GAS BILL.

HL Deb 07 July 1948 vol 157 cc444-574

2.38 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF DROGHEDA in the Chair.]

Clause 1:

Establishment and general functions of Area Boards.

1.—(1) There shall be established Boards, to be known by the names mentioned in the first column of the First Schedule to this Act and in this Act referred to as "Area Boards", for the areas which are described in general terms in the second column of that Schedule and are to be defined by orders made under this Part of this Act, and it shall be the duty of every Area Board as from the vesting date

1. (a) to develop and maintain an efficient, co-ordinated and economical system of gas supply for their area;
445
2. (b) to develop and maintain the efficient, co-ordinated and economical production of coke by them.

(2) Every Area Board shall have power to carry on all such activities as it may appear to the Board to be requisite, advantageous or convenient for them to carry on for or in connection with the discharge of their duties under the preceding subsection or with a view to making the best use of any assets vested in them by or under this Act, and in particular, but without prejudice to the generality of the preceding provision,— (e) after consultation with the Gas Council established under the next following section, to manufacture plant required by the Board or any other Area Board and to manufacture gas fittings and coke fittings, except for export.

(4) Every Area Board shall have power to do any thing and to enter into any transaction (whether or not involving the expenditure, the borrowing in accordance with the provisions of this Act or the lending of money, the acquisition of any property or rights or the disposal of any property or rights) which in their opinion is calculated to facilitate the exercise or performance of any functions conferred or imposed on them by any enactment other than this subsection, or is incidental or conducive thereto.

(5) In carrying out any such measures of reorganisation and works of development as involve substantial outlay on capital account, every Area Board shall act in accordance with a general programme settled by them from time to time with the approval of the Minister, and the Minister shall consult with the Gas Council before approving any such programme.

(8) Subject to and in accordance with any directions given by the Minister under section seven of this Act, every Area Board shall reduce, so far as practicable, the price of gas and coke and avoid undue preference in the supply of gas and coke.

LORD TEYNHAM moved, in subsection (1), after paragraph (a) to insert: (b) to satisfy at the lowest economical cost and subject to the provisions of this Act all reasonable demands for gas within their area. The noble Lord said: This Amendment raises one of the most important principles in the Bill. The public are becoming alarmed at the serious rise of prices which has occurred in the various nationalised industries. It has occurred in coal and it is occurring also in electricity. I suggest that the acceptance of this Amendment would go a long way to reassure the gas-consuming public on this important matter of price. It may be argued by His Majesty's Government that subsection (8) of this clause covers the points raised, but I would point out that it is hedged in by various considerations. The reduction of the price of gas appears to be subject to "any directions given by the Minister," and the Area Boards are to reduce prices only "so far as practicable" What do those words really mean? We maintain that that subsection does not go far enough and is vague and indirect. Surely the main object of this Bill is to produce a cheap supply of gas for the domestic consumer, as reasonably as possible. We maintain that that intention should be clearly set out in the Bill. I think it is true to say that there are over 4,000 trades and industries which are dependent upon a supply of gas. If the price of gas is to be increased, it will undoubtedly adversely affect our prices for many articles in the export trade. The high price of coal and electricity is already having that effect. When the trilogy of fuel and power is complete, we may well see yet a further restriction in our export trade owing to increases in the price of fuel.

There is another reason why this important principle should be clearly stated in the Bill. In the past there has been a feeling in the coal industry that the gas companies were getting their coal far too cheaply. The miners felt that the low price had an effect on the scheme for the ascertainment of their wages. I am all in favour of the miner getting a fair wage for a fair day's work, but it is possible that pressure may be brought to bear upon the Minister by coal mining interests to increase the price of gas so that the Coal Board may get more for their coal. It is not so much the words of subsection (8) or the words of this Amendment to which we attach great importance; it is to the principle that a cheap supply of gas should be supplied to as many people as reasonably possible, and that it should be clearly stated in the Bill that the duty of every Area Board is to carry out that principle as and from the vesting date. I beg to move.

Amendment moved— Page 2 , line 4, at end insert the said new paragraph.—(Lord Teynham.)

THE LORD CHANCELLOR (VISCOUNT JOWITT)

I sympathise with the requirement of the noble Lord to have it made quite plain in the Bill that so far as it is economical to do so, it is fundamental that the Area Board should supply gas as cheaply as possible. I think I can meet him. I would suggest that words such as the following should go in at page 2, line 4. The noble Lord will see there the words: to develop and maintain an efficient, co-ordinated and economical system of gas supply for their area I would suggest adding to those words something like the following: and to satisfy, so far as it is economical to do so, all reasonable demands for gas within their area. I think that those words would meet the substance of what the noble Lord has in mind. I will undertake to consider those words, and I will put down an Amendment on Report stage on those lines if that is satisfactory to the noble Lord.

LORD TEYNHAM

I am most grateful to the noble and learned Viscount for his undertaking. On that assurance, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

2.44 p.m.

LORD ROCHDALE moved, in subsection (1) (b), after "coke" to insert "other than metallurgical coke." The noble Lord said: Clause 1 lays upon the Area Board certain obligations. Among others, your Lordships will see in paragraph (b) these words: to develop and maintain the efficient, co-ordinated and economical production of coke by them. It does not lay down any specific type of coke. Your Lordships will be aware that there is more than one type of coke. There is coke which arises as a by-product to the gas industry, but that is a type of coke which is unsuitable for the smelting of ores except, I believe, in one or two very unusual instances. Then there is metallurgical coke, which is mentioned in my Amendment, which is the type of coke required for the smelting of ores and which arises, not as a by-product but as the principal product of the coke-oven plants, and is used in the steel industry. The gas that arises from those plants is used along with the blast furnace gas in the steel industry for steel making and finishing processes.

As the Bill stands at the moment, it seems to me that there is an obligation on the Area Boards to go into the development of coke-oven plants. Of course, that is an industry which is entirely separate from the industry that we are discussing to-day in this Bill. I do not believe that when this Bill was framed, that was the intention of His Majesty's Government. I am strengthened in that view by the interpretation clause on page 84, which states what "gas undertakings" are. It specifically says that: the business of operating a coke-oven plant shall not be deemed to be a gas undertaking. Therefore, what my Amendment does is to relieve the Area Boards of the obligation of developing coke-oven plants. On the other hand, it does not reduce their powers, and if there are any particular instances where that work is undertaken now or where it may be advisable in the future to produce this form of coke, there is nothing to restrict them in doing so. I beg to move.

Amendment moved— Page 2, line 6, after ("coke") insert ("other than metallurgical coke").—(Lord Rochdale.)

THE LORD CHANCELLOR

I am not going to pose as an expert on metallurgical coke or any other sort of coke. I understand that what the noble Lord said is a fact. Therefore, I will accept this Amendment. When we get to the definition clause, we may have to consider more carefully what is the appropriate definition for "metallurgical coke," but I will accept this Amendment.

LORD ROCHDALE

I am most grateful to the noble and learned Viscount.

On Question, Amendment agreed to.

VISCOUNT BRIDGEMAN had given Notice of an Amendment, in subsection (2), to leave out paragraph (d) and insert: provided that nothing in this section shall empower an Area Board to manufacture plant and fittings, or to sell, hire or supply gas plant. The noble Viscount said: As this is the first time that I have spoken to your Lordships upon this Bill, perhaps I ought to say straight away that I have no financial interest of any kind in the gas industry. The Amendment that stands in my name is not quite correct as it is printed. There is a mistake for which I apologise. Its effect is to put the Amendment in the wrong place. With the permission of the Committee, and if the noble and learned Viscount agrees, I will move it in this form—namely, page 2, line 34, leave out paragraph (e) and there insert the words printed on the Marshalled List.

The Amendments which are to be moved by my noble friend Lord Rochdale and myself are all founded on a certain number of main arguments and main principles. Although in certain well-defined cases we accept the principle of State trading, we do not acquiesce in it for the supply and distribution of gas; we draw a firm line between what we accept in principle and what I might call infiltrations into State trading, which seem to us to be permitted as the Bill now stands. We realise that there may be need for certain powers for the manufacture of gas equipment, and those powers are already given to the Gas Council by the clause at page 4 of the Bill. We are not going to contest that, because it is clear that there may be a need to manufacture certain kinds of equipment for home use only. Perhaps—and this point was made in another place—there ought to be certain provisions to prevent the possibility of a practice growing up to force up the price of gas appliances, which would react unfavourably on the price that the consumer would have to pay for the gas.

As I say, we do not quarrel with the provision allowing the Gas Council to manufacture; but when we come to the Area Boards, that is another matter. We see no reason why it should not be perfectly possible for the Gas Council to do all that is necessary, in the same way as is provided under the Electricity Bill. I am not talking about the locations in which the appliances should be manufactured, I am talking about control of the power to manufacture. Under those conditions, it would not be delegated to an Area Board but would reside in the Gas Council. Clearly, there are certain trades which are best left alone by the gas industry. There are those specialised trades like the drawing of pipes and various kinds of iron foundings. Once the Area Boards Kart on the slippery slope, so far as I can see there is no limit to the amount of manufacture that they may want to undertake—far beyond the scope of the gas industry, and perhaps far beyond anything that we imagine here, because every industry has its Empire builders and everywhere there is an urge for people to go just a little further. I believe most of the gas fittings are simple types of fittings which can be made by a variety of firms. There is another aspect of this matter—namely, the export trade. It is perfectly clear that there is no permission granted in this Bill to the nationalised gas industry to make any fittings for export. But that is not the whole of the matter, because in these days, when export is difficult, the only basis upon which any firm can build up a satisfactory export trade is on a good hard core of home orders; and firms will not be able to carry on with their export if the nationalised gas industry may come in and take away the cream of the home orders. So to weigh up the matter, we propose to accept Clause 2 (3), which allows the Gas Council to manufacture, but we want to limit that power to the minimum. We think that this clause about which I am now speaking goes much too far, is far too wide. Although it allows for consultation it specifically does not provide the control which we think ought to be there. Therefore, in our opinion, it is far too dangerous as it stands, and I beg to move the Amendment.

Amendment moved— Page 2, line 34, leave out paragraph (e) and insert the said provison.—(Viscount Bridgeman.)

THE LORD CHANCELLOR

I quite understand what the noble Lord has in mind, and I say quite frankly that I very much hope, and indeed I believe, that these Area Boards will never have to use this power. I think the circumstances in which they would want to use this power would be if they were being "squeezed," or if they anticipated that they might be "squeezed" by the trade. I am not making any aspersions that it has ever happened, but I am thinking of possible contingencies. If that did happen, or if they reasonably believed fiat it was going to happen, then I think they ought to have a means to protect themselves. And the best means of doing that is to give them the power themselves to manufacture, though not for export. I conceded this "not for export" principle in the Electricity Bill, if I remember rightly, and having conceded it there I am prepared to put it in here. I am prepared, if the noble Lord thinks it will in any way meet him, to put in some introductory words—I am not at the moment attempting to draft them, I am only sketching out what is in my mind— to make this power conditional upon some such words as If they have reason to be dissatisfied with the existing facilities. I am not quite certain that those words are right, because the Board might be satisfied for the moment. Therefore I want to consider those words. I suggest them, however, to make it plain that it is only in that event that this power should be exercised.

It is true that the Gas Council have this power, and of course this can be done only after consultation with the Gas Council. But I claim that one of the merits of the Bill (which owes much to the criticism of noble Lords opposite, and particularly of Lord Swinton) is that we secure a greater measure of decentralisation than we have had in the previous Bills. Therefore, claiming full credit for that, and conceding a share of the credit, I want these Gas Area Boards so far as possible to be autonomous. I do not want them to have to go round, hat in hand, each time to the centre before they do anything. As I said, I hope this power will never be used, except in the event of the sort of thing that I have indicated. Yet, for the reasons I have given, I want them to have the powers. If the noble Viscount would care to withdraw his Amendment, we might in collaboration think out a form of words on the lines I have indicated, to make it plain that this power is to be exercised only if there is present difficulty about getting supplies at a fair price, or if there is an apprehension that in the future that difficulty may arise. Unless the Gas, Boards obtain, at a fair and reasonable price, that which they want from the trade then I think it better that they should have this power. If the noble Viscount will agree, I shall be pleased to see him to try to agree some form of words before Report stage.

VISCOUNT RIDLEY

Before the noble Viscount withdraws his Amendment, may I make a suggestion that rather follows on what the Lord Chancellor has said? As this is the first time I have spoken on this Bill, I should say that I have a connection with the gas industry and have been a director of a company for a number of years. I regret that I was not able to be present for the Second Reading, but perhaps I may say that I personally agree with what the Lord Chancellor has said, that in respect of decentralisation and management there is a great improvement here on the Bills which we had last year. Coming back to the immediate point, I think there is a little difficulty, if I may say so, about the lines which the Lord Chancellor has suggested. While I follow the noble Viscount, Lord Bridge-man, in not wishing to set up the Area Board as plant manufacturers, the Amendment is not quite so straightforward as that, because it deals with both plant and fittings.

In the definitions in the Bill "fittings" are described as gas and coke fittings, and consumer apparatus—that is to say, cookers or heaters or piping in a house, which it is not at present the custom of the gas industry to manufacture, although they do purchase and retail them. On the other hand, the plant referred to must, I think, mean plant required by the Board for the purpose of the manufacture of gas. There is no definition in so many words of the term "gas plant" in the Bill. I would suggest that if the Bill went so far as to say that Area Boards could not manufacture plant without being satisfied that it was impossible to obtain such plant—I forget the phrase which the noble and learned Viscount used, but the effect of it was "under reasonable conditions," it might hamper quite a lot of minor operations. It is common in the industry to manufacture in the works small bits of plant and apparatus—as, for example, for distilling by-products or in connection with repairs, overhauls and alterations, which really could be said to be manufacturing. The main point in connection with plant, I think, is that Area Boards—and I suggest also the Gas Council—should not set themselves up in business as manufacturers in a big way of gas-manufacturing plant. At the same time, I think they must have the power and authority to help themselves out from time to time with relatively small pieces of apparatus which are most economically made at the works. It may well be that in many instances they can be made out of disused plant. This is particularly the case in the smaller concerns, and I think it will be a good many years before the smaller concerns are completely given up under this new arrangement. I hope the new Amendment which the Lord Chancellor is to propose will not be too restrictive, therefore, in this connection.

As regards fittings, it has never been the custom of the gas industry to manufacture fittings for supply to the public. That has been largely for the reason that the gas industry has never wanted to go into that business, and has never found it necessary to do so. Nor do I believe that it ever will be necessary. I should have thought the right thing to do would be to leave out any specific reference to the power of every Area Board or the Gas Council to manufacture gas and coke fittings. If such power was not quoted, for example in Clause 2 (2) (e), there would neither be an express prohibition on them from doing it nor any particular encouragement for them to do it, as there might be held to be if the clause were left as it is. I do not quite draw the same distinction which the noble Viscount. Lord Bridgeman, has drawn. It must be remembered, when giving powers to Area Boards and the Gas Council, that Area Boards are going to be fairly large concerns. If there is any manufacturing to be done, which one hopes will not be necessary in a big way, I should think the Area Boards will be big enough and important enough to undertake their own. I agree that to have that power does put them in a much stronger position as regards running their own business. I would suggest that some form of words might be devised which would give Area Boards the power to manufacture certain pieces of plant, while not giving them the power to go into the manufacture of gas-making plant in a big way. I would not like, myself, to suggest the form of the words, but no doubt the noble and learned Viscount, if he goes into it in the light of our discussion, will be able to devise an Amendment which will meet the case.

VISCOUNT SWINTON

I think we have all reason to be glad that we again have the benefit of the knowledge and experience of the noble Viscount, Lord Ridley, in dealing with this Bill. He was invaluable to us on some of the earlier Bills. The fact that people have had an interest in a concern, and have managed it well, is certainly no bar to their taking part in our discussions—and that is a very good thing. If these matters had to he discussed entirely by people who were, so to speak, virgins, we should not be likely to get very great results. I am sure that the point which Lord Ridley has so rightly raised can be met. Clearly, every business has got to have its own small workshop. You cannot be held up every time you need a small item of plant which you can, if you have the power, quite easily turn out in your own little foundry. The making of such things is not manufacturing. I am sure that words could be devised to meet this. I think, if I may say so, that the Lord Chancellor has made a very constructive suggestion. What we want to do here is to prevent these gas-producing bodies going into the wholly alien trade of manufacturing.

Quite frankly, I rather agree with the noble Viscount, Lord Ridley. I think that provided there is the necessary safeguard, it does not matter much whether a thing is done by an Area Board or by the Gas Council. Indeed, it might well be that if manufacture had to be undertaken, it would be better done by an Area Board than by the Gas Council. On the other hand, it is business which neither ought to undertake, except in most exceptional and unforeseen circumstances. As I understand it, this is desired only as an insurance in case the industry is held up by a ring. I do not believe, even if it were so held up, however, that that would be a wise way to tackle the difficulty. We had an agreement on that particular matter during our discussions the other day on the Monopoly Bill. I am sure that if there is any alleged malpractice by a ring, the way to deal with it is to have a proper judicial investigation into it, stop the malpractice and get the industry properly conducted by people who know how to conduct it. That is the best thing to do in the interests of the consumer.

As I have indicated, I think we are practically at one on this. The Lord Chancellor has shown that he does not wish, except in the most exceptional circumstances, that these concerns should go into manufacture; but he says, in effect: "I want to have this as a possible insurance." He has suggested some words to meet the case. May I suggest that there is an exact precedent for this in a Bill which we passed through this House in the last month—the Development of Inventions Bill? The First Lord of the Admiralty, who was responsible for the Bill, said the last thing which the Government wished with regard to any invention fathered or fostered by the Corporation was that the Corporation should go into manufacture. He made it clear that what was proposed, therefore, was just what has always been done in regard to existing industry. That is, the Government would say: "You take up this invention on reasonable terms." Only if no industry could be found to do it, would the reserve power, provided in the Bill, for developing the invention be brought into play. The noble Viscount, the First Lord, quite reasonably said that "if that is our intention we ought to put it into the Bill." And some words were carefully designed by the Government draftsmen which we agreed entirely met the case. If the Lord Chancellor would look at this in connection with the wording in that Bill, and also bearing in mind Lord Ridley's suggestion, I think that we shall then have a provision which will satisfy us all.

THE LORD CHANCELLOR

I gladly undertake to do that. I am grateful to the noble Viscount, Lord Ridley, for pointing out the distinction which he did point out. I realise the importance of what he has said. I will certainly look at the words in the Development of Inventions Act to see what help we can get from that.

LORD BARNBY

Before this Amendment is disposed of, may I just put this to the noble and learned Viscount? In the discussion which we had on a point in the Electricity Bill it was admitted that there is advantage in having some safeguards such as are now proposed. Could the Lord Chancellor indicate, in the event of circumstances arising which might require interpretation, what authority would interpret the grounds for a suggested review of the safeguard which he proposes?

THE LORD CHANCELLOR

It will be for the Area Boards themselves, but the Statute would state quite plainly that they would do this only if they were apprehensive. Whether they are apprehensive or not is a matter which only they can determine.

VISCOUNT BRIDGEMAN

I am grateful to the noble and learned Viscount for the way in which he has met the point, and for the undertaking which he has given. In view of that undertaking, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

3.11 p.m.

LORD TEYNHAM moved, in subsection (4), after "calculated" to insert "directly" The noble Lord said: The object of this Amendment is to limit the very wide powers given to the Area Boards by Clause 1 (4). As the clause is at present drawn, it gives the Area Boards very wide powers indeed. The first line of the subsection reads: Every Area Board shall have power to do any thing and to enter into any transaction… The object of this Amendment is simply to limit those powers to those functions directly concerned with the powers entrusted to them under this clause. I beg to move.

Amendment moved— Page 3, line 11, after ("calculated") insert ("directly").—(Lord Teynham.)

THE LORD CHANCELLOR

I am afraid I cannot accept this Amendment, and I do not think the noble Lord would really want me to. Take, for instance, a consideration such as this. The Area Board want to do something to extend the amenities of their workers: it may be a question of better housing for them; it may be a question of a canteen; it may be a question of a sports ground, or what you will. They ought obviously to have power to do all those things, and the noble Lord would be the first to agree with me in that. On the other hand, if the noble Lord inserts the word "directly," the subsection will read: which in their opinion is calculated directly to facilitate the exercise or performance of their functions. It would then be arguable whether they had that power. It could be said that the extension of these amenities conduced to the happiness and well-being of the men and, therefore, conduced to the efficient performance of the functions, but that it was only an indirect way of getting a good result. Therefore, I think that to limit the powers in this way would be disadvantageous. That being so, I am afraid I cannot accept the Amendment.

LORD TEYNHAM

In view of the explanation given by the noble and learned Viscount, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT SWINTON moved to omit subsection (5). The noble Viscount said: I put down this Amendment in order to elicit from the Government what are their intentions under this provision. The noble and learned Viscount in charge of the Bill has said that the whole intention in the Bill is to give as wide a latitude and as free play as possible to the Area Boards, and to have as little centralisation and control as feasible. He was good enough to say that I had been the part author of that principle. I hope it will be carried out. But I am a little anxious about this matter. Your Lordships will see from the Bill what are the powers of the Area Boards, and I agree that they are wide powers. But subsection (5) says: In carrying out any such measures of reorganisation and works of development as involve substantial outlay on capital account, every Area Board shall act in accordance with a general programme settled by them from time to time with the approval of the Minister, and the Minister shall consult with the Gas Council before approving any such programme.

The whole essence of the Heyworth Report, upon which so much has been based, was to give the Area Boards complete autonomy, and, indeed, to put them in competition one with another (in so far as a monopoly in one district can be in competition with a monopoly in another district) and with the other light and power units in industry, so that they might each try out their own ideas, and there might be competition in efficiency. If your Lordships look at the Heyworth Report, you will see, in paragraph 16, on page 50: The effect of these provisions is:—

1. (a) To place the responsibility for the efficient operation of the Industry squarely on the shoulders of the Boards.…
2. (b) To give the Boards freedom to carry out this task. The price of this freedom is willingness to be judged by results."

It is true that in paragraph 10 of their Report, on page 50, they say that all new capital issues must be approved by the Minister. I do not think that is unreasonable, because the capital issues carry a Treasury guarantee. But there is all the difference in the world between giving to the Treasury a general financial control, or general financial supervision of the amount which is to be expended by an industry, and giving the Minister or the Gas Council the deciding voice—and both are brought in here, because the Minister has to approve every plan, and he has to approve only after consultation with the Gas Council.

The limitation laid down by subsection (5) seems to me to be very wide. It is: In carrying out any such measures of reorganisation and works of development as involve substantial outlay on capital account. Of course, every reorganisation and development on any scale involves substantial capital outlay. Yet reorganisation and development, after all, is what these Boards are set up to carry through. The whole essence of having the separate Boards with their individual responsibility and trying out their own ideas is that each of them shall be able to frame their own plans suited to their own district—indeed, you may not want the same scheme in all different districts—and shall have the responsibility, and know that they have the responsibility, for carrying out those plans. If all substantial plans are to come to the Minister and be reviewed by him, and to come to the Gas Council and be reviewed by them, then I am afraid that, though we pretend to lay down a pattern of decentralisation under this clause, we shall again have bureaucratic centralisation brought in. I do not think the Government want to do that, but if this clause stands as it is drafted, as I read it, there is a very real risk of that happening. I beg to move.

Amendment moved— Page 3, line 14, leave out subsection (5).—(Viscount Swinton.)

VISCOUNT HALL

I want to assure the noble Viscount, Lord Swinton, that the Minister will interpret his powers under this subsection strictly in accordance with the rules which have almost been laid down by various statements which have been made in another place during the course of the last five or six months. My noble friend the Lord Chancellor referred, as did Lord Swinton, to the autonomy of these various Boards. But here we are dealing with what is, after all, one of the fundamentals of the Bill—namely, the right of the Minister to have certain general control over the capital investment of this industry. Indeed, all other nationalisation Acts—the Coal Act, the Civil Aviation Act, the Transport Act and the Electricity Act—have similar provisions to this in dealing with capital development. I am not sure that such provision is confined to the Acts to which I have referred. I think that in the Act of 1938, dealing with the nationalisation of royalties, words very similar to these were inserted. It does give the Minister certain overriding powers, but it is left to the Minister as to how he shall interpret those powers. I think in the cases to which I have referred it can be said that the Government have not attempted in any way to interfere with what might be regarded as the detailed work of the Boards, whether they are central boards or whether they are area boards.

I would emphasise the point that it is not intended that the Minister shall exercise a minute, detailed control of new plans produced by the Area Boards, but that there should be submitted to the Minister the programme, not necessarily of one year, but covering a number of years, including plans of development—how much they will cost and what form they will take. Of course, these plans will be discussed between the Area Boards and the Gas Council, and the Minister will have the benefit of the advice of the Gas Council. In the light of that advice, and of other general considerations affecting the national economy, he will decide as to whether the plan is a sound one. I think this degree of control is absolutely essential if we are to have a plan for full employment, and if the Minister is to carry out his functions of co-ordinating fuel and power. Even in the different areas there must be some relationship between the one industry and another. I do not think it is fair to say that the Minister is asking for what might be regarded as continuous supervision. I think it right that capital development plans, involving—as they might well involve—substantial sums of expenditure, should receive the approval of the Minister, but that the extension of some minor plans or repair activities should be undertaken by the Area Boards without the consent of the Minister.

If this subsection is deleted, and if we rely simply upon the borrowing powers, it would mean the withdrawal of control from just the place where it is desirable to have it. The words of the subsection were put into the Electricity Act after the measure was fully discussed in Committee in another place and modified to meet the wishes of the Opposition. I would like to say again that all the other nationalisation Acts make provision in closely similar words to those of this subsection, and this may be regarded as a common form clause for such measures. Indeed, I think it was brought out in the discussion upon this Bill in another place that here is one means whereby Parliament can be kept informed of the plans from time to time, by charging the Minister with the responsibility which this subsection gives him. It is for that reason, and because this subsection is of fundamental importance to the Bill, that I hope noble Lords will not press for this subsection to be deleted.

VISCOUNT SWINTON

I think the answer of the noble Viscount is fully satisfactory. I admit that I should have some difficulty in redrafting this clause to make it do just what I want it to do, and to avoid its doing what I do not want it to do. That is always the difficulty in drafting. If you draft the thing too tightly, you exclude something. If you draft it too loosely, you give an interfering Minister too much power. It is one of the difficulties of engaging in this kind of legislation. Administered in the way in which the First Lord has suggested—namely, that a broad programme over some years is all that is to be submitted, with a general financial estimate, it seems to me to be quite legitimate. How the plan should be carried out, I think, should rest entirely with the Board, otherwise you will get a sealed pattern laid down by the Gas Council, instead of the experiments conducted by the Board who should have freedom of action and be judged by the results. I understand that that is the avowed intention of the way in which this is to operate, and as my ingenuity has not drafted anything which will completely meet what I want to do and what I want left undone, I feel bound to withdraw my Amendment.

