HL Deb 07 December 1949 vol 165 cc1263-77

2.45 p.m.

LORD MACDONALD OF GWAENYSGOR

My Lords, I beg to move that the Special Order as received from the Special Orders Committee on November 29 last be approved. As your Lordships are no doubt well aware, many, if not most, of the provisions contained in these proposed Regulations have been discussed at full length on previous occasions in your Lordships' House. That relieves me of the necessity of going into any detail in regard to some of the questions which were then discussed and disposed of. The usual basic provisions included in the previous Regulations are to be found in these Regulations. Those are well-known to your Lordships. They are: that there must be a qualifying period of not less than eight years' continuous service; no entitlement is to arise on the ground of anything occurring more than ten years after the vesting date; claims must be made within two years of the loss; protection is afforded for employees away on war service at vesting date; maximum compensation is limited to two-thirds of the emoluments lost; emoluments in excess of £4,000 per annum are to be disregarded; substantive compensation is subject to review, but the period in which a review may take place is limited, in cases of compensation for loss of employment, to two years from the date of first assessment or, if there was an appeal from that assessment, from the date of award thereon; a right of appeal to referees appointed by the Minister of Labour is given; and, finally, the extent to which compensation may be commuted is strictly limited. As I say, all those provisions have been discussed at great length in your Lordships' House on previous occasions, and in particular the qualifying period of eight years and the disregarding of emoluments in excess of £4,000 per annum. I know that your Lordships have always had a strong objection to what I would call a tedious repetition of arguments, and therefore it is not my intention to repeat arguments used on those occasions. I question whether any of your Lordships could produce any fresh argument either for or against these provisions.

There is one very pleasing feature which I know will appeal to your Lordships and which I ought to mention. These Regulations, compared with those made for the other nationalised industries, are in many ways an improvement. For instance, local authority and composite company servants are enabled to count as qualifying and reckonable service any form of service with such employers. There were complaints during the discussions on the Electricity Regulations that that was not so. In this case it is so. For instance, an accountant who had served part of his time with the rating, water or other department of a local authority, as well as with the gas department, might be excluded by the wording of the Electricity Regulations; but he would not be by these Regulations. Periods of whole-time training, preceded and followed by service in industry, now count as both qualifying and reckonable service. A person's emoluments may include a variety of payments such as fees, commission, bonus on sales and so on. Under the Electricity Regulations such variable payments are averaged out over the longest period in which conditions had not changed materially. The Gas Regulations state that the payments will be averaged out over the three years immediately preceding the date of loss—or an even shorter period where appropriate. In addition, any payments calculated as a percentage of salary or wages will be averaged by taking the average of the percentages, instead of the amounts. These alterations were made at the request of the staff unions, and in their view, because of the tendency in recent years for emoluments to rise, will benefit many workers.

A further improvement is that the limit on small claims which was introduced during previous discussions has been reduced from 5 to 2½ per cent. of annual emoluments. Moreover, an obligation has been placed on the compensating authority to give a claimant all the information about his previous service that he may require in preparing his claim. Such information was not available under the previous Regulations. As in the Electricity Regulations, compensating authorities are required to make a first assessment of substantive or residual compensation within three months from the date of claim. A further provision has been inserted here to prevent the recovery of overpayments in the event of the first assessment being too high, and to ensure that a firm figure is arrived at within six months of the date of claim. A right is conferred by Regulation 10 (5) to allow claims to be presented orally at the option of the claimant. Claimants are also given the right to be accompanied by their advisers when summoned for interview by the compensating authority. Whilst I agree that none of those improvements is substantial in itself, I claim that as a body of improvements they will be welcomed by your Lordships.

