HL Deb 28 July 1948 vol 157 cc1291-6

Clause 25, page 29, line 14, leave out subsection (2) and insert— (2) In the case of any class of securities of a company being a statutory or non-statutory undertaker or a gas holding company, the value of securities of that class for the purposes of this section shall be deemed to be the amount of the reasonably maintainable annual income which could have been expected from those securities, if this Act had not been passed, multiplied by such number of years purchase as may be appropriate in order to secure the payment of fair compensation to the holders of those securities. The amount of the reasonably maintainable annual income and the number of years purchase shall be such as may be agreed between the Minister and the stockholders' representative or, in default of such agreement, as may be determined by arbitration under this Act.

The Commons disagreed to the above Amendment and to ten others for the following Reason— Because the Bill provides a fairer and more expeditious method of assessing the compensation payable to stockholders than the Amendments.

3.17 p.m.

VISCOUNT SWINTON had given Notice that he would move, That this House do not insist on their Amendment in page 29, line 14, but do propose the following Amendment in lieu thereof: page 29, leave out lines 40 to 46 and insert: Provided that a quotation appearing in any of the said lists shall be disregarded for the purposes of this section unless business is recorded in that list as having been done at any time during the three months immediately before the date of that list. The noble Viscount said: My Lords, perhaps it would be convenient if I accepted the invitation of the noble and learned Viscount the Lord Chancellor and said a word or two about the Amendment upon which we are not asked to insist, and then go on to the alternative Amendments in lieu, which I have put down on the Marshalled List and which I understand the Government are prepared to accept. The Amendment on Clause 26 is consequential; there is no dispute about that clause. I would rather not deal with Clause 26 now, because, when we come to it, certainly we shall accept the reinsertion of that clause. I have, however, one or two Amendments to suggest upon that clause which I do not think will be found to be contentious.

Your Lordships will remember that Clause 25 deals with the whole basis of compensation. The clause, as now restored, or as proposed to be restored to the Bill by another place, says that this is to be on Stock Exchange values or the nearest possible equivalent—I paraphrase. In the reasons which are given to your Lordships, they reject "a net maintainable revenue" on the grounds that the Amendment they propose is "fairer and more expeditious." I certainly do not think that it is fairer; nor do I think that the Government have presented a more expeditious method. Before the Bill came here, the Minister himself (and this is why some of your Lordships were very hopeful that a different principle would be adopted) did not dissent from the proposition that net maintainable revenue was in fact a much fairer basis of compensation than Stock Exchange values, or certainly than a hypothetical equivalent of a Stock Exchange value where it did not exist. We were greatly fortified in our contention by the fact that the Trades Union Congress, after having considered this matter for ten years, which was an adequate period of gestation, finally made a report (I think, in 1945) in which they said that they had come to the conclusion that Stock Exchange values were not the right basis for compensation, and the fairest and right basis to take over property was on the net maintainable revenue.

I observe that the Minister, in rejecting that proposal, did not in fairness deny what he had said (and he would not do so unless he was convinced he was wrong) and he certainly did not seek to repudiate the recommendations of the Trades Union Congress—that would have been more than his place was worth. He would have been supplanted by one of Dr. Dalton's young Etonians and not by one of Sir Stafford Cripps' young men. But I thought he was rather unkind to the T.U.C. He said that the reason the T.U.C. had decided against Stock Exchange quotations was because those values might give somebody too much. It may be that in some cases a speculative boom or lack of information has led to a particular share being priced on the Stock Exchange above its real value. I am just as much against giving people more than a fair value by way of compensation as I am against giving them less than a fair value. But it seems to me that that is not the alternative before us at all. Surely we have to find a middle way, which in this case happens to be the right way and the fair way.

There can be no doubt that the Stock Exchange value sometimes tends to give too low a price to those concerns which have been most conservatively managed, which have ploughed back profits into their businesses and have been most conservative in their dividend policy. There is no possible question, therefore, but that the fair value is not the Stock Exchange value, but is the real value; and of course that argument must apply much more forcibly in certain cases where the great bulk of shares are not quoted. You are dealing with certainly a couple of thousand undertakings where there is no Stock Exchange quotation at all, and I am bound to say I very much doubt whether the Government's method is more expeditious. In a matter of compensation, undoubtedly it is our duty, as, I recently suggested, to point out to the other place where we think they have gone wrong and where we think justice and equity lie. In this House we deal with the matter so far as possible in an impartial manner, and we really try to arrive at a right decision. If the other place dissents from us on what is largely a financial matter, it is not a case in which I think we ought to insist on our view, although certainly in the world at large it may well be considered that our view is more in touch with reality and with equity.