Amendment, by leave, withdrawn.

3.26 p.m.

VISCOUNT BUCKMASTER moved, after subsection (7) to insert: (8) Every Area Board shall, after consultation with the Gas Council, prepare and put in force arrangements whereby incentives to increase efficiency, output and economy shall be provided for all persons in the regular employment of that Board. The noble Viscount said: This Amendment has one great advantage, in that it is capable of being clearly understood. Its purpose, as your Lordships will see, is to preserve in this industry some measure of incentive. As your Lordships know, the industry, to a large extent, has co-partnership schemes which have been proved of the greatest advantage in giving workers a great interest in the business itself, and encouraging them to do what they can to keep down the cost of production.

It is true that Clause 58 provides that these co-partnership schemes shall endure for an unstated period, but if we approach this matter in a realistic spirit we know very well—for reasons which I will not repeat to your Lordships, and which I have fully given before—they will not in fact endure. You will not have co-partnership schemes for long, and I suggest that it is necessary that we should replace them with some form of incentive. I well appreciate that incentives in a nationalised industry—and I beg noble Lords opposite to believe that I am not seeking to be provocative when I say this—cannot be based upon output. After all, part of the purpose of nationalisation is to decide what demands each kind of fuel will satisfy. The Government will be perfectly free to shift the load from gas to electricity, and it would not be fair to base these schemes on output. At the same time, it is by no means impossible to devise a perfectly practical and effective scheme. It is a simple thing to take the cost of your fuel or coal (if you are producing water gas, oil or coke), and take your wages, when you will arrive at a figure which gives you the cost per them. You can then take that as your basis, and any improvement on that figure can be reflected in some sort of bonus incentive to the workers. By this means you can get into the bonus scheme every form of worker including, of course, the repair men and maintenance men, because they in their turn, by exercising skill and efficiency, would tend to reduce the cost per them.

There are two other aspects of this matter and the first is this. I must say that if it is intended to replace co-partnership—and I fear this may be the intention—by a straight increase of so many pence per hour, that must obviously have an inflationary effect which at the moment is not desirable. The second point is that the wages in the gas industry are not unduly high compared with those in other industries, and the workers have to a large extent relied on the co-partnership schemes to supplement their earnings. It is true, also, that the consumer is apt to be forgotten in these matters. I would remind your Lordships that the Lord Chancellor himself stated on the Second Reading—I will quote his exact words: …there is no reason why a new type of scheme embodying the incentive wage principle should not be adopted. Therefore, in the interests of the workers, in the interests of the gas industry and in the interest of the consumer, I urge your Lordships to accept this Amendment. I beg to move.

Amendment moved— Page 3, line 27, at end insert the said new subsection.—(Viscount Buckmaster.)

VISCOUNT HALL

I should like to say at once that I believe in incentives for increased production, and indeed for contentment amongst workpeople themselves. Ninety per cent. of my own industrial life was spent in an industry where I worked for an incentive, under a system of piece work. I agree with the noble Viscount who moved this Amendment that there are different methods in the varying industries. In my old industry it was a question of tonnage. Here, it is not easy to measure the means whereby incentives can be given. I am afraid that it is impossible to accept this Amendment, for I think that any arrangement for effecting incentives to increase efficiency should be made by the Gas Council rather than by the Area Boards. The noble Viscount knows that in the gas industry the relationship between employers and employees has been for many years a happy one. I know of no industry where industrial difficulties and disputes have been less frequent than in the gas industry, and that is largely due to the relationship which existed between employers and employees. At the same time it must be recognised that the negotiations over a long period have been conducted by the national organisations rather than by the district organisations, and any interference with that national system of negotiation may, I am afraid, lead to considerable difficulties, and would not be accepted by the trade unions.

As the noble Viscount rightly said, under Clause 56 (1) the primary duty for negotiating not only wages but conditions of employment was, at the request of the Minister of Labour and in agreement with the trade unions, placed on the Gas Council, which, under this clause, is given full power to develop incentive schemes if desirable. But the general idea behind the clause and similar clauses in other nationalisation Acts is that the Council should be left as free as possible to work out whatever arrangements for dealing with wages and conditions of employment and so forth seemed most appropriate to them and to the trade unions and other employees' organisations. If this Amendment were made, the trade unions would be put at a certain disadvantage in their negotiations. The Opposition may argue that this Amendment is particularly desirable because the old co-partnership schemes provided gas workers with an incentive. But the Government Amendment made in the other place to Clause 58 provides for the temporary continuance of the old co-partnership schemes and looks to the development of new arrangements where both sides of the industry agree. The development of co-partnership schemes in future will, as the noble Viscount rightly said, require a great deal of thought. I think, therefore, that the point is properly covered in the Bill by the general powers under Clauses 54 and 58. I think it is in the interests of the industry and certainly of the trade unions that this matter should be dealt with in accordance with their wishes, and I regret therefore, that it is impossible to accept this Amendment.

VISCOUNT RIDLEY

I suggest that both points of view could be met by the alteration in the Amendment of the word "shall" to the word "may," I think we all desire to see the co-partnership schemes continued as much as possible, and this may be one way of doing it. On the other hand, there are great difficulties in forcing this requirement on every Board in every Area. Only certain companies have co-partnership schemes and I believe I am right in saying that none of the municipal undertakings has one. I do not think there is any other industry in which a bonus or other incentive scheme is legally enforceable. It might make an odd situation for those who were negotiating wage rates and conditions of employment. On the other hand, it seems to me that the proper people to put such a scheme into effect are the Area Boards, because they are the employers. It is true that later on in the Bill the Gas Council is mentioned as the wages-negotiating body, but there is a clear parallel there with a number of other industries where the wages and conditions of work are negotiated nationally between employers and trade unions. They are put into effect locally and perfectly clearly and definitely worked out. So I submit that there is here a fair parallel. I suggest, therefore, that the word "shall" should be deleted in favour of the word "may."

VISCOUNT CECIL OF CHELWOOD

I find a little difficulty here, because the later clauses of the Bill suggest that any arrangement of this kind should be a matter of negotiation and discussion between the Area Board or the Gas Council, as the case may be, and those who represent more directly the workers. Here it is proposed to give to the Area Board a power, entirely off their own bat, to enforce incentives, which would really be covered by the later clauses. I confess I should be a little nervous about that. I should prefer to leave it to some Amendment to Clause 56 or 58 dealing with this subject, rather than do it by compulsion.

VISCOUNT SWINTON

I entirely agree with the noble Viscount. I thought originally that this was the right place to insert an Amendment of this kind. I am convinced now that this is not so. I agree with the noble Viscount, Lord Cecil, that there must be national negotiations about general principles. I think that has always been so in this industry. This industry has had a peculiarly happy history in its industrial relations, and that result has been obtained by a combination of two things—good national negotiations and a sympathetic and understanding detailed application of general principles, with a pretty wide latitude by the employers and the workers in the different localities in working out the application which is most useful to the particular circumstances of their case. I am sure that we all want to keep both those things so far as we possibly can, and, above all, to keep the spirit and habit in which that has been done.

I do not believe that it will depend very much upon the words which are put into the Act of Parliament. In these things, the letter kills and the spirit makes alive, and, if the spirit is not there, it really does not matter what is written into the Act of Parliament. If the spirit is there, provided there is nothing prohibitive in the Act of Parliament, then that spirit will work and make the thing real. I suggest that my noble friend should withdraw this Amendment now and, when we come on to have a general discussion on Clauses 56 and 58—I think they are the clauses which deal with national negotiations and the attempt to try to continue the co-partnership scheme—we might consider (and the Government could consider in the meantime) whether it would be possible and wise to insert some words into one or other of those clauses Which would make it clear that we are all in favour of national negotiations about the general principles, but that they should leave a wide latitude to Area Boards to carry out those principles in accordance with local practice and local experience.

LORD LUCAS OF CHILWORTH

Before the noble Viscount withdraws this Amendment, might I say one word in support of what the noble Viscount has said? In doing so, I may perhaps echo a thought of which your Lordships' minds will be receptive—namely, how much your Lordships' House, upon a subject of this sort and a Bill of this nature, misses what would have been the wise counsel of the late noble Lord, Lord Dukeston. Lord Dukeston was the head of the trade union to which the noble Viscount, Lord Swinton, has just paid such a glowing tribute. His knowledge of the gas industry and its industrial relations in this country was, I suppose, unrivalled. I feel that his advice to your Lordships' House this afternoon would have been exactly the same as that of my noble friend, Lord Hall, and of the noble Viscount, Lord Swinton.

VISCOUNT BUCKMASTER

I am much indebted to the noble Viscount, Lord Hall, for the courteous and careful nature of his reply. Particularly do I appreciate his remarks in regard to the happy relationship on both sides of the gas industry, of which, having been on the co-partnership committee of the company of which I am privileged to be a director, I have had some considerable personal experience. In the light of the observations which other noble Lords have been good enough to offer, and if not in the expectation, at any rate in the hope that something may be done on the later clauses, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT SWINTON moved, in subsection (8), to omit all words from the beginning of the subsection down to and including "Act" The noble Viscount said: I am not quite sure whether this is a good Amendment or not. On the face of it, it looks as if it were a very good one, because observe what it does. The clause reads: Subject to and in accordance with any directions given by the Minister under section seven of this Act, every Area Board shall reduce, so far as practicable, the price of gas and coke and avoid undue preference in the supply of gas and coke. We certainly want every Area Board to reduce so far as practicable the price of gas, and we certainly want them to avoid giving any undue preference. Therefore, I said to myself: "Where two such admirable principles and directives are laid down, why should we bring in the Minister and regulations? Surely this ought to be an absolute directive to them: 'Sell as cheaply as you can and avoid giving undue preference'—two very sound principles. Why should the Minister have the power to come in and to give them directions that they are not to do, or that they are to do in only a modified form, what it is clearly laid down that they are to do?" Certainly I would have said they ought to do this in every case.

However, on looking a little more closely at it, I see that it is not just a general direction by the Minister who can come in and put temptation in their way. I rather think that Clause 7 limits his powers to what is requisite in the national interest, although I believe that he is the judge of what is in the national interest—there is no definition laid down as there is, for instance, in the Monopoly (Inquiry and Control) Bill which we were considering. What I would like as an absolute assurance is this: that this clause is not intended to, and does not in fact, give the Minister power to tell the Boards, or any Board, to give undue preferences or to avoid selling as cheaply as they can. If I am told that it is to provide only for some very exceptional cases where, in the national interest, a supply of gas must be given (that was a case which we met with in other Acts: for instance, there might be a reason on defence grounds for giving a special supply with great rapidity to a particular undertaking) I think it would be all right. If the words are necessary for that purpose and for no other purpose, I think that they are not objectionable, but if they give a general power to make a Board do the wrong thing, then I would say that my Amendment is a very good and necessary one. I beg to move.

Amendment moved— Page 3, line 28, leave out from beginning to ("every") in line 29.—(Viscount Swinton.)

LORD CHORLEY

The noble Viscount has really made my speech for me. His second thoughts have hit so accurately upon the head the point of the opening words of this clause that there is little more to be said. As the noble Viscount himself has pointed out, the whole thing is subject to the general powers of the Minister in Clause 7, which can be exercised only in the national interest. The sort of matters which are in mind are exactly those to which the noble Viscount has referred. We are dealing with undue preferences. It might well be essential in the national interest that a particular type of industry should be built up rapidly for purposes of national defence. It might, therefore, be necessary that the Minister should issue a general instruction that special facilities in the way of supplies of gas must be given to that industry. I am very glad indeed to give the noble Viscount the assurance for which he has asked: that it will be only in cases of that kind where it is in the national interest, and the matter is of a general character and not of the type which he himself indicated would be mischievous, that this power will be exercised. In those circumstances and on that assurance, I hope that the noble Viscount will withdraw his Amendment.

VISCOUNT SWINTON

I think that my Amendment is not quite so good as I thought it was at first blush. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 1, as amended, agreed to.

Clause 2:

Establishment and general functions of Gas Council.

(5) The Gas Council shall have power to do anything and to enter into any transaction (whether or not involving the expenditure, the borrowing in accordance with the provisions of this Act or the lending of money, the acquisition of any property or rights or the disposal of any property or rights) which in their opinion is calculated to facilitate the exercise or performance of any functions conferred or imposed by any enactment other than this subsection or is incidental or conducive thereto.

LORD CHORLEY

This is merely a drafting Amendment. I beg to move.

Amendment moved— Page 4, line 24, after ("imposed") insert ("on them").—(Lord Chorley.)

On Question, Amendment agreed to.

3.50 p.m.

LORD O'HAGAN moved to add to subsection (5) but nothing in this subsection shall be construed as derogating from the powers conferred upon Area Boards by this Act. The noble Lord said: This Amendment that I venture to propose is one of some substance. I think it will have emerged from the discussion which we have already had that the success of the working of this Bill will be largely the result of adequate administration and action on the part of the various Area Boards; and, as I think the noble and learned Viscount said, the Government wish these Boards to have a certain degree of autonomy. From the way in which this particular subsection is drafted it very much looks as though the overriding powers which appear to be in this subsection may materially affect the action of the various Area Boards. Your Lordships will recollect the importance that was attached in the Heyworth Report to the powers which would be given to the Area Boards; and, as my noble friend Lord Swinton said earlier, there should be great responsibility placed on these Boards. In the circumstances, I hope His Majesty's Government will consider these words, in order that it may be clear that these Area Boards will not have their duties curtailed in any way, though of necessity they may be under the general supervision of the Gas Council and, also, of the Minister. At the same time, I venture to repeat what I have already said, that I believe that the success of this measure is largely wrapped up in the efficient discharge by the Area Boards of the responsibility that it is intended to place upon them. I venture also to repeat that I am afraid, under the wording of this particular subsection, that that may be jeopardised. Therefore I beg to move.

Amendment moved— Page 4, line 25, at end insert the said words.—(Lord O'Hagan.)

LORD CHORLEY

I think the fears of the noble Lord are quite groundless. If he looks at the subsection to which he is proposing this Amendment, he will see that the powers which are there conferred are conferred purely to "facilitate the exercise or performance of the functions conferred or imposed" on the Gas Council. If he looks at the earlier part of the clause, he will see that the Council will simply advise the Minister to promote and assist the efficient exercise and performance by Area Boards of their functions. Then there are the powers in subsection (3): to manufacture plant required by Area Boards. to sell or supply such plant to Area Boards…to manufacture gas fittings and coke fittings except for export.… So it is really in pursuance of those powers that these words in subsection (5) are inserted. I think the noble Lord will appreciate that what he is in fact proposing carries the matter no further, and I hope he will withdraw his Amendment.

VISCOUNT MAUGHAM

Might I add a word on this? I find myself in complete agreement with what Lord O'Hagan has said. This is a question of law and, for my part, I should be quite content if the Lord Chancellor would undertake to look into it before the matter comes to Report stage. But I might say now that in my opinion subsection (5) of Clause 2 is not limited to transactions which have been referred to in the preceding subsections. There is nothing in the clause which leads one to suppose that it is so limited. It refers to any transaction (whether or not involving)"— a number of things which I need not read— which in their opinion is calculated to facilitate the exercise or performance of any functions conferred or imposed by any enactment other than this subsection or is incidental or conducive thereto. Speaking from a very long experience, I am inclined to think that the words which Lord O'Hagan has suggested will, or may in the future, prevent a good deal of heart-burning as to the precise limits of subsection (5). I would ask the Government to reconsider the view expressed by the noble Lord just now as to the necessity for these words. To my mind they are necessary.

LORD CHORLEY

Naturally I am much influenced by an expression of opinion corning from the noble and learned Viscount who has just sat down. Of course, there is no other enactment at the moment; it must be some future enactment, if it goes outside this particular enactment. Presumably, if a later enactment of that kind were in fact passed through, it would obviously override; but in the light of what has been said by the noble and learned Viscount I will certainly have it looked into again.

LORD O'HAGAN

I should like to thank the noble Lord for what he has said and, in view of his assurance, I will not press the Amendment. I rather infer that the drafting Amendment that we have just passed goes a certain part of the way to meet my point. I withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 2, as amended, agreed to.

Clauses 3 and 4 agreed to.

Clause 5:

Constitution of Area Boards and Gas Council.

(2) Every Area Board shall be constituted as follows:— (a) the chairman and not less than five nor more than seven other members shall be appointed by the Minister from amongst persons appearing to him to be qualified as having had experience of, and shown capacity in, gas supply, local government, industrial, commercial or financial matters, applied science, administration, or the organisation of workers; and

3.57 p.m.

LORD HAMPTON moved, in subsection (2) (a) after "Minister" to insert: and in making such appointments the Minister shall secure that either the chairman or the person appointed under the next succeeding subsection to be deputy chairman shall have had practical knowledge of the gas industry and that the other members shall be appointed The noble Lord said: As your Lordships will be aware, Clause 5 deals with the composition of the Area Boards and of the Gas Council, and lays down that the Minister shall be responsible for the appointment of the chairman and the deputy chairman of both. This Amendment seeks to ensure that, in making these appointments as regards the Area Boards, the Minister shall secure that either the chairman or deputy chairman shall have had practical knowledge of the industry. For my own part, I should prefer that in every case the chairman himself should have that practical knowledge, firstly because he will be a very important person, certainly at the beginning of the new era and the new set-up, with great responsibility as to the reorganisation of his Area, both in the administrative and the technical field.

Secondly, to my mind it is essential that from the day of his appointment he shall be able to inspire confidence, both in his staff and his workers and, equally important, have confidence in his own ability to carry his job in full measure. Thirdly, I should have thought it would have been very much more helpful to the Minister if all members of the Gas Council had a practical knowledge of the industry. But we realise that, consistent with selecting the best man in every way suited for the post, the Minister should have as free a hand as possible in selecting his team, and therefore we suggest the alternative of the chairman or his deputy. It may be said, of course, in so far as members of the Boards are concerned, that they—and here I quote from the clause—shall have had "experience of, and shown capacity in, gas supply." The chairman and his deputy will have at their call, in the natural course of events, all the knowledge necessary. But surely, when it comes to weighing the evidence as between possible conflicting opinions—and we all know that experts do disagree—and making decisions upon the evidence so gained, that is not quite the same thing. It seems to me that a background of personal knowledge and experience will be essential.

As I suggested earlier, confidence in "the boss" from the beginning of the new era of the industry will be of incalculable value in securing smooth working and co-operation. Such confidence is surely more easily obtainable if the person appointed is, so to speak, from the beginning "one of us." I may be told that, in the natural course of events, the Minister will seek to appoint men who have this practical knowledge. If so, why not put it in the Bill? With its great traditions of public service and long history, the gas industry should surely be able to supply all the men necessary who have qualifications in both fields. I submit that the confidence of the industry and of the consumer—who, after all is the person most vitally concerned—will be greatly increased if His Majesty's Government can see their way to accept this Amendment. I beg to move.

Amendment moved— Page 5, line 19, after ("Minister") insert the said words.—(Lord Hampton.)

VISCOUNT HALL

My Lords, a somewhat similar Amendment was moved during the Committee stage in another place, and I think it would be well if I quoted the reply which was given by the Minister, for I think it contains a definite assurance as to what is his intention in relation to this matter. He said: we have no intention—I can give that assurance—of going outside the industry except where we honestly believe that there is no one in the industry as capable of filling this particular job as somebody from outside. In essence, I think it would be agreed that a man in the industry starts with a great initial advantage, but equally we do not want to rule out the possibility of appointing someone from outside. I think that that assurance is quite definite and clear. It is given on general grounds, and it is most unlikely that there will be many cases where neither the chairman nor the deputy chairman of an Area Board is not what we might call a "gas man." The Amendment would tie the Minister's hands rather rigidly, not only now but for the distant future. Although these jobs are always likely to go mainly to men in the gas industry, I think it is undesirable to put this limitation on the discretion of the Minister. I believe that men in certain branches of the gas industry itself, while they may not have had experience in the actual production of gas, in certain cases have had experience in certain of the ancillaries of the gas industry.

If the, noble Lord requires further assurance I can refer only to what has happened in relation to the appointment of chairmen and deputy chairmen of the Electricity Area Boards. In that case, no fewer than twenty-two out of the twenty-eight persons appointed as chairmen and deputy chairmen were from the electricity industry. In view of the experience which has been gained quite recently, and of the assurance which has been given by the Minister (and, after all, the Minister who is mainly responsible for the appointment of the chairmen and deputy chairmen of the Electricity Area Boards will, to some extent, have the appointing of the chairmen and deputy chairmen of the Gas, Area Boards) I would ask the noble Lord not to press this Amendment.

VISCOUNT SWINTON

The First Lord of the Admiralty has just given twenty-eight excellent reasons for accepting this Amendment, and then he has asked us not to press it.

A NOBLE LORD: Twenty-two reasons, not twenty-eight.

VISCOUNT SWINTON

I cannot understand why the noble Viscount asks the Committee to reject this Amendment. We are getting a little tired of being given all these assurances—of practices to be followed, and from which, we are told, no one in his senses would dream of departing—and not having them put into the Bill. If that is the way we ought to legislate, then all that is wanted in a nationalisation Bill is one clause to say that the Government will take over this industry, appoint a sensible Minister to run it and that that Minister will use his discretion in the most sensible way he can. If, in fact, a Bill were ever presented in that form, everyone would say what a disgraceful thing it was. We lay down all sorts of matters in great detail in this Bill. When it comes to compensation there is meticulous dotting of i's and crossing of t's—or double-crossing. But when it comes to what is vitally important—that is, who is to run this decentralised industry—then, although any sensible Minister would appoint people who know something about the industry, we are told that it must not be put in the Bill. Why not?

THE LORD PRIVY SEAL (VISCOUNT ADDISON)

It is in the Bill.

VISCOUNT SWINTON

No, it is not. It is definitely not in the Bill. The noble Viscount really must read measures for which he is responsible. I know that it ought to be in the Bill, but if he had been paying proper attention he would have seen——

VISCOUNT ADDISON

It appears on page 5, at line 21—that is, in subsection (2) (a) of the clause.

VISCOUNT SWINTON

I know this clause very well. Of course I have read it. It is the "Uncle Tom Cobley and all" clause, and we have often seen it before. It states that in the constitution of every Area Board

1. "(a) the chairman and not less than live nor more than seven other members shall be appointed by the Minster from amongst persons appearing to him to be qualified as having had experience of, and shown capacity in, gas supply, local government, industrial, commercial or financial matters, applied science, administration, or the organisation of workers; and
2. (b) there shall be one other member who shall be the person for the time being holding the office of chairman of the Gas Consultative Council established under the following provisions of this Part of this Act for the area of the Area Board:"

The person referred to in paragraph (b) has not necessarily to be a person who knows anything about gas. He has to be someone whose appointment is agreed with local bodies.

I suggest that the first hundred people one would meet in the street would probably come within this clause. Sir Geoffrey Heyworth, upon whom the Minister has relied so greatly, was quite categorical about this in his recommendation. He said the chairman should be a man experienced in the gas industry. We have given in this Amendment a wider discretion which, on the whole, I think, is a reasonable one. We say that either the chairman or the deputy chairman shall be a man experienced in the gas industry. I can conceive of a case where it might be said: "I would rather take for chairman a man of general business experience and have as his deputy a man who has had long experience of the particular industry." But to say that we will not put into a Bill, which provides for a Board whose sole job is to be the efficient manufacture and sale of gas, a requirement that either the chairman or deputy chairman shall be a man with experience of that industry, seems to me to be not sensible. As the noble Viscount said, of course the Minister would appoint that kind of man. I have nothing to say against this Minister; he is a very good young Minister, I am told. He does not approve of washing, but he does approve of gas.

THE LORD CHANCELLOR

There is no vermin about him, at any rate.

VISCOUNT SWINTON

No, indeed. I am glad he has not reached that stage, and I hope he never will. It would be awful if the Cabinet had to set up a delousing station for some of their colleagues! But, seriously, surely it is good sense to insert these words. We are not legislating now only for what this Minister is going to do; we are legislating for all time—at least, I suppose we are. At any rate, we are legislating in general terms, and we ought really to legislate with good sense. I was much impressed with a point Lord Hampton made. He said that we want to give people in this industry confidence in the industry. I hate going outside to appoint somebody to command the battalion. I think it is a bad thing in the Services, and it is a bad thing in business. I want, by this provision, to give an indication to this nationalised industry that the jobs are going to the boys who come up through the industry and who know something about it. I believe this to be essentially right, for all the reasons which the noble Lord himself has given. I am afraid we shall have to divide on this Amendment if the Government are unable to accept it.

THE LORD CHANCELLOR

I quite realise the force of the argument. Indeed, I think if I were the Minister I should invariably select either the chairman or the deputy-chairman as a man who had been trained in the gas industry. But I do not think, as a rule, it would be the chairman. I have had no practical experience, but when I was at the Bar I had great experience of meeting Boards when they had got into difficulties. My experience is that it is rather a good thing not to have a technical man as chairman, but to have a man of wide outlook and wide sympathies, a man of great experience, and so on. As a rule, I think that is preferable.

The hesitation I have about the matter arises from the fact that there might be an exceptional case—it would have to be a very exceptional case—where the personalities with whom you were dealing were so strong that you might prefer, on a particular Board at some time (this, of course, is going to apply to the future) that neither your chairman nor your deputy-chairman should have what is called "practical knowledge". I am not quite sure what "practical knowledge" means. It is for that reason that I am hesitant to accept an Amendment which I quite concede would be sensible in 99 cases out of 100. I am willing to consider the matter again, and discuss it with the Minister, and see whether, in order to meet your Lordships' wishes, he will accept an Amendment on these lines. If he does, I shall be very pleased. I cannot promise anything, because I have no authority at the present moment except to resist the Amendment. But if your Lordships want the Amendment, your best chance of getting it, if I may suggest so, is to see what the Minister thinks about it. If I am given authority, I shall be glad to accept the Amendment.

LORD HAMPTON

I am grateful to the noble and learned Viscount for his undertaking. I would assure him that we put forward this Amendment entirely with a view to helping this new organisation at the beginning. We feel that it is important to have the provision in the Bill, where all may read it, that the Government are taking every possible step, as far as they can, to make the industry happy about the whole set-up. In view of the assurance given by the noble and learned Viscount, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

VISCOUNT CECIL OF CHELWOOD moved to add to paragraph (a) of subsection (2): not less than two members shall be elected by the workers in the gas undertakings taken over by the Board; and". The noble Viscount said: This Amendment is simply to add to the Area Board two members, to be elected by the workmen of the undertakings within the district of the Area Board. I think it raises a point of some importance on the question of the reorganisation of industries generally, and particularly in this case of the gas industry. The object of the Bill (I think it has been restated this afternoon) is to secure and improve the supply of gas for the various purposes for which it is used, and, therefore, to increase the efficiency in the methods used for its manufacture and sale. It is therefore of the first importance to increase the interest of the workers in what they are doing. A bored worker is a bad worker, as everybody knows. On the other hand, the conditions of modern industry make it rather difficult to provide that the worker shall be interested in his work. That is so for many reasons. One of them is merely the size of the undertaking. The size is such that each worker necessarily regards his particular job as so small a part that he is apt to feel that he is merely a cog in the machine, and he does his allotted work mechanically and without that enthusiasm which some great authorities have declared to be the chief need of industry at the present moment.

