might involve, and it would be a bad example to apply that principle to even a few cases. What I do say is that if the lady in question is a Pole, as I presume she is, she would appear to be qualified under Clause 2 for a grant from the Assistance Board if she is in need. Of course, her case, as the noble Earl will realize, must be investigated by the Assistance Board in the same way as they investigate any other case.
The noble Earl also asked me about dentists. I do not know the answer to the question about opticians, but I believe the answer to the question about dentists is that they were not mentioned in the Bill because they can be admitted to practice under the existing law. Whereas the doctor has to have a special clause in the Act to enable him to practise, I believe that is not necessary in the case of the dentist. I do not know the position about the optician, but I will verify that and let the noble Earl know on another

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occasion. With regard to the phrase "expected to contribute," may I say that any charge fixed by the Assistance Board under Clause 3 (6) will be enforceable on the person charged. That is provided in Part II of the Schedule. As to the time limit, certain clauses—Clauses I, 3 and 8—have time limits peculiar to themselves, but there is no time limit on the whole Bill. Indeed, certain clauses, such as Clause 3, may be needed for a long time to come. Clause 9 will not be required after the last Polish soldier has either returned to Poland or has joined the Polish Resettlement Corps. It may be possible to bring this about—and I devoutly hope it will—at a fairly early date. The sooner the better for all of us.
Then I was asked whether members of the Polish Resettlement Corps who want to do so can join other units of the Service. We do not intend to establish a Foreign Legion. There is no reason whatever why they should not apply in the ordinary way to join whatever particular Service they like, and if they are considered suitable they can join. By this Bill we have struck out the limit which is, as your Lordships know, in the Army Act, wherein it is said that there must not be more than a certain proportion of foreigners in the Army. I was asked about the Polish Resettlement Corps. Of course, Clause 9 does not affect members of that Corps; they are subject to British Military Law and administrative arrangements. Those subject to Clause 9—Polish troops who are not in the Resettlement Corps—are a diminishing class, but so long as they exist they will be subject to administrative arrangements made by the Administrator. The necessity for a separate detention camp will depend on circumstances.
The noble Viscount, Lord Samuel, asked me a question about habeas corpus. I think the answer is—I will investigate it and give him a more positive answer at a later stage in the Bill—that anybody can apply for habeas corpus. The question is, when you show your return to the writ, do you show a justification for the detention? Under Section I (6) of the Visiting Forces (British Commonwealth) Act, 1933, if a person is sentenced by a Court, the sentence and the detention pursuants to the sentence are presumed to be legal. Therefore the return to the claim for habeas corpus would be: "I hold the
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body of this man, but I hold him legally and I need not give him up." It is not quite right to say that habeas corpus does not apply; the effect of incorporating sections of that Act is rather to make it permissible to detain the body of the man and therefore to give the gaoler or anybody holding him an answer to the claim for habeas corpus. I think that is the way in which to put it and that is what I think we should desire. If anybody were sentenced by one of these Polish Courts he might have to be detained, and we should want to give the British gaoler a justification for holding the body of the man.
As to the difficult Clause 9, I am grateful for all the criticism which has been made. I do not myself like the idea of setting out or scheduling the actual law. We could do it by reference, by simply referring to the law as set out in a particular text hook, but then I have no doubt that there are a variety of text hooks which are probably not strictly in accord one with another. The book to which I referred would be merely a little manual of law, dealing no doubt with the principal features of the law. My theory as to the way in which the thing would work is this. I should like to see an Administrator. I do not think it matters if he does not know Polish law. What I want to get is some distinguished officer who knows about discipline, the handling of men and that sort of thing—that is the important thing to have, and men of that type are perhaps rarer and more difficult to find than mere lawyers. I want some distinguished British officer of that sort. I do not at the moment see any objection to naming the class of man—somebody like a General in the British Army. That is the type of man I want to see at the top.
He is to be appointed by the Secretary of State. It does not necessarily follow that that is the Secretary of State for War—I think in constitutional theory there is only one Secretary of State. It might he the Secretary of State for the Home Department, but that does not matter. The man I would like to see would be a man of the world, a man of experience and savoir faire—a Britisher. He would have to delegate the administration of the Polish law, and the obvious people to whom he would entrust it would be Polish officers. Speaking on the spur of the moment and without the instructions

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of my colleagues. I think that is the scheme which we want to get. We have made inquiries about Polish law and we have found, for instance, that there are no forms of punishment which would be repellant to us. They do not allow any form of torture, they do not allow flogging and there is no death penalty. There is nothing to which any of us would take exception. Indeed, I believe it is said that on the whole the Polish military law is less strict than our own. I will gladly look into these matters. I think your Lordships realize that we have really tried to meet this situation. We are dealing with a wholly unprecedented and exceptional state of affairs, and when we come to the Committee stage I shall invite the collaboration of your Lordships in all quarters of the House to see if we can make the Bill even better than it is. I am very grateful to your Lordships for your assistance.
On Question, Bill read 2a and committed to a Committee of the Whole House.

COMPANIES BILL. [H.L.]
House again in Committee (according to Order):
[The EARL OF DROGHEDA in the Chair.]
4.10 p.m.
First Schedule:

ACCOUNTS. PART I.
General Provisions as to Balance Sheet and Profit and Loss Account.
A. Balance Sheet.
8.—(1) The matters referred to in the following sub-paragraphs shall be stated by way of note, or in a statement or report annexed, if not otherwise shown.
(8) The aggregate market value of the company's quoted investments, other than trade investments, where it differs from the amount of the investments as stated.
10.—(1) The matters referred to in the following sub-paragraphs shall be stated by way of note, if not otherwise shown.
(2) If depreciation of fixed assets is provided for otherwise than by means of a depreciation charge, the method by which it is provided for or if depreciation of fixed assets is not provided for the fact that it is not provided for.

PART IV.
Interpretation of Schedule.
1. For the purposes of this Schedule, unless the context otherwise requires—

(a) the expression "provision" shall mean any amount retained by way of providing for diminution in value of assets or for any known liability of which the amount cannot be determined with substantial accuracy;

(b) the expression "reserve" shall not include any amount retained by way of providing for diminution in value of assets or for any known liability;