I now come to a section of the Regulations which I know will be commented on by your Lordships—what I may call the unpopular section. The Regulations applying to the other nationalised industries have been slightly varied for this industry, in that they include the element of expectation, which was not to be found in the previous Regulations. This differentiation in treatment arises in consequence of the differences that existed between the different industries, before nationalisation of either industry, on this question of payment of compensation in consequence of amalgamation in the different industries. This fact needs to be clearly understood, otherwise we may go astray in discussing this element of expectation. In the industries already nationalised, as against the gas industry, there existed before nationalisation codes of compensation which were embodied in Public and General Acts, such as the Railways Act, 1921, the London Passenger Transport Act of 1933 and the Electricity Supply Acts of 1919 and 1926. These provided for the payment of compensation to persons who might suffer loss of employment or earnings as the result of the amalgamations for which those Acts provided the procedure. No such general code existed for the gas industry. What there is in the gas industry is a history of compensation to persons who suffer loss in case of amalgamation.

When examining Special Orders relating to amalgamations, your Lordships have in the past insisted upon some such provision being made. I think I can put it best in this way. The Regulations made for other nationalised industries are regarded as adaptations of the codes of compensation which those industries enjoyed before nationalisation. The proposals new before your Lordships in these Regulations are regarded as a similar modification of the pre-nationalisation arrangements existing in the gas industry. The expectation of all workers in other nationalised industries were very similar, but in the case of the gas industry the expectation of all workers is by no means the same as it would have been had there been a code of general application. Hence the element of expectation is introduced.

I understand that some of your Lordships may feel a little perturbed about this new element. The reason, then, for the introduction of this new element of expectation is because of the difference in the position regarding compensation when amalgamation takes place in the gas industry as compared with other nationalised industries. In this case the claimants must justify their claims for compensation by referring either to what was in fact done by their previous employers, in the event of amalgamation, or to the general treatment of their workers by those employers as showing that if an amalgamation had taken place they would have been as well treated as the employees of other companies which had experienced amalgamation. It is antici- pated that the great majority of those likely to be affected will be able to prove expectation, if only for the reason that of the large number of amalgamations that took place in the gas industry in the 1930's, compensation was paid on a generous scale; and that one fact will assist all workers involved to make a case for expectation.

Let me add, however, that persons who are unable to prove any previous expectation of compensation are not excluded from all compensation. Provision has been made for such persons to receive, if they lose their employment, a minimum compensation at the rate of two-thirds of the difference between their net emoluments lost and any unemployment or sickness benefit they may receive whilst unemployed. This minimum compensation will be payable for at least thirteen weeks, the number of weeks being extended in the case of men over forty-five years of age. They will receive compensation up to a maximum of twenty-six weeks on the basis of an additional week for each year of service after attaining the age of forty-five.

2.55 p.m.

VISCOUNT SWINTON

My Lords, before the noble Lord passes from this point (which is an important and complicated part of the Regulations) I think the House would like to be clear exactly what is meant by this rather oddly-phrased Regulation 7 (2). We had considerable discussion in this House on expectation and the noble and learned Viscount the Lord Chancellor was most helpful in trying to devise wording which would not result in something being given to a man who had no reasonable expectation but would make sure that anybody who had an expectation would be satisfied. Obviously, it is intended that these Regulations shall carry that out. Indeed, if they did not I think they would be ultra vires, because that was the direction given by Parliament.

As I understand it, the Minister says that this question of compensation would depend on what was the expectation of an individual man, which in turn would depend on how he would have been treated, or might have expected to be treated by the company in which he was employed. I am not sure that I follow what the Minister said in this connection. If an amalgamation has taken place, then anybody who was got rid of or worsened by reason of the amalgamation, gets his compensation as regards that amalgamation when the amalgamation takes place. What we are concerned with now is that the Government have compulsorily amalgamated into twelve different groups all gas undertakings in the country. We in this House have always held that the Government should in these respects be model employers. They are, indeed, in other respects being model employers, because wherever there is custom of trade, then the best custom of trade is being applied. I do not understand why there should be a difference between the compensation given to an employee of Company A and that given to an employee of Company B I should have thought that there ought not to be any differentiation against a man by reason of a particular practice or hypothetical practice of the individual company in which he is employed.

