Lords Sitting of 29 June 1949

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

  AMMUNITION IN SHERWOOD FOREST
  2.35 p.m.
  EARL MANVERS: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
  [The Question was as follows:
  To ask His Majesty's Government: (1) whether they are aware that, four years after the conclusion of hostilities, Sherwood Forest is still cumbered with ammunition, and placarded with alarming notices "Dangerous Ammunition; curiosity can kill you"; and (2) if, in view of the chance of forest fires, the time has not come when this mountain (or those portions of it to which the profit motive does not apply) might be removed and cast into the sea.]
  THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM): My Lords, owing to the shortage of permanent storage accommodation it will be necessary to continue storing ammunition in the Sherwood Forest for some time to come. Until future Service requirements are known, it will be possible to dispose only of unserviceable ammunition, which is being cleared as rapidly as man-power, transport and breakdown facilities permit. In view of the possibility of fire in the Forest, a strong fire prevention team has been provided. Warning notices have been erected in the interests of the public and, providing no unauthorised persons tamper with the ammunition, there is no cause for alarm.
  EARL MANVERS: My Lords, in thanking the noble Lord very much for his courteous reply, may I ask him whether his advisers have not underestimated the risk of fire in Sherwood Forest? Has his attention been called to a paragraph appearing in the Nottingham Guardian, which says:
  "Mansfield Fire Brigade used a water tender to put out a blaze involving half an
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  acre of grass and twenty yards of hedgerow in Kirklington Road, Rainworth, yesterday. Warsop brigade dealt with another fire which spread through five acres of grass and bracken off Cotton Mill Road, Church Warsop. Twenty acres of trees and undergrowth were severely damaged by fire in Gibbet Dale Wood, on the Newstead Abbey Estate, yesterday afternoon. Hucknall and Arnold firemen extinguished the outbreak."
  It seems to me that there are many fires in the Forest now, and I hope that great care will be taken.
  LORD PAKENHAM: My Lords, I am quite sure that great care is being taken. I have no reason to suppose that the dangers have been underestimated, but I will certainly call the attention of my right honourable friend and his advisers to the passage which the noble Lord quoted from the Nottingham Guardian. In reference to the noble Lord's question about moving mountains into the sea, I would add only that, if I remember rightly, we are exhorted to show faith. If the noble Lord shows sufficient faith, I have no doubt that a happy result will ensue.

FAR EAST DEFENCE
2.39 p.m.
EARL HOWE: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask His Majesty's Government whether they are in a position to state what alterations have been decided upon in the composition of the Imperial Defence Forces in the Far East, and in particular with regard to aircraft carriers.]
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, my right honourable friend the Minister of Defence recently visited the Far East to study the whole defence problem there, and on his return he announced in a statement in another place that His Majesty's Government had found it necessary to send additional reinforcements to Hong Kong. It is not in the public interest to announce the resultant alterations in the composition of the Imperial Defence Forces in the Far East, but I can say that naval reinforcements will include an aircraft carrier.
EARL HOWE: My Lords, in thanking the noble Viscount for his reply, may I

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ask him two further questions? First, with regard to the air strip at Hong Kong, will a second air strip be provided, or have we to depend upon one? Secondly, with regard to aircraft carriers, we have been told in the newspapers that H.M.S. "Triumph" is being sent to the Far East, and that H.M.S. "Ocean" has been withdrawn from the Mediterranean preparatory to going to the Far East as well, but apparently her air squadrons have been withdrawn from her. Will any aircraft carrier sent to the Far East be fully operational?
VISCOUNT HALL: I think the noble Earl would do better to listen to what I say, in preference to paying attention to what appears in the Press. There will be an aircraft carrier sent to the Far East. There will be one which will be operational. With regard to the noble Earl's first supplementary question, I do not think I can add anything to the reply I have already given.
EARL HOWE: My Lords, I realise what the noble Viscount has said. I heard his answer about one aircraft carrier, but there is the question of a second. Can the noble Viscount tell us whether he considers that the Far Eastern Squadron is fully operational without two aircraft carriers which are at least 100 per cent. operational and have their aircraft squadrons abroad?
VISCOUNT HALL: My Lords, again I am afraid that I cannot add anything to the reply which I have already given in relation to an aircraft carrier.

POLICE PENSIONS REGULATIONS, 1949
2.42 p.m.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I rise to move that the draft Police Pensions Regulations, 1949, a copy of which was presented on May 25 last, be approved. Perhaps I may say this. Subject to your Lordships' consideration and convenience, what I propose is that, after I have formally moved these Regulations, which of course relate to England, my noble friend, Lord Morrison, should add a word or two relating to Scotland, so that, if any noble Lord desires, we may on the one debate discuss both English and Scottish matters. The Motions must be put
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separately and formally at the end, but I thought that that course would meet the convenience and wishes of your Lordships' House.
Your Lordships will recall that when I asked you to approve the 1948 Regulations a year ago, I intimated that there were a number of issues connected with police pensions upon which no agreement had been reached on the Police Council. I said it would be for the Committee on Police Conditions of Service, appointed by the Home Secretary and the Secretary of State for Scotland, under the Chairmanship of the noble and learned Lord, Lord Oaksey, to decide whether to recommend further changes in the police pension code.
We now have before us the first part of the Report of the Committee over which the noble Lord, Lord Oaksey, presided. That part deals, inter alia, with police pensions, and my right honourable friend the Home Secretary has already expressed his gratitude to the Committee under the chairmanship of Lord Oaksey for the most thorough and careful examination of police problems, the results of which appear in the first part of their Report. I understand and I desire that this debate shall be as full as possible, but I hope your Lordships will realise, if and when I come to reply at the end of the debate, that it would be embarrassing to me to have to deal with matters which are now before Lord Oaksey and will form the subject of the second part of his Report. There is no reason why your Lordships should not debate and discuss them and I have no doubt Lord Oaksey will derive assistance from such a debate. But I think it would be wrong that I, on behalf of the Government, should express a definite view on matters which are at the present moment, as it were, sub judice, in that they are before Lord Oaksey's Committee. I am prepared therefore to deal with Part I of the Report to which I have already referred. Inasmuch as the police required such a Committee, I confess that I think they should regard themselves as very fortunate that I found my way to consent to anyone of the eminence of Lord Oaksey acting as Chairman of the Committee, and I feel that as a result of the great amount of laborious work which the Committee have put into this task, they have produced a Report which does show