THE LORD CHANCELLOR: The next Amendment we have to deal with is a drafting Amendment to clarify the position. I beg to move.
Amendment moved—
Page 96, line 35, after ("for") insert ("depreciation, renewals or").—(The Lord Chancellor.)
On Question, Amendment agreed to.
VISCOUNT SWINTON: I do not propose to move the two Amendments which follow, but I think it would bs right that I should move the first Amendment to page 97, which is to leave out paragraph 4. I think that it will be completely covered by the Amendment of the noble and learned Viscount, the Lord Chancellor, to page 104, line 10. Is that not right?
THE LORD CHANCELLOR: Yes.
VISCOUNT SWINTON: Then I beg to move to leave out paragraph 4.
Amendment moved—
Page 97, line 1, leave out paragraph 4.—(Viscount Swinton.)
THE LORD CHANCELLOR: I am quite prepared to accept this Amendment.
On Question, Amendment agreed to.
LORD CHORLEY: The next Amendment is consequential. I beg to move.
Amendment moved—
Page 97, line 8, at end insert ("depreciation, renewals or").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a further drafting Amendment. I beg to move.
Amendment moved—
Page 97, line 18, at end insert ("depreciation, renewals or").—(Lord)
On Question, Amendment agreed to.
LORD CHORLEY: This is a further drafting Amendment. I beg to move.
Amendment moved—
Page 97, line 23, leave out the second ("the") and insert ("any of the reserves or").—(Lord Chorley.)
On Question, Amendment agreed to.
VISCOUNT SWINTON: I would like to ask the noble and learned Viscount, the Lord Chancellor, if the next two Amendments standing in my name become unnecessary. If I am right, he has dealt with this matter at page 104, line 27. If that is so, these Amendments become superfluous.
THE LORD CHANCELLOR: I think that is so.
VISCOUNT SWINTON: Then I will not move them. I beg formally to move the third Amendment standing in my name. It is entirely a drafting Amendment, to make the meaning clear. I would accept either the words of the Bill or my words, whichever the noble and learned Viscount thinks is the better draftsmanship. I beg to move.
Amendment moved—
Page 98, line 17, leave out from ("amount") to the end of line 18 and insert ("shall be shown free of tax and the fact that it is so shown shall also be stated."—(Viscount Swinton.)
THE LORD CHANCELLOR: We think the noble Viscount's drafting is better, and we will accept his Amendment.
On Question, Amendment agreed to.
VISCOUNT SWINTON VISCOUNT SWINTON moved to leave out paragraph 8 (6). The noble Viscount said: I beg to move to leave out subparagraph (6), not because I think it ought necessarily to be deleted but because I should like to have an explanation of exactly what it is intended to cover and how it will work. As your Lordships see, the sub-paragraph reads as follows:
"The aggregate amount or estimated amount, if it is material, of contracts for capital expenditure, so far as not provided for."
I would be grateful if one of the Ministers would explain to us what it is all about. I beg to move.
Amendment moved—
Page 98, line 25, leave out sub-paragraph (6).—(Viscount Swinton.)
THE LORD CHANCELLOR: I do not pose as a very great authority on this
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matter, but I am told that the information may be most important to shareholders, and that without it the picture would not be complete. It may be argued that it might, in some cases, give too much information to competitors, but on the whole we think not. We ask your Lordships to say that this is a piece of information which ought to be included and can be included. Personally, I should be reluctant to see sub-paragraph (6) taken out.
LORD RENNELL: There is not a great difficulty in actually giving what is asked for in a contract for capital expenditure in its easiest form—a contract to buy something or erect something for which a given sum of money has been provided, in whole or in part. If it is only provided in part, then the amount not provided for is bound to be shown under this sub-paragraph. In practice, with big industrial plant, it is very difficult to say what the aggregate amount of the contract is. In the first instance, it may be a contract on a "cost plus" basis; it may be a contract the value of which is to be determined subsequently by agreement or by arbitration, and it may be that capital expenditure is represented not merely by one contract at all but by a series of contracts, one of which joins on with the other. It is not possible for a director of a company making capital expenditure on a certain scale—for instance in a steel-works—to say what the capital expenditure is and how much has been provided for, especially if it is divided up into stages. I think, therefore, that some amplification of the wording is required, even if something of this sort is allowed to remain in. I suggest that it might be reconsidered with a view to its omission, because I think it is a. very difficult subparagraph to comply with.
VISCOUNT MAUGHAM: I should like to support what has just been said by my noble friend. I have been concerned with cases where the contracts involve £1,000,000—contracts in which you could not really estimate at a particular time the amount of capital expenditure which ultimately would be involved. In those cases it would have been very difficult to find out precisely what it was. I venture to think it would be even impracticable to try to do so, and that it would be better that some such words as these

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should be inserted: "so far as is practicable at the time," or something of that sort.
THE LORD CHANCELLOR: I will certainly look into this matter between now and the Report stage and see whether we cart clarify or modify the schedule in this way. What we have in mind particularly are commitments of the sort which may have been entered into in regard to the purchase of land or buildings, which have not been disclosed and have not been provided for. Those ought to be dealt with. That is what we have in mind, but we will look into the question.
VISCOUNT SWINTON: I am very much obliged to the noble and learned Viscount. I have great sympathy with that point, because I imagine that it was designed really to catch the sort of company n which has made an issue and has then made commitments, and consequently has to say how much capital is required and how it is to be spent—I am paraphrasing the provision which has to go into prospectuses—and which has bitten off more than it can chew. On the other hand, as the noble and learned Viscount knows, plant is always changing. It you take, for instance, chemical works, you may renew your plant over the course of a few years, and you do not know what you are going to spend. This readjustment of plant is a continuous process in some industries. Of course, in a reputable company, what you really want to know is what has been added to the fixed assets, and that can only be shown, and properly shown, when a new fixed asset has been established. If it could be looked at from the point of view of protecting investors and shareholders in an adequate manner, and by making it flexible to include other companies, we can get the solution. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD SALTOUN LORD SALTOUN moved to leave out paragraph 8 (8). The noble Lord said: After what the noble Lord Chancellor has said I do not suppose he will look at this particular Amendment which I move. I take the opportunity to point out that while a company's investments might be quoted at Stock Exchange prices and be perfectly right with regard to ordinary stock exchange counters, especi-
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ally in London, it is a very illusory thing when there are a large number of companies which do have local stock exchange quotations and in whose shares there are very few dealings. I could easily name several companies which are quoted on the stock exchanges and whose shares probably have a value very different from that at which they are quoted on their own stock exchanges where they are very seldom dealt in. What I am afraid of in this provision is that it will, as a rule, tend to give shareholders as a whole a rather too rosy view of their company's finances, and that is just as much to be deprecated as a gloomy view. In conclusion, I would say that I know one company which dealt largely in investments, an investment trust company, of which the chairman in 1929 said boldly, "None of the investments which stand at the prices in front, of you is really worth the price it is quoted at; all the investments ought to be sold." Unfortunately he was unable to carry his brother directors with him and the company sustained a total loss in the next period. That is only one particular case.
Amendment moved—
Page 98, leave out from the beginning of line 31 to the end of line 33.—(Lord Saltoun.)
THE LORD CHANCELLOR: I do not think I can accept this Amendment. As the noble Lord said, investments may have been written down and their real value may be greater than the balance sheet value. The quotation values may be those at which the securities were purchased and the real values may be substantially lower than the value in the balance sheet. In many accounts this fact is already disclosed, and I think it ought to be disclosed. The retention of this paragraph is, in our view, essential and achieves that desirable object. I cannot agree to leave this paragraph out.
LORD SALTOUN: I realize the force of the noble and learned Viscount's remarks. I would like to point out that I know several reputable companies who put in their balance sheets a note to the effect that investments held are worth at least the value in the balance sheet, or if not, they disclose it.
VISCOUNT MAUGHAM: This Amendment is of importance to an investment company. The correct market value is generally defined in this case as meaning

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the middle price of the day in stock exchange investments, and it makes a great deal of difference in some investments.
THE LORD CHANCELLOR: I will look at that.
LORD SALTOUN: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD CHORLEY LORD CHORLEY moved, at the commencement of sub-paragraph (II), paragraph 8, to insert: "Except in the case of the first balance sheet laid before the company after the coming into force of this Schedule." The noble Lord said: The object of this Amendment is to deal with points made in the next Amendment on the marshalled list standing in the names of Viscount Swinton, Lord Rennell and Lord De L'Isle and Dudley. I think the wording of the Government Amendment is perhaps a little more artistic than that of the other Amendment, but they deal with the same point. The point is that in the first year after the Schedule comes into force companies will not be able to give corresponding amounts for the items in the balance sheets for the preceding financial year. Therefore it is necessary that they should have this period of grace, and the Amendment is moved for that purpose.
Amendment moved—
Page 98, line 39, insert the said words.—(Lord Chorley.)
VISCOUNT SWINTON: I agree this meets the same point more conveniently than the words standing in my name and the names of the other noble Lords.
On Question, Amendment agreed to.
LORD CHORLEY: The next Amendment and another affecting line 15 go together. They are both consequential on the re-drafting of paragraph 2 of Part I of the Schedule. I beg to move.
Amendment moved—
Page 99, line 2, leave out lines 2 to 4, and insert
("(a) the aggregate amount charged to revenue by way of provision for depreciation, renewals or diminution in value of fixed assets;").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The object of this Amendment is to require to be shown the total amount of tax levied including tax deducted at source from dividends
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derived from investments of the company, and not just merely the United Kingdom tax where there has been a relief from tax elsewhere. In other words it rather widens the field. I beg to move.
Amendment moved—
Page 99, line 7, leave out ("taxation assessable on profits") and insert ("income tax and other United Kingdom taxation on profits including where practicable as United Kingdom Income Tax any taxation imposed elsewhere to the extent of the relief if any from United Kingdom Income Tax and").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The next is consequential.
Amendment moved—
Page 99, line 15, at end, insert ("depreciation, renewals or").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH Moved, at the end of paragraph 10 (1), to insert:
(2) The amount of the company's trading turnover.
The noble Lord said: I hope I may have your indulgence, because although in moving this Amendment I feel I have a case, I have a very shrewd suspicion that I shall have to make my case. May I say this at the outset? I have sat through the whole of the proceedings on the Companies Bill with the exception of a few moments, and I have been very much impressed with the public-spirited manner in which this Bill has been debated. If the noble Viscount, Lord Swinton, will forgive my saying so, I think his public spirit has followed very hard on the heels of the noble and learned Viscount the Lord Chancellor, to make this a really outstanding Companies Bill. But I do feel that there have been times when we have forgotten that there are other sections of the public interested in these things, apart from the directors, the shareholders, and the prospective investors. There is the great body of the British public, and also that section of the public who invest their labour and their skill in our great public companies.
It would not be an exaggeration to say that the financial make-up of British
industry is held in very great suspicion by the majority of the public in this country. That is the fault of industry itself. In the past, the policy of British industry in its financial matters has been to tell the British public as little as it possibly could, and the time has arrived when there must