LORD MACDONALD OF GWAENYSGOR

When I read these Regulations I said to my advisers that I was sure that if the noble Viscount, Lord Swinton were in the House, I should not get far before he interrupted me. I have proved to be right—and I am not surprised. I can assure the noble Viscount that I have spent much time over this Regulation 7 (2). Whoever reads it for the first time is bound to find it a little difficult to understand. Let me tell your Lordships the result of the consultations that I have had. We are dealing here with a very abstruse legal point, I agree. First, let this be clearly understood. It is intended that every gasworker who loses his work or some of his earnings because of nationalisation, will be treated as well as he would have been treated had he lost his job as a result of amalgamation earlier; no worker will be treated worse than he would have been had he lost his job before nationalisation. I want to make that plain. What he has to do first of all is to establish that there is a loss, and that he has lost something as the result of nationalisation.

VISCOUNT SWINTON

Or a reasonable expectation.

LORD MACDONALD OF GWAENYSGOR

He has to prove that there has been a loss. It has to be fairly understood that, as a result of nationalisation, he has lost his job or is reduced in salary. If he does that and satisfies us on that, what he gets is the same consideration as his fellow gas worker got when he lost something as the result of amalgamation. I do not think it would be expected that the worker should receive different treatment from that which he would have received before nationalisation. We put the onus on the worker in this case of establishing that he had an expectation.

Let me now turn to something different. I will read the advice I have been given. Up to now I have been putting it in my own words. No question of compensation can arise until after there has been a loss—surely that is agreed.

VISCOUNT SWINTON

Yes.

LORD MACDONALD OF GWAENYSGOR

There are two prospects mentioned in Regulation 7 (2)—that is, if there is amalgamation and loss of employment or earnings. Unless both qualifications are taken as fulfilled, it is not possible to weigh up whether a particular worker has had a reasonable expectation of the payment to him of compensation for loss of employment or earnings. The first prospect is mentioned expressly, because it cannot be implied. The second is, and must be, implied, because without it the question of compensation would be irrelevant. That is the interpretation given. All the man has to do is to show that had he lost his job as the result of an amalgamation he would have received compensation. Once he has clone that he is treated the same way under these Regulations.

VISCOUNT SWINTON

I am much obliged to the noble Lord; he has displayed in a most able way his mastery of this subject. I think we understand now what this curiously drafted Regulation means, but I still fear that a man may suffer unfairly—for this reason. The noble Lord says: He will not be any worse off under this universal amalgamation than he would have been if a chance amalgamation had taken place—

LORD MACDONALD OF GWAENYSGOR

Quite right.

VISCOUNT SWINTON

—amalgamation between two companies or between a company and a corporation. I agree that if things had gone on without nationalisation there might have been an amalgamation here and there, but what the Government are doing by the Gas Act is to enforce compulsory amalgamation upon every gas undertaking in this country—thousands of them. Therefore, by this compulsory amalgamation thousands of people are brought in for the first time—people who, if events had followed the ordinary course, would never have had their undertakings amalgamated. That being so there is enforced compulsory amalgamation on everybody. I suggest that the Government ought to pay the same terms to everybody; that is rough justice.

LORD MACDONALD OF GWAENYSGOR

In the case the noble Viscount has mentioned he has put forward what he himself would have done. What is attempted in the Regulations is to put the gas worker who has lost his job as the result of nationalisation in exactly the same position as his fellow worker who lost it as the result of an amalgamation. The noble Viscount introduces that it is now compulsory, whereas it was voluntary amalgamation before.

VISCOUNT SWINTON

It is universal.

LORD MACDONALD OF GWAENYSGOR

It is on a larger scale. So far as the worker in the industry is concerned, it makes little difference to him whether the amalgamation is voluntary or not.

VISCOUNT SWINTON

Yes, but in ninety-nine cases out of a hundred the amalgamations would not have taken place if the Government had not nationalised the industry.