Prima facie, this Bill will not remedy that. On the contrary, it will increase that difficulty, because, as we all know, it provides for amalgamating gas undertakings into units still larger than any existing undertaking. Unless we take steps to prevent the result, each worker will inevitably feel that his effort is smaller than ever compared to the size of the undertaking; and he will feel, therefore, that the quality of his work is of little or no importance. Every step possible should be taken to enlarge what I may venture to call the mental horizon of the workers. I cannot help feeling that the constitution of the Area Boards does nothing to help in this matter. They are nominated by the Minister, who is himself appointed by the Prime Minister; and the Prime Minister represents, not the gas policy particularly, but the general tendency of the votes given at the previous General Election. It is true that each worker has a vote and, therefore, a tiny—it is almost infinitesimal—voice in the general industrial policy of the country, but it is mere folly to suppose that by that vote he has any real share in directing the particular industry in which he is engaged.

The Amendment that I am venturing to submit to your Lordships will at least give him a voice by giving him his share in the appointment of two members of the Board. Through those members he may hope to influence the way in which the section of the industry in which he is engaged is carried on. The member of the board will be able, as a matter of right and not of favour, to receive information on any point upon which he is interested. I know it is said that the fact that industry belongs to the State will give the worker a greater interest in his work. I am bound to say that I doubt very much whether that is a sound view. The State is a mere abstraction; it does not represent another individual. It represents just a body sitting somewhere, in Whitehall I suppose, which directs the government of the industry. There is no direct human relationship between the State and the worker, even under a system of nationalisation. It is not, indeed, the State to whom he will look at all, but to the Area Board, who will be in the place of his present employers. The success of this plan, and the success of the Bill generally in giving anything like increased interest to the workers must depend largely upon relations with the Board.

Your Lordships should remember that these workers have now the right of electing members of the board of directors of the company for which they are working. Having had some means of ascertaining whether I am right in so saying, I think they will feel it bitterly if that right is taken from them and nothing is put in its place. It is for that reason that. I ventured to put down this Amendment. If the industry is to work properly the bond of human sympathy between the workers and their employers must not be destroyed. We have often heard the phrase that a Government should be one which operates with the consent of the governed. I believe that to be a perfectly sound view, and one of the many discoveries in political wisdom which this country has made. I believe it to be as important in industry as it is in political affairs. To some extent we have solved the problem of securing the consent of the governed by the representative system in politics. It does at any rate involve a direct relationship between the voter and the Government. That principle has, on the whole, been very successful in this country, and I venture to say that it should be extended to industry. It is only in that way that we can avoid what the Prime Minister called the substitution for democratic socialism—which he recommends—of a bureaucratic collectivism, which he rightly condemns. After all, it is upon the freedom of the worker that his interest depends, and it is upon his interest that depends not only his efficiency but his responsibility for the work in which he is engaged. It is for those reasons, which I will not venture to enlarge upon now, that I recommend this Amendment to your Lordships.

Amendment moved— Page 5, line 24, at end, insert the said words.—(Viscount Cecil of Chelwood.)

THE MARQUESS OF SALISBURY

Perhaps I may say one personal word in support of the Amendment which has been moved by my noble relative Lord Cecil. We are often told in this House, and outside, that the greatest cause of distrust in industry at the present time is that the men do not know what is going on. I have no doubt that at various times in the past many noble Lords opposite have felt that very strongly, at any rate with regard to private industry. I expect there is a good deal of truth in the suggestion that there is a distrust. In old days, when industries were small—sometimes you still find small firms—that cause of distrust did not bulk very large, because the employer was in such close touch with his men that he was able to tell them, day by day, what was happening with regard to the fortunes of the firm. But the bigger the industry becomes, and the larger the amalgamation that is created, the more remote the employer becomes from the man whom he employs, and the greater need there is for those men to be given reassurance—at least so I should have thought. I believe this evolution reaches its furthest point in the case of a nationalised industry. After all, it is a vast concern, covering the whole country, and the individual cog in the machine is very remote indeed from the board room. One would have thought, therefore, that some such special machinery as is suggested by this Amendment was more necessary there than in any other case.

I have often heard, as has my noble relative, the argument that now that the State is the employer, the man can feel absolutely confident that no private interests are to stand in the way of their welfare. I have heard that urged with great force and sincerity. But I do not think that is so. I say this in no controversial spirit. I think there is a tendency, so far as I can understand it, and so far as I have heard it, in the coalfields and in other fields of nationalised industry, for the men to feel not that they have a completely beneficent employer, but that they have in fact, if I may use the phrase, "exchanged one boss for another," and that inevitably the new boss—because he is a bigger boss—is further away from their personal concerns than the old one, and is one with whom they cannot get in touch. If industry is going to be nationalised, we on this side of the House do not want that feeling to gain ground, any more than do noble Lords opposite. Obviously, it is unhealthy for that body of industry. Surely, the best way is that two representatives of the men should divulge to their fellows all that is possible as to the working of the industry in which they work. The easiest way to do that is for the men to feel that they have on the Board some representatives who have, as it were, a watching brief for their interest.

After all, that is what a director does in a company. I have always thought that the word "director" is most unfortunate, because it gives the impression that all these members are, in fact, running the industry. They are not, of course; that is done by the management. The directors are there to watch the interests of the shareholders. The shareholders are the people who have invested their money, and these are the people who have invested their labour. I put that forward only as an argument which appeals to me, and I should have thought that it ought to appeal to the Government. It does not seem to me that there is anything very revolutionary in the proposal. It is a natural evolution which ought to be acceptable to members of all Parties. I therefore strongly hope that the Government will be able favourably to consider this Amendment.

LORD RENNELL

I had considered an Amendment on the same lines as this, but I did not put it clown because I saw the Amendment of the noble Viscount. There is only one aspect of the terms of his Amendment which make me a little doubtful. The words in his Amendment are: Not less than two members shall be elected by the workers.… There is a certain danger, if members of boards are elected by organisations, that they tend to become advocates of the organisation, instead of members of the board. On the other hand, the actual prescriptions of the clause as drafted in the Bill do not make it in any way mandatory on the Minister to appoint any member of an organisation of workers. It is only that workers shall be appointed from a group of people. I wonder whether it would not meet the noble Viscount's point and the point of the noble Marquess, Lord Salisbury, if the Amendment were altered to read: Not less than two members shall be selected from among the workers in the gas undertakings taken over by the Board… They would then feel that they are members of the Board, rather than representatives of the organisation. If an Amendment of that sort were acceptable to the Government I should be strongly in support of it. I feel that the terms of the subsection as drafted are not sufficiently mandatory to require the Minister to appoint any members of any workers' organisations. Having regard to the past history of the gas industry, I think that is a great pity.

VISCOUNT HALL

Like other noble Lords, I have listened with a great deal of interest to the speech made by the noble Viscount, Lord Cecil, in moving this Amendment. I know and admire his long efforts for the humanising of relationships between workers and employers in the gas industry. That industry owes much to his efforts. His proposal, of course, is not revolutionary, but it lays down a new principle in industry.

VISCOUNT CECIL OF CHELWOOD

No.

VISCOUNT HALL

I do not know of a single instance, certainly in the industry with which I have been connected, where representatives of the workpeople, selected by the workpeople, have been asked to join any board of directors.

VISCOUNT CECIL OF CHELWOOD

My noble friend has not been properly informed, if I may say so. It is certainly so in the gas industry. The South Metropolitan Gas Company had a board of nine members. Of these, three represented the workers; two of these three represented the manual workers and one represented the clerks. They were all elected—not, if I may say so, with respect to the noble Lord, Lord Rennell, appointed by an outside organisation. The workers themselves chose the men they desired to see on the board. That has been in operation for a great many years, and it has always worked perfectly smoothly and with the best possible results.

VISCOUNT HALL

I am delighted to hear that. I think it must be confined entirely to gas companies, for I do not know of any other industry where an experiment of the kind has been tried.

I think it may be said that in the set-up of the boards under the nationalised industries there is to be found much greater confidence in the Board by the workpeople than they had in their previous employers. I am referring to particular industries, and especially to the coal-mining industry. In that industry over a very long period—it might I well go back to 1921—there has been an utter lack of confidence between the workpeople and those who were charged with the responsibility of management. In South Wales at the present time much of that feeling has been destroyed, and a growing confidence is being built up as between the workpeople and the Board itself. I look upon this proposal with some sympathy, but unfortunately I am charged with the difficult task of saying that, under the setup which is provided under the Bill, the selection of persons to serve on the Area Boards and the Gas Council must be the responsibility of the Minister. It is a difficult matter when persons have to be selected from a large area. Take the Area Board for the whole of South Wales, where—although I can only hazard a guess—the number of people employed in the gas industry must be 15,000 to 20,000. To select by ballot two representatives from that area would present a considerable amount of difficulty; and there is, the danger that, once the precedent is laid down, other interests, such as the local authorities who are responsible far the ownership and management of many of the gas undertakings in the various areas, would ask that in the same way they should have direct representation upon the board.

Although, as I say, I have some sympathy with the point of view expressed, I can appreciate the difficulty at the Minister in connection with this Amendment. The clause which has already been referred to gives a wide choice for representation on the Board; and as has been stated in the discussions in another place it is the intention that representatives of the workers will be given very careful consideration in the selection for membership of the board—although the Minister did not commit himself that the representatives of the workers should come from that industry. I wish that I could meet the noble Viscount, but unfortunately my instructions are that we cannot depart from the method of selection. For these reasons, it is impossible for me to accept this Amendment.

LORD RANKEILLOUR

I hope the noble Viscount, Lord Cecil, will divide on this matter. I have the greatest distrust of a system of nomination from a long distance to important bodies. I wish it were possible in this instance to proceed on the lines of the Port of London Authority or the Thames Conservancy. If that is not possible, I think that some improvement where it is most needed in the system of nomination is supplied by this Amendment. If ever there was an industry in which the men were qualified to act in this way it is the gas industry. As my noble friend has pointed out, there has been confidence among the workers in the industry. I do not think that recent results of nationalisation have shown that there is any greater good feeling than there was before. I know all about the Grimethorpe Colliery. The history of that colliery certainly does not support that conclusion. However, that is by the way. We have a definite proposal here and I trust that it will be voted upon. No doubt some Schedule may be necessary as to the means of election, but there is plenty of time for that. At any rate, this is a fine principle to establish, and I trust that that will be done.

VISCOUNT CECIL OF CHELWOOD

I am much obliged to my noble friend and to my noble relative. Certainly, if I get any support I shall divide the House, because I regard this matter as of the first importance, not only for the gas industry but also for the general industrial policy of this country. It is time to recognise that the best way out of our difficulties is to inculcate a fresh confidence and a fresh responsibility in the workers. Give them the right to know exactly what is going on and to offer their advice and opinions. That is the way to avoid reckless strikes, such as we have seen in the immediate past, and other difficulties in industry. I want to press upon the Government that this is not so much a question of confidence in the State or in the Area Board. The question is: Can we do something which will make the employment of the workers more humane and more interesting than it is now, and, there-more, more efficient? Also, can we give them such a sense of responsibility that everyone will feel that the industry in which he is working is partly his own? That is the object of my suggestion. As to the problem of the number of people involved in my Amendment, my noble friend is not very courageous in telling me that there is difficulty in polling 15,000 men. That would mean that our whole constitutional arrangements are thoroughly unsound. May I say that I most heartily agree with my noble friend in saying that nomination is a poor substitute for election. I earnestly press upon the Government that this is not a new device, something that has never been tried before. It has been tried for something like fifty years in one of the great industries with which we deal in this Bill—and tried with perfect success.

VISCOUNT RIDLEY

I do not know whether the noble Viscount is withdrawing his Amendment or not. I hope, however, that the House will not accept this Amendment, not because I have not every sympathy with the idea of men who are working in the industry gradually rising through it and reaching responsible positions, but because I think that the method which is laid down by the Amendment is totally wrong. I think also that it is founded on a slight misapprehension. Let me say a word upon that point first. The noble Viscount who moved this Amendment referred to the difficulties which are now apparent in industry, particularly in nationalised industry, such as coal, due to the trend of Government and the distance from the individual worker to the responsible head. That is a very real difficulty to an industry, but I do not think that the solution here recommended would have any effect. It would involve a matter of perhaps 20,000 or 30,000 workers employed by one of the Area Boards. They would have to elect two people, and that is the last they would see of them. Those two men would be employed no longer as workers in their jobs, as they were before, but would become at least part-time members of the Board.

It is suggested that they would then be in a position to know all that was going on, all that was being planned and thought, and that they should be used as a means of keeping contact between the responsible Board and the workers themselves. But there is a way of doing that which avoids the confusion arising from divided loyalties—confusion that I think is bound to arise here if members of a Board are appointed by election rather than by nomination. People elected by their fellow workers are there to represent them, to put forward their point of view, whereas these people are members of the Board for the purpose of running the industry. That is where confusion of thought arises. The modern trend of thought in the matter of meeting the difficulties mentioned by the mover of the Amendment is much more in the direction of breaking down responsibility so far as possible, and of arranging for what is known as joint consultation at a number of points in the chain of command. So far as that has gone, I think it is pretty clear that it can achieve results. I am sure that that is the way to do it. As to the extent of this practice in the gas industry, I think that it is only in the South Metropolitan Gas Company and in perhaps one other company that it is at present in operation. Of course, that is a very small percentage of the gas industry as it now is.

It seems to me that it is partly open to the Minister to appoint people, as it says here, with experience in the organisation of workers—people who have been brought up in the industry and also, beyond that, have been trained in management of trade unions and for dealing with wage negotiations. It is clear that the best and the most satisfactory method for the man who starts as a manual worker to work up into management and direction of industry is by gradually gaining experience and being given opportunities—more opportunities than he is now given—of equipping himself in the functions of management and direction, which are very different from the functions which are carried out by most of the men employed by the gas industry. So that, granted that there are improvements in the methods of training for promotion, which are, I think, referred to in this Bill, there is every opportunity for the men gradually to qualify themselves and to become appointed under this general category as members of the Board.

A practical point of difficulty arises here. It has arisen over the Electricity Act. I do not know whether it applies also in the case of this Bill or not. That is, that I think it has been found in one or two cases under the Electricity Act that there is no provision for a pension scheme for part-time members of the Board. It has been found difficult to persuade people who are at present members of pension schemes or are employed by trade unions and have their pension rights, to give up all those rights and become part-time members of the Board when no pensions provision is made for them in the Act. For these reasons, I think that this Amendment is a mistake. There are other and better ways, first, of keeping the worker in industry in contact with the management and direction; and, secondly, of promoting trained people from the lower levels right up to the top. I think this is an unsatisfactory proposition. It would be a difficult one to handle and would put the two elected people themselves in a very unfair position.

LORD LUCAS OF CHILWORTH

No one will accuse any member on this side of your Lordships' House of not being in sympathy with the underlying principle contained in this Amendment, but I suggest to your Lordships that this is fundamentally the wrong way to achieve it. I cannot conceive of a method which would cause more trouble in an industry which all your Lordships have said on many occasions is the most harmonious industry in this country. It has been stated by all noble Lords on the other side who have been spokesmen for this industry, and have claimed to have a lifelong experience in it, that its industrial relations are a model of what industrial relations should be. I think noble Lords will agree with me that one of the chief reasons for that is that the wisdom and guidance of the particular trade union have been, to a major degree, responsible for the organisation in the gas industry. Suppose that you started representation upon these Boards by popular vote. I need not say much upon some of the evils of popular voting, and mandated representations. Every noble Lord has agreed that this is entirely the wrong way of putting responsible men upon these Boards. I wonder what would have happened if a fortnight ago had been the period for electing two or three dockers' representatives upon the dock authority.

VISCOUNT CECIL OF CHELWOOD

It would never have occurred.

LORD LUCAS OF CHILWORTH

That is a supposition which the noble Viscount ought not to make. Do you really need to have mandated representations for which there will have to be fierce electioneering to serve upon these Boards? And to represent whom; and to represent what? Surely the members of these Boards have to run this concern in the national interest, and not to look over their shoulders all the time they are on the Boards to appease and collect the votes of the people who put them there. I feel quite certain that if you want to bring about close co-operation and a greater degree of worker representation upon Boards, whether they be national boards or any other—and I am all in favour of it—a hasty movement such as this would retard that desirable end for years and years to come. I therefore hope the Committee will reject this Amendment.

VISCOUNT SWINTON

May I venture to make a suggestion to my noble friend? I think this has been a most rewarding debate. I believe there is a tremendous volume of sympathy in the Committee for having worker directors on the Board, and particularly in this industry. I entirely agree with my noble friend Lord Ridley that, having regard to the size of these undertakings, it will not in the least be a substitute for that close joint consultation in every sub-station or, at any rate, throughout the whole organisation of the Board. I feel that what is enormously important is to get the right men. That means two things: it means men who are able in themselves to make a real contribution; it also means men who can serve in a team. Both these things are very necessary when it comes to a Board or to the management of a trade union. Even in the management of a Party it is not unimportant.

There is, I think, some force in the statement that this matter of elections has worked extremely well in the South Metropolitan Gas Company. There, it has grown up through the course of time, and everybody has got used to it. There is a complete profit-sharing system, where these people are shareholders, and it is almost a family partnership. It is very intimate. But you are legislating here for all these Boards and, as I said before, you cannot legislate a spirit into them, and that may be a reason why you might not get the best men elected. You want people who will undertake functions on the Board other than from the point of view of representatives. It is like representing a constituency in Parliament. I have always made a working rule in my business life that if people contemplate a vote on a board of which I am a member I shall resign from the board, whether the people are with me or against me. It would be unfortunate if they went back to elections, rather like some people go back to election pledges. I had a fairly safe seat, but others were not so happily situated; and there might be a good many candidates for the post. It would be most unfortunate if you get the sort of feeling "What have they got for us while they were sitting on that Board?" Those are the dangers.

On the other hand, I think there is something to be said for having workers on the Board, not elected in that way but chosen. I do not quite know how, and perhaps we might think about that between now and Report. I do not think there would be the least difficulty in finding for every one of these Area Boards not one but twenty worker-directors, who would be valuable directors, not simply because they are workers but because they could contribute a great deal to it. And the right men would be found. I venture to suggest to my noble friend that he might ask the Committee now to accept his principle but leaving out at this stage the words "elected by the," and that he should move his Amendment in this form: Not less than two members shall be workers in the Gas undertakings taken over by the Board; and… If he is willing to move the Amendment in that form, I certainly would go wholeheartedly with him in his Amendment. About the form of his Amendment as it stands now, in spite of all the forcible points that he put forward, I should feel a difficulty. But I believe that for the Amendment in the form I have suggested he would have a large consensus of opinion in his favour. It may be that at a later stage, if that Amendment were accepted, the Government might want to add perhaps one more member to the Board, but that would be an easy and a consequential Amendment to insert. Therefore I suggest to my noble friend that he should move his Amendment in the form in which it stands but leaving out the words "elected by the."

VISCOUNT CECIL OF CHELWOOD

Of course, I shall have to do what I am told.

VISCOUNT SWINTON

By whom? It is a free vote.

VISCOUNT CECIL OF CHELWOOD

My whole career shows that I am always ready to do that. If that is what the House desires, of course they will do it. But would not the best plan be for my noble friend to move an Amendment to my Amendment? I shall vote against him, but that Amendment would no doubt be carried in its amended form. I would rather do that, because I cannot honestly bring myself to say that I think nominated workers are anything like as good as elected members. I belong to the English school and not to the Russian school. The whole difference really between us and the governors of Russia at this moment is: "Do you believe in election or do you believe in nomination?" They say: "We believe in nomination as much the soundest way of producing a really representative body." The result is what we have seen—the body becomes a mere oligarchy, without any real relation to the people it governs. We believe, and have believed for centuries, in this country, that if you want representation the best way of securing it is by election. And that is the only way in which we have ever succeeded in doing it.

There is the matter of the difficulty and danger which my noble friends belonging to the progressive Party foresee in any expansion of the power of the workers—and indeed that Party have always been foreseeing difficulties and dangers in every extension of the franchise, from the Reform Bill onwards, They say "You do not know what will happen. They will be at the mercy of agitators, they will vote for all sorts of things," and so on. I agree that they are real dangers. But, what are we going to do in order to bridge the gap that at present divides the employers from the workers? That is the real problem in this country, and in my view it is by far the greatest industrial problem that exists. I believe that the only way to do it is by getting the workers to understand that they are not just bought like slaves, to do their job without any voice in the organisation or the management of the concern by which they are employed, but that they are real partners and owners of the concern. They must be persuaded that they are working primarily for the concern, but also for the public duties involved. Thus you will find the real kind of sympathy and security that exist in the great gas company, in dealing with which I have repeatedly bored the House. But that company affords a splendid example of what can be done by giving complete trust to the workers, and it shows what an immense response you get by appealing to their sense of responsibility and loyalty to their work. I will do whatever my noble friend tells me I must do, because I do not want to quarrel with him. But I do beg him, if he can bring himself to do so, to support me in some way or other in the suggestion which I have ventured to make to-day.

VISCOUNT SWINTON

It is not a question of my telling the noble Viscount what to do, or of the Whips being on, so far as we are concerned. We leave this matter entirely to a free vote. I hope that I shall not be permanently labelled as a commissar. I would be perfectly prepared to move an Amendment to my noble friend's Amendment, because that would be the right way of doing things. And I do not think that it is particularly undemocratic. I would just point out something which we might be in danger of overlooking in this very interesting debate—something which may have escaped my noble friend's notice. The other members of these Boards are not to be elected at all. We must remember that. I am not saying that I like the arrangement for all these people to be appointed by the Minister. I prefer the process of election, but I think it would be a strange thing, apart from other objections, to introduce into this clause an Amendment of this kind. The result would be that you would have six or seven members appointed by the Minister and then add two people appointed in quite a different way. But I will not argue this further now. My noble friend's Amendment is before the Committee.

THE LORD CHANCELLOR

Let me see if I can elucidate this discussion a little. If it is a question as between the government of Russia and that of England I am wholeheartedly on the side of England. But if it follows from that that election is always better than nomination, then I am not prepared to assent to any such proposition. One of my tasks, as noble Lords know, is to appoint Judges. In certain parts of the United States they elect Judges. When I was there last summer, I was asked by many people how they could get rid of their system and adopt ours. There are undoubtedly instances where, without any slavish adherence to the Russian system, nomination is better than election. The question is: Is this one of those instances? I think that it is; and for a very simple reason. If you are going to have a Board, part of whose members are nominated and part of whose members are elected, I do not believe that you will be likely to get a very harmonious body. It seems to me that the two elected members will be delegates. They will, in my view, be likely to have divided loyalties. The whole success of this scheme depends upon having happy and contented Boards, with members who will work together, who will pull together and, generally speaking, exhibit the team spirit. To have a Board constituted in the way that is now suggested is not, in my view, calculated to promote the team spirit.

What is the position at the present time? Clause 5 gives the Minister power—this appears on page 5, lines 20 to 24—and indicates to him the sort of people from whom he is to appoint his boards—they are to be …persons appearing to him to be qualified as having had experience of, and shown capacity in, gas supply, local government, industrial, commercial or financial matters, applied science, administration, or the organisation of workers.

LORD RENNELL

May I interrupt the noble and learned Viscount for a moment? I think there is a point here which may have escaped attention. One of the categories from which the Minister is to appoint these Boards is people who have "had experience of and shown capacity in…the organisation of workers." What we are discussing now is the appointment of workers from the industry, and not from an organisation of workers. There is a vast difference. The Minister is not required to appoint someone from the workers but from organisation of workers.

THE LORD CHANCELLOR

That is exactly the point I was going to make. That will appear when I come to the projected Amendment to the Amendment. This is my reason for opposing this idea of having a board part-elected and part-nominated, and the elected part being mere delegates—for that is what they would tend to be. They would tend to be mere delegates pressing a particular point of view, feeling that they have got to do so to justify their election, that it was, in fact, their raison d'être. I say this, knowing that it may be used in evidence against me hereafter, but what we have to guard against is this sort of thing. You might have pressure for, say, an increase of wages or something of that sort, and it might be too readily assented to because there is no strong enough motive to resist it. It would be passed on to the consumer. That is the kind of danger we have to guard against. I do not think that danger would be in any way lessened if we had elected representatives. The tendency would be for those representatives to press a particular point of view. Therefore I think the principle is wrong.

I can well understand that the system has worked, and worked well, in a comparatively small and homogeneous company like the South Metropolitan. I agree that they blazed the trail in their early days, when the welfare of the workers was regarded—I am not making any Party point about this—as nothing like so important as it is to-day, when it was regarded as more or less a sideshow. But it is one thing to do this for a particular company, such as the South Metropolitan, and quite a different thing to do it for an Area Board which spread over a huge area and embrace all sorts of companies which have no relationship with each other. I think therefore that this idea is impracticable. Let us by all means stress as most important the necessity of getting together a happy and contented band of workers, and all that that means. Let us have all the Boards concerned to bring that about. Let us have facilities for discussion with the organisations of the trade unions, and so on, to hammer out satisfactory schemes. I believe that is a much more likely way of bringing about what we all desire to bring about than to have part of the Board elected by the workers—a method which I believe to be wrong.

I come now to the suggested Amendment to the Amendment. Here I am inevitably speaking without any instructions from the Minister, because there has not been an opportunity for him to consider the matter. The point is that the classes from whom the Minister can appoint are sufficiently wide to include the trade unions. The phrase is, "organisation of workers." The exception which, on the spur of the moment, I would take to the Amendment if moved in Lord Swinton's form—I do not know whether this is the view the Minister would take—would be that it would make that impossible. I do not say you should appoint persons from the trade unions, but I do say that you should not word your Amendment so as to make that impossible. The appointment may be from the workers in the industry; it may be from the trade unionists, who have had a lifelong experience of the industry as trade unionists, but who are not in the industry. Therefore, it seems to me that the Amendment in that form would be wrong. In any case, whether I am right or wrong on that, I obviously could not accept the Amendment without finding out what those who advise me have to say about it. For those reasons, if this matter were to be voted upon, I should find myself voting against the Amendment moved by the noble Viscount, Lord Cecil, and if and when that was defeated, I should then find myself voting against Lord Swinton's suggested Amendment.