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be far fuller and franker disclosure of the financial make-up and financial manoeuvrings (if that word is not out of place in your Lordships' House). If there is nothing to hide, there is no reason why everything should not be disclosed. If there is a reason that anything should be hidden, that is all the more reason why it should be disclosed to public criticism. I maintain that to ask for this very simple thing-and it is very simple in spite of the complications which I fully anticipate will be woven around it—the disclosure of a Company's turnover, is in the interests, first of all, of the shareholders, because it is the only real yardstick by which shareholders can get a true estimate of the profit value. Against what has the profit been made? That, in my commercial experience, has always been the acid test of the value of the profit. Against what has it been made?
Secondly, I believe it is in the interest of the public that the public should know from what these profits have been made, and I an going, with your Lordships' permission, to quote toe you one or two examples that I have culled from the Press during these last few days. I want you to ask yourselves, as ordinary members of the British public—not as men skilled in law, or in accountancy or in company affairs, but as ordinary common members of the public—what would have been your impressions if you had read these things? Here is one passage which relates to a well-known and popular store. I will not mention any names in giving your Lordships these extracts; I will not give the concerns in question a free advertisement. The undertaking to which I am first going to refer used to sell goods before the war limited to prices of 3d. and 6d.
A NOBLE LORD: Is it the Co-op.?
LORD LUCAS OF CHILWORTH: This extract is from the chairman's statement:
"the accounts disclose a profit for the year 1946 of £9,148,557, an increase of L1,898,909 … over that of the much improved year 1945."
Now as everybody in this country knows, consumer goods are in short supply, and yet that firm can make profits on that scale. People cannot get what they want, and they know that for what they can get they must—if I may use such a vulgarism in your Lordships' House—"pay through the nose." And here is a company that can make a profit of over
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£9,000,000. What was their turnover? I make no accusation whatsoever, but I do suggest that the first impression of members of the British public generally, if they have no yardstick to measure this by, must be that the public, in buying goods from this concern's stores, have been well arid truly fleeced. But if they had the turnover to use as a yardstick to measure it by, it might well be that it would show that a reasonable profit had been made on a. very extensive turnover. But that is not shown.
The chairman of that comply in another part of his speech said:
"Thus you get a picture of a well balanced and healthy year's trading."
The opinion of the chairman of the company as to what constitutes a well balanced and healthy year's trading, I would suggest, is sometimes about as reliable as a mother's opinion of her firstborn child. Now I turn to a second example. This is provided by another well known and popular store which suddenly increased its profits from £164,000 to £500,000. Again, what are the public to think? Why should they not be told the full facts? I now come to the last case which I expect will cause some heart-burning among some of your Lordships.
LORD HAWKE: May I interrupt the noble Lord at this point to give him what I. hope he will regard as some pleasant news? I believe that I was in the second store to which he referred yesterday. There are a lot of goods on sale there without coupons. Perhaps that may account for some of the, profit.
LORD LUCAS OF CHILWORTH: I do not know about selling goods without coupons, but I believe that the second store to which I referred is dealing largely in Government surplus goods. Perhaps it would be interesting to have the facts published showing what the prices are that they charge for these goods and what the prices are that they paid for them.
LORD HAWKE: They are being sold cheaply.
LORD LUCAS OF CHILWORTH: Well, that is no argument against disclosure of turnover. The last case to which I wish to refer is that of a company who have just declared a dividend of 100 per cent. This company have been dealing in a commodity of which I have some knowledge, and they claim here that

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they have for years past—but I will quote again from the chairman's report:
"For many years past your company, as England's leading motor agents, has specialized in the buying, reconditioning and selling of used cars, and I feel that during the past year the … organization has fulfilled a very urgent need in these days of limited new car production in being able to assist in satisfying the public's demand for transport—"
Out of this very public-spirited service this company make profits which enable them to declare a dividend of 100 per cent. Against what turnover are those profits made? It may well be that the turnover allows for only a very nominal profit, even though they are able to pay a dividend of 100 per cent., and that no one would be able to take any exception to their trading methods. But the suspicion is that the ratio of turnover and profit was not quite so reasonable as' it should be.
I do say seriously that the public should be told these important facts. It is due to the public to know what the turnover is of these public companies so that they may regain confidence in them. Perhaps some of your Lordships may have heard that apprehensions have been expressed by directors as to the effect upon the minds of some of the employees of our companies when they see what is the remuneration of the directors. I have heard the question asked: "What is going to be the effect upon the wage earners of disclosing directors' remuneration?"
VISCOUNT SWINTON: Not in this House, I think. Did any one in this House say that?
LORD LUCAS OF CHILWORTH: No, but it has been said to me. It has been said that if the total remuneration of directors is disclosed it would create suspicions in the minds of the work people. I say that you should give them a yardstick by which to measure the value of such remuneration. Suppose you are going to pay directors, in the aggregate, £50,000 or £100,000 for controlling a company with, let us say, a turnover of £10,000,000 or £15,000,000. Nobody is going to say that is too high. I think it is clear that those directors would earn their remuneration. But if you want to remove suspicion about these things I claim that you must give the public this full information.
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Finally, what are the objections to disclosing the turnover? I do not think anybody is going to say that turnover cannot be arrived it. I should not expect that for one moment. Every commercial executive goes into some office of his works every day of his life and immediately asks: "What is the turnover?" The turnover is one of those things which is put on a chart and which we company directors hope will go up and up and up. Any auditor, or any accountant, can easily get the turnover of any company. Objection may be made that it could be misleading; but could anything be more misleading to the public than the profits I have just read out? It is no more misleading than being asked to disclose, as a company has to disclose, the total profit. That could be misleading because nobody knows how it has been made. I do not accept, for one moment, that the disclosure of turnover is misleading.
Again, it might be said that it would give an unfair advantage to some companies over others. That I cannot accept, because it applies in this particular case to companies other than exempt companies, and these companies have so large a business that everybody in competition with them knows all about them. One of the first things you do in business today is to find out all about your competitor's business, and one of the first things you want to know is what is your competitor's turnover. That is the only measurement by which you can judge what share of any market in any particular commodity your competitor is getting with yours. I hope the noble and learned Viscount the Lord Chancellor will seriously consider this Amendment and if he cannot accept it this afternoon will at least give it some more consideration. I believe that it is in the interest of the whole of the public, and certainly in the interest of the whole of industry, that these figures should be disclosed. I beg to move.
Amendment moved—
Page 99, line 31, at end insert the said words.—(Lord Lucas of Chilworth.)
THE LORD CHANCELLOR: The noble Lord has been very eloquent and has put forward a powerful case with great energy, vigour and skill. I am bound to tell him that, having listened to him, I must still make the answer which I have been instructed to make; that is to say, I must resist this Amendment. It