LORD MACDONALD OF GWAENYSGOR

That may be so. The noble Viscount is not trying to suggest that a person whose company suffers amalgamation as the result of nationalisation, and who loses his job, should be treated better than the person who loses his job as a result of voluntary amalgamation in years gone by. The only thing to do is to say to the worker in the industry, "Here you are. It is possible that as a result of this Act you may lose your job or some of your earnings. We promise you that you will be treated as well under this Act as any other worker in the gas industry was ever treated under amalgamation." I think that once he gets that he is satisfied.

I was about to give your Lordships an example of the way the scheme operates—I thought it would be helpful to your Lordships—with a person who fails to satisfy an expectation clause. I take as an example a man of forty-eight, with eight years' service in the industry, who had no expectation of compensation, whose wages amounted to £6 5s. 0d. a week and who paid 5s. a week to a superannuation fund. This is how it works out. Net wages—that is, £6 5s. 0d. less 5s. 0d.—come to £6 0s. 0d. Unemployment benefit or sick pay is £2 2s. 0d. in the case of a married man. That leaves £3 18s. 0d. Such a man would get £2 12s. 0d. (two-thirds of £3 18s. 0d.) per week for a period of 16 weeks—13 weeks plus 3 weeks in respect of the three years served after attaining the age of forty-five. Such an example will satisfy your Lordships that the employee who fails on the grounds of "expectation" is not treated ungenerously.

Compensation for diminution of emoluments will also be paid to persons without "expectation." It will be payable for the same period as compensation for loss of employment and at a rate equal to two-thirds of the net loss. The net loss is calculated by taking two-thirds of the emoluments received before the date of loss and deducting two-thirds of the emoluments received afterwards, superannuation contributions being deducted in each case. I wonder whether I dare give your Lordships another example to make it clear. Emoluments before loss—£6 a week; two-thirds of £6—£4; emoluments after loss—£4 10s. a week; two-thirds of £4 10s.—£3; difference between £4 and £3—£1, which is the amount the man receives for a specified period. I think that is correct. I spent some time on this.

VISCOUNT SWINTON

The arithmetic is all right. It is the justice of it that we dispute.

LORD MACDONALD OF GWAENYSGOR

Broadly speaking, the Regulations deal with two classes of persons: (a) those employed by the gas industry who may lose their employment or suffer loss or diminution of emoluments or pension rights by reason of the vesting of the industry in the nationalised bodies or as the result of the transfer or subsequent disposal of property, rights and liabilities; and (b) gas examiners, inspectors of meters and their assistants, responsibility for whose employment has been transferred to the Minister by Sections 54 and 55 of the Gas Act, and who may suffer a loss as a result of the passing of the Act. In the past, these men were appointed by local authorities and by the justices. The nationalised industry will be responsible for compensating from its own resources persons transferred to it. The Minister will be responsible for compensation out of public funds to persons referred to in paragraph (b) above, who suffer a loss, either because they are not taken into the Minister's employment or are employed with reduced emoluments, or who remain in local authority service but suffer a loss of earnings because of the transfer of functions to the Minister. Whatever may be your Lordships' views of certain provisions in the proposed Regulations, I trust that, taken as a whole, they will commend themselves to the House. I beg to move that the Special Order as reported from the Special Orders Committee on November 29 last be approved.

Moved, That the Special Order as reported from the Special Orders Committee on November 29 last be approved.—(Lord Macdonald of Gwaenysgor.)

3.9 p.m.