VISCOUNT CECIL OF CHELWOOD

You have to vote against Lord Swinton's Amendment first.

THE LORD CHANCELLOR

Yes, that is quite right. I should have to vote against Lord Swinton's Amendment and having done that, I should then vote against the Amendment moved by the noble Viscount, Lord Cecil. I should vote against Lord Swinton's Amendment primarily for the reasons I have given, and also because I could not accept it until I had had an opportunity of getting instructions as to what I should do about it.

THE MARQUESS OF SALISBURY

I think we are all in some difficulty over these Amendments. We have two Amendments before us. I think it very important that the Committee should be in a position to come to a clear conclusion. I am in as great a difficulty as anybody else, because, fundamentally, I agree with my noble relative that election is the better form. I am made a little nervous by remarks which have come from the Government Front Bench about representatives of trade unions who will be selected, and who may not be entirely representative of the working people. On the other hand, I do see, equally, a great difficulty in two members of the Board being elected by an outside body, and all the rest being nominated by the Minister. I have an uncomfortable feeling that that would not work, however much I like it. Therefore, I am inclined to come to the conclusion that I shall support the Amendment of the noble Viscount, Lord Swinton, not because I think it is the better, because I would prefer election if that were possible, but because my fundamental object is to get two workers from the industry on the Area Board. If we can get that, then I think a good deal has been gained. If the other proposition is not practical, I shall be prepared to fall back on this as the best that can be practically obtained.

VISCOUNT CECIL OF CHELWOOD

With the permission of the Committee, I would like to say a few words in answer to those which have fallen from the Lord Chancellor and from my noble relative Lord Salisbury. Of course, I want to get anything I can in the direction for which I am working. I should not think of dividing against Lord Swinton's Amendment, after the expression of approval that it has received front various quarters of the Committee. I hope, in that case that I can rely on Lord Swinton being able to support the Amendment as amended.

VISCOUNT SWINTON

Certainly. The noble Viscount, Lord Cecil, would move it.

VISCOUNT CECIL OF CHELWOOD

No. I will accept Lord Swinton's Amendment, if he moves it, and if the Lord Chancellor wants to vote against it, he can.

VISCOUNT SWINTON

I beg formally to move, as an Amendment to the Amendment moved by the noble Viscount, Lord Cecil, to leave out the words "elected by the" in the second line.

Amendment to the Amendment moved— Leave out ("elected by the").—(Viscount Swinton.)

THE LORD CHANCELLOR

The Amendment to the Amendment has now been moved, and I want to put this to your Lordships. I think you are pacing me in a rather embarrassing position. Sometimes if I go to the Minister and discuss these things with him I am able to bring about permanent results, which do not always follow if your Lordships carry through your Amendments. As I have said, I am not prepared to accept this Amendment now; I have no instructions in regard to it. Therefore, if your Lordships press the Amendment now, I must vote against it. If, on the other hand, the Amendment is withdrawn now, I will consult with the Minister about it (I have no authority to say anything), and it may be that I shall be able to accept something on the Report stage. In the long run that may prove to be the wisest thing to do. If your Lordships choose to press this Amendment now, in view of the difficulties with which I am faced I shall have no option—nor will those who sit with me—but to vote against it.

THE MARQUESS OF SALISBURY

I appreciate the difficulties of the Lord Chancellor, but I hope your Lordships will not refrain from coming to a decision on this point. It ought not to make all that difference to the Minister whether your Lordships have voted on the point or not. He ought to come to his decision

Resolved in the affirmative, and Amendment, as amended, agreed to accordingly.

upon the merits of the case. If he thinks that our Amendment is justified, no doubt he will be prepared to accept it, or, at any rate, to see that it is recommended to the other place. If, on the other hand, he thinks it is a bad Amendment, no doubt he will vote against it in any case. But to say that we are precluded from coming to a decision, because if we come to a decision without prior consultation with the Minister he is bound to show himself unfavourable to our decision, is not, in my view, a position which your Lordships can accept.

THE LORD CHANCELLOR

I did not mean that of course. On the other hand, it is sometimes useful to have consultation when, as we all know, sometimes we can, if I may put it crudely "do a deal" with each other. However, I do not mind. If your Lordships press the Amendment, I shall vote against it.

On Question, Whether the said new words shall be there inserted?

Their Lordships divided: Contents, 51; Not-Contents, 25.

CONTENTS
Salisbury, M.	Monsell, V.	Howard of Glossop, L.
Townshend, M.	Simon, V.	Hutchison of Montrose, L.
	Swinton, V.	Lloyd, L.
Albemarle, E.	Trenchard, V.	Lyle of Westbourne, L.
Beatty, E.		Monson, L.
Buckinghamshire, E.	Balfour of Inchrye, L.	Moyne, L.
Craven, E.	Carrington, L. [Teller.]	Newall, L.
Fortescue, E. [Teller.]	Clanwilliam, L. (E. Clanwilliam)	O'Hagan, L.
Howe, E.		Rankeillour, L.
Iddesleigh, E.	Courthope, L.	Rennell, L.
Lindsay, E.	De L'Isle and Dudley, L.	Rockley, L.
Manvers, E.	Denham, L.	Sandhurst, L.
Perth, E.	Dunleath, L.	Schuster, L.
	Ebbisham, L.	Shute, L. (V. Barrington.)
Bridgeman, V.	Fairfax of Cameron, L.	Teynham, L.
Cecil of Chelwood, V.	Greville, L.	Tweedsmuir, L.
Hailsham, V.	Hacking, L.	Wardington, L.
Lambert, V.	Hampton, L.	Wolverton, L.
Long, V.

NOT-CONTENTS
Jowitt, V. (L. Chancellor.)	Amwell, L.	Milverton, L.
Addison, V. (L. Privy Seal.)	Chorley, L.	Monkswell, L.
	Darwen, L.	Morrison, L. [Teller.]
Huntingdon, E.	Fairlie, L. (E. Glasgow.)	Pakenham, L.
	Henderson, L.	Pethick-Lawrence, L.
Hall, V.	Holden, L.	Quibell, L.
Ridley, V.	Kershaw, L.	Rochester, L.
St. Davids, V.	Lucas of Chilworth, L.	Shepherd, L.
	Marley, L.	Walkden, L. [Teller.]
Ammon, L.

On Question, Amendment to the Amendment agreed to.

5.30 p.m.

LORD BALFOUR OF INCHRYE moved, after subsection (2) to insert: (3) The chairman or the deputy chairman of each Area Board and not less than three other members of the Board shall devote the whole of their service to the Board. The noble Lord said: the purpose of this Amendment is to secure that there shall be a sufficient number of full-time members to ensure the efficient management and functioning of the Area Boards. As the Bill is at present drafted, the industry could he run by Area Boards on a part-time basis. There is nothing in the Bill that says that the chairman or any other members of the board need be anything but part-time. I do not think there is any difference between the two sides of your Lordships' House on the fact that the industry is so vast and important that it needs the most efficient management, and that obviously full-time management will have to be incorporated in the structure of the industry. The work will be continuous and responsible. On an earlier Amendment the noble and learned Viscount the Lord Chancellor stressed the decentralisation which is taking place in this nationalisation measure as compared with previous measures. It has already been said that the Area Boards will have a greater responsibility and more work thrown upon them than the corresponding bodies under the previous Acts.

We may receive an administrative assurance that in fact the Minister intends to appoint a certain number of whole-time members, but I submit to your Lordships that such an administrative assurance is not sufficient. The point is of such importance that it deserves to be incorporated in the Bill. The Heyworth Committee recommended that the size of the Board should be seven—a chairman and six members. The Bill proposes a chairman and not less than five and not more than seven members. It would seem that a minimum of four whole-time members—namely, three and the chairman—is not unreasonable. If, however, it makes the matter easier for the Government, and the Government think that we have put the figure too high, I and those noble Lords who support me would be willing to alter the Amendment so as to reduce the three to two. I hope that in view of this olive branch of willingness to reduce the number, the Government will consider the matter sympathetically and be prepared to accept this Amendment. I beg to move.

Amendment movd— Page 5, line 36, at end insert the said subsection.—(Lord Balfour of Inchrye.)

VISCOUNT HALL

I should like to ask the noble Lord one question. Does he mean that in the event of the chairman and vice-chairman being full-time members, there should be one other?

LORD BALFOUR OF INCHRYE

No, the chairman, deputy-chairman and not less than two other members.

THE LORD CHANCELLOR

Suppose you had a set-up of chairman and deputy-chairman and one other member, making a total of three. Would the noble Lord be prepared to accept that?

VISCOUNT HALL

If the noble Lord will withdraw his Amendment, we shall be prepared to consider the matter on the lines of his suggestion and bring in an Amendment on Report.

VISCOUNT SWINTON

We consider that either the chairman or the deputy-chairman should be whole-time. I agree that it may be possible that both should be whole-time. We say in this Amendment that you ought to have four, and that they should be whole-time members. We are quite prepared to suggest three whole-time members instead of four, but it would be three including the chairman or deputy-chairman.

THE LORD CHANCELLOR

We shall have to consider words in order to get that in, but we accept this and will insert something on Report.

LORD BALFOUR OF INCHRYE

In view of that assurance, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn

LORD ROCHDALE moved, after subsection (5) to insert: (6) Before appointing a person to be a member of an Area Board the Minister shall satisfy himself that that person will have no such financial or other interest as is likely to affect prejudicially the discharge by him of his functions as a member of the Board and the Minister shall also satisfy himself from time to time with respect to every member of the Board that he has no such interest; and any person who is, or whom the Minister proposes to appoint to be, a member of an Area Board shall, whenever requested by the Minister so to do, furnish to him such information as the Minister considers necessary for the performance by the Minister of his functions under this subsection. The noble Lord said: Your Lordships will notice that there are two Amendments standing in my name, and since they are intimately related I should like to make a few remarks concerning both.

The objects of these Amendments concern something which is so obviously a matter of normal practice, both in Government organisations and in private industry, that they need little explanation. In the first Amendment, obligation is placed upon the Minister to see that when he is making appointments to the Area Boards no member shall be appointed who may have a financial or other interest which would be prejudicial to his proper functioning on that Board. I suggest that there is another point. It may perhaps be a safeguard to the individuals themselves. More than once, when names of persons who have been appointed to these nationalised boards have been mentioned, one has heard criticism, possibly quite unfair, of the individuals themselves. As regards the second Amendment, here the obligation rests not with the Minister but with the individual; and all that it lays down is that if, in the course of everyday business, a matter arises—perhaps a contract has to be settled—in which that individual may have some interest, then he should disclose any interest which he has. Your Lordships will remember that there are similar clauses in the Transport Act. In the Electricity Act the matter is dealt with, so far as I can remember, by regulations. As I understand the discussions on this point when the matter was dealt with in another place in Standing Committee, it appears to me that it is the purpose of His Majesty's Government to deal with the matter by means of regulations, but in my view the matter should be included in the Bill itself. With those few words of explanation I beg to move the first Amendment.

Amendment moved— Page 6, line 8, at end insert the said subsection.—(Lord Rochdale.)

THE LORD CHANCELLOR

I am bound to say that this Amendment appears merely to be enunciating certain principles of common honesty. Whether you have this matter in the Bill or in regulations, I cannot conceive of any honest man serving on an Area Board without revealing the fact, if it be a fact, that he has a financial interest. Therefore, I have not the smallest objection to this being specified. The noble Lord is right in saying that there has been divergence of practice here. It was specified in the Transport Act. In the case of the Electricity Act, there was an Amendment to the Electricity Bill which was moved by the Opposition in Committee and, upon the Minister's assurance that the matter would be covered by regulations and that he would ensure that the regulations applied both to part-time and full-time members, the Amendment was withdrawn. The noble Lord will be aware that the assurance is carried out by regulation 2 and regulation 3 (1) made under the Electricity Act. So it is by regulation.

When this Bill was in another place, a similar Amendment was moved to have this put in the Bill. Again, the Minister gave the assurance that, following the Electricity principle, he would deal with it by regulations. Upon that assurance being given, the Amendment was withdrawn. I have to give exactly the same assurance to your Lordships—that this matter, which is elementary common honesty, will be dealt with by regulations under the Bill. I think that that is a better method of dealing with it because it is more flexible. If you find that there is any gap, you have not to amend the Act but can do it by regulations. It is perfectly obvious that this ought to be done, whether it is in the Act or is done by regulations. I would ask the noble Lord to agree with me when I say that here we had better follow the principle of the Electricity Act rather than the principle of the Transport Act.

LORD HAWKE

Before the noble Lord, Lord Rochdale, considers withdrawing his Amendment, would the noble and learned Viscount tell me whether what he has said applies both to the first Amendment and to the second? I can see that a Minister may make regulations as to how a member of an Area Board should act, but can he make regulations as to what he himself, the Minister, should do? I am ignorant upon that point.

THE LORD CHANCELLOR

The actual form of the first Amendment wants looking at, because the words are: …the Minister shall also satisfy himself from time to time. I think that is different from the requirement in the Electricity Act. That imposes a continuous liability upon the Minister to keep a check on these things. Subject to that, the Minister can prescribe by regulation what he himself is to do.

LORD ROCHDALE

I am grateful to the noble and learned Viscount for the way in which he has replied to me upon my Amendment. I see his point. I rather regret that it is not to be put into the Bill itself, but in view of the assurance he has given I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 5, as amended, agreed to.

Clause 6:

Definition of and variation of areas.

(6) An order made under subsection (2) of this section shall, if and so far as it appears to the Minister to be necessary or expedient in consequence of the variation of areas or the establishment of a new Area Board, provide— (d) for dissolving any Area Board the whole of whose functions are to be exercised by another Area Board or Boards, and for winding up the affairs of the Board to be dissolved; and

5.44 p.m.

LORD TEYNHAM moved in subsection (6), after paragraph (d) to insert: (e) for the payment of compensation by the Board to whom property is transferred to the other Board. The noble Lord said: The object of this Amendment is to ensure that, in cases where property belonging to one Area Board is for any reason transferred to another Area Board, proper compensation shall be paid. We think that unless this compensation is paid, it might be necessary for the Area Board from whom the asset had been transferred to increase the price of gas in order to remunerate the additional capital required to replace the transferred asset. It may be argued by His Majesty's Government that a transfer of property from one public body, such as an Area Board, to another, should not be the subject of compensation; but it is already laid down in the Bill under Clause 50 (6) (b) that compensation is to be paid if property is transferred between the National Coal Board and a Gas Area Board. Then why not between Gas Area Boards? As the Bill stands, it does not appear to be logical. I think it is clear that, under this Bill, Area Boards are responsible for their own financial stability, and are also under an obligation to reduce the price of gas. This Amendment is simply to ensure that, in these circumstances of transfer, the price of gas will not be increased by an Area Board owing to a loss of assets through a transfer of property. I beg to move.

Amendment moved— Page 8, line 13, after ("dissolved") insert the said new paragraph.—(Lord Teynham.)

VISCOUNT BUCKMASTER

I would, in the briefest manner, like to support my noble friend. As your Lordships are aware, each Area Board is responsible for earning the interest on a given amount of Gas Stock and obviously, if the structure is weakened in the way contemplated, the service of the Stock in question may be in jeopardy. The Amendment seems to me to be not only sound but essential, and I have much pleasure in supporting my noble friend.

THE LORD CHANCELLOR

We do not think that we can accept this Amendment. May I just remind your Lordships how the position stands? First of all, let us take the original payment of compensation. It may have taken the form of an issue of British Gas Stock by the Gas Council, if the property is part of a company undertaking; or it may have taken the form of cash, if Me property was owned by a non-corporate body, an ancillary undertaker or an Electricity Board; or it may have taken the form of the servicing of outstanding debt, if the property has been part of a municipal undertaking. Those are the three heads under which compensation may be given. The adjustment of compensation liabilities between Boards when a transfer of property is made is already covered in the Bill—first, if British Gas Stock issued as compensation is outstanding, by the provision in Clause 43 (2) (a) for the allocation of liabilities in respect of that stock having regard to the extent to which the assets… are subsequently transferred to a particular Board; and, in any other circumstances, by the provisions in Clause 6 (6) (e) and Clause 24 (3) (c): for such other financial adjustments… as may be required. I think we have in the Bill all the requirements we need. I quite see that a matter of book-keeping may be involved in this, but the power already exists in the Bill.

LORD RENNELL

May I ask whether my assumption is right, that an Area Board starts off with a certain mass of capital assets, on the cost of which it assesses the price of the gas which is to be sold in that area? The sale of the gas provides the funds required to service that amount of capital originally taken over. If, at a subsequent date, half of those capital assets are to be transferred from that Area Board to another Area Board, will the cost of gas in the Area Board from which the assets are transferred be diminished by the lesser amount required to service the capital by reason of half of it having been transferred?

THE LORD CHANCELLOR

Where half of the capital is transferred, presumably half of the sales are transferred too.

LORD RENNELL

I meant the ancillary undertakings.

THE LORD CHANCELLOR

Maybe, but it would tell on both sides. You lose some of your assets, your markets and your sale, and some of your expenses. All those factors would have to be worked out, but there is ample power in the Bill to make all these financial adjustments.

LORD TEYNHAM

In view of the explanation given by the noble and learned Viscount, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

Clause 7:

Powers of Minister in relation to Area Boards and Gas Council.

7.—(1) The Minister may give to Area Boards generally or to a particular Area Board or to the Gas Council such directions of a general character as to the exercise and performance by those Boards or that Board or the Gas Council of their functions as appear to the Minister to be requisite in the national interest, and they shall give effect to any such directions:

Provided that—

1. (a) before giving any such direction, the Minister shall consult with the Gas Council; and
504
2. (b) before giving any such direction to a particular Area Board, the Minister shall consult with that Board.

5.50 p.m.

LORD TEYNHAM moved to delete subsection (1).

The noble Lord said: On behalf of my noble friend Lord Swinton, I beg to move this Amendment. It raises, of course, on more general lines, the responsibility of the Minister in relation to Area Boards. We have already discussed this point under Clause 1. I hope His Majesty's Government will be able to give a clear statement of what they have in mind as to the scope of the directions of a general character which under this clause may be issued by the Minister to the Area Board. What is going to happen if an Area Board challenges the direction given by the Minister on the ground that it is not a direction of a general character? I should like to ask the Government what would be the machinery for dealing with this kind of a possibility, which of course may well arise.

Another point is, how is the national interest to be defined? The Minister may give a direction which is intended to introduce the use of another fuel rather than gas. Would that be in the national interest? In another place, the Minister indicated that he may give a direction covering gas tariffs and, I believe, electricity tariffs; that he could direct a particular Board to vary up or down its charge for gas, which would have the effect of destroying the freedom of choice of fuel. Can that be said to be in the national interest? Such directions may well be due to pressure placed upon him by an interested trade union. We on this side of the House are all in favour of giving the Area Boards as much autonomy as possible. We realise that the Minister must have certain powers of direction; but we feel that the scope of this clause is too widely drawn, and that His Majesty's Government should give your Lordships an explanation as to how these powers of direction are to be used and how the national interest is to be determined. I hope His Majesty's Government will be able to give an assurance that it is the intention of the Minister to interfere as little as possible with the Area Boards, and that the power of direction will not be used to place one of the members of the trilogy of fuel and power in a more favourable position than another. I beg to move.

Amendment moved— Page 8, line 23, leave out subsection (1).—(Lord Teynham.)

THE LORD CHANCELLOR

I can readily give the assurance which the noble Lord seeks. May I first of all try to answer his questions? He asked: Who is to determine what is in the national interest? The words of Clause 7 are as appear to the Minister to be requisite in the national interest. The Minister will be the judge of that. Then the noble Lord said: Supposing that it were argued that the directions given were not of a general character. If that were argued the case would go to the courts, and an injunction might be granted. It is unlikely to happen, but that is the legal theory underlying the whole thing. The principle we want to establish is, first of all, that we do not want the Minister to interfere with the day-to-day running of this concern—and by day-to-day running I mean to give a pretty wide construction. The normal running of the business is to be done by the Area Boards. They are to be autonomous, and they are to run their own concern on sensible business-like lines with a minimum of interference.

On the other hand, the Minister must have some reserve powers, if only to preserve Parliamentary control—because, of course, it is the fact that the Minister is responsible to Parliament which gives Parliament its control—and rightly so—over the whole matter. Although Parliament in its turn should not, if it is not impertinent to say so, interfere with the normal running of the business, yet it is right that Parliament should have a right to look into everything through the Minister; and of course, it can criticise the Minister, or move to reduce his salary and that sort of thing. I can give the noble Lord this assurance. It is only broad and general matters about which we contemplate the Minister will give directions, and not in regard to the ordinary running of the business. And so long as all goes well, the less the Minister interferes the better. It will probably be only on very important questions on which the Minister may—and I hope he will not—have to give directions. But I am sure it is right that the power should be retained, because that is the essence of our democratic set-up, and it is that power which is therein reserved which gives Parliament control over what is being done.

VISCOUNT BRIDGEMAN

I noticed that in the reply which the noble and learned Viscount gave he did not make mention of the possibility of the need of this clause for national defence, in the same way as the noble Lord, Lord Chorley, did in dealing with a similar clause earlier. I was wondering whether there is a possibility of using it for national defence purposes.

THE LORD CHANCELLOR

Yes, that is one of the matters we have in mind.

VISCOUNT BRIDGEMAN

I am much obliged to the noble Viscount. But perhaps one ought to say that, if that is so, it is a procedure which has not often been used before. Up to now, Acts of Parliament like this have been passed without making a specific provision for defence conditions and then, when provision had to be made for those matters, a Defence Regulation was passed. The effect was that the necessary action in defence matters was taken under the regulations, and not under the Act. I de not know whether it is worth asking the noble and learned Viscount whether this procedure is intended to cut out the need for Defence Regulations as and when the time comes.

THE LORD CHANCELLOR

No; we do not intend to cut out Defence Regulations at all.

VISCOUNT BRIDGEMAN

Apart from that, we are still left in a certain amount of doubt as to what the Minister is going to do in the way of dealing with matters in Parliament. How far is he going to be prepared to answer questions, either here or in another place? If we correctly interpret what the noble and learned Viscount has said, not only will the Minister keep to the minimum his activities in regard to the day-to-day working of the Boards, but he will presumably expect that Parliament will also refrain from interfering in, the day-to-day affairs of a business which, if it was not nationalised, would come before a board of directors.

THE LORD CHANCELLOR

I remember a song to the effect that intelligent statesmen do not usually interfere in matters which they do not understand. This, of course, was a mater of considerable controversy in another place, upon which the Speaker has given a ruling. I am not aware exactly what the ruling is. Of course it is very difficult to draw a line. We can easily say that it falls on this side of the line or that side of the line, but where precisely to draw the line it is difficult to say. I would not attempt to indicate where the line is, but probably in practice there would not be much difficulty in defining it. There has not been much difficulty in regard to the Post Office. There you have the Postmaster-General who is directly responsible, yet the House has never interfered in such matters as whether a particular person shall be appointed to one district or another. I think in practice this will work itself out. But substantially I cannot do more than say that it is only in regard to broad general matters that we contemplate the Minister will interfere at all.

LORD TEYNHAM

In view of the assurances given by the noble and learned Viscount, I beg leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

LORD HAMPTON moved, in subsection (3), after "may" to insert "reasonably." The noble Lord said: In the absence of my noble friend Lord O'Hagan, I beg leave to propose this very small Amendment. It is hardly more than a drafting Amendment. The object of it is to ensure that the demands of the Minister upon the Area Boards and the Gas Council with regard to the supply of information shall be reasonable.

Amendment moved— Page 8, line 45, at end insert ("reasonably").—(Lord Hampton.)

THE LORD CHANCELLOR

To show how reasonable I am, I accept this Amendment.

LORD HAMPTON

I am grateful to the noble and learned Viscount.

On Question, Amendment agreed to.

Clause 7, as amended, agreed to.

Clause 8 agreed to.

LORD ROCHDALE moved, after Clause 8 to insert the following new clause:

Central Advisory Committee.

".—(1) For the purposes of giving advice and assistance to the Minister with respect to and for safeguarding any interests affected by the exercise of the function of the Gas Council under section 2, subsection (3) of this Act and the exercise of the functions of the Area Boards under section 1, subsection (2) (c) and (e) of this Act in relation to directions which may be given by him as regards any such matters or any approval by him of any substantial outlay of capital in relation thereto a Committee (to be known as the Central Advisory Committee) consisting of not less than eleven persons of wide commercial and trading experience shall be appointed by the Minister (after consultation with the various undertakings and interest concerned) from nominees of the various classes of undertakings to be affected by the exercise of such powers of the Gas Council and the Area Boards referred to in this section and of labour trading interest and such other interests as he may deem desirable.

(2) Before giving any such directions or approving any capital expenditure referred to in subsection (1) of this section the Minister shall refer the matter to the Committee for their advice and they shall report thereon to him and shall before making any such report (unless in their discretion they consider it unnecessary or undesirable to do so) give such public notice as they think best adapted for informing persons affected or likely to be affected by the exercise of such functions of the Gas Council or an Area Board or Boards of the date when and the place where they will inquire into the matter, and any persons affected may make representations to the Committee, and, unless in their discretion the Committee consider it unnecessary, shall be heard at such inquiry and if the Committee in their discretion think fit, the whole or any part of the proceedings at such inquiry may be open to the public.

(3) The Committee shall hear such witnesses and call for such documents and accounts as they think fit and shall have power to take evidence on oath and for that purpose any member of the Committee may administer oaths.

(4) Any member of the Central Advisory Committee shall be considered to be acting entirely in a confidential capacity." The noble Lord said: I am afraid this is rather a long Amendment but I will be as brief as possible in explaining its object. It concerns the power of manufacture, both of plant and fittings, and power to manufacture by-products, and to carry out the processing of them and their distribution.

We have had a discussion earlier this afternoon with regard to the manufacture of plant and fittings and I will not go over that ground again. As regards the matter of by-products I would remind your Lordships that powers exist here for the industry at present to carry out certain production of by-products, and that, in fact, is now done by the industry. Such by-products as benzole, ammonium sulphate and tar readily come to the mind. Under the Bill, these powers of production and distribution of byproducts and their derivatives will, it seems to me, be largely extended. I am not necessarily criticising that. What I am doing is taking the situation as it stands under the Bill, and seeing whether the set-up, as it will be, will be able to work smoothly. It seems to me essential that with the immense ramifications that are possible in production, especially of these by-products, the consultative machinery under the Bill should be absolutely complete and adequate, particularly as regards ability to provide expert advice on these many matters. I believe that there is a very definite gap in the consultative machinery set up in the Bill. Whilst I do not look with favour on there being any further committees appointed, I must admit that I see difficulty in finding any other way of overcoming the gap that exists. Your Lordships know that, when we come to Clause 9, we shall find that consultative councils are set up. But they are for the assistance of the Area Boards; and they deal only with the supply of gas, and not with any of the other matters that I have mentioned. Moreover, they deal only with matters concerning their own areas. It might be that their powers could be extended, but in view of the proposed composition of these councils I doubt it. I doubt whether they would, in fact, be competent to deal with these very difficult matters of processing and so on.