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is a technical and complicated matter, and I do net conceal from noble Lords that there are two schools of thought amongst accountants about this. It is quite true that there are some eminent and distinguished accountants who think that this information would be useful, but, on the other hand, there are a large number of eminent and distinguished accountants who think to give it would be a mistake. There is a division of opinion. The Cohen Committee had evidence put before them about this matter, and if your Lordships will turn to paragraph 97 on page 54 they will see this statement towards the end of the paragraph:
"We have also considered suggestions that, to assist those responsible for framing general economic policy, companies should be required to disclose in their accounts details of sales, expenses of production, selling and distribution administration and management, and other like details. In our view, however, such information could not be given in sufficient detail to achieve the object in view without loading the published accounts, of which the primary purpose is to convey financial information in a form that can be assimilated by shareholders and creditors, with so much derail as to fail in that purpose."
They made no specific recommendation at all about this question of turnover. It is quite true the noble Lord can answer that by saying he is only recommending that a single figure should be given—a sort of weather gauge. Unfortunately, weather gauges are not always reliable, and that figure frequently has little meaning without a good deal of other information, such as, for instance, stocks in existence and purchased. It would be necessary to require all companies to furnish a complete trading account. I quite agree that there are instances—the noble Lord has given some—where particulars of the trading turnover in relation to profit may have significance, but in a great many other instances, perhaps the majority, they would not, and much more information would be necessary in order to know their precise significance. It would be a great danger, and people might be misled, if a figure of this sort were given without further information. As against the cases where the public might be helped, there might be many more cases where they would he misled, and, in consequence, the companies concerned would have to disclose much more information than that asked for by the noble Lord, Lord Lucas.
There is a further matter. This Bill has received a great measure of general
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agreement, and it is certain that an Amendment such as that proposed by Lord Lucas, with the best of intentions, would not receive general support and would introduce an element of disquiet which has, happily, been absent from the discussion on this Bill. I do riot desire to stress unduly the difficulties of definition (I have no doubt they could be surmounted) but it is necessary to remember that all cases are by no means so simple as those of the firms the noble Lord instances. Supposing you get a case of a contractor building a bridge, and taking three years to build that bridge. can conceive it might be extraordinarily difficult to answer the question as to what is the trading turnover in that case. Or supposing you have a group of holding and subsidiary companies where it is necessary to eliminate inter-company transactions in order to prevent a large amount of duplication. I think the noble Lord will see his suggestion is not so simple as he seemed to make out, and would need a great deal of elaboration.
There is the other point which he mentioned. I do not want to stress it unduly, but it has been represented that many concerns, particularly the smaller ones which are riot exempted private companies, would be seriously prejudiced by the disclosure of this information to their competitors. You may have a grocer's shop which is not an exempted private company. I can imagine that the disclosure of turnover would be of wry great value to a chain store in making up their minds to go and set up next door to that grocer's shop. That is an aspect we ought to consider. Therefore, for these reasons I am bound to tell the noble Lord, although I have great sympathy for the point of view he put forward so forcibly, that I do not think it would be appropriate or wise to include this provision in this Bill at the present time.
LORD LUCAS OF CHILWORTH: I thank the noble and learned Viscount the Lord Chancellor for the trouble he has taken in getting so well briefed upon this point. Any argument I might put forward now would be only of academic interest, so I do not intend to argue the matter further except to say that I was far more impressed by the second part of the argument than the first, the second part being that this. Bill has got so far in a very happy and non-controversial atmosphere. Far be it from roe to throw the apple of

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discord into what has been such a pleasant, entertaining and instructive occasion. But if we are going to frame a Companies Act round what is convenient to engineering contractors who build Sydney bridges, and isolated cases of that description, and if the noble and learned Viscount's advisers can think of no better cases in contradiction of my argument than he has brought forward, then, if I may say so with respect, I would prefer my advisers to his. However, having said that, may T have your Lordships' permission to withdraw my Amendment?
Amendment, by leave, withdrawn
LORD CHORLEY: The next Amendment is consequential.
Amendment moved—
Page 99, line 32, leave out sub-paragraph (2) and insert
("(2) If depreciation or replacement of fixed assets is provided for by some method other than a depreciation charge or provision for renewals, or is not provided for, the method by which it is provided for or the fact that it is not provided for, as the case may be ").—(Lord Charley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is another consequential Amendment. It is consequential on the Amendment to the First Schedule, Page 98, line 39, and it provides that in the case of the first profit and loss account after the Schedule comes into operation, the corresponding amounts of the previous year need not be given. It is parallel to the Amendment we dealt with a few minutes ago on the same point relating to the balance sheet. I beg to move.
Amendment moved—
Page 99, line 40, at beginning, insert ("Except in the case of the first profit and loss account laid before the company after the coming into force of this Schedule").(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY LORD CHORLEY moved, in paragraph 1(2), to leave out "references therein to provisions shall not, except in paragraph 4 thereof, include provisions for losses of subsidiaries," and to insert:
"Paragraph 2, sub-paragraph (I) (a) of paragraph 9 and sub-paragraph (2) of paragraph co thereof shall nut apply in relation to fixed assets consisting of interests in its subsidiaries,"
The noble Lord said: This Amendment deals with the question of fixed assets.
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The point is that the term "fixed assets" would include the interest of a holding company in its subsidiaries. The Amendment is drafted so as to exclude such interests from the provisions relating to fixed assets. Under Part II of the Schedule the information about its interests in its subsidiaries has to be given by the holding company, and that should be all that is necessary. I beg to move.
Amendment moved—
Page 100, line 12, leave out from ("and") to end of line 14 and insert the said new words.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY LORD CHORLEY moved, in Part II, at the end of paragraph I (3) to insert:
"or their nominees, but excluding any of those shares or debentures in the case of which the subsidiary is concerned as personal representative or in the case of which it is concerned as trustee and neither the company nor any subsidiary thereof is beneficially interested under the trust."
The noble Lord said: Paragraph 1(3) of Part II of the First Schedule requires the disclosure in the accounts of a holding company of the amount of its shares and debentures held by its subsidiaries. The Amendment proposes to include in this requirement the shares in, and debentures of, the holding company held by nominees of the subsidiary, which I am sure your Lordships will think is very necessary. On the other hand, it excludes the case where the nominee is holding purely in the capacity of a personal representative or as a trustee or in some position of that kind. For example, if a bank nominee company holds shares as executor in the banking company itself of which it is a nominee, then obviously that need not be disclosed. I am sure the Amendment will meet with the approval of your Lordships, and I beg to move.
Amendment moved—
Page 100, line 18, at end insert the said words.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: There are three Amendments here which go together. There is one in line 25, one in line 30 and one in line 32. They go together, and the position is this. Paragraph (4) (b), as it stands, requires a disclosure of the net amount of the subsidiaries' profits, and, separately, of the amounts dealt with and of the amounts not dealt with in the companies accounts,

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because by leaving undistributed profits in subsidiary companies and not taking them into account in their own accounts, holding companies would be creating a hidden reserve. The Amendments provide for disclosure of the amounts of the subsidiaries' profits not dealt with in the accounts of the holding company, and, separately, the amounts so dealt with, but do not require the total to be given of the two amounts.
The amounts not dealt with in the accounts of the holding company have to be shown under two separate headings; first of all, for the respective financial years of the subsidiaries ending with or during the financial year of the holding company, and, secondly, for their previous financial years since they respectively became subsidiaries of the holding company. The amounts dealt with in the accounts of the holding company have also to be dealt with under two separate heads. The first of these headings is exactly the same as in the case of amounts not dealt with in the accounts of the holding company, but the second heading relates to the other financial years since the subsidiaries respectively became subsidiaries of the holding company. I am afraid it is a little bit complicated but we feel that it is necessary, and I beg to move.
Tim LORD CHAIRMAN OF COMMITTEES: Perhaps it would be convenient to take these three Amendments together.
Amendment moved—
Page 100, line 25, after ("company") insert ("and is not dealt with in the company's accounts").—(Lord Chorley.)
On Question, Amendment agreed to. Amendment moved—
Page 100, line 3o, leave out ("other") and insert ("previous").—(Lord Chorley.)
On Question, Amendment agreed to.
Amendment moved—
Page 100, line 32, leave out from beginning to end of line 33, and insert:
(" (c) the net aggregate amount of the subsidiaries' profits after deducting the subsidiaries' losses (or vice versa)—