LORD TEYNHAM

My Lords, I have listened carefully to the interesting and full explanation given by the noble Lord who has brought forward these Regulations, but I am bound to say that I do not think the non-manual employee in the industry will have much confidence in them. I should like to ask His Majesty's Government what provision has in fact been made for compensation of office staff. It also appears that the compensation offered in these Regulations is not comparable with that allowed for in previous nationalisation measures. In fact, we have it in a statement by the Minister of Fuel and Power himself in another place. This is what he says: We do not say that that code is exactly the same as was provided under previous Statutes; we say quite definitely that in certain respects previous Statutes were too generous. It is therefore fairly obvious that these provisions are not so good as those in previous Regulations. It is, of course, true that there has been no code in being in the gas industry similar to that which has existed, for instance, in the electricity industry. I suggest, therefore, that it is all the more important that we should ensure that these Regulations shall be in every way as equitable as those ruling in other nationalised industries.

The noble Viscount, Lord Swinton, raised a question on Regulation 7 (2) in regard to the word "expectation," and what it really means. I must say that I am still confused on this point. I suggest that perhaps the Regulation means—the noble Lord will correct me if I am wrong—that an employee would have to prove that as a result of a hypothetical amalgamation he might lose his job and, therefore, would be entitled to substantive compensation, and that if he could not prove this he would get no compensation. Perhaps if he had read Great Expectations he might be better off!

LORD MACDONALD OF GWAENYSGOR

I do not like the word "might." He must prove that he has actually suffered a loss, not might suffer a loss—that as a result of nationalisation he has suffered a loss.

LORD TEYNHAM

The fact that the man must not use the word "might" but must actually prove a loss, makes the case more difficult for him.

LORD MACDONALD OF GWAENYSGOR

Well, it should not.

LORD TEYNHAM

I suggest that under these Regulations a large number of employees will in fact be excluded from compensation. As the noble Viscount, Lord Swinton, pointed out, this expectation requirement is a provision which has never been used in any previous Act or Regulation. I might ask, without being too strong: why do His Majesty's Government delight in whittling away the just and due compensation which should be payable to these employees? In defence of this code the Minister in another place suggested that in assessing compensation we must not penalise the consumer and place a heavy burden upon him. I suggest that, such an argument cannot be substantiated at all. How can a few thousand pounds of extra compensation affect, for instance, the price of gas to a consumer? I think His Majesty's Government should withdraw these Regu- lations and have another look at them. Surely the Government wish to be considered as model employers in these nationalised industries. I think it has been truly said that a man cannot really be compensated with money for the loss of his career, and I am sure all your Lordships will agree that we must see that real and ample justice is done by these Regulations.

3.14 p.m.

THE LORD CHANCELLOR (VISCOUNT JOWITT)

My Lords, it has been suggested that I might assist your Lordships by saying a word on the question of the drafting, which I agree is not very happy. I discussed this matter for a considerable time last night with my noble friend Lord Macdonald. If ever there were a case of the apprentice's pillar, it is this, because his explanation has been wholly admirable. What underlies this idea is that there always have been a large number of people, particularly in the old days of the railways, who used to apply different standards of morals when dealing with the railways from those they applied when dealing with ordinary people. To take things which were not theirs so long as they belonged to the railway, was comparatively venial, and was often done by people who would never dream of doing such things in other circumstances. I am afraid that we might find that people might apply a rather more lax standard to the State.

What underlies this scheme is simply that in regard to compensation we think it right that the State, which now becomes the one universal gas provider, should follow the best commercial practice, but should not clutter itself up with obligations to pay large sums of money which would never have been paid in ordinary commercial practice. Accordingly, though it is far from happily drafted, this Regulation proceeds on the assumption that you have to ask yourself: are you a man who has suffered loss or diminution of wages by reason of nationalisation? It applies only in this case, because you get compensation only for a loss. If you have suffered a loss (either you have lost your employment altogether or you have suffered a diminution in salary), then the test which is taken is this. Supposing that some loss had been suffered by reason of a voluntary commercial amalgamation in the old days, would you or would you not have received compensation? I would point out to the noble Viscount, Lord Swinton, that the test is not an absolute one, whether the man would have received it, but whether he had a reasonable expectation of getting it. That gives a good deal of flexibility.