If we turn to a higher level, the level of the Gas Council and the Minister, your Lordships will remember, in view of the Amendment which we were discussing a moment ago, that under Clause 7 the Minster may give directions of a general character either to the Gas Council or to the Area Boards. Your Lordships will remember, too, that under Clause 1 (5) the Area Boards are under the obligation to ask the permission of the Minister when it is a question of making any substantial capital outlay on some such scheme of this nature, whether for the manufacture or processing of by-products. It seems clear, therefore, that the Minister has to come to decisions on matters of this type, and the only people whom the Minister has to advise him are the Gas Council. As your Lordships know, apart from the independent chairman and deputy chairman it consists only of the chairmen of the Area Boards. In other words, when such schemes as may come up for approval are put forward by Area Boards or are put forward by the Gas Council, the only people the Minister will have to advise him will be the very people who are promoting these schemes. Whether they are competent to advise him on such questions is another matter. I find it difficult to believe that in all cases they will always be absolutely impartial.

My Amendment, therefore, seeks to set up this Central Advisory Committee which would contain members possessing expert knowledge of the manufacture of by-products, and their processing and distribution, who would be able to give advice from the very broadest outlook, in the national interest and not merely from the point of view of the gas industry or any other industry affected by the gas industry entering into a new sideline. I have no doubt that in nine cases out of ten they would realise that the existing engineering trade or the existing chemical trade would be able to carry out work of this nature far better than a newcomer to these matters, such as the gas industry. I realise, however, that there will be the tenth case when it may be appropriate for the gas industry to come in on this sort of work. The Amendment contains nothing to prevent the industry so doing. The Amendment is designed simply to ensure that really expert advice is given before these new sidelines, these new ventures, are embarked upon. May I say that I am not particular as to the wording of the Amendment? I put it down in this way in order to bring to notice what to my mind is a definite gap in the consultative machinery proposed to be set up under the Bill. I believe that there is a precedent for this in other Bills and I hope that the Minister will see his way to give this matter careful consideration. I beg to move.

Amendment moved— After Clause 8 insert the said new Clause.—(Lord Rochdale.)

LORD HAWKE

I would like briefly to support my noble friend Lord Rochdale. I must say, having re-read the Amendment which stands in our joint names, that I would have welcomed provision for this committee or council to be approachable by industry as well as by the Minister. Perhaps, in due course, His Majesty's Government may give thought to that matter. The Amendment seems to me to be one of considerable importance—certainly of an importance far transcending that of the comparatively humble position on these Benches occupied by my noble friend and myself—more in keeping, in fact, with the appalling length of the Amendment. The gas industry is quite unlike the electricity industry, in that gas is really only a sideline. The industry splits up coal into its component parts. As I read the Bill, there is nothing ultimately made out of coal which cannot be made under the Bill by the gas industry. Moreover, the gas industry may well be the only source of the material from which some of these ultimate by-products can be made. Therefore, it not only has the power to compete with the private manufacturing industry but, at the same time, denies to that industry the sole source of its raw material. For that reason, I think it is important that there should be a committee representative of industry to which the Minister can apply for advice before he sanctions capital extensions, and so on, for the Area Boards. Moreover, I think it will provide him with a source of advice which otherwise he might well have to set up in his own Ministry. All of us, including the Government, are only too anxious to keep the Ministry down to as reasonable a size as possible.

LORD CHORLEY

I am afraid we cannot accept this Amendment. I do not think I can do better than adopt the statement which was made in a speech by Mr. Brendan Bracken when this Amendment was brought before another place, in which he said that the Minister would be well advised to have nothing to do with advisory panels. I think the noble Lord who moved this Amendment felt a little guilty at suggesting that there should be another advisory panel or committee established, because he said that he felt in the ordinary way it would be inadvisable to add more wheels to the coach, or words to that effect. The proposed advisory committee is quite unnecessary, and would, in fact, add to the complications of the machinery. It has been emphasised time after time, during the course of these discussions, that the Area Boards in particular ought to be left free to look after their own business. Yet the noble Lord is suggesting that this advisory machinery should be set up; that it should be, in effect, compulsory over a fairly wide range of business; and that the Minister should have to consult the advisory committee. Naturally, the Minister will in proper cases take advice, and, indeed, the Gas Council has been set up in order that the Minister may have an advisory body to advise him.

The noble Lord says that the Gas Council would not be an appropriate body in a number of cases. But, surely, the Gas Council will be composed of men of wide experience in the business, and if on some particular matter they find that they have no technical assistance, the obvious thing for them to do is to seek technical assistance on that particular point from the men who are best qualified to give it, rather than to have to go to a generalised body of this kind with a very substantial number of members who are, so to speak, set up in advance of the particular problems upon which the Gas Council might wish to seek assistance. We have already had this afternoon, at an earlier stage, a substantial discussion on the question of the manufacture of plant and gas fittings, and I think a sufficient assurance has been given that that will not be embarked upon except in the very unexpected event of some attempt being made to form a price ring, or otherwise to bring pressure to bear upon the industry. That assurance I am glad to repeat. I would go further and give the assurance that, in the event of some price ring or pressure of that kind growing up, the Boards will, if necessary, obtain advice as to how they should go about the business of dealing with that particular problem.

VISCOUNT BRIDGEMAN

I am grateful for the noble Lord's assurances, but I think I am right in saying that we also had the assurance that a Government Amendment on this subject would be brought forward on the Report stage.

LORD CHORLEY

Certainly.

VISCOUNT BRIDGEMAN

I only wanted to make sure that I was right about that.

LORD CHORLEY

It would, to some extent, cover this point, but it would not go the whole way, because it might still be advisable, having complied with the condition which my noble friend the Lord Chancellor suggested might be put in, that there should be further consultation. I am glad to assure the noble Viscount that those consultations will, if necessary, take place.

LORD HAWKE

The noble Lord has assured us on the subject of gas fittings, and so on, but he has not dealt with the matter of the by-products. What machinery is there available for industry to protest if, say, the gas industry follows coal to its ultimate conclusion and goes in for nylon spinning?

LORD CHORLEY

I think it is obvious that the gas industry will not go in for nylon spinning. Actually, a number of the gas undertakings already have powers to go in for development, in the way of coke and by-products of that kind, and obviously it may be necessary that some developments of that kind should take place. Clearly, however, that would not be done without careful consideration, and after consultation with the people best qualified to give advice, in the way in which I have already indicated.

LORD RENNELL

They would be given careful consideration by whom?

LORD CHORLEY

By the Board which has undertaken the work.

VISCOUNT RIDLEY

On this Amendment I think the real fear which leads to the necessity of an advisory committee of this sort is not so much about the manufacture of fittings—or, to my mind certainly, the processing of chemicals by the Area Boards themselves—as that customers of the gas industry, who now buy from them certain chemicals, such as tar, acids, sulphates and other things, which they process into a wide range of chemicals, feel that at some future date they may be deprived of supplies, or that the cost of the supplies will be raised in an arbitrary manner. I do not suppose that is likely in the foreseeable future, but it is a possibility. We have the parallel in the Coal Act of the two consumers' councils—the domestic and the industrial consumers' councils. In this Bill we have one consumers' council, in the same way as in the Electricity Act. But as, in the case of gas, the industrial consumers buy not only the gas and the heat from it but, in many cases, the chemicals as well, there would seem to be need for some kind of industrial consumers' council in respect of chemicals and other materials purchased. We had the same difficulty in rather a different way on the matter of coke. There is an Amendment later on which attempts to deal with that point.

We could not expect that the consumers' council could deal with complaints from industry on the matter of chemical and other supplies, although I take it that it is intended in this Bill, in the same way as in the Electricity Act on the matter of current, that the one consumers' council should deal with complaints about the cost of gas. That seems to be a feasible thing. What machinery will there be, not for giving advice to the Minister—because I think quite clearly he is in a position to get all the advice he wants, and the Area Boards and the Gas Council are also—but for a chemical Manufacturer to complain that the tar from the gas industry is costing him too much, is not of the kind which he really requires to buy, or is not made available in sufficient quantities for him to be able to continue satisfactorily? I hope there will be something in the Bill, and I understand that this Amendment is intended to achieve something of that sort. I am not quite sure how it does it, but I read into it that that is what it intends to do. Would the noble Lord tell us whether there is anything in the Bill as it now stands which will do it?

LORD CHORLEY

I think that if this problem came to be a serious one, it could be dealt with in this way—it would be the appropriate way of dealing with it, because it would be a way by which Parliament asserted its control over the situation. Under Clause 1 (5)—your Lordships will remember we looked at that clause earlier—the Minister has to approve of any substantial developments involving capital outlay on a substantial scale. If that happens, it would come not under the ordinary day-to-day management, in which Parliament does not concern itself, but it would be of a character which clearly would entitle Parliament to intervene and call upon the Minister to explain what he was doing. If Parliament did not approve of what he was doing they could then take the appropriate course. I cannot imagine that if a powerful industry such as the chemical industry felt that something was happening which was likely to prejudice its interests and position, it would not see to it that the matter was properly and effectively raised before Parliament.

VISCOUNT RIDLEY

May I say one more thing? I agree that if there was serious trouble in the chemical industry, it is more than likely that the Minister would be bound to take notice of it and do something about it. But I do not think there is anything in this Bill to deal with the matter. I do not think Clause 1 (5) does so, because that concerns itself with matters of re-organisation and works of development. What is troubling my mind is the commercial considerations of trading in various commodities.

LORD ROCHDALE

I am most grateful to the noble Viscount, Lord Ridley, for the aspect he has introduced into this Amendment. The noble Lord, Lord Chorley, made some play of the fact that when I was moving the Amendment I had occasion to say that I did not want any more committees. I still stick by that. It seems to me that the point underlying this Amendment has not been adequately covered by the reply. I should be happier if the noble Lord would be willing to consider giving a similar assurance on the matter of the production and distribution of by-products as has already been given regarding the manufacture of plant and fittings. I wonder if the noble Lord would be prepared to consider that?

LORD CHORLEY

Obviously I cannot give the noble Lord any undertaking about it now. It might fetter the industry in an important line of development, because obviously there is a close connection between gas and power and the chemical industry. I will certainly have the point looked at, and if there is any way in which I can satisfy the noble Lord, I shall be very glad to do so.

LORD ROCHDALE

I am grateful to the noble Lord for that promise to look into the matter, and on that understanding I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 9:

Consultative Councils.

9.—(1) A Council, to be known as a Gas Consultative Council, shall be established for the purposes mentioned in this section for the area of every Area Board.

(2) A Gas Consultative Council shall consist of a chairman appointed by the Minister and not less than twenty nor more than thirty other members appointed by the Minister…

6.25 p.m.

LORD WOLVERTON

moved, in subsection (1), after "established" to insert "not later than three months after the vesting date." The noble Lord said: This is an important Amendment, although a simple one to understand. Under the Electricity Act, and also under this Bill, it is proposed to set up consultative councils in the areas of the fourteen Area Boards as a go-between between the consumers and the Area Boards. It is now eight or nine months since the Electricity Act was passed and three or four months since the industry was vested, and still the consultative councils for the electricity supply industry have not been set up. The object of this Amendment is to say that the gas consultative councils shall be set up within a time-limit of three months from the vesting date. It is true to say that the Electricity Commissioners are still in being; that there is power to abolish the Commissioners when the consultative councils are set up, but that they are acting in the meantime. In the gas industry, however, there are no Commissioners at all, and it is much more important, therefore, that the gas consultative councils should be set up at the earliest date. For those reasons, I hope that the Government will accept this important though small Amendment. I beg to move.

Amendment moved— Page 9, line 7, after ("establish") insert ("not later than three months after the vesting date").—(Lord Wolverton.)

LORD LLOYD

I would like briefly to support my noble friend's remarks, and to add one thing to what he said about the consultative councils in the electricity industry. He is quite right in saying that none of the councils has yet been set up, although it is more than three months since the vesting date. What he did not mention, and which I think is of some importance, is that electricity prices have already been varied during that period. As the consumers' councils were not there, the consumers really had no say in the matter whatsoever, and their watchdog, which should have been watching, is still not in existence. I should like to make one other point. The Minister, when he was questioned as to why the councils had not been set up, said that the reason was that the qualifications of so many people had to be gone through before the consultative councils could be selected. I quite appreciate that that may be so, but I do not think we can accept that as an excuse. After all, if there are so many people to be considered, the Minister can either start earlier or postpone the vesting date. I think it wrong that the appointment of these consultative councils should be delayed in the manner in which it has been.

VISCOUNT HALL

I am afraid that I must admit that there has been delay in setting up the consultative councils under the Electricity Act. I must also say that the Minister is blameless in this matter. As noble Lords will remember, the persons appointed or nominated to the consultative councils come from a varying number of organisations and a large number of local authorities, and there has been delay in the submitting of nominees to the Minister for his appointment. As the noble Lord, Lord Lloyd, said, there has been a very large number of names—I think the actual number is about 1,400—which take quite a little sorting out. It is in the interests of the efficient working of these schemes that the consultative councils should be set up as soon as possible.

I am afraid the noble Lord, Lord Wolverton, and the noble Lord, Lord Lloyd, are tying the Minister rather too closely to the vesting date when they suggest three months. After all, three months is very little time. There are twelve of these consultative councils, which will be made up of from twenty to thirty persons, and it is not always easy to get replies from the nominating authorities to nominate the right persons—and we must see that we get the right persons. I am afraid that I cannot accept the Amendment as it is, because it certainly does not give the Minister sufficient time.

VISCOUNT SWINTON

This seems to be a case where the insertion of a little "ginger" might be necessary. It may be that it is not the Minister but the local authorities who require stimulating, and if they were given some time within which they must put their names in, everybody might be satisfied. After all, if the Councils are not appointed, the real sufferer is the consumer, and it will not be any consolation to him to know that it is not the Minister but the local authorities who are at fault. If the noble Viscount could suggest a time-limit within which the local authorities must do this job, I think everybody would be satisfied. Can the noble Lord suggest an alternative to the three months period?

VISCOUNT HALL

I would be quite prepared to consider fixing some date in consultation with my noble friend, and possibly we might then be able to insert suitable words on the Report stage.

LORD WOLVERTON

I am much obliged to the noble Viscount for his assurance, in the light of which I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

LORD TEYNHAM moved, in subsection (2), to omit "a chairman appointed by the Minister and." The noble Lord said: I would like to suggest that we discuss the first two Amendments standing in my name, together with the last Amendment—on page 9, line 28. The first two are really consequential. The object of these Amendments is very simple: it is to ensure that the gas consultative councils shall elect their own chairman. What is the position with regard to these consultative councils? Surely they are to be a safeguard and a protection for consumers, and as such they should so far as possible be independent; but as the Bill is drawn, we find it laid down that the Minister shall appoint the chairman. I suggest that it would be far better to allow the consultative councils to elect their own chairman, and thereby prevent any feeling amongst the public that it is merely a packed committee. This would ensure that the chairman was elected in accordance with usual committee practice. If the Government do not accept this Amendment, I think it would be possible for the Minister to appoint a chairman who did not in fact enjoy the confidence of the consumers' council. They would thus be forced to have as their representative on the Area Board someone who might differ from the majority of the council. I do not say that this would happen, but it might, and the Bill should be drafted in such a way that it cannot happen. I beg to move.

Amendment moved— Page 9, line 9, leave out from ("of") to ("not") in line 10.—(Lord Teynham.)

VISCOUNT BUCKMASTER

I would like briefly to support this Amendment. There seem to me to be three independent reasons for accepting it. The first is that these councils are all appointed by the Minister; but as the Minister chooses the entire council it is not easy to suggest that the chairman can be anybody particularly evil; he is, in fact, someone whom the Minister has chosen though not in the capacity of chairman. It is difficult to see how the Minister could take exception to someone in whom he himself has confidence. The second point is that the happy and harmonious working of such bodies as these committees can be secured only through the good offices and personality of the chairman. I feel that it is not a wise or prudent thing to depart from the correct and conventional practice in such cases by not allowing the members of the Committee to elect their own chairman. It must follow, surely, that when the committee elect their own chairman, their working is much more likely to be smooth and easy than if an arbitrarily imposed chairman is inflicted on them. The third point is this—and I venture to think it is also one of some substance. The chairman of a gas council is ipso facto a member of the Area Board. The councils are there to protect the consumer—and the consumer does not get much protection, because the whole of the gas council is appointed by the Minister. Surely if this council is intended to protect the consumer, and if the chairman has ipso facto a seat on the Area Board, it is not unreasonable that the council should, in the protection of the consumer, nominate their own chairman. I trust that the Government will see their way to accept this eminently reasonable Amendment.

VISCOUNT HALL

As the noble Viscount, Lord Buckmaster, rightly said, the chairman of the consultative council will have a dual function: he will be chairman of the council and he will also be one of the members of the corresponding Board. I think your Lordships will agree that it is important that all the members of the Area Boards, which will be fairly small bodies, should be very competent persons indeed. The chairman of the consultative council should be a man of ability and a person who holds the confidence particularly of the local authorities, as they will be vitally concerned as to consumers' interests. The chairman must, therefore, command respect and at the same time be useful to the Area Board as an administrator. We want the consultative councils to be something other than bodies set up solely for the purpose of criticising Area Boards. They must be taken into complete confidence by the Area Boards; and the chairman, who is a member of the Area Board, would act, of course, as a liaison between the Area Board and the consumers' council. He should also take the consumers' council into his confidence as to the future plans of the gas industry within that area. Indeed, these consumers' councils can be highly constructive bodies, with the chairman acting as their leader in addition to being a liaison between the consultative council and the Area Board.

I can foresee some difficulties if the Amendment were agreed to. The membership of the consumers' council will be a fairly large one—from twenty to thirty members. They will be drawn from all over the area which the Board covers. I think of the Area Board which will be operating in Wales, which is a very wide area. If the consumers' council are faced, say at their first meeting, with the election of a chairman, there may be some difficulty in getting the best man as the chairman and as the member of the Board. In so far as the member of the Board is concerned, I think the nomination should be in the hands of the Minister—taking into consideration of course that the chairman has a dual function. Then difficulties might arise in relation to the period of his office. It can be imagined that some difficulty might arise as to the limits of the period, and also as to a possible break in the continuity of membership of the Area Board. Taking all these facts into consideration, I think the Minister is wise in retaining to himself the appointment of the chairmen of the councils. I think it will be much better in the interests both of the consumers' councils and of the Area Board. For those reasons, I hope that noble Lords will not press this Amendment.

LORD TEYNHAM

I am not entirely satisfied with the explanation given by the noble Viscount, but I do not propose to press this Amendment and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 9 agreed to.

6.40 p.m.

LORD TEYNHAM moved, after Clause 9 to insert the following new clause:

Coal Consumers Council.

".On the notification or making to the Minister by the Industrial Coal Consumers' Council or the Domestic Coal Consumers' Council established under the Coal Industry (Nationalisation) Act, 1946, of their conclusions or report on any matter relating to the manufacture, production, sale or supply by any Area Board of coke or manufactured fuel, if it appears to the Minister after consultation with the Area Board concerned, and with the Consumers' Council concerned, that a defect is disclosed in the general arrangements of the Area Board for the production, sale or supply of coke or manufactured fuel, he may give to the Board such directions as he may think requisite for remedying the defect, and the Board shall give effect to any such directions." The noble Lord said: At first sight, this Amendment appears to be rather lengthy. In fact, it is little more than a drafting Amendment.

The Minister of Fuel in another place indicated that complaints about gas coke would be dealt with by the coal consumers' council and not by the gas consumers' council. He went on to say that under Clause 7 of this Bill he had sufficient powers to deal with any complaints about gas coke. But I would point out that Clause 7 of this Bill contains only the same general powers as were laid down by Section 3 of the Coal Industry (Nationalisation) Act. In addition to those general powers in the Coal Act, we find in Section 4 of that Act very specific powers covering the production and supply of coke and manufactured fuel. We think that similar specific powers should be inserted in this Bill to ensure that, if a defect is disclosed in the general arrangements of an Area Board for the supply of coke or manufactured fuel, the Minister shall have express powers to give directions, after consultation with the Area Board and with the consumers' council, for remedying the defect. As the Bill is drawn, the Minister has only general powers of direction. This new clause would ensure that he has specific powers to deal with the production and sale of gas coke or manufactured fuel. I beg to move.

Amendment moved— After Clause 9 insert the said new clause.—(Lord Teynham.)

THE LORD CHANCELLOR

I quite follow the point that the noble Lord has in mind in moving this clause. It is of course the fact—it is under Section 4 of the Coal Industry (Nationalisation) Act, if I remember aright—that the consumers' councils have the right to make representations to the Minister in regard to (amongst other things) the production of coke. Therefore, the only ground upon which I could logically refuse to accept this Amendment is that I was satisfied that the subject matter of this Amendment was already covered by the Bill. What is the subject matter of this Amendment? I read from the last five lines of the Amendment: that a defect is disclosed"— in what?— in the general arrangements of the Area Board for the production, sale or supply of coke or manufactured fuel, he may give to the Board such directions… and so on. That is the defect with which we deal here. It is a general defect. That being so, it seems to us clear that that is precisely a matter which is covered by Clause 7.

VISCOUNT SWINTON

Yes.

THE LORD CHANCELLOR

Because Clause 7 says: such directions of a general character..[...]as appear to the Minister to be requisite. Where you are dealing with a general arrangement of the Area Board, which is the subject matter of this Amendment, that is precisely covered by Clause 7. Therefore, we do not want this Amendment. An Amendment to this effect was moved in another place. It was only upon the Minister giving this assurance that the Amendment was withdrawn. Since then, my legal advisers have looked into the matter again and they are quite confident that the advice which they then gave to the Minister was right and that therefore the clause is unnecessary.

VISCOUNT RIDLEY

I wish to refer to another point that arises here. With regard to consultative councils, mentioned in Clause 9 of this Bill, there are arrangements under subsection (5) whereby: Each of the Gas Consultative Councils shall be informed by the Area Board of that Board's general plans and arrangements for exercising… and so on. That puts them in a position to advise, and to consider properly and carefully, the whole matter of gas supply. They consider that along with the complaints. Under the Coal Act, the coal consultative council, who deal with consumers' complaints about coke, have not this form of access to the Gas Area Board. So, in fact, they would be reporting to the Minister on the sale or distribution of coke and suggesting arrangements, improvements and alterations without necessarily having had any access to all the facts of the arrangements made by the Board for the supply of coke in their area. I do not think that the Amendment put down meets this, but it would simplify the procedure if there were some way of arranging that if the coal consumers' council can deal with the price of coke from the gas industry, as from the carbonising industry which belongs to the National Coal Board, it would be a convenience and a great help to the Area Gas Boards for them to have a direct contact with the consumers' council and have something similar to Clause 9 (5) so that there is a sort of backwards and forwards arrangement whereby the consumers' council know of the complaints of the Gas Area Boards.

THE LORD CHANCELLOR

I have no objection to that at all. All this can be done. I have no doubt that these Boards will talk to each other; they will talk to each other if they are sensible. The only point is whether there should be a special power to make them do it. With regard to that, there is already the power under Clause 7.

LORD TEYNHAM

In view of the explanation given by the noble and learned Viscount, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 10:

Annual reports of Area Boards and Gas Council.

10.—(1) Every Area Board and the Gas Council shall, as soon as possible after the end of each financial year, make to the Minister a report on the exercise and performance by them of their functions during that year and on their policy and programmes.

(4) A Gas Consultative Council shall, as respect each financial year of the Area Board for their area, make to the Board a report on the exercise and performance by the Consultative Council of their functions during that year, and the said report shall be made to the Board as soon as possible after the end of the said financial year, and the Board shall include that report in the report made by them under this section.

LORD TEYNHAM moved to add to subsection (1): and every Area Board shall as soon as their report has been made to the Minister send a copy thereof to the Gas Council. The noble Lord said: The object of this Amendment is simple. It is merely to ensure that the Gas Council will receive the annual reports which are made by the Area Boards to the Minister at the end of each financial year. The Gas Council are responsible for the finances of the Boards and, therefore, we think that they should have an opportunity to consider the annual reports of these Area Boards. I beg to move.

Amendment moved— Page 11, line 41, at end insert said words.—(Lord Teynham.)

THE LORD CHANCELLOR

I think this is right. Therefore I accept the Amendment.

On Question, Amendment agreed to.

VISCOUNT BUCKMASTER

I am in some difficulty with the next Amendment, for two reasons. The second Amendment on this clause which stands in my name on the Marshalled List has unfortunately been misprinted, in that "line 10" should read "line 5." If I could have your Lordships' permission to correct that error, it would then follow that I should have to seek your Lordships' permission to move that Amendment before the other, because it would automatically fall into that place in the Bill. I gather that your Lordships would agree to that. The Amendment then reads: "Page 12, line 5" and so on, as printed on the Marshalled List. This is a perfectly simple and innocuous Amendment, which proposes that the Gas Consultative Council shall make their report not later than three months after the end of each financial year. I agree that, even as corrected, the wording is not perfect, but if the noble and learned Viscount is prepared to accept it in principle—and I trust that he is—we can easily settle the correct form of English. I beg to move.

Amendment moved— Page 12, line 5, after ("shall") insert ("not later than three months after the end of each financial year").—(Viscount Buckmaster.)

THE LORD CHANCELLOR

I am quite prepared to do that. The words which I am suggesting are these. I agree to look at it again, but at present we have "as soon as possible." I should like to retain the words "as soon as possible," but I think a better solution would be to put it in line 9 in this form: and the Board shall, as soon as possible, and not later than three months. I think that that would be the better way of doing it. If the noble Viscount will not press it now, I will put down something on Report. Will that satisfy the noble Viscount?

VISCOUNT BUCKMASTER

I am much indebted to the noble and learned Viscount, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.50 p.m.

VISCOUNT BUCKMASTER moved, in subsection (4), after "year" (where that word occurs a second time) to insert: and shall include a statement setting out any matter or thing in respect of which representations have been made to the Minister under section nine of this Act unless such representations shall have been referred by him to any person for inquiry and report.

The noble Viscount said: This is a perfectly simple Amendment and I trust the Lord Chancellor may be able to receive it in the same spirit as he received the first Amendment. The real purpose of it is this. The consultative council does, and is intended to, protect the consumer and, while I do not suggest any bad things, it is essential that its recommendations should not be "scotched" or shelved or put on one side. I would like particularly to call your Lordships' attention to a fact I have stressed in an earlier Amendment—namely, that the consultative council is appointed by the Minister and, as the earlier Amendment was rejected, the chairman also will be appointed by the Minister. Therefore, I think we can safely assume that any matters which the consultative council put forward are worthy of close and careful attention; and I suggest that in the interests of the consumer we should ensure that these matters do receive immediate attention. I hope the noble and learned Viscount will feel able to accept my Amendment. I beg to move.