(i) for the respective financial years of the subsidiaries ending with or during the financial year of the company; and

(ii) for their other financial years since they respectively became the holding company's subsidiary;

so far as those profits are dealt with, or provision is made for those losses, in the company's accounts.").—(Lord Chorley.)
On Question, Amendment agreed to.
4.58 p.m.
LORD CHORLEY: My Lords, the next Amendment is consequential on the first of the Amendments which your Lordships accepted to Clause 12. which is on Page ii, line 9. Your Lordships will remember that that was rather an important matter under which the Board of Trade were given a discretion to permit a holding company not to deal with the accounts of its subsidiaries in its own accounts in cases where the Board felt it was right and necessary. This Amendment has been tabled to make it quite clear that the Board of Trade shall have power not only to dispense with consolidation but also with other requirements which apply to the accounts of a holding company.
Amendment moved—
Page 100, line 44. at end insert:
("Provided that in relation to a subsidiary not dealt with in consolidated accounts by virtue of a direction of the Board of Trade, this sub-paragraph shall apply only to such extent (if any) as may he provided by the direction.").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY LORD CHORLEY moved, in paragraph I (5) of Part II, to leave out from the beginning to "and," where that word occurs a third time, and to insert:
"(5) Paragraphs (b) and (c) the last foregoing sub-paragraph shall apply only to profits and losses of a subsidiary which may properly be treated in the holding company's accounts as revenue profits or losses, and the profits or losses attributable to any shares in a subsidiary for the time being held by the holding company or any other of its subsidiaries shall not be treated as aforesaid so far as they are profits or losses for the period before the date on or as from which the shares were acquired by -the company or any of its subsidiaries;"
The noble Lord said: The purpose of paragraph I (5) of Part II of the Schedule is in general to secure that where a company holds shares in a subsidiary it shall not treat profits which were earned by the subsidiary before the acquisition of the shares as revenue profits in its own accounts. They are, of course, strictly speaking, part of the capital which it has taken over. As drafted, the paragraph provides that the operative date is that of the acquisition of the shares, but sometimes the contract of sale is expressed so that it is deemed to operate

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from a different date from that at which it would legally have effect. The Amendment provides that the date on or as from which the shares were acquired by the company or any of its subsidiaries shall be the operative date. I beg to move.
Amendment moved—
Page 100, line 45, leave out from beginning to ("and") in line 4 on page rot and insert the said paragraph.—(Lord Chorley.)
VISCOUNT ELIBANK: That does not alter the existing practice, does it? I think that is the existing practice.
LORD CHORLEY: I am afraid I cannot answer that, but it is necessary that this Amendment should be moved in order to improve on the position as it appeared on the original draft, which was defective in the way which I have indicated.
THE LORD CHANCELLOR: It is at present good accounting practice, but it is not legal.
LORD CHORLEY: The object is to make the present good accounting practice legal accounting practice.
On Question, Amendment agreed to.
LORD CHORLEY: There are six Amendments following which are really consequential and drafting—that is to say, to lines 13, 15, 20, 25, 26 and 27, which really all go together; and which I would like your Lordships to take together. The object of this little group of Amendments is to simplify the requirements as to the accounts of holding companies. They are designed to omit some of the requirements which appear in the Schedule as drafted, and which it is considered, on further reflection, are not really essential. The provisions which it is proposed to omit relate to the disclosure in the accounts of a subsidiary company of the amount of shares held by it in any companies in relation to which it is itself a subsidiary company or in respect of which it is a fellow subsidiary. That is the first group. The other deals with the distinguishing of the amounts of shares held in, and indebtedness to, different groups of companies, which it would have to do under the clause in the Schedule as originally drafted. It is felt that these are refinements which are not really necessary and these Amendments have been drafted in order that these obligations shall not be imposed. I beg to move.
Amendment moved—
Page 101, line 13, leave out from beginning to end of line I4.—(Lord Chorley.)
LORD BALFOUR OF INCHRYE: Could the noble Lord say what a fellow subsidiary is? I cannot find it defined in the Schedule.
LORD CHORLEY: It is not a term of art, but I think it is fairly obvious that you frequently get a case where one subsidiary is the fellow of another subsidiary in a holding company.
VISCOUNT SWINTON: Is the term used in the collegiate or the social sense?
LORD CHORLEY: It is used in the "common sense."
On Question, Amendment agreed to.
Amendment moved—
Page 101, line 15, leave out ("such bodies corporate") and insert ("bodies corporate of which it is a subsidiary or a fellow subsidiary").—(Lord Chorley.)
On Question, Amendment agreed to.
Amendment moved—
Page 101, line 20, leave out sub-paragraph (2).—(Lord Charley.)
On Question, Amendment agreed to. Amendment moved
Page 101, line 25, at end insert ("body corporate").—(Lord Chorley.)
On Question, Amendment agreed to. Amendment moved
Page 101, line 26, leave out ("company") and insert ("body corporate").—(Lord Chorley.)
On Question, Amendment agreed to.
Amendment moved—
Page 101, line 27, leave out from ("other's") to end of line 30.—(Lord Chorley.)
On Question, Amendment agreed to.
VISCOUNT ELIBANK VISCOUNT ELIBANK moved, in Part II, B, at the end of paragraph 4, to insert:
"The aggregate amount of remuneration to directors to be disclosed in the consolidated accounts shall be restricted to the aggregate sum paid to persons who are directors of the holding company, such aggregate sum to include the amount received by such persons both from the holding company and from any subsidiary companies of which they may be directors."
The noble Viscount said: I would like, first of all, to say that I am not quite sure that I placed this Amendment after the proper paragraph. Looking at it