It is obviously very difficult to know where to draw the line. I take it that the man who came round once a week to wind up the clock for the old gas concern would obviously not get compensation if he lost his job because the new nationalised concern had another clock winder, or some other arrangement. It is obvious that the man who was managing director of a gas company would have obtained compensation if he had lost his employment. Between those two extreme cases, of course, there is an infinite variety of cases. Therefore, what one has to do is to imagine what I may call a notional amalgamation in the old days. Supposing there had been an amalgamation, and that the loss which you have sustained was sustained as a result of that amalgamation, you have to ask, not "Would I in those circumstances have got compensation?" but "Would I have had reasonable expectation of getting it?" Therefore, I do not think it is fair to say, merely because you find that one company who actually amalgamated had rather a black record and another company who amalgamated had rather a good record, that there will be any differentiation of treatment, because there is always room for the sinner to repent. After all, if a general standard had been established in the gas industry, I have no doubt the bad company would have had to come round to approximately the standard of the good company.

But the test is—and the tribunal would have to determine the whole circumstances—this man having sustained a loss by reason of nationalisation, would he or would he not, supposing he had sustained that same loss by reason of a voluntary amalgamation under commercial practice in the old days, have had a reasonable expectation of getting compensation? If he would have had a reasonable expectation, then we can give compensation now. If, on the other hand, he would not have had a reasonable expectation, then we say he should not get compensation simply because the present amalgamation is an amalgamation by the State and not an amalgamation by another gas company. That is what underlies this scheme, and if it is worked fairly, as I am sure it will be, all the criteria required to make it work fairly are available. It is plainly right that we should follow good commercial practice and ask ourselves whether, according to that commercial practice, this man had or had not a reasonable expectation of receiving compensation.

3.19 p.m.

VISCOUNT SWINTON

My Lords, I am much obliged to the Lord Chancellor for intervening, because he and the noble Lord who introduced the Regulations have not only been crystal clear, but absolutely fair with the House. If I followed the Lord Chancellor aright, I think there will now be no disagreement between us. The Lord Chancellor said that in this matter the gas boards will follow the best commercial practice. I accept that, because I do not think the nationalised industry ought to have a higher standard than the best firms in ordinary commercial practice. That, I think, is generally accepted by us. What I was anxious about, and I think on the Regulations was not clear, is the question of whether a man would get compensation on the basis of the individual practice of the particular gas company in which he was employed. I am very glad indeed that that has now been cleared up. There was, I think, a complete misunderstanding in this matter. I do not know what some of these little "tin-pot" gas companies did, but the Gas Light and Coke Company and other great companies. I am sure, had most admirable rules and commercial practice. What I was most anxious to avoid was that in the case of, shall we say, Mr. A, who is employed in the Little Puddleton Gas Company, it should be said: "Ah, you did not get nearly as good conditions as did people in the Gas Light and Coke Company, and because you happened to be in the Little Puddleton Gas Company when amalgamation took place and you were got rid of you will be compensated on the Little Puddleton standard and not on the standard of the Gas Light and Coke Company, which follows the best commercial practice." The Lord Chancellor has made it clear that the Gas Board will apply the best commercial standards. That being so, I am sure the discussion has been very valuable, and I am equally certain that what the Lord Chancellor has undertaken will be carried out.

LORD MACDONALD OF GWAENYSGOR

My Lords, perhaps I may be allowed to add one word with regard to the reference made by Lord Teynham to office staffs. In view of his remarks I think it would be wrong if I did not make a short reply. The question was raised in another place whether office staffs would be covered by the Regulations, and in view of its having been raised in another place I rather anticipated that it would also be raised here. I am advised that the Minister replied in another place to the effect that he could not give an answer because everything depended on the circumstances of the individual case. It depended on whether there was evidence that previously in the industry, in the event of amalgamation, there had been compensation for persons in that position. He could not say more than that. That is the difficulty. I can see that it is appreciated in your Lordships' House, and at the moment I cannot say any more about the matter.

On Question, Motion agreed to.