Amendment moved— Page 12, line 8, after ("year") insert the said words.—(Viscount Buckmaster)

THE LORD CHANCELLOR

I am afraid I cannot accept this Amendment because I do not think it is a very good one. The position is as follows. Under Clause 9, subsection 6, of the Bill: the Area Board shall consider any conclusions, reports and representations notified or made to them by the gas consultative council for their Area under the last two preceding subsections, and that the council may, after consultation with the Area Board, make representations to the Minister. That is to say, if at their first try they cannot get satisfaction from the Area Board they can then carry their complaint to the Minister. In subsection (7) the noble Viscount will see words to this effect: Where representations have been so made to the Minister and appears to him that there may be a defect, then he may refer the matter to inquiry. The object of the Amendment seems to me to deal with the case where the consultative council have made representations and the Minister has not called for an inquiry. The reason why no inquiry has been called for would be because the Minster thinks that the complaint is not a reasonable one. The consultative council may sometimes put forward rather a silly case and there may be a complete answer to it. Sometimes that happens when a noble Lord moves an Amendment and, when he hears the answer, he wishes he had not moved it. It is very hard, in those circumstances, that complaint should be a matter of compulsion.

The noble Viscount wishes the report to include a statement. The complaint may, as I say, have been a very silly one and it may have been blown completely sky high when it was answered. In those circumstances it is better buried and forgotten. Do not let us make the unfortunate consultative council advertise to the world and his wife that they have made a rather silly remark. On the other hand, the council have a perfect right to put in anything they like. With great respect to the noble Viscount, I do not see any point in taking up matters which are not worth taking up. It is much better to leave it to them in their discretion to put in what they like, so as to avoid the happening of the unfortunate thing I have indicated. For that reason I cannot accept this Amendment.

VISCOUNT BUCKMASTER

I am not altogether happy about the answer given by the noble and learned Viscount. It is the first time that he and I have engaged in open warfare. He has never before compared me to either a dead body or a nominee of the Minister. But these things I gladly forgive him because of his great courtesy and patience on all the occasions I have addressed him. I cannot feel happy about this matter. If these complaints are not altogether with substance, I still do not see why we should not know that they have been made. But I do not feel that the matter is one of real importance and I have no wish to detain your Lordships. Therefore, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 10, as amended, agreed to.

Clause 11:

Compulsory purchase of land.

(2) in this section the expression "land" includes easements and other rights over land, and an Area Board may be authorised under this section to purchase compulsorily a right to place a gas pipe across land, whether above or below ground, and to repair, maintain and remove the pipe, without purchasing any other interest in the land.

VISCOUNT BRIDGEMAN moved to add to the first paragraph of subsection (2): Provided that an Area Board shall not be authorised to purchase compulsorily a right to place a gas pipe above ground unless the Minister shall be satisfied that it is not reasonably practicable to place it below ground.

The noble Viscount said: As the clause now stands, it gives the Minister power to authorise Area Boards to exercise certain powers of compulsory purchase. My Amendment is designed to make certain that an Area Board shall not be authorised to purchase compulsorily a right to place a gas pipe above ground unless it has been expressly authorised by the Minister so to do. We have had differences of opinion throughout this debate as to whether there should or should not be centralisation, and this seems to be a case where it is very much in the interests of the public that the right to authorise compulsorily a gas pipe or main being placed above ground should be carefully guarded and should be given only by the Minister—I am talking about compulsory authority and not about anything else.

In the course of the passage of the Bill through another place this matter did arise, and some of us on these Benches had thought that an Amendment would be moved by noble Lords opposite. That turned out not to be so, and, for that reason, we have put down this Amendment. When I first saw this Amendment I admit I did not realise how important it was to make this safeguard. I had seen very few gas mains put above ground, but I am told there is in technical circles the thought that in the future it may become much more desirable from a technical point of view to place gas mains above the ground. If that is so, I certainly think that the public ought to be protected, as they are protected under the present Electricity Act, from having overhead gas mains placed compulsorily all around them. Therefore I think the Amendment is a very necessary one. Apart from amenities, there is also the question of danger. Despite what the Chancellor of the Exchequer so often tells us, we still smoke a great many cigarettes, and I need hardly make a long speech to remind your Lordships of the danger to the public from a leaking or burst main if it were above ground. For those reasons I hope this Amendment or some Amendment that means the same thing will be accepted, and that we shall jealously guard the power to place gas mains over land by compulsory purchase. I beg to move.

Amendment moved— Page 12, line 32, at end insert the said proviso.—(Viscount Bridgeman.)

THE LORD CHANCELLOR

I think this is a reasonable point. In the discussion in another place the Attorney-General gave an assurance that the Minister will not assent to the compulsory acquisition of this right to lay a pipe above ground unless it is the only practicable course. The noble Viscount is moving an Amendment to give effect to the undertaking given by the Attorney-General. As such, therefore, I can accept it in principle, and one of two things can happen: I can either accept it now, reserving to myself the right to modify it on Report stage, or perhaps it will be more convenient—because it may be a rather substantial alteration—that the noble Viscount should rest content with the undertaking I give to accept it in principle. The words about which I have a little apprehension are "reasonably practicable." I would like to be quite sure about this matter. I think it is all right. But suppose it is practicable to carry them below ground but it means that it is going to cost a great deal of money in comparison to the cost of laying them above ground, or perhaps over a canal or river. That could be easily done, with no engineering difficulty about it. It might cost ten times as much as the other way, and the Minister, in those circumstances, might say: "This is an occasion where I think I ought to say the pipes should be above ground." I am not sure about the words "reasonably practicable." I want to consider them, but I will leave it to the noble Viscount to decide what he will do. I will accept the Amendment if he likes, reserving to myself the right to alter it when the Report stage is reached. But I would prefer that he should let me consider the whole matter to see whether I cannot agree a clause with him and put it down on the Report stage. That, of course, would mean the noble Viscount withdrawing his Amendment now.

VISCOUNT BRIDGEMAN

I am most grateful to the noble and learned Viscount for the way in which he has met us on this matter. I will certainly do as he prefers. On the understanding that the Government will put down something on the Report stage to meet this point, I now beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

Clauses 12 to 14 agreed to.

Clause 15:

Undertakers to whom Part II of Act applies.

15.—(1) Subject to the provisions of this and the next following section, this Part of this Acts applies to—

1. (a) every person who carries on a gas undertaking authorised by any enactment;
2. (b) every person who carries on a gas undertaking not authorised by any enactment but providing supplies of gas the whole or main part of which was, during the year nineteen hundred and forty-seven, consumed by persons other than the undertaker, any subsidiary or holding company of the undertaker, and any subsidiary of a holding company of the undertaker; and
3. (c) every company which—
   1. (i) had, at the date of the last audited balance sheet of the company before the first day of January, nineteen hundred and 530 forty-eight, one or more subsidiaries, being statutory undertakers or non-statutory undertakers (as hereinafter defined) and
   2. (ii) at the said late held securities of, or rights in respect of loans made to, the said subsidiaries, the value of which as shown in that balance sheet, amounted to not less than seventy-five per cent. of the total amount of all the assets of the holding company as so shown;
   and references to an undertaker to whom this Part of this Act applies shall be construed as referring to such a person or company as aforesaid:

Provided that this Part of this Act shall not apply to the National Coal Board or the British Transport Commission

VISCOUNT BUCKMASTER moved to add to the proviso to subsection (1): nor shall it apply to any gas holding company (as hereinafter defined), who serve on the Minister not later than two months after the passing of this Act, a notice stating that they wish to be treated in the same way as other holders of securities of any undertaker to whom this Part of this Act applies and in such event, that company shall be deemed never to have been a gas holding company. The noble Viscount said: The noble and learned Viscount feel that at times I may have moved an Amendment which I have later wished I had not moved. I hope that he will respond to my appeal and give me further encouragement to move Amendments in the future. This Amendment, I can assure him, is perfectly innocuous. It does not seek preferential treatment for anybody. I may add that I myself have no connection with any gas holding company. I do not hold any shares in any such company, and I have no connection, either direct or indirect, with one.

What the Amendment seeks to do is to allow the holding company, on giving notice, to be treated as any other holder of gas securities. The effect of this would be that a holding company not giving the notice would have its own shares taken over as on the basis provided in Clause 25. If it gives the notice, two things happen. First the shares of the companies which it owns, either in whole or in part, would be taken over on the basis provided in the Bill instead of this happening to the shares of the holding company itself. The second thing that would happen would be that the holding company itself would remain in existence. There cannot be any objection to this. The company has an organisation, and may have property outside the gas industry, and there can be nothing essentially wrong in allowing it to remain in existence if it wishes. This Amendment does not prescribe any preferential treatment. It merely asks that a holding company should, if it wishes, be treated as any other holder of gas securities. I hope that the noble and learned Viscount may be able to accept this Amendment.

Amendment moved— Page 14, line 13, at end insert the said words.—(Viscount Buckmaster.)

THE LORD CHANCELLOR

I am afraid that I cannot respond wholeheartedly, as the noble Viscount would like me to do, to his attractive invitation. This Amendment really would not do. It would give every gas holding company complete freedom to opt in or out of the vesting provisions of the Bill as it pleased. Indeed, if it were accepted, there would be little point in retaining the gas holding company as a category of undertaking to be vested. The tests laid down in Clause 15 (1) (c)—they will be found at the bottom of page 13—are intended to identify those holding companies which are concerned in the administration and control of gas undertakings to such a degree that they are quite clearly part and parcel of the industry which is being nationalised, and so can reasonably be treated as proper subjects for vesting in the same way as gas undertakings generally. I had the curiosity to get a list of these companies—I dare say the noble Viscount knows about these things, but if not I will gladly show him the list—and I find that there are ten of them. With one exception, they are companies which are in it "up to the neck." The point of taking over these holding companies is that the Gas Council get their experts, their central organisation, their accountants and so on, which may be very valuable. There can be no question about these holding companies, save one in respect of which it has been suggested that an exception should be made—that is, North Cambrian Holdings Limited. It is a comparatively small concern; its total assets are £190,000. It has one subsidiary, a composite gas and water company, and no other extraneous interests. Now it happens to be a private company—I do not want to put ideas into the noble Viscount's head.

VISCOUNT BUCKMASTER

If they are profitable ideas, I hope that the noble and learned Viscount will certainly do so.

THE LORD CHANCELLOR

Well, just thinking aloud, let me make this supposition. Suppose that an Amendment were to be suggested at page 13, line 41, defining what these companies are. Suppose that I said: "Every company not being a private company," and made that my definition of a company. Then the noble Viscount would see that the company to which I have been referring would be out of the provision because it is a private company. It would go out. If that is the substance of the noble Viscount's point—and I gather that it may be—I will tell him that if I were severely pressed on that topic, it is possible, under that very strong pressure, that I should wilt and give way. I should have to explain to the Minister, of course, that I had been severely pressed. It may be that that will meet the noble Viscount, but that is as far as I can possibly go. No possible pressure will make me go further. If that idea is any good to him, there it is. But I am afraid that I must resist this Amendment.

LORD HAWKE

It struck me that the noble and learned Viscount did not put the matter in quite his usual lucid perspective. The fact is that by our Amendment he will get everything he wants, which are gas securities, owned by these holding companies. But, unfortunately under this he will not get the staff. If it were suggested to us that there should be provision that the technical staff should pass over, I see no reason why perhaps something on that line might not be done. The arithmetic of it is perfectly simple. I think the noble and learned Viscount will admit that he is denying justice to the shareholders of these companies. The simple essence of the matter in principle is that when the holding company receives from the gas companies dividends which it does not distribute in full, its shares do not stand as high as they might do. Now His Majesty's Government come along and take over the shares of the component companies on the basis of the quotation of the shares of the holding company, whereas if they take them separately, on the basis of the shares of each company, they would probably have to pay a little more. The difference represents moneys which shareholders have not received in the past, and which they have some expectation of receiving in the future, whether by way of bonus, liquidation or something of that kind. I think it is a denial of justice to say that you insist on taking these stocks and shares on the basis of the quotation of the holding company, when it would be more just to take them on the basis of the individual companies, as you would do under our Amendment. As I said before, we would certainly be prepared to consider any method by which the technical staff may pass over. Having heard that, I hope that the noble and learned Viscounts heart may be melted.

THE LORD CHANCELLOR

I am afraid my heart has not been melted. I would point out to the noble Lord that in a short time we are coming to an Amendment of fundamental importance, which raises the whole question of whether we shall operate on the basis of Stock Exchange values. If I may contemplate a gloomy contingency, it is, of course, just possible that the Government may be defeated on that point. In that very unlikely event, then, of course, Stock Exchange values go by the board.

LORD HAWKE

In that case, there is no harm in accepting our Amendment.

VISCOUNT BUCKMASTER

I am obliged to the noble and learned Viscount. In this matter I am more innocent than he supposes. I am grateful for the thoughts which he has put into my mind. On the principle that half a loaf is better than no bread, I gladly accept what he has offered, although it does not amount to much. I certainly do not feel able to put on him that extreme and intensive pressure which he feels necessary, but, none the less, I hope that the half loaf will not be denied. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT SWINTON

Might we not now close with the Lord Chancellor, in case he should be less amenable next time? I beg to move in line 41, after "company", to insert "not being a private company."

Amendment moved— Page 13, line 41, after ("company") insert ("not being a private company").—(Viscount Swinton.)

THE LORD CHANCELLOR

I gather that the noble Viscount is pressing me to accept this Amendment.

VISCOUNT SWINTON

I am pressing most strongly.

THE LORD CHANCELLOR

Reluctantly, I will agree to accept it.

On Question, Amendment agreed to.

Clause 15, as amended, agreed to

Clause 16:

Determination of questions as to application of Part II of Act.

16.—(1) The Minister shall, within the prescribed period, serve on every person who in his opinion is an undertaker to whom this Part of this Act applies other than a statutory undertaker a notice stating that that person is in his opinion such an underaker and also stating in which of the categories mentioned in subsection (2) of the last preceding section that person in the Minister's opinion is included, and—

1. (a) unless that person contends by a counter notice served on the Minister, within two months after the service of the Minister's notice, that in his opinion this Part of this Act does not apply to him and the counter notice is not withdrawn, this Part of this Act shall be deemed to apply to him; and
2. (b)unless that person contends by a counter notice served as aforesaid (and not withdrawn) that in his opinion he is included in a different category of undertaker, he shall (subject to any contention that this Part of this Act does not apply to him) be deemed to be included in the category stated in the notice of the Minister.

VISCOUNT BUCKMASTER moved, in subsection (1), to omit "within the prescribed period," and insert "not later than three months after the passing of this Act." The noble Viscount said: This is also, I trust, a perfectly innocuous Amendment. It does not in any way relate to the statutory companies; it relates to what I call the border-line cases. The purpose of the Amendment is to ensure that they shall not have to wait an undue length of time before being told of their position. There are not a very great number of them—some 400, I believe—and it appears to me that a measure of hardship may be involved in the case of these small undertakings if they do not know in a reasonable measure of time where they stand. I suggest that the period of three months proposed is not unreasonable, and that it should be well within the competence of the authorities to send out the appropriate notice within that time. I gather that they wish to obtain still further information in regard to these border-line concerns. But the time is running on; some months will elapse before the vesting day and, therefore, I see no reason why the information needed cannot be gained by that time, and the notice sent out within the three months which I propose. I beg to move.

Amendment moved— Page 15, line 15, leave out from ("shall") to ("serve") and insert ("not later than three months after the passing of this Act").—(Viscount Buckmaster.)

THE LORD CHANCELLOR

I entirely sympathise with the object of the noble Viscount. It is quite obvious that this is in the interests of everybody concerned and, in fairness to the companies, it should be done with a minimum of delay. There are, as he said, about 400 undertakings concerned here. I do not anticipate that there will be any difficulty at all with regard to, say, 390 of them, but there will be the border-line and marginal case which will be very difficult. With regard to that case, it may be necessary to collect a good deal of preliminary information, and that preliminary information may, in its turn, be dependent upon the regulations to be made under Clause 39—the production of documents and records. In a few odd cases like that it may be impossible to adhere to a time which, for all normal cases, is too long. That is my difficulty, and I put it quite frankly to the noble Viscount. There may be these few cases, and if we are to try to conform to a time, which in the vast majority of cases is a perfectly reasonable time, we shall be in difficulty. That being so, I would ask the noble Viscount to accept the Minister's assurance that he will in his own interest, in the interest of the companies, and of everybody, do this in the shortest possible time. I have little doubt that in the vast majority of cases we shall be able to work within the three months which the noble Viscount has in mind, but there may be the odd case, and it is that which prevents me from accepting the Amendment.

VISCOUNT BUCKMASTER

I am obliged to the noble and learned Viscount. I gladly accept the assurance he gives on behalf of the Minister, and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 16 agreed to.

Clauses 17 to 19 agreed to.

Clause 20 [Payments in respect of reserves of composite companies]:

THE LORD CHANCELLOR

When this Bill was printed the Companies Act, 1948, had not become law. We were working on the Companies Act, 1947. Now, thanks to the energy of those who have been working on this matter, we have been able to do what I promised I would try to do—namely, bring out our Consolidated Act. Consequently, we can now make the necessary Amendments to make it "1948." This occurs a number of times in the Bill, and your Lordships will realise why it is that I am moving these Amendments. I beg to move.

Amendment moved— Page 24, line 44, leave out ("First") and insert ("Eighth").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This is the same principle. I beg to move.

Amendment moved— Page 24, line 45, leave out ("1947") and insert ("1948").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 20, as amended, agreed to.

Clause 21 agreed to.

Clause 22:

Disclaimer of agreements and leases.

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

Provided that any of the said parties may, within the prescribed period from the date on which the notice is served, refer to arbitration under this Act the question whether or not the agreement or variation thereof was reasonably necessary as aforesaid, or was made or varied with unreasonable lack of prudence, and, on such arbitration, the arbitration tribunal, if satisfied that the agreement or variation was not reasonably necessary as aforesaid or was made or varied with unreasonable lack of prudence, shall confirm the notice and if not so satisfied shall revoke it.

7.20 p.m.

LORD LLOYD moved in subsection (1), to leave out "made or varied" (where that phrase first occurs) and insert "or variation of an agreement, made." The noble Lord said: This Amendment, the succeeding Amendment, and a number of consequential Amendments, are an endeavour on our part to try and improve what at the moment we think is a very unsatisfactory clause. It is unsatisfactory for two reasons. The first is because of the ambiguity which attaches to such words as "not reasonably necessary" or "unreasonable lack of prudence" After all, there are a great many actions which at the time may seem to those responsible both necessary and prudent but which may appear to other people, when they review them later, to be very wrong and neither necessary nor prudent. May I give an example? No doubt His Majesty's Government were acting in perfectly good faith when they nationalised the bulk of our industries at the time of our greatest economic crisis, but there are a number of noble Lords on these Benches who consider that action to have been neither necessary nor prudent. From that point of view, this clause is somewhat unsatisfactory.

But that is not the only reason why it is unsatisfactory. It is unsatisfactory because it penalises not the gas company (who might conceivably have learnt whether anything was necessary or prudent) but the unfortunate third party who could not have had the foggiest idea whether anything was necessary or prudent. The gas undertaker is abolished, and the fellow who has his contract disclaimed, or has to go to the expense of arbitration to prove that the agreement was all right, is the third party. That seems to us rather unfair. As it stands, the clause appears to afford the clearest warning to all people who are intending to do business with industries under the threat of nationalisation, that they only do so at their own peril.

This Amendment is a very simple one, and I genuinely think that it will improve this clause. What it seeks to do is to ensure that the minimum of inconvenience and dislocation shall come about as a result of the operation of this clause. Suppose that there was an agreement ten years old, that during the last three years that agreement has been varied for any reason, and that the Area Board take exception to that variation. Suppose further that they go to arbitration and it is proved that there has been an unreasonable lack of prudence; then, as the clause stands, the Area Board, if they wish to exercise their right of disclaimer, have to disclaim not only the part to which they object, but the whole agreement, even though the rest of the agreement is perfectly satisfactory and not such as they would wish to disclaim at all. This seems to me to be an. Amendment which would be an advantage, not only to the third parties—because it will mean that a great many more agreements will stand than would stand under the clause as it at present exists—but also to the Area Boards, because they will not want to disclaim all these agreements in full; they may wish to disclaim only part. I hope that the noble and learned Viscount will be able to accept this Amendment. I beg to move.

Amendment moved— Page 25, line 37, have out ("made or varied") and insert ("or variation of an agreement, made").—(Lord Lloyd.)

THE LORD CHANCELLOR

I am sorry that I cannot yield to the seductive voice of the noble Lord. I think he has not quite thought this matter out, if he will forgive my saying so. Let us analyse it for a moment. You have an agreement which I will call Agreement No. 1. At a later date you vary that agreement, and what do you arrive at?—Agreement No. 2 Now Agreement No. 2 is the agreement, and Agreement No. 1 has gone. You cannot reinstate Agreement No. 1—it may be absolutely impossible. One can give any number of illustrations. Take a case like this. An officer of a gas company is employed at a salary of £2,000 a year, and he has a pleasant residence in the vicinity of the gas company which he is allowed to occupy free of rent and rates. The gas company come to the conclusion that they want that house for other purposes—perhaps for extension of their works, or what you will—so they vary the agreement and, instead of giving him £2,000 a year with the house and amenities, they give him £5,000 a year. What happens? Perhaps they pull the house down. If you are operating that £5,000 a year agreement, you cannot go back to the other agreement—it may be absolutely impracticable and impossible.

If I may say so, the Amendment springs from the fallacious idea that where there is an agreement which, historically, was arrived at by reason of it being a modification or a variation of an earlier agreement, lurking in the background there is some ghostlike previous agreement. There is not. It has gone. It may be absolutely impossible to reinstate and people may not want it to be reinstated. Therefore, on analysing the matter, it is impossible to accept any of this series of Amendments. I quite understand the point which the noble Lord has in moving them, and to some extent I sympathise with him. I think he will come to the conclusion that the Amendment he is proposing would not work. I am sorry that I cannot accept it.

VISCOUNT SWINTON

I wonder whether the Lord Chancellor would enlighten us on this point. This problem gives us a great deal of trouble every time we consider one of these Bills. I remember that, with the help of all the great lawyers in the House, we worked out on either the Transport or the Electricity Act something which I do not say we liked very much, but which, with all the legal difficulties with which we were confronted, seemed on the whole to be fairly reasonable. It always seems unfair that one should, ex post facto, ask whether an action has been wise. The advice of the Lord Chancellor, when he was at the Bar, seemed very good advice when he was sitting in his chambers; but when his predecessor on the Woolsack delivered the final judgment against him in the House of Lords, it turned out to be not very prudent advice. But it would be unfortunate for the Lord Chancellor if he had to return his fees and pay something more because the case went against him.

That really is the sort of way in which we were rather anxious the Act should not work. I gather that the lawyers now assure us that that sort of thing cannot happen. I remember at the time I wanted to put in the words "mala fides" because, being a simple person, I thought that whether an agreement was wise or unwise was a matter of business and almost impossible to job back and judge back upon. But I do understand the difference between good faith and bad faith—at least I did until a day or two ago. Could the Lord Chancellor tell us whether, when a thing has been done decently and in good faith, the agreement is perfectly safe; and secondly, whether it follows accurately upon the decision on which we finally compromised when considering the Electricity Bill?

THE LORD CHANCELLOR

I have not checked this, but I have a recollection of this argument on the Electricity Bill.

VISCOUNT SWINTON

It arose mainly on the Coal Bill.

THE LORD CHANCELLOR

Yes. We considered this point first of all on the Coal Bill and then we had it on the Electricity Bill. I was persuaded to make some small concession on the Electricity Bill and I understand that that small concession is also contained here. Therefore, I think we have followed the Electricity Act, which was rather better for the noble Lord than the Coal Act. Of course, it is utterly fallacious to job backwards and to judge in the light of after events whether an agreement was reasonable or not. One must forget what happened afterwards and judge it as at the time it was made. Your Lordships will see that if there is a difference of opinion here, there is room for arbitration. There is the question whether or not the agreement or the variation thereof was reasonably necessary, or was made with unreasonable lack of prudence. An instruction is given to the arbitration tribunal to direct their minds to the time at which the agreement was made. I have no doubt that if they were not satisfied that the agreement was unreasonable then, they would support and uphold it. I think, therefore, that I have done everything I can to meet the point.

LORD LLOYD

I am grateful to the noble and learned Viscount for his extremely lucid exposition of this matter. On a legal point of this kind I would not presume to argue, and in the circumstances I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD AMMON

As the next Amendment seems likely to involve a fairly lengthy argument, perhaps it would be convenient if I suggested that the House should now adjourn, and meet again at nine o'clock.

[The Sitting was suspended at half past seven and resumed at nine o'clock.]

LORD LLOYD moved, in subsection (1), to omit "nineteenth day of November, nineteen hundred and forty-five" and insert "twenty-third day of January, nineteen hundred and forty-eight." The noble Lord said: This Amendment is another attempt to improve this clause which is still not an entirely satisfactory clause. I have already referred to two of the aspects of the clause which I think are rather unsatisfactory; that is to say, the ambiguity of its wording in some respects and the fact that it penalises a third party who is almost certainly entirely innocent. I cannot help feeling that this clause must act as a deterrent to enterprise to all those who do business with industries threatened with nationalisation. After all, when we are legislating for one particular industry which is being nationalised, we have to look ahead to see what the effect of what we are doing now will be upon other industries which are likely to be nationalised in the future.

As your Lordships will see, the object of this Amendment is to change the date which is contained in this clause, so far as this question of the disclaimer of agreements is concerned. This clause is no stranger to us; in fact it is an old friend—or, from our point of view, an old enemy. We had it last year in the Electricity Bill. On that occasion, having expressed the same doubts as I have expressed this evening, I ventured to ask the noble and learned Viscount whether he could not do something to clarify the position (this was on Electricity) as regards the gas industry, which we all knew at that time was likely to be nationalised in the near future. The noble and learned Viscount on that occasion was not—perhaps he could not help it—very helpful. He said that he could not deal with gas, and then he went on to say—I am paraphrasing what he said—that there would be a date of some kind but that at that time the gas people were quite untrammelled and they could do as they liked. The question was of a clause dealing with the dissipation of assets. I am not suggesting that his statement was in any way inaccurate, so far as the dissipation of assets is concerned, because the date is January of this year. Therefore, technically speaking, he was entirely correct in what he said. But, at the same time, it is extremely difficult to do much in the way of dissipation of assets or anything else without making some kind of an agreement. You cannot dispose of property or land. Indeed, I understand that even if you sign a cheque in payment for something or other, that, technically, is an agreement.