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again, I think probably it would be better if it came after line 4o. However, it is a very simple Amendment. The aggregate amount of remuneration to directors to be disclosed in the consolidated accounts should be restricted, I suggest, to those directors who are directors of both the holding company and the subsidiaries, and should not apply to directors who are directors. of the subsidiaries and not of the holding company. Otherwise you will not get a true picture of the remuneration receivable by the the directors of the holding company and the subsidiaries. There may be, somewhere else in the Bill, something which meets that point of view, but I have not been able to find it. I beg to move.
Amendment moved—
Page 101, line 44, at end insert the said words.—(Viscount Elibank.)
THE LORD CHANCELLOR: I quite appreciate what the noble Viscount has in mind in moving this Amendment, and I think there is substance in it. I asked the Parliamentary draftsman whether the language was entirely appropriate, but he thought it was not and has prepared another version which is intended to do exactly the same. Your Lordships will see that that comes in the next Amendment. This is what the Parliamentary draftsman has done to carry out the wishes 01 the noble Viscount. The substance of the thing is the same, but I prefer the drafting as done by the Parliamentary draftsman. I would ask the noble Viscount if he would be good enough not to press his Amendment, and I will in a moment move the Amendment in the form which has been prepared for me, which gives the noble Viscount all he wants and is really another version of his idea.
VISCOUNT ELIBANK: I looked at the next Amendment thinking perhaps that it was meant to replace mine but, quite frankly, with great respect, I could not understand it; I could not make out what it meant. My own Amendment seemed to me far more simple arid direct, and it explains what is required. The Amendment which the noble and learned Viscount
has placed upon the Order Paper scorns to be one of those almost incomprehensible provisions which the draftsmen can understand but which the layman cannot make out. If I withdraw my Amendment, I would ask the noble
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Viscount to see whether he cannot get something inserted which can be understood by the ordinary company secretary, or whoever has _to deal with these things.
THE LORD CHANCELLOR: I think the difficulty in understanding it is only because it talks about "Section 128 of the principal Act and Section 3o of this Act." That illustrates the importance of consolidation. When the two measures are together I think the difficulty will disappear.
VISCOUNT ELIBANK: I accept what the noble and learned Viscount has said, and beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR moved, at the end of paragraph 4, to insert:
"5. In relation to past and present directors and other officers of-the holding company, section one hundred and twenty-eight of the principal Act and section thirty of this Act (except so much of the said section thirty as requires the sums paid by or receivable from different persons to be distinguished) shall apply for the purpose of the consolidated accounts as if they were the accounts of the holding company, but save as aforesaid the consolidated accounts need not comply with the requirements of those sections.
6. Paragraph 5 of Part I of this Schedule shall not apply for the purpose of any consolidated accounts laid before a company with the first balance shoot so laid after the coming into force of this Schedule."
The noble and learned Viscount said: This is the Amendment to which I have just referred. It falls into two sections. Paragraph 5 is intended to reproduce in correct form the Amendment we have just been discussing. Paragraph 6 is intended to pick up a point raised by the noble Viscount, Lord Swinton, and on which he put down an Amendment. The object of paragraph 5 is to secure that consolidated accounts need not show information about remuneration, pensions, compensation for loss of office of directors, or loans to directors, in the case of directors of subsidiary companies who are not directors of the holding company.
It also provides that the information shown in the consolidated accounts as to the remuneration of the directors of a holding company, including any remuneration received by them from subsidiary companies, need not be shown under the three separate headings required by Clause 3o—that is, re-

311
muneration received from the company, from the company's subsidiaries, and from any other person. All that will have to be shown will be the aggregate sum in respect of those three headings. The balance sheet and profit and loss account which the holding company has to present, in addition to the consolidated accounts, will give the information required by Clause 30 under the three' separate headings. It is, therefore, unnecessary for these details to be repeated in the consolidated accounts, and an aggregate figure will suffice.
Paragraph 6 is substantially the same as the Amendment which the noble Viscount, Lord Swinton, put down to Clause 12, page II, line 25. It provides that for the purpose of the consolidated accounts laid before a company with the first balance sheet after the coming into force of the Schedule, paragraph 5 of Part I of the Schedule shall not apply. That paragraph requires the disclosure of additions to and withdrawals from capital reserves, revenue reserves or provisions, the Source from which any additions have been derived and the application of any amounts withdrawn. It occurred to us that this information might not be available to a holding company in the case of subsidiaries at the date of the coming into force of the Schedule, as the subsidiaries would have been under no obligation to keep this information. It is to meet that point—a point which the noble Viscount had in mind—that we have included paragraph 6 of this Amendment. I think I can assure your Lordships that, complicated though the paragraphs are, when they fit into their proper place in the Consolidated Act they will be quite simple and easy to understand. I beg to move.
Amendment moved—
Page 101, line 44, at end insert the said paragraphs.—(The Lord Chancellor.)
VISCOUNT SWINTON: The second paragraph covers the point I had in mind.
On Question, Amendment agreed to.
LORD CHORLEY: This Amendment is purely consequential on the Amendment to Clause 12, to which I referred a few moments ago.
Amendment moved—
Page 102, line 10, leave out from the first ("it") to ("coincide") and insert ("should not ").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This Amendment is consequential on the Amendments to lines 13, 20 and 27 of page 101. Those Amendments remove the need for showing certain shareholdings. Paragraph 7 is made unnecessary as a result and therefore it is proposed to leave it out. I beg to move.
Amendment moved—
Page 102, line II, leave out paragraph 7.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a further consequential Amendment on the Amendment to Clause 12, which, again, was referred to a few minutes ago. I beg to move.
Amendment moved—
Page 102, line 16, leave out paragraph 8.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a consequential Amendment, this time consequential on the Government's Amendment redrafting paragraph 2 on page 96. It does not affect the exemptions allowed to banking and discount companies. The requirement in sub-paragraph (3) of paragraph 2 to state the method of arriving at the amount of any fixed assets has simply been transferred by the Government Amendment to sub-paragraph (3) of paragraph I. I beg to move.
Amendment moved—
Page 102, line 27, leave out ("sub-paragraph (3) of paragraph 2").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This Amendment is also consequential.
Amendment moved—
Page 102, line 34, after ("for") insert ("depreciation, renewals or").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a drafting Amendment. In paragraph 2 of Part III of the First Schedule there is in the case of assurance companies an exemption from certain requirements as to accounts if they comply with the requirements of the Assurance Companies Acts of 1909 and the various other Acts, culminating in one of 1946. As your Lordships are aware, the requirements of the Assurance Companies Acts in regard to accounting are very stringent, and certainly quite as stringent

313
as those in the present Bill. Assurance Companies normally prepare two sets of accounts, one which they have to provide under the Assurance Companies Acts, and which is very complete and stringent, and a rather more general one for the purposes of their own shareholders. As the draft originally appeared, it might have been thought that they would have to provide a complete and stringent set of accounts for the shareholders, but it is not really desirable that there should be these two sets of accounts prepared on that sort of basis. It is not considered that they should have to render in addition accounts as provided for by the Assurance Companies Acts, and the Amendment is designed to make it clear that that is not so. I beg to move.
Amendment moved—
Page 102, line 47, leave out ("its") and insert ("the preparation and deposit with the Board of Trade of a").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is consequential on the Amendment to page 96.
Amendment moved—
Page 103, line 9, leave out paragraph 3—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a further consequential Amendment.
Amendment moved—
Page 103, line 21, leave out ("or a public utility company").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is purely consequential on the Amendment to Clause 12. The Board of Trade will no longer need these powers.
Amendment moved—
Page 103, line 27, leave out paragraph 5.—(Lord Chorley.)
On Question, Amendment agreed to.
VISCOUNT SWINTON: These are two Amendments to insert the Cohen Committee's definition of "current" and "fixed" assets. The Schedule has been so much amended that I am not sure whether assets definitions have not been inserted or, at any rate, implied, by some of the Amendments which the Government themselves have moved. I would rather like the Government's advice as to whether my Amendments had better go in or riot. I beg to move.
Amendment moved—
Page 203, line 42, at end insert ("the expression 'current assets' means cash and assets held for conversion into cash").(Viscount Swinton.)
LORD CHORLEY: I am afraid we are not able to accept this Amendment, but we shall be happy to consider the problem between now and the Report stage.
VISCOUNT SWINTON: I understand they are no longer needed, and the noble Lord need not give it any further consideration. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD CHORLEY LORD CHORLEY moved, in Part IV, to leave out sub-paragraphs (a) and (b) of paragraph I and insert:

"(a) the expression "provision" shall, subject to sub-paragraph (2) of this paragraph, mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy;

(b) the expression "reserve" shall not, subject as aforesaid, include an amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability;"

The noble Lord said: This Amendment provides definitions for the expression provision "in contrast to the expression "reserve." It was explained by. my noble and learned friend yesterday on an Amendment moved by the noble Lord, Lord Saltoun, and I do riot think your Lordships would like me to go over the ground again. I beg to move.
Amendment moved—
Page 103, line 43, leave out from beginning to end of line 3, on page 104, and insert the said new sub-paragraphs.—(Lord Charley.)
LORD SALTOUN: I do not propose to move the first Amendment in my name which immediately succeeds this Amendment, and therefore I will make now the point which I should have made then. I very respectfully urge the Government to consider it. If you observe these two definitions, they are not really mutually exclusive and they leave something not defined. I consulted the Accountants' dictionary, and I also asked my own Association for their definition of "provision." They say that a provision is a sum set aside or retained either to meet a specific liability—and then they gave some examples—or to cover a specific diminution in the value of an asset.