But if we have to accept the principle of Stock Exchange values or their equivalent, we should certainly want to make that principle work as fairly as possible. That should be common ground between us. It is for that reason that I have suggested the two Amendments which stand in my name in lieu of the restored clause, and I am glad to hear that the Lord Chancellor will look with favour upon these proposals. They are the first two Amendments on page 3 of the Order Paper. Perhaps it would be convenient if I dealt quickly with them. The first one relates to the question of quotations. It is to insert these words: Provided that a quotation appearing in any of the said lists"— I accept the Stock Exchange quotation for this purpose— shall be disregarded for the purposes of this section unless business is recorded in that list as having been done at any time during the three mouths immediately before the date of that list. I think that is obviously reasonable, because, as your Lordships are well aware, the list, whether it is the official list or the old unofficial list which was prepared during the war, gives a number of quotations merely in order to keep the shares in their place in the queue. There may not have been dealings in them for a long time—indeed in some cases for several years—but because the Stock Exchange Committee have giver a quotation to that security it keeps its place in the list, just as some noble Lords keep their place in our official list, although their attendance here is not unduly frequent. The official list, while giving a quotation which may go back for even a year or two or three years, always has a mark against the name of the security to show whether there have in fact been any dealings.

Therefore, what I am proposing in my Amendment is that we should disregard the so-called official quotation where there have not been dealings for a reasonable time. The Minister admitted there was a case to be dealt with, and he met it, but he met it only partially, because in the form in which the Bill reached us it excluded quotations which were in the daily supplementary list on the 1945 quotation dates and also those not dealt in during the period February 15 to July 15, 1945. On consideration I am sure the Government will agree that that does not meet the case. I do not think it meets it with regard to the 1945 quotation, and of course it does not meet it with regard to quotations in 1947 (which is the other alternative set of dates), because those quotations are not included at all. I am advised that the 1947 list (where, of course, there is the official list in all its completeness to deal with) would include quite a number of securities which were given a formal quotation but which have not in fact been dealt in for several years. I am sure the Government want to make this fair. I have an open mind as to whether three months is the right date. If the Government consider that six months is a fair period to take, I should think that was a reasonable compromise.

My other proposal is this. As your Lordships will see from the Bill, the arbitrator, in default of agreement, has to assess what is the value of all these kinds of unquoted stocks. My suggestion here—and I am glad that the noble and learned Viscount the Lord Chancellor agrees—also represents I think the general intention. In default of agreement, the arbitrator will have to deal with an infinite variety of companies. The only thing that is common between them is that they all deal in gas; but the circumstances of each company, its past, its present, and its prospects, must all vary a great deal. It is obviously intended that he should give a fair decision, and clearly if he is to do so he must have regard to the varying factors, including, of course, as the Government propose, so far as may be, the relevant quotations. As, in fact, the arbitrator will have to consider all these matters, it seems to me that it is right to put into the Act of Parliament a direction to him that that is what he is to do, and is indeed what he must do. Therefore, I am proposing, as an alternative Amendment, at page 31, line 29, to leave out "as far as may be to" and to insert "to all relevant factors including as far as may be." I think it was for the convenience of the House that the Lord Chancellor suggested that I should add to my more destructive remarks my constructive suggestions as to what might be done to make the Government clause better. I do not seek to induce your Lordships to reject the clause which it is proposed to restore to the Bill.

THE LORD CHANCELLOR

My Lords, I think the noble Lord is proposing a convenient course. I am prepared to accept his Amendment at page 29, to leave out lines 40 to 46, and to insert the words which he has read out, provided he is willing to insert the word "six" in place of "three," in the fourth line of the Amendment. That particular part of the Amendment will then read: unless business is recorded in that list as having been done at any time during the six months immediately before the date of that list. If that meets with the convenience of your Lordships, I think it will be desirable that the noble Viscount should now move the Motion standing in his name at the head of page 3 on the list of Amendments.

VISCOUNT SWINTON

My Lords, I beg to move.

Moved, That the House do not insist on the Amendment to which the Commons have disagreed, but do propose the following Amendment in lieu thereof— Page 29, leave out lines 40 to 46, and insert: ("Provided that a quotation appearing in any of the said lists shall be disregarded for the purpose of this section unless business is recorded in that list as having been done at any time during the six months immediately before the date of that list.")—(Viscount Swinton.)

On Question, Motion agreed to.