Therefore, it is difficult to dissipate assets without making some kind of an agreement. That is really the point of this Amendment, because it seems to me very illogical and extremely unfair that there should be two different relevant dates concerning two clauses which are so closely interlocked as these two classes. In the case of the dissipation of assets, it is unfair, I think, from the point of view of the people concerned within the industry because, in the case of the dissipation of assets, the people penalised are the gas workers themselves, who presumably have some idea whether or not they are dissipating their assets. In the case of the disclaimer of agreements, as I have already pointed out, the people penalised are not the undertakers, because they have already been dissolved. The people penalised are the third parties—namely, the people who do business with them.

When we examine the two different dates, however, we find that where it is a case of dissipating assets the period is only a year, whereas when we come to the disclaimer of agreements we find that any agreement can be disclaimed so far back as November, 1945. That seems very unfair, because the people affected are the third parties, who in any case could not have known whether any particular agreement was either necessary or prudent from the point of view of the gas undertaker, and still less could they have known it two years before the Bill was introduced. They could not possibly know what were the contents of the Bill. But it does not only work unfairly as between the undertaker and the third party. In my opinion it acts unfairly as between the different industries that are nationalised because, after all, the date in all these Bills has been November, 1945. The period in the case of the gas industry is a year longer than it was in the case of the electricity industry; and, no doubt, if noble Lords opposite intend to nationalise steel at a later date, that will be a year later still. Therefore, the later the industry is nationalised, the longer is the period of uncertainty and the worse the dislocation—which seems rather bad luck on those who happen to be nationalised last.

This Amendment tries merely to link the two dates, and to make a new date for both the dissipation of assets and for the disclaimer of agreements. In this case it will reduce to the minimum the period of uncertainty for the third parties with regard to agreements, and it will ensure that no third party is penalised for making an agreement at a time when the Bill in question was not even published. That is the first advantage. The second advantage is that it brings these two clauses—namely, the dissipation of assets and the disclaimer of agreements, into line. Finally, it legislates fairly between the different industries which are to be nationalised by giving the same date—namely, the date of the publication of the Bill—as the date governing this clause on disclaimer of agreements instead of making it a different date for different industries. I do not myself feel that there is any particular sanctity about this date of November, 1945, unless it be that that was the occasion when the Lord President in another place said that various industries including gas were to be nationalised.

I would like to remind your Lordships of certain things the Lord President said on that occasion, and I will quote from his speech in volume 416, column 36, where he said: During the interval which will necessarily elapse before the plans outlined can be presented to Parliament and carried into effect, all necessary development in the industries concerned must proceed. The Government therefore propose to see that progressive undertakings will not be prejudiced if they continue to develop in the interim period. I am sure the noble and learned Viscount must agree with that admirable sentiment; indeed he has already agreed with it, because on the Electricity Bill he said: It is of the utmost importance that people should not be petrified into inaction in this matter. Development must go on. If we are to have the minimum of uncertainty and the maximum of development I suggest that this Amendment will do a great deal to help, and for that reason I hope the Government will be prepared to accept it. I beg to move.

Amendment moved— Page 25, line 38, leave out from ("the") to ("and") in line 39 and insert ("twenty-third day of January, 1948").—(Lord Lloyd.)

9.5 p.m.

LORD CHANCELLOR

The object of this Amendment is to substitute as the operative date for the purposes of this clause January 23, 1948—the date of the publication of the Gas Bill—for November 19, 1945—the date of the announcement made by the Lord President to Parliament of the Government's nationalisation proposals. In making that announcement, the Lord President specifically referred to the intention to nationalise the gas industry and he said this: in the lifetime of this Parliament the Government intend to introduce measures to bring under national ownership the electricity supply industry and the gas industry. He added these words: The Government will naturally take precautions in its legislation to protect the acquiring authority against any transactions entered into in the interim period, whether by way of contract or otherwise which may prejudice that authority. That is reported in the OFFICIAL REPORT for November 19, 1945, Volume 416, columns 35 and 36. So the gas industry was warned well in advance that legislation in respect of contracts would be retrospective in its effects. It has also had the experience of the Transport and Electricity Acts, where similar powers were taken to disclaim agreements made or varied on or after November 19, 1945.

We regard it as essential that these powers should be retained in this Bill to ensure that any onerous, and possibly long-term, agreements entered into during the past two or three years with a view to defeating the ends of nationalisation may be challenged. I do not say that there were any—I do not know. I say that there could have been such agreements. If there were such agreements I think it would be wholly wrong to allow them to stand. I would point out that the contracting parties are protected by the proviso in subsection (1) which enables questions arising on disclaimer to be referred to arbitration. Moreover, to avoid any unnecessary embarrassment to undertakings through fear of genuine contracts being arbitrarily challenged much later, there is provision in subsection (7) for excluding from the scope of the clause any agreement or lease made or varied with the consent of the Minister of Health or with the approval of the Minister of Power.

I come to what was said in the Committee stage in the House of Commons, and I need hardly say that the poor old Lord Chancellor got into trouble again. I will say this to your Lordships. I do not for a moment claim that in all the observations I have made on all these various Bills I have not made a large number of mistakes. All I can claim is, having regard to the number of Bills that I have dealt with, I should be more than human if I had not. All I can undertake to do is to serve your Lordships to the best of my ability. My next quotation, I think, illustrates what I say about something being divorced from its context. May I read to your Lordships what was said in the Committee stage? Mr. Raikes on July 23, 1947, said: No less a person than the Lord Chancellor made a statement in regard to the disclaimer provisions in the Electricity Bill in which he said that the gas people are quite untrammelled, and are not controlled, but can do what they like. It is a little surprising…to find that what the Lord Chancellor said has been made retrospectively untrue by the provision in this Bill. Mr. Boyd-Carpenter went a little further and said: In the light of the attitude the Government are taking, the Lord Chancellor was talking nonsense—and misleading nonsense at that. What did I say? I made my remarks in answer to a question by the noble Lord, Lord Lloyd. Lord Lloyd asked me: But what is the position of the gas companies? There is nothing specifically in writing to protect them. Would he be able to give us an assurance that the gas companies, if they write to the Minister, will be exonerated. What I said in answer to that question was this: I cannot, I am afraid, deal with gas. But after all, when you do get a gas Bill—if and when you do—you will no doubt have some date, just as there is in connection with this Bill, January 10, 1947—which I. think was the date of the introduction of the Bill. You will have some sort of date of that sort, I should think. At the present time the gas people are quite untrammelled. They are not controlled, and they can do as they like. I cannot, do anything about them. What was the clause with regard to which I made those observations? Those observations were made in a discussion of a clause dealing with the reopening of transactions resulting in the dissipation of assets.

LORD LLOYD

That is not what I said.

THE LORD CHANCELLOR

I am not complaining about the noble Lord for the moment. He is much too fair-minded to attempt to misrepresent me. I am now dealing, as I think I am entitled to deal, with the misrepresentations in another place. He was dealing with the reopening of transactions resulting in the dissipation of assets, and Clause 36 is the corresponding clause in this Bill He was not dealing with disclaimers of agreements. It was an entirely different clause. I am bound to say that it so happens—perhaps it is a remarkable thing—that my statement was perfectly accurate, and has not been falsified by any provision in this Bill. The corresponding Clause 36 in the Gas Bill operates, as in fact I forecast, only from the date of introduction of the Bill—namely, January 23, 1948. As I indicated, the transactions entered into by the gas companies before that date are not subject to control, and are not liable to be reopened by the Area Boards. The position in regard to agreements is quite different, since if no precautions were taken the ill-effects of these could be perpetuated long after the vesting date. You can have an agreement lasting into the indefinite future. I made no reference to the position of gas companies, as the noble Lord frankly stated—in fairness, he would—in relation to a disclaimer of agreements. As I have already said, the Gas Bill in this respect, in fixing November 19, 1945, follows the Electricity and the Transport Acts. All I would say in self-defence—I am not deeply concerned to defend myself, so long as I think all your Lordships know that I did the best I could—is that it so happens that, in this case, my statements were perfectly accurate. But if you take my statements out of their context, and apply them to a different subject matter altogether, it is easy to say that I am talking nonsense, and dangerous nonsense. I consider that it might be appropriate that people who make observations of that sort should, before making them, understand what is the context of what is being said.

VISCOUNT MAUGHAM

For my part, I should like to say at once that I think there can be no real comment made about the statements of the noble and learned Viscount the Lord Chancellor on the previous occasion. He has explained how the phrase which he used has been subject to misconception—and, I am quite sure, honest misconception—in another place. Let us accept that, and regard the Lord Chancellor as being, in this respect at least, absolutely immaculate. That does not really answer the Amendment which has been moved. I would point out, with regard to that, that the phrase which is used in Clause 22, whatever it may be in other Acts of Parliament, is not the subject for discussion. Whatever may be the words in those other Acts, I think there is a strong reason here for not dating back the period mentioned in Clause 22 to so distant a date as November 19, 1945.

I found my opinion to that effect—and I am quite sure I shall be credited with founding it honestly at any rate—on the curious phrase: …that the making or the variation of that agreement was not reasonably necessary for the purposes of the activities of the said undertaker… Those words may be just if you have a comparatively short date. To go back to what I regard as the distant past, simply because you think that the agreement was not reasonably necessary for the purposes of the activities of the undertaker, is really to mean that whenever you like you can come to the conclusion that something was not "reasonably necessary"—I am emphasising the word "necessary"—even in the case where the undertaker has, in completely good faith, done something which was no more than expedient for the future of the undertaking. It is all very well to say that the Government intend to bring a Bill before the House of Commons, but after all you do not know when it will come; you do not know whether it will be persevered in, and you do not know how long it will take before it will pass into law.

In the meantime, as I recollect, we have been told in other cases—and I think in this case—that it is desirable that the undertakers shall go on with their business in just the way in which an honest undertaker would carry on his business, whether or not a Bill was threatened. I am sure that I am not exaggerating the case when I say that in the case of any undertaker who carries on his business in a way in which we should like all people to carry on their business—namely, with a desire to increase, improve and extend the success of the undertaking—it is common form to enter into agreements which are not reasonably necessary, or, indeed, necessary at all. They are merely expedient having regard to the desire of the undertaker to carry on his business successfully in the future. If you stand still with an undertaking you will often let the undertaking—I do not like to use unparliamentary language—"go to the devil." If all that is being done, in such a case as I have in mind, is something which a reasonable man with a desire for the future of the undertaking would do, that is simply something expedient.

It is quite wrong to go back after all these years, and come to the conclusion that the agreement in question was not necessary. The addition of the word "reasonable" does not help us. It must be "necessary" in order to be exempt from the possible great injury which will be inflicted if the Council are of opinion that it was not necessary for the purposes of the undertaking but was merely expedient. Unless those words are modified I contend that this is a most unfair and unjust section, and it should be altered in some way, if only by going back to the fair date—which cannot be earlier than the year 1948—or by some modified clause, so that you will hit the only people whom you ought to hit—namely, the undertakers who do something for the purposes of defeating the effect of this measure. That, I am sure, can be easily done with a slight alteration in the language of this clause, without inflicting grave injustice on people whose only sin has been to carry on business in an up-to-date and courageous way.

VISCOUNT SWINTON

I should like to reinforce that argument. We are in a genuine difficulty here, and whatever the noble and learned Viscount the Lord Chancellor said about dissipation of assets has nothing whatever to do with this matter. There we were dealing with how much people were to be allowed to pay out and what the gas companies could do, and he suggested that until the Bill came in they were free to do as they liked. No complaints can be made about that. I am sure that he wishes, as we all wish, to deal fairly with these people. We are in a genuine difficulty, and if we can get the best minds to bear on it, it should work out. It appeared a tolerably simple thing when an announcement was made in 1945 or 1946, or whenever it was, that something was going to happen "next year." It was not so simple when the thing passed on through the years. I am sure the Lord Chancellor will agree with me about this, whatever views he and I may hold on nationalization—and maybe he is a little nearer to me in that regard than are some of his colleagues. Whether an industry is nationalised in the future or not, what must happen to-day is that everybody in industry in this country—management and workers and everybody else—must go full steam ahead and produce. What does that mean? It means that we have to take risks. I do not care whether it is an industry nationalised or under private enterprise, risks have to be taken, whether we are making a contract at home or overseas. If we fail to do that, then that way stagnation lies—and where stagnation lies, damnation lies. I do not think there is any difference between us on that point. But real anxiety is being caused to these people.

I do not happen to be a director of any of these concerns which are threatened with nationalisation, but I am associated with some great undertakings in different parts of the world, and I know that the vital thing is to go ahead and take chances. But you cannot easily take chances if you are not sure whether or not something is coming down to hit you on the head. Nobody in business minds taking a fair chance, a chance on the future. The business man must bet on the future, take the risk and go forward. In business to-day the number of risks and chances one has to take are innumerable. I am not making a Party point now. I do not refer to all the tiresome controls, and things of that sort. There are almost imponderable risks of changes, even of peace or war. But the hundred and one uncertainties are not the fault of this Government or of any Government but are the fault of the conditions under which we live.

In the light of these conditions, more than ever is it necessary that people should forge ahead and take a chance. Good keen people, the best people whom I hope you will get from your nationalised industries and whom we have in our private enterprise, will take those chances and risks, whether they are in the nationalised industries or not; whereas people who just sit back on their hunkers want to play for safety. They are dreadful. By this clause you are really asking everybody to play for safety, just when you want them to go out and take risks and chances. Noble Lords opposite say "We do not know what industries we are going to nationalise, but those industries must go forward in the national interest; they must go forward, taking risks as if there were no sword of Damocles over their head or even in the middle distance," That cannot be done with this kind of clause. I agree that if there has been mala fides, I am all for hitting the people concerned for all you are worth—somebody who, in some little or big concern, has made a contract which is going to benefit his son or his son-in-law for twenty years. I am all against "jobs for the boys," either on your side or on mine, and that sort of thing I am prepared to hit at. But that is not what you are hitting here. In fact, here you are hitting a contract on which a man has taken a chance. There is no nepotism or suggestion of nepotism.

Was it a reasonable contract to enter into? The noble Leader of the Horse says he is all in favour of bulk purchase. I am not. I ask the noble Viscount the Leader of the House to go and examine all the transactions of the Ministry of Food and the other buying Departments, honestly entered into—nobody doubts that—with the public interest at heart—and nobody doubts that—but with most unfortunate results. Take one example—linseed. I am sure that the man who entered into that contract and other contracts like it was quite sincere when he thought he was doing good business. He certainly was not doing good business. Go and examine that contract. Would anybody say two years later, in the light of what is known, that that contract was entered into with reasonable prudence, foresight and the rest of it? Of course he would not. Anyone sitting in judgment upon that man would probably say, "It is quite unbelievable, looking at the facts to-day, that the man exercised reasonable prudence or foresight at the time." I ask the Government to consider that sort of case.

Let them take this clause away. I am not making a Party point upon it. We are all equally interested to see if we cannot between us hammer out something better, because this provision is going to cast its shadow upon the future of other industries. It may bring about a palsying effect. It might even have a palsying effect upon Mr. Strachey. Let us see if we cannot hammer out something which will deal as drastically as you please with a man who has entered into some contract to favour a friend, or to do a bit of nepotism for his family, but will deal much more realistically with people who have just made an ordinary business deal and exercised their judgment, whether or not that has turned out right.

THE LORD CHANCELLOR

Now that I have been acquitted of talking misleading nonsense on that occasion, I may be thankful that the particular attack made upon me was on a matter in which it was so easy to demonstrate that I was right, although there must be many occasions upon which I have talked it all unknowingly! I can now afford to disregard all that sort of thing and look at the clause. As I see it, the trouble is this: what I really want to get at is those agreements which would not have been made had it not been known or anticipated that there was going to be nationalisation. That is what I want to hit at. I cannot use the phrase "bad faith" for this reason—that a business like this, anticipating that it was going to be nationalised, might be much more expansive in its dealings than it would otherwise have been. The business might be like the Unjust Steward in the Bible. It might say to its servants "What are you getting now? Only a £1,000 a year! That does not seem enough in these hard times. We will make it a couple of thousand"; and so on. You might have all sorts of agreements like that, which you could not really say were mala fide, although you would quite obviously examine the matter carefully because they would have been made in an expansive frame of mind which would probably not have existed had there not been this moral certainty of nationalisation hanging over the industry. That is what I want to get at, and I am not sure that I should get at it if I used any words like "mala fide."

VISCOUNT SWINTON

May I just say this? These cases are contracts of personal service, but what I am anxious about is not that sort of thing but genuine business risks, such as buying coal forward or buying something forward—an ordinary commercial transaction. I would go a long way with the noble and learned Viscount if he would restrict this to contracts of personal service, but it is the commercial dealings that I am anxious about.

THE LORD CHANCELLOR

I entirely agree that it would be utterly fallacious to judge a commercial bargain in the light of after-events. You buy "futures" and you turn out to be entirely wrong. I suppose every business man—like Lord Chancellors—makes mistakes from time to time, and it would be quite fallacious to say that because the particular bargain turned out wrong, therefore it was an imprudent bargain to make. I think you must consider matters as they were at the time when you made the bargain. Here, if the Area Board thinks that the bargain was not reasonably necessary or was made with an unreasonable lack of prudence, they make this claim. And if the claim is made on the company they have a right to arbitration, and the Tribunal can act against them only if it is satisfied that the agreement or bargain was not reasonably necessary or was made with unreasonable lack of prudence. It is only in that event that the Tribunal are to decide against the agreement. I think that is not an unreasonable proposition. The Arbitration Tribunal must not be guilty of the obvious fallacy of judging the agreement in the light of after-events. The Tribunal must put themselves in the armchairs of the directors at the time of the contract.

VISCOUNT MAUGHAM

May I interrupt? The danger, as I see it, is not that the Arbitration Tribunal will refuse to look at the facts as they were at the date of the agreement; it is that the Arbitration Tribunal are bound to come to the conclusion that the transaction was not reasonably necessary or was entered into with less than ordinary prudence. That means just what I have endeavoured to say, and what my noble friend Lord Swinton has said with much more force. It is something quite different. On some occasion, in the interests of their company, and without thinking in the least of the Bill that might or might not turn into an Act, they had done something which was admittedly not necessary, but which was expedient in order that the business should improve. Perhaps it was thought that a chance should be taken with possibility of a very great reward. That is the difficulty which I have with this clause.

THE LORD CHANCELLOR

I differ from the noble and learned Viscount here. I make a distinction between the terms "reasonable" and "reasonably necessary." I think that "reasonably necessary" means that, by and large, it was a sensible sort of agreement to make at the material time—that is, at the time when the agreement was made. And that is what I want to provide. I believe that these words are satisfactory. I cannot overlook the fact that these words are, substantially, the words of the Electricity Act and the Transport Act, though, in this case I think they are slightly more acceptable to your Lordships, for some slight concession has been made. It is plain from the use of the words "if satisfied" that the onus is upon the Tribunal only to decide whether they are satisfied that the agreement was not reasonably necessary. That being so, I feel that we must adhere to this clause. Of course, if anyone makes a suggestion to me between now and the Report stage of some modification which will safeguard the position, I will gladly consider it. Quite frankly, I do not want to hit at the sort of agreement that would have been made whether there was nationalisation in the offing or not. What I want to deal with is the sort of agreements which were made comparatively lightheartedly because nationalisation was in the offing. I am not prepared to accept any suggestion of mala fides. I think that too restricted, too narrow. I want to ask: "Was this a sensible agreement for prudent businessmen to make at the time they made it?"

VISCOUNT MAUGHAM

Put that in the clause and we shall be happy.

THE LORD CHANCELLOR

I suggest that that is in the clause. My case is that it is there. If the noble and learned Viscount can give me any better form of words I shall be glad to consider it. So far as I know—and I hope that I am not talking misleading nonsense—in the Transport Act or in the Electricity Act no one has succeeded in finding a better form of words. Until one is suggested I must adhere to this

VISCOUNT SWINTON

This is an extremely important matter. I admit that I have difficulty over suggesting a better form of words. We discussed this together, both on the floor of the House and with all our advisers. It is very difficult to find a form of words which covers something which I agree ought to be covered and, at the same time, protects transactions which ought to be protected. But I have this suggestion to make to the Lord Chancellor. I would like to divide the classes of cases, because, as you get further and further back, to somewhere like November 19, 1945, in dealing with commercial transactions (and I am not worrying about anything else) it becomes more and more difficult for any arbitrator to put himself into the position which existed then. I admit that a good arbitrator might do that. But what I am much more worried about is the effect on people conducting the business.

The Lord Chancellor knows so well the phrase we often use in business: "I am chary of buying a lawsuit." I have been held up in business I wanted to undertake. I have asked my adviser: "What is the chance?" and I have received the reply: "Well, you may have a lawsuit against you." You know it is the right thing to do, but you are not going to buy trouble, and so you stop doing it. That is not right. It is the deterrent effect on all the other people who are doing their ordinary business—the fear that they would be buying trouble. As I say, I would take a chance of buying trouble in the future, but what worries me is the buying trouble back to some uncertain date. Would the Lord Chancellor consider this? I do not expect an answer to-day. Let him take his 1945 date for contracts of personal service, and that sort of thing; but let him take a much more recent date for commercial contracts which are to be readjusted because there was not a reasonable amount of prudence. Upon that I do not think he can lose anything. On the contrary, I think he would gain a great deal by giving confidence to everybody in the business world.

THE LORD CHANCELLOR

I am quite prepared to consider anything, so long as I am not misleading by indicating that I am going to accept it. I am quite prepared to consider that suggestion. If the noble and learned Viscount, Lord Maugham, will give me a better form of words, I am quite prepared to consider those. I am prepared to consider anything, so long as I preserve this principle—that it would be utterly wrong that after this nationalisation was announced people should enter into agreements by which they avoid its effect. The other difficulty is that this is the form of words in two existing Acts of Parliament. But I will gladly consider this matter. While I make no promise that I will do anything, I invite suggestions from your Lordships, and I will examine them with those who advise me.

VISCOUNT SWINTON

I am obliged.

VISCOUNT RIDLEY

Before the noble Lord withdraws the Amendment, I would like to support the last suggestion made by the noble Viscount, Lord Swinton, of trying to divide it into two categories. I say this simply from having experience of the industries which have been or are about to be nationalised. I say it from the point of view of the effect which it has on those who are responsible for policy decisions as to the development of the industries. So far, I think, it is true that there has been no difficulty about the electricity or transport industries, which have already been nationalised. But it is having a serious effect. I agree that anything like a contract for employment, improperly given, or an arrangement of that sort, ought to be most severely discouraged, and ought to be made inoperative. The date question is a most difficult one. For example, I would rather raise the question: How does that apply to the steel industry? We have had a lot of things said as to whether it is or is not to be nationalised; and how and when it is to be nationalised. We understood that it was the Government policy, and it still may be. But is there any clear date at which the steel industry can understand that a decision to nationalise was taken? Will there be there a date of this kind going back to 1945? Is that not bound to have the effect of discouraging people from making their forward plans, and ordering plant? Are not they bound to consider: "If we embark on this new modernisation of the plant, and commit ourselves to large expenditure, what will be the effect on our shareholders? Should we undertake this, that and the other, or are we likely to be criticised? Will there be a disclaimer of contract in this case? There is the other difficulty, with regard to ordinary normal things which arise from time to time—subscriptions to trade societies and annual subscriptions to bodies like charities and hospitals, as there used to be until recently. Should we be strictly within the terms of the Bill in agreeing to this or should we say that it will bring us into the disclaimer clause?"

Those things must operate, and I am certain have operated, to give people a feeling of insecurity and doubt as to what they should do. If this date question could be solved in the way proposed by the noble Viscount, Lord Swinton, it would be a great help, because whatever may be arranged as to the vesting date, in the case of the gas industry it is not likely to be less than a number of months, and a good deal requires to be done in that period. Anything which can be arranged to give more confidence will surely help in its development. Although I cannot suggest any form of words, I hope the noble and learned Viscount will try to follow the suggestion as to the two categories which have been proposed by the noble Viscount.

LORD LLOYD

In the circumstances, I should like to say two things. First of all, the noble and learned Viscount suggested in his later speeches that I accused him of talking misleading nonsense. I would like to say again that nothing was further from my intentions.

THE LORD CHANCELLOR

I am sorry if I suggested that. I meant to make it quite plain that the noble Lord had made no sort of accusation, but that certain persons in another place had quite wrongly made that suggestion.

LORD LLOYD

I wanted the noble and learned Viscount to understand that. The reason I raised that point was purely because it seemed there was a difference between the two clauses. In view of the assurance he has given to the noble Viscount, Lord Swinton, for which I am grateful, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 22 agreed to.

Clauses 23 and 24 agreed to.

Clause 25:

Compensation to holders of securities.

25.—(1) Every holder of securities of any undertaker to whom this Part of this Act applies, not being an undertaker to whom section eighteen of this Act applies, shall be entitled to be compensated by the issue to him by the Gas Council, in accordance with the provisions of. the Second Schedule to this Act, of British Gas Stock of such amount as in the opinion of the Treasury is at the vesting date of a value equal to the value of the said securities held by him, regard being had (in estimating the value of the stock so issued) to the market value of government securities at or about the vesting date:

Provided that— (a) if the whole of the beneficial interest in any such securities was, immediately before the vesting date, vested in any undertaker to whom this Part of this Act applies, other than an ancillary gas undertaker or an undertaker who is not a body corporate, no compensation shall be payable in respect of those securities and the securities shall be extinguished on the vesting date; and

9.53 p.m.

LORD RENNELL moved, in subsection (1), to delete "in the opinion of the Treasury" The noble Lord said: The apparently somewhat innocent Amendment which stands in my name is moved for a particular purpose, first, to draw attention to the operation of similar sections in the Transport Act and the Electricity Act, and, secondly, with a view to avoiding the repetition of those occurrences under the Gas Bill. The first part of the clause in question deals with the compensation to holders of securities by the issue of Gas Stock, similar to the issue of Transport Stock and Electricity Stock under the other two Acts.

My Amendment, and what I have to say, have no bearing on the method by which that compensation is assessed, in regard to which other Amendments will come before your Lordships' House in due course. What have to say about the first part of the clause is without prejudice to what I may have to say about the method of compensation, referred to later. The particular part of the clause to which I am referring is subsection. (1), the relevant parts of which read at present as follows: Every holder of securities of any undertaker to whom this Part of this Act applies shall be entitled to be compensated by the issue to him by the Gas Council…of British Gas Stock of such amount as in the opinion of the Treasury is at the vesting date of a value equal to the value of the said securities held by him regard being had"— and these are the particularly important words— to the market value of government securities at or about the vesting date.