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"Reserve," on the other hand, is a sum retained to meet unknown contingencies or for the development of the business. The difference between "provision" and "reserve"—I should like to see the whole thing treated more generally—is that a "provision" is a sum set aside for something that can reasonably be estimated, such as a liability that is certain. A "reserve" is for something that cannot be reasonably estimated and in fact it embodies everything of the same kind which is not a "provision." The part I would rather suggest altering is in the last line and a half of the definition of "provision." I should be inclined to say, "by which the amount can be estimated with reasonable accuracy."
There you would have two alternative definitions. As it is, if you make a provision for something which you can accurately determine, then it is neither a provision nor a reserve, and I should very much like to ask His Majesty's Government what they would like it called. I hope, therefore, that they will consider this point at a later stage in the Bill, and that they may alter the definition. I am bound to say that I do not think these definitions define very well. I rather take exception to them as definitions.
VISCOUNT BRIDGEMAN: The Amendment which we are discussing now is a good deal more important than some of the Amendments which we have had of late. I agree very much with my noble friend Lord Saltoun that we should try to define exactly what is meant and what is required by the Amendments which we have here. I would put it in rather a different way, 'because I very much doubt—whatever my noble friend Lord Saltoun says—whether it is possible to get a form of words which can cover every possible contingency in every possible company. Therefore, I am going to approach it, if I may, from another angle.
Reading these Amendments, it looks as if the intention behind the drafting is that you should show in reserve only those things which are absolutely free and which might be capitalized, or reserves such as those created by the refund of Excess Profits Tax, and so forth. On the other hand, if there is any possible use to which your reserve or provision could be
316
allocated—contingencies, taxation, pensions and anything of that sort—and if the amount is known or approximately known, then you should not attempt to describe that as a reserve, but should in the ordinary course of things describe it as a provision. I hope that the noble Lord opposite can say whether I am right in that or whether I am wrong.
I am fortified in hoping that I am right by two things. First of all, with the leave of the House, may I refer to the Amendment laid down by the noble and learned Viscount, the Lord Chancellor, on page 104, line 10? It seems to me that the intention there is that directors of companies are to be allowed a good deal of latitude and generosity in making provision for renewals, depreciations and so forth, and that only when they have made all the provision they want in that respect is the balance, if such balance there be, placed to reserve. That is one of the reasons I hope I am right in advancing. Like the noble Lord, Lord Lucas, I have been examining the balance sheets of leading companies, but for quite a different purpose. Like him, I adopt the policy, "No names, no pack drill." I noticed that in the case of one leading company, audited by a leading firm of auditors, that practice has been followed. Nothing is shown as reserve which can be of any possible use, and anything which can be of any possible use is shown as provision.
House resumed.
House adjourned during pleasure. House resumed.
5.30 p.m.

ROYAL COMMISSION.
The following Bills received the Royal Assent:
Appellate Jurisdiction,

Births and Deaths Registration, County Councils Association Expenses (Amendment),

Exchange Control,

Agricultural Wages (Regulation), Summer Time.

House adjourned during pleasure.
House resumed.

COMPANIES BILL.
House again in Committee on the Companies Bill.
5.44 p.m.
LORD CHORLEY: I feel that there is a good deal of force in some of the observations that have been addressed to your Lordships on the subject of getting an accurate definition of "provision" and "reserve." It is a matter which has only recently, so to speak, come floating into the compass of company legislation. I think that possibly the view which the noble Viscount, Lord Bridgman, put before your Lordships is the correct one. We shall certainly be very glad to consider the observations which have been put before tu in this connexion between now and the Report stage.
On Question, Amendment agreed to.
LORD SALTOUN LORD SALTOUN moved in Part IV, paragraph (I) (c) to leave out "not." The noble Lord said: I think the point which I am going to put in submitting this Amendment is of some material substance.
I am not really quite sure what is the view of the Government in these matters. The paragraph as it now stands, reads:
"the expression 'capital reserve' shall not include any amount regarded as free for distribution through the profit and loss account …
That is quite rigorous. You may not put in any capital reserve sums which might be available for dividend. But that does not appear to me to exclude the reverse action. I think it is much more important to put into capital reserve sums that the shareholders may consider available for dividend but that are not, in fact, regarded as free for distribution through the profit and loss account. I do not think there is any harm in putting into capital reserves sums which have been accumulated by savings out of profit during a series of years, but I think that the reverse is a very dangerous practice. If you are going to have a revenue reserve, shareholders ought to be able to look at that so that they may appreciate what is going to be available for dividend. If you leave out the word "not" in the first line of the sub-paragraph, and put in "not" after "amount" in the second line, it will, I believe, effect the necessary change. I beg to move Amendment moved—,/p>
Page 104 line 4, leave out ("not").—(Lord Saltoun.)
LORD CHORLEY: This is all part of the policy which the noble Lord has been putting before your Lordships and which has already been discussed with him by my noble and learned friend the Lord Chancellor. I am afraid that we are not able to accept this Amendment.
LORD SALTOUN: I do not wish to press it. I have drawn attention to the point. It will not matter very much to me. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD CHORLEY: This is an Amendment consequential on the Amendment to page 96, line 12—that is, the new paragraph of the First Schedule. I beg to move.
Amendment moved—
Page 104, line 10, at end insert
("(2) Where—

(a) any amount written off or retained by way of providing for depreciation. renewals or diminution in value of assets, not being an amount written off in relation to fixed assets before the coming into force of this Schedule; or

(b) any amount retained by way of providing for any known liability;

is in excess of that which in the opinion of the directors is reasonably necessary for the purpose, the excess shall be treated for the purposes of this Schedule as a reserve and not as a provision.")—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a further consequential Amendment. I beg to move.
Amendment moved—
Page 104, line 15, leave out from ("Schedule") to end of line 27.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The object of the next Amendment is to define the expression "quoted investment" and "unquoted investment" which are referred to in Paragraph 6 (I) (a) and Paragraph (8) of the First Schedule. The term "recognized stock exchange," as used in the definition, means the London Stock Exchange or a body which the Board of Trade has declared by order to be recognized as a stock exchange for the purposes of the Prevention of Fraud (Investments) Act of 1939. A number of such stock exchanges have been declared by the Board of Trade, and I do not think I need trouble your Lordships with their names.
Amendment moved—
Page 104, line 27, at end, insert:
("3. For the purposes aforesaid, the expression 'quoted investment' means an investment as respects which there has been granted a quotation or permission to deal on a recognized stock exchange, and the expression 'unquoted investment' shall be construed accordingly.").—(Lord Chorley.)
LORD BALFOUR OF INCHRYE: The New York Stock Exchange is naturally included. But there is an unofficial stock exchange in New York called the "Curb" where a great many securities are quoted. What happens to Curb exchange quotations? I do not press it now, but would the noble Lord say whether is included or not included?
LORD CHORLEY: We will look into that.
On Question, Amendment agreed to.
First Schedule, as amended, agreed to.
Second Schedule:
Matters to be expressly stated in auditors' report.
4. In the case of a holding company submitting consolidated accounts, whether, in their opinion.—
(b) the reasons given for any difference between the financial year of the holding company and that of any subsidiary are satisfactory.
LORD CHORLEY: These are two drafting Amendments which come together. I beg to move.
Amendment moved—
Page 105, line 16, after ("the") insert ("consolidated").—(Lord Charley.)
On Question, Amendment agreed to.
Amendment moved—
Page 105, line 18, leave out the last ("and") and insert ("or").—(Lord Charley.)
On Question, Amendment agreed to.
LORD CHORLEY LORD CHORLEY moved, in paragraph 4, to leave out sub-paragraph (b). The noble Lord said: The effect of this Amendment is to remove the requirement that the auditor shall state in his report on the accounts whether the reasons given for any difference between the financial year of the holding company and its subsidiary are satisfactory. Your Lordships will recollect that there was an Amendment to Clause 12 under which the position was changed, and it was left to the
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companies' directors not to bring in the subsidiary account in certain circumstances when there was good reason against it. It would obviously be inadvisable that the auditors should report on the situation in those circumstances, and this Amendment is moved in order to remove that obligation from them. I beg to move.
Amendment moved—
Page 105, line 20, leave out from ("company") to the end of line 23.—(Lord Charley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is purely a consequential Amendment. I beg to move.
Amendment moved—
Page 105, line 25, after ("accounts") insert ("on the ground that it is impracticable or would be misleading").—(Lord Chorley.)
On Question, Amendment agreed to.
Second Schedule, as amended, agreed to.
Third Schedule agreed to.
Fourth Schedule [Amendments as to Persons liable for defaults under principal Act]:
LORD CHORLEY: The next is really a drafting Amendment. The effect is to substitute for the existing phrase in Section 89, subsection (2) of the Companies Act (which lays down a penalty for failure to permit inspection of copies of instruments creating charges and inspection of the register of charges) the words "every officer of the company who is in default." We dealt with this expression when we were discussing Clause 92. The Amendment omits the reference to the offence being committed" knowingly and wilfully," because the expression "every officer of the company who is in default" is defined in Section 365 of the Companies Act to mean any director, manager, secretary or other officer of the company who knowingly and wilfully authorizes or permits the default, refusal, or contravention. I beg to move.
Amendment moved—
Page 108, line 13, at end insert:
("s. 89 (2) … Any officer of the company refusing inspection and every director and manager of the company authorising or knowingly and wilfully permitting the refusal")—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: When this Schedule was compiled, subsection (3) of Section 91 of the Act of 1929 was included in it, but actually that section was of a purely transitory nature, and has ceased to be effective. Therefore, it ought not to be in the Schedule at all, and the effect of the Amendment is to remove it.
Amendment moved—
Page 108 line 14, leave out from beginning to end of line 16.—(Loyd Chorley.)
On Question, Amendment agreed to.
Fourth Schedule, as amended, agreed to.
Fifth Schedule agreed to.
LORD CHORLEY LORD CHORLEY moved, after the Fifth Schedule, to insert the following new Schedule:

SIXTH SCHEDULE.
AMENDMENTS OF PROVISIONS OF PRINCIPAL ACT REFERRING TO OFFICERS.
1. There shall be left out—

(a) the words 'director, manager, secretary or other' in section sixty and in subsection (2) of section three hundred and sixty-five;

(b) the words director, manager or other ' in subsection (2) of section eighty-eight, subsection (1) of section two hundred and seventy-one, section two hundred and seventy-two, section two hundred and seventy-three, and subsections (I), (2) and (5) of section two hundred and seventy-seven;

(c) the words 'director, manager or' in subsection (4) of section ninety-three and in section one hundred and fifty-two;

(d) the words 'director, manager' in proviso (a) to the said section one hundred and fifty-two and in subsection (2) of section three hundred and seventy-five;

(e) the words 'director or other' in subsection (2) of section one hundred and eighty-two, section two hundred and fifteen and subsection (I) of section two hundred and sixteen;

(f) the words 'director or' in both places in subsection (I) of section one hundred and twenty-eight, in subsection (I) of section one hundred and thirty-three, in the second place in subsection (I) of the said section two hundred and sixteen and in both places, in subsection (7) of section two hundred and ninety-five;

(g) the word 'director' in the second place in subsection (I) of the said section two hundred and sixteen;

(h) the words 'directors or' in subsection (2) of section one hundred and eighty-one;

(i) the words 'directors and' in subsection (2) of section one hundred and thirty-four;

322

(j) the words—

'(a) directors of a company:

(b) managers of a company:'

in subsection (4) of section three hundred and seventy-two.
(2) In subsection (3) of the said section two hundred and seventy-one (which extends the meaning in that section of 'director' to include persons on whose instructions the directors have been accustomed to act) for the word 'director' there shall be substituted the word 'officer'."
The noble Lord said: This new Schedule is necessitated by the Amendment made to Clause 108, on page 95, line 17, under which the expression "officer" was defined as "including director, manager, secretary, or other." Therefore, the various sections under the Act in which these expressions are used have to be stated in the Schedule. I beg to move.
Amendment moved—
After the Fifth Schedule, insert the said Schedule.—(Lord Chorley.)
On Question, Amendment agreed to. Sixth Schedule agreed to.
Seventh Schedule [Enactments of Principal Act repealed]:
LORD CHORLEY: Your Lordships yesterday inserted a new clause after Clause 92 in order to make provision for the procedure to be established by Rules of Court instead of proceedings having to be initiated by Petition. This Amendment is purely consequential on that. I beg to move.
Amendment moved—
Page 110, line 23, at beginning, insert ("Subsections (2) to (7) of section five, except as respects resolutions passed before the coming into force of this repeal.").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is an Amendment consequential on the Amendments to Clause 71 which were accepted. They were Amendments requiring the number of members of a limited company and of companies limited by guarantee to be registered.
Amendment moved—
Page 110, leave out lines 23 to 26.—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: This is a further consequential Amendment on the new clause after Clause 92. 1 beg to move.
Amendment moved—
Page 110, line 40, at end insert ("In subsection (1) of Section fifty-six, the words 'by petition'.").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The next Amendment is consequential on an Amendment which your Lordships accepted to Clause 16, page 16, line 10. I beg to move.
Amendment moved—
Page III, leave out lines 34 to 36 and insert ("Subsection (3) of Section one hundred and thirty-three ").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The next Amendment is consequential on subsection (I) of the new clause after Clause 84. I beg to move.
Amendment moved—
Page 112, line 4, at end insert ("Section one hundred and sixty-four").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: The effect of the next Amendment is to delete the words "by the regulations of the company" from proviso (v) to Section 321 (I) of the Act. This section provides that, subject to exceptions, certain companies may at any time register under the Act, whether as unlimited companies or as companies limited by shares, or as companies limited by guarantee. Proviso (v), to which I have referred, lays down that a company shall not so register without the assent of a majority of such of its members as are present in person or by proxy (in cases where proxies are allowed by the regulations of the company) at a general meeting summoned for the purpose. Your Lordships amended Clause 5 of the Act, which lays down that any member of the company may be represented at a meeting of the company by a proxy, and that is an absolute provision; so that even if the company had a regulation in its Articles which did not allow it, I should think it would not be effective. Therefore this Amendment is moved to deal with the situation. I beg to move.
Amendment moved—
Page 112, line 37, at end insert—
("Enactment contained in Part IX.
In proviso (v) to subsection (I) of Section three hundred and twenty-one, the words 'by the regulations of the company'").—(Lord Chorley.)
On Question, Amendment agreed to.
LORD CHORLEY: With regard to the next Amendment, the Seventh Schedule, in conjunction with Clause 109 (3), repeals the entry relating to Section 35 in the Eleventh Schedule to the Companies Act. This entry, in conjunction with Section 362 of the Act, imposes a penalty on any person wilfully making a false statement in any return, report, certificate or other document required by Section 35; in this case it is a prospectus issued by or on behalf of a company. Clause 54 of this Bill imposes a criminal liability on persons who authorize the issue of a prospectus for any untrue statement, but this would not normally apply, in view of Clause 54 (2), to an untrue statement by an expert whose report is reproduced in the prospectus with his consent. It is considered desirable that there should be powers retained in the Act in order to deal with such an expert, and therefore we propose to put back in the Act this provision of Section 362 which has been taken out by this repeal Schedule, in order that we should be in a position to deal with such an expert. I beg to move.
Amendment moved—
Page 113, leave out lines 18 and 19.—(Lord Chorley.)
On Question, Amendment agreed to.
Remaining Schedule, as amended, agreed to.

NOTTINGHAMSHIRE AND DERBYSHIRE TRACTION BILL.
Examiner's Certificate of non-compliance with the Standing Orders: Referred to the Standing Orders Committee.
House adjourned at six minutes past six o'clock.