My reason for moving this Amendment, which seeks to omit the words, "in the opinion of the Treasury," is that experience has shown, in the case of the Transport Stock and Electricity Stock which was issued in compensation, that the opinion of the Treasury in these matters was not worth having. In the past, we have had experience of the opinion of the Treasury and were given to understand that that opinion was not only of great value but was not allowed to be traversed, either by circumstances or by other people's opinions. That regard and that good opinion have not been borne out by circumstances within the last two years. One of two things has therefore taken place. Either the opinion of the Treasury which led to the issue of Transport Stock and British Electricity Stock was founded on misleading and erroneous circumstances; or the opinion of the Treasury has been guided in a direction which has led to the results to which I have referred.

In both the cases to which I have referred—the issue of Transport Stock and Electricity Stock—the value of compensation stock given to holders has not been such, having regard to the market value of British Government securities at or about the vesting date, as would have justified anybody in taking up the stock. The evidence of that can be found in the value of British Government stocks on both of the two dates which are relevant to this argument. On the vesting date of the transport industry (January 1 this year) and of the electricity industry, it appeared likely that Transport and Electricity Stocks would stand at a certain value. In point of fact, the values of those stocks on those two dates was par for a 3 per cent. stock of a certain maturity. To be more precise, on the vesting date of the transport industry, 3 per cent. Savings Bonds, 1965–1975—a representative British Government stock—stood at about 100½, having been Too a short time before. The stock known as 3 per cent. Savings Bonds 1955–1965 was at the same relevant date a little under 102. British Transport Stock, which was a 3 per cent. stock dated 1978–88 and was issued in compensation to the stockholders under a clause analogous to the one I have quoted, opened on the date of issue at 98, which was 2½ points below the other stock, for the simple reason that the stock selected to compensate the holders was somewhat longer in date and therefore might be expected to command a lower price. I will come back to those two stocks in a minute. On the vesting date of the electricity industry, the two stocks to which I have already referred stood at par. Electricity Stock, when issued, opened at 99 and thereafter, in common with other Government stocks, fell steadily, but the Electricity Stock fell lower than the others.

THE LORD CHANCELLOR

Could the noble Lord tell me what it is today?

LORD RENNELL

I am coming to the price of both of them in a minute. In other words, the Transport and Electricity Stocks were issued at a price which, in the opinion at the time of everyone except the Treasury, was higher than the price which they could (and did) command. I am coming to the question of price and the value of compensation in a minute. Nobody held the opinion that the two stocks which were respectively issued to compensate holders of transport and electricity securities could possibly command a higher price if they were longer in date than the other two Government stocks to which I have referred and which were the standard stocks by which a stock like that was likely to be judged. No one thought so, and in fact the stocks did not command a higher price.

Now it may be argued—and I gather that this was the reason for the inquiry made by the noble and learned Viscount—that anyone to whom those stocks had been issued and who had retained them, might have obtained the prices which the Government would have wished them to obtain. It is, however, an unfortunate circumstance, from the point of view of the noble and learned Viscount opposite, that, whereas since those dates other British Government stocks have risen in value above the level to which I referred, the British Transport stock (to take that stock first) has steadily fallen. The two stocks to which I first referred as being what one might call the standard measurement stocks, stand to-day at either about the same level or about a point higher than they did. British Transport stock stands, not even at the level at which it was issued, but very considerably below it. In other words, the value of the compensation stock issued to holders of transport securities was not only wrong in the light of after-events and in the light of everybody's opinion at the time by a matter of 2 per cent., but has since shown a decline in the wrong direction, so much so that the price of compensation stock is to-day some 4 per cent. below the level which I presume the Treasury wished holders of transport securities to receive. I am coming to that point about what they wished them to have.

To complete the answer to the noble and learned Viscount's inquiry, I would say that the price of British Electricity Stock has at long last risen to the level at which it should have stood at the time it was issued, but the other comparable stocks are higher. If, therefore, the Treasury had wished to give a stock which in its opinion was worth what it was alleged to be worth at the time that it was issued, in the case of electricity it would have given a stock which to-day would have been worth slightly more than the price at which it stood when the compensation was made. A fortiori, if the Treasury's opinion had been worth having, the price of Transport Stock would now stand, at lowest, at the level at which it came out (which is less than the level at which it should stand) but it is now considerably lower than the price at which it came out. I have shown, I hope to your Lordships' satisfaction, that the value of the compensation made at that time in respect of both those stocks was not what was expected or indeed what the Government intended. I will elaborate that point in a moment. Therefore in the case of one very large block of compensation, not only has the compensated party not received the price to which he was entitled, but he has been involved in very considerable loss.

I am not on this Amendment dealing with the question of income value; I am dealing solely with capital value. The question of maintainable income, or the receipt of an income similar to what the holder had before the compensation stocks were issued, is not germane to this particular part of the argument, but we will come to that when considering a series of Amendments which are being proposed by other noble Lords. All I am saying is that I find it a matter of grave criticism that the Government should say: "We will give you, for something which you have, a price which is supposed to represent a certain price," and then give you something which is worth considerably less. When they state that, in the opinion of the Treasury, the value given is the value they claim to be giving, I say that the opinion of the Treasury is not one which I would be prepared to follow or to recommend to your Lordships in the case of compensation under the Gas Bill.

How that Treasury opinion was arrived at is no concern of mine, but it probably may concern your Lordships very considerably in another context—namely, consideration of the conduct of British Government finances over the last two years. But for what has happened with British Government finances I do not believe that these two types of stock would have been selected for compensation for transport shareholders or electricity shareholders. I therefore arrive, very unwillingly at the conclusion that the opinion of the Treasury about the values of certain things was an opinion which was vitiated—I say "vitiated" deliberately—by the political complexion which the Treasury were directed to assume in issuing that compensation stock. I prefer to take that view rather than the view that the Treasury in these matters is incompetent and their opinion about the value of compensation stock is so much at variance with the opinion of everyone else in this country about the value of compensation stock. I do not believe that our Civil Service is se incompetent as that.

Having regard to those arguments, I have moved to omit the words "in the opinion of the Treasury" in the case of compensation to Gas Stock holders, so that the clause shall read that holders of gas securities covered by that part of the clause to which I refer shall receive equal value in compensation—not compensation which, in the opinion of the Treasury, is equal value. I am prepared to admit that in framing a clause of this sort an opinion is required, and if any of your Lordships would care to move an Amendment to my Amendment to insert in the place of the words "in the opinion of the Treasury" something to ensure that the value of the compensation shall be fixed in some other body's opinion or some other person's opinion or in the opinion of some tribunal, I shall be happy to accept it. Having regard to what has happened, I submit that the opinion of the Treasury in this connection is not worth having. I therefore beg to move.

Amendment moved— Page 28, line 39, leave out from ("as") to ("is") in line 40.—(Lord Rennell.)

LORD TEYNHAM

I should like to add my support to this Amendment which has been so eloquently moved by my noble friend, Lord Rennell. Whatever may be the reply of His Majesty's Government, I think that it is an indisputable fact that both Electricity and Transport Stock fell below par almost from the moment of issue. Why did that fall occur? No doubt one reason was that people who received Electricity or Transport Stock in exchange for their securities were forced to sell them and reinvest elsewhere in order to make up their loss of income. Exactly the same thing, I suppose, will occur with Gas Stock. It seems to me that the Chancellor of the Exchequer will not adroit this fact, but maintains the view that the holders of national stock have obtained additional security which is sufficient to compensate them for loss of income, and ignores the fall in national stock that it is bound to occur. In subsection (1) of this clause it is laid down that holders of securities in gas undertakings are to be compensated by the issue of Gas Stock of such amount as is, at the vesting date, equal in value to that of securities which he at present holds, regard being had to the market value of Government securities at or about the vesting date.

LORD RENNELL

One of my points was not concerned with the question of the selling of the stocks at all. It was that compensation was to be received in a type of stock which was found to be of lesser value than standard stocks with which it was compared.

LORD TEYNHAM

I would like to ask who is to be the judge in this equality of value of securities? As laid down in the Bill, none other than the Treasury themselves are to be responsible for the issue of the stock. In fact they are to be judges in their own cause, and I think that, in view of what has transpired in the case of Transport and Electricity Stock, it would seem that the judgment of the Treasury is not a very good one. I would suggest that it would be far better to have an independent body to fix the equality in value. The Chairman of the Committee of the Stock Exchange, the President of the Institute of Chartered Accountants or some other suitable person might be appointed. In another place, I think the Governor of the Bank of England was suggested. But whoever it may be, he should certainly be independent of the Treasury, and I hope His Majesty's Government will have some better plan to offer than that now set out in this clause of the Bill.

Then we have the curious market operations of the Treasury at about the time when national stock is to be issued. I would suggest that the methods used by the Treasury just before the issue of Transport and Electricity Stocks were very strange. I think that they might be described as almost a "rigging of the market." It certainly appears that deliberate action was taken by the Treasury to boost the gilt-edged market at about the time of the vesting dates. What would be said of private enterprise if a similar operation in the markets had been carried out by a board of directors preparatory to making an issue of stock by their company? The Minister indicated in another place that open market operations were essential to the present technique of management. We may be living in an era of managed currency and cheap money policy, but it is going a little too far when the market is manipulated by the Treasury when they are faced with the issue of a national stock, in order to obtain the best terms for themselves. I hope His Majesty's Government will give an assurance that they do not intend to carry out these operations in the future, and especially at the time when Gas Stock is about to be issued. I think there is little doubt that such Treasury operations have had the effect of producing losses to a very large number of people in this country, many of whom are living on small incomes, who will, in any case, have to face a loss under this Bill.

THE LORD CHANCELLOR

I am not going to enter into a controversy with these two noble Lords on these matters, about which they obviously understand a great deal and about which, I admit quite frankly, I understand absolutely nothing. I will not endeavour to deal with the matter at all. But I would say this. It seems to us absolutely essential that there should be someone to determine the value of compensation stock on the vesting date. So far I think we are all agreed. If you did not have that, you would have the matter subject to litigation. I suppose every individual would be entitled to litigate, and to litigate up to your Lordships' House, and the matter would be quite impossible. It seems to us that that "somebody" should be the Treasury. I do not know how it came about that the Treasury made a mistake—if they did make a mistake—but I am glad to find that even the Treasury can make a mistake.

LORD RENNELL

It was two in this case.

THE LORD CHANCELLOR

It seems that even the Treasury can make two mistakes. Let us hope they will not make it three. Anybody can make a mistake. Even the Chairman of the Stock Exchange might make a mistake. The President of the Institute of Chartered Accountants might make a mistake. I have made mistakes. It is even possible that the noble Lord has made a mistake—though the latter is perhaps more unlikely. There it is. Somebody has got to fix this value, and, in fact, the Treasury in fixing it do consult the Bank of England. It is not right to say that this is the responsibility of some civil servant. It is not. This is the responsibility of the Chancellor of the Exchequer himself. No doubt he acts in the light of the advice he gets from his civil servants, from the Bank of England and from other people he consults; nevertheless it is his responsibility, and it seems to us absolutely right that we should adhere to this clause. This clause has been adopted throughout in the various nationalisation Acts—in the Cable and Wireless Act, the Transport Act and the Electricity Act—and here it is again. All I can say is that it seems to us that the Treasury are still, thank goodness! honest people and that they are less likely to make mistakes than anybody else. In the circumstances, I regret to tell your Lordships that I have nothing to offer here, and if your Lordships want to take these words out, your remedy is to take them out by a Division. I maintain that these words are essential to the structure of this Bill, as they have been to the structure of all the other nationalisation Bills.

VISCOUNT SWINTON

I must say that that is one of the most singular answers I have ever heard. There seems to be a competition in seeing who can make most mistakes—a sort of "Comedy of Errors." That may be very entertaining as a matter of debate, but it is not very entertaining to the people who receive what is intended to be just and fair compensation. The compensation, as the previous Acts have said, is to be the fair and just equivalent. Surely the Lord Chancellor will at any rate admit this: that having laid down in a Bill that people are to receive what is the fair and just equivalent, it is the intention of His Majesty's Government that that is what they shall receive.

THE LORD CHANCELLOR

Certainly.

VISCOUNT SWINTON

I am very much obliged for that answer. May I ask assent to the next proposition? In testing whether the method which has been pursued in order to reach a fair and just equivalent has in fact given that result—which is not a matter of opinion ex post facto but a matter of fact—if it is found that the stock which has been issued does not give that fair equivalent but is in fact lower by several points, or even a point (a point is very substantial in this matter) than the equivalent stocks, then it is admitted that a mistake has been made.

THE LORD CHANCELLOR

No.

VISCOUNT SWINTON

It is not admitted that a mistake has been made? Then I really do not understand what is the meaning of the word "mistake" or "miscalculation."

THE LORD CHANCELLOR

May I help on this matter? This is to be the opinion of the Treasury. Of course, that means the best opinion of the Treasury, and the opinion of the Treasury come to on fair and legitimate grounds. The Treasury are not prophets, but come to an honest conclusion, taking into consideration the relevant circumstances. Directly after they make the bargain, there might be an outbreak of war to falsify the thing. All you can ask is that the Treasury should honestly apply their mind to the right considerations. I do not admit for one moment that any mistake has been made.

VISCOUNT SWINTON

I do not in the least admit that that is all we can ask for. Really, I have never heard such an extraordinary proposition. What the British citizen is entitled to ask for is justice. Nobody is accusing the Treasury of being corrupt, but what h as been proved beyond peradventure is that the Treasury have been wrong. The Lord Chancellor says he has been wrong. He says that the noble Lord, Lord Rennell, may be wrong. We are often wrong, but we really must not boast about being wrong. When we have been wrong I thought that what we did was to try next time to right that wrong. The Lords Chancellor says: "Not at all. Do not let us try to be right. All you have to say is that the Treasury were giving an honest opinion."

THE LORD CHANCELLOR

I never said we must not try to be right—that is a complete misrepresentation of my views. If next time the Treasury were to fix the value too high and say that, in the light of after events, these people had got too much, I should not ask them to pay it back. So long as the Treasury honestly fix the price, that is all they have to do.

VISCOUNT SWINTON

That is not in the least the issue. I am not asking, the noble Lord, Lord Rennell, is not asking, and nobody is asking that we should alter Acts of Parliament which have been passed. We thought they were unfortunate at the time, and we said so, but they were passed and we must take our chance on them. What we do say is that surely we may learn from experience; and if, in fact, in the issue of Transport Stock and Electricity Stock the public has not received what they were entitled to receive under the terms of the Act of Parliament because the Treasury made a miscalculation, then, I say, surely let us try and safeguard the position in this present nationalisation bill. It seems to me that that is a self-evident proposition.

Really, for the Lord Chancellor to assume a sort of Papal infallibility for the Treasury seems to me to be a strange assumption of prerogative. Surely we want to do what is fair and just and to give in fact what is, in the best opinion, the equivalent. I agree that somebody has to be the judge. You cannot have these matters litigated in the courts. I quite agree also—at least I am prepared to assent to the proposition though I do not think it is a self-evident proposition, because after all a great deal is going to arbitration—that it may be that the Treasury are the right body to fix this. I should not have said, however, that there was anything in the least derogatory in setting up a tribunal. One very often goes to a tribunal. I remember the noble and learned Viscount the Lord Chancellor boasting—and rightly: he was entitled to boast because he carried this legislation through—that he was going to propose legislation under which the Government and the subject were going to be on an absolutely equal footing, and that one would have as much right against a Government Department as one citizen has against another. I am not even asking that we should re-open the subject of the Treasury's mistakes—though if we go back to a clause which we were discussing only a few moments ago, on the right to re-open contracts where there has been an "unreasonable lack of prudence," I should have thought that what was sauce——

THE LORD CHANCELLOR

It is excessive prudence in this case.

VISCOUNT SWINTON

Excessive prudence on the part of the Treasury. I do not know whether it has worked out to the benefit of the Treasury—I suppose it has—but it has worked out to the loss of the consumer. I should have thought that, taking the precedent of the last clause, we might have had something to say about that. But I am not trying to go back upon the past; I am praying in aid the past only in order to learn for the future. I should have thought that the reasonable thing to do—and it would not lead to any loss of face or pride—would be for the Treasury to say, "If the responsibility is ours we will take the best advice we can from the people who really know what the effect on the Stock Market is likely to be—the Bank, the Committee of the Stock Exchange or whomsoever it may be." I think that that would be the right and reasonable thing to do; and, having taken that advice, let the Treasury make their decision. I do not think it would be satisfactory merely to delete these words. I submit that to my noble friend, Lord Rennell, and that he should propose that the Treasury in coming to a conclusion should take advice. No one is better qualified to draft an Amendment as to who are the right people to consult than is the noble Lord, and if he were to put down such an Amendment I would certainly support it.

10.30 p.m.

LORD RENNELL

With your Lordships' leave, I should like to correct two points that have arisen. I have assumed that when the Government said in effect, "We will give you something of a certain value for something which you have," that the "something" which the Government gives will have the value which it is represented it has. I have submitted evidence to show that that "something" which the Government have given did not have that value. My proposal in this regard is a very simple one. It is that when the holders of gas securities come to be compensated they shall be compensated with a stock which at the time of the compensation shall have the value that it is alleged to have. It would have been simple in the case of transport and electricity compensation to have given to the holders of those stocks something which at that moment had that value, and not a different thing which turned out to have a different value. I go no further than that, and, at this stage, I ask the noble and learned Viscount only to give the House the assurance that, in the case of the holders of Gas Stock, they shall have something which at the time that it is given has, in fact, the value which it is supposed to have, and not a different value which, in the opinion of the Treasury, ought to be the same value—an opinion which nobody else shares. All I am asking now is that, if the clause is allowed to stand in somewhat the same form as that in which it is now drafted, the holders of gas securities shall have issued to them a stock which, at the time of compensation, shall be identical with a stock which has the value that the Government intend that the new stock shall have. If I can have that assurance, I shall withdraw the Amendment now and not amend it at a later stage.

THE LORD CHANCELLOR

I am afraid that the only assurance that I can give now is that the Treasury will apply their minds to the problem. They have to fix the price at some given moment of time. They will apply their minds to that problem and they will take all such advice—for instance, advice from the banks, and so on—as is open to them. They will try to fix a price which gives too per cent. of the value. That is what they will aim at and try to do. I cannot say more than that. No man can do more. One cannot absolutely guarantee that they will be right one way or the other. All I can say now is that they will do their best in applying their minds to all the relevant circumstances at the relevant date to fix the right price.

LORD RENNELL

May I take the noble and learned Viscount just a little further by an example, if your Lordships will allow me? In paying for something, you pay for a known commodity and not for an unknown commodity. If you buy a sheep, you expect to get a sheep; you do not expect to get a fat goat, which is larger than a sheep, in place of a sheep. I ask the noble and learned Viscount the Lord Chancellor to say that the compensation stock that is given shall be of a type which, at the time that it is given, is identical with other stocks in existence having that value, and that it shall not be another stock of a different type which is alleged, in the opinion of the Treasury, to be of the same value. In other words, when I buy a sheep want a sheep and not a goat. Will the noble and learned Viscount go so far as to say that he will represent those views in the proper quarter, and will also accept from me the assurance that I am not concerned with what the value of the compensation is after the event? It might then be affected by reason of a large number of people selling, which would not be a fair criterion. The only point of my remarks is that the value at the time shall be what it is alleged to be. If the noble and learned Viscount will go down that road just a little further with me, and ensure, or seek to ensure, that when a sheep is sold a sheep is delivered instead of a goat, a horse or a donkey, I will beg leave to withdraw my Amendment.

THE LORD CHANCELLOR

At twenty-five minutes to eleven to-night, I cannot give any undertaking in regard to these complicated financial measures, except this. I will gladly convey to the proper quarters the observations which the noble Lord has made, in order that at a later stage of the Bill, if it is thought proper, I may be authorised to accept it. More than that I cannot do at the moment.

LORD RENNELL

I entirely agree and, with your Lordships permission, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

LORD HAWKE

I was going to ask the noble and learned Viscount if he would perhaps go a trifle further. These people are unwilling sellers of their stock to the Government. I freely admit that to ascertain with mathematical exactitude what is a stock that has exactly the same value presents certain difficulties. But would the noble and learned Viscount represent in the right quarters that the benefit of doubt should go to the holders of the stock, rather than to His Majesty's Treasury?

THE LORD CHANCELLOR

I will gladly represent any thing, but I cannot myself give any view.

THE MARQUESS OF SALISBURY

We do not want unduly to press the Lord Chancellor and I fully appreciate the difficulties involved. But would it be possible for him, before we reach the next stage, to inform the noble Lord, Lord Rennell, or Lord Swinton, or somebody, of the reply which he receives from the Treasury? Because it may influence the course we take.

THE LORD CHANCELLOR

I will, with the greatest pleasure. Indeed, I will gladly put any noble Lord in touch with the Treasury so that he may hear the reply with his own ears.

VISCOUNT BUCKMASTER

May I just say——

THE LORD CHANCELLOR

We are getting out of Order now. This Amendment has been withdrawn.

VISCOUNT SWINTON

With great respect, surely the procedure is that after a noble Lord has moved his Amendment, he then, if he so desires, asks leave to withdraw it; but if any noble Lord desires to speak, he is entitled to speak before that Amendment is withdrawn.

THE LORD CHANCELLOR

The Question was put from the Chair and carried. I will gladly see the noble Lord about this. He knows perfectly well that if he will see me privately, I will gladly deal with the matter. But when an Amendment has been put and leave has been given from the Chair—it was put from the Chair: "Amendment by leave, withdrawn"——

VISCOUNT SWINTON

It was not carried.

THE LORD CHANCELLOR

It really was put, and the Chairman said: "Amendment, by leave, withdrawn."

LORD RANKEILLOUR

I submit to your Lordships, on a point of Order, that a practice has grown up whereby the Chairman does not put the Question that ought to be put—namely, "Is it your pleasure that the Amendment be withdrawn?" which is the practice both here and in the other place. The Chairman has sometimes assumed that it is withdrawn, and has never put the question that leave be given. In this case, leave would not have been given.

THE LORD CHANCELLOR

I thought it was put. I thought the Chairman said, "Is it your pleasure that the Amendment be withdrawn?" and, there being no opposition, it was withdrawn; but I am speaking only from memory.

VISCOUNT BUCKMASTER

I am quite happy to accept what the noble and learned Viscount says, and to defer any observations I may have to make.

10.39 p.m.

VISCOUNT BUCKMASTER moved, in proviso (a) of subsection (1), after "than" to insert "a composite company." The noble Viscount said: I rise to move the Amendment standing in the name of my noble friend Lord Swinton and myself. This Amendment, I trust, is both innocent and innocuous but I am sorry to say that it is not altogether simple. It deals with composite companies. Your Lordships do not require any dissertation from me as to the meaning of a composite company. It is a company which operates in gas and in other things. The issue here is simplified because the composite companies, in fact, now comprise only companies which manufacture gas and provide water. There are, I believe, no other sorts of company which can be called "composite" within the meaning of this Bill. I am afraid that I must weary your Lordships by calling attention to Clause 18, subsection (5), which plainly states that: No part of the cash and investments of a composite company shall vest in an Area Board.… It then goes on to state that the whole of the cash and investments of the company shall be apportioned. That is a perfectly simple proposition. It means that the investments are apportioned on the basis of the Board taking a part and the surviving moiety of the composite company taking the other part.

Now I must direct your Lordships' attention to Clause 25 (1) (a). I do not wish to detain your Lordships by going into this matter at length, but proviso (a) plainly states that if the whole of the beneficial interest in any such securities was, immediately before the vesting date, vested in an undertaker…other than an ancillary gas undertaker.… such securities shall be extinguished. The purpose of this Amendment is to include a composite company amongst the ancillary gas undertakers which, under this provision in Clause 25, are specifically excluded. Your Lordships will appreciate that if that is not done, all the gas investments held in a gas capacity in such a case would be extinguished, whereas under the earlier clause they would be apportioned. This, to my mind, is a curious and unfortunate anomaly, and one which I can see no reason to continue. I hope that the noble and learned Viscount the Lord Chancellor will be able to follow me in a somewhat involved and complex matter, and that I shall receive from him an assurance that what I conceive to be a palpable anomaly will be corrected. I beg to move.

Amendment moved— Page 29, line 2, after ("than") insert ("a composite company").—(Viscount Buckmaster).

THE LORD CHANCELLOR

This is, or seems to be, a rather complicated matter. No doubt it is clear to your Lordships, although it is difficult. The position is this. Subsection (1) of Clause 25 provides shortly that every holder of securities of an undertaker shall be compensated by the issue to him of British Gas Stock. That is the broad general principle. But if the holder is an undertaker of certain classes no compensation shall be payable because, of course, the assets of the holder also vest in the Area Board. This Amendment seeks to exclude from the undertakers to which the exception applies composite companies—that is to say, those companies supplying gas and water under statutory powers. Under Clause 18, the undertakings of composite companies are split and only the gas assets vest in the Area Board. Further, by Clause 18 (9), references to undertakers in the subsequent provisions of the Bill in relation to composite companies refer to them only in their capacity as gas undertakers. For this reason this Amendment seems to us to be unnecessary and inappropriate.

As your Lordships will see, if the composite company, as part of its water undertaking, holds securities of a gas undertaker, it will duly receive compensation therefore. But if it holds them as a part of its gas undertaking, the compensation would have vested in the Area Board and its issue would be completely pointless. If any of your Lordships should ask why ancillary gas undertakers and non-corporate undertakers (to which Clause 18 also applies) are excluded from the exception in Clause 25, the answer is that by Clause 18 (6) none of the investments of such an undertaker vests in an Area Board, I started off by admitting that this is rather a complicated matter and, having made the few observations I have—I think all your Lordships will agree with this—I would humbly suggest that the observations that I have made should be read, marked, learned and inwardly digested by your Lordships. If, having done that, your Lordships want to return to this matter at a later stage of the Bill, I shall be glad to go into it again. But I think that when those remarks are fully understood your Lordships will see that there is an overwhelming case against this Amendment.

VISCOUNT BUCKMASTER

I appreciate the noble and learned Viscount's reply, which almost makes me feel that this is one of those Amendments which, as I said before, I wish I had never moved. He has asked your Lordships to read, mark and inwardly digest his words. I would ask your Lordships to do the same to my concluding remarks, because, with the greatest respect to the observations that have fallen from the Lord Chancellor I still maintain that the gas investments held in a gas capacity will be extinguished. And the result of perpetuating this anomaly is that in such cases these companies will be forced to liquidate those investments to escape the extinction which otherwise threatens them. On the understanding that the noble and learned Viscount will consider the matter further, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT SWINTON

Your Lordships would hardly wish to move the next very important and complicated but meritorious Amendment at this time of night.

THE LORD CHANCELLOR

After that last Amendment, I am prepared to go home to bed!

House resumed.