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a real insight into police conditions as they exist to-day.
I would remind your Lordships that this Committee were unanimous in presenting that Report. Of course, there are inevitably some features which do not appeal equally to all sections of the service, but I feel that the Report as a whole presents a series of closely integrated recommendations which, if adopted as a whole, will without any doubt result in a general raising of police conditions. We feel that there should be no question of picking and choosing between the various recommendations made in the Report; the Report must stand or fall as a whole. It has been explained in a White Paper issued just before the Recess that the Government share the Committee's view that the circumstances of public interest and of the police service render it essential that effect should be given at the earliest possible moment to the recommendations contained in the Report and so, after discussion with the Police Council, it is proposed that the new conditions recommended by the Committee shall be introduced with effect from July 1 of this year. In order to give effect to the recommendations of the Committee we must pass the necessary Police Regulations and Police (Women) Regulations to be made under the Act of 1948, and in order that all these Regulations may come into force as from July 1 I must ask your Lordships to-day to approve the draft Pensions Regulations which I am now moving.
My Lords, we now have that which we did not have last year when we were debating this matter—namely, the advantage of a thorough review of the whole police pensions scheme by an impartial Committee of the highest possible standing. The Committee have made some most interesting remarks about the background of the police pensions scheme—for example, that the cost of the benefits provided is the equivalent of 25 per cent. of the policeman's pay. I need hardly add that these figures were supported by figures supplied by the Government actuaries—and only one-fifth of this amount is covered by the policeman's pension contributions. But they make few recommendations for amendment of the present code. The Committee record that they have had considerable difficulty in maintaining a
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balance between the claims made on behalf of the service, many of them supported by a considerable weight of evidence, and the obvious impracticability of accelerating the rise in pensions costs to a level which, apart from other considerations, can hardly fail to have adverse repercussions on the pay of serving members of the force. The Committee express the view that it is not unlikely that a review of the pensions scheme, taking into account the National Insurance scheme, may he necessary in the near future, but having regard to the circumstances in which they were appointed, they recommend no major alteration either in the scales of benefit or in the contributions.
The Committee then go on to deal with the specific points placed before them in evidence, and set out in full their recommendations, all of which are implemented in the draft Regulations now before the House. These draft Regulations, for which I am now seeking your Lordships' approval, form a complete and comprehensive new code. They are broadly similar to the existing Police Pensions Regulations, 1948, as amended by the Police Pensions (No. 2) Regulations, 1948. But it was felt that it would be preferable, in the interests of administrative efficiency, to produce a complete new set, rather than simply to lay before the House the amendments proposed to the existing Regulations. The existing 1948 Regulations, as modified by the Appendix to the new Regulations, will continue to apply to pensions granted in respect of retirements between the day when they came into force—that is to say, July 5, 1948—and the day on which the new Regulations come into force, and in respect of deaths occurring before the latter day. The proposed alterations in the existing law have been summarised in the White Paper on the pay and conditions of service of the police, which was presented to Parliament just before the Recess, but I should like to draw special attention to some of the new or amended provisions.
The first of these is the proposal that once the new Regulations come into operation police pensions should be calculated on the basis of the average of pensionable pay over the last three years of the officer's service—a proposal which received a good deal of attention at the

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recent meeting of the Police Council, when the first Part of the Committee's Report was discussed. The proposed scheme of averaging will not in practice have any considerable effect on the amount of pension to which the majority of members of the police force will become entitled on their retirement. Objections which have been levelled to this proposal are levelled, not so much at the principle, which is already in operation in other public services, as to the suggestion made by the Committee and accepted by the Government that it should be brought into operation at the same time as the new rates of pay. Two criticisms most often made are, first, that the introduction of averaging at the same time as the new pay scales will have an adverse effect on promotion, because a number of senior officers who would otherwise have retired will prolong their service in order to obtain higher pensions, and, second, that it is unfair to men who have already done a full period of service to have to continue to serve in order to secure a pension based on the new rates.
We do not yet know what the Committee will say in Part II of their Report on the subject of promotion, but it may well he that some senior officers will defer their retirement as a result of the introduction of averaging, which may mean a temporary slowing down of promotion, although, of course, taking it at its worst, there will in three years' time be a corresponding acceleration of the rate of promotion. Something will be done to mitigate this effect by the provision made in draft Regulation 87 to meet the case of the members of police forces who were serving on August 28, 1921, who will, if they are compelled by the operation of the age limit to retire within three years of the day on which the Regulations come into force, have their pension assessed on actual, as opposed to average, pay. There is no doubt that police authorities will be readier to exercise their right to require officers to retire when they know that these officers will be able to have their pensions calculated on the actual rate of pay in operation when they retire. Further, I do not think that it should be automatically assumed that all the senior officers who are now entitled to
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go on pension, and who are not covered by the special arrangements made to cover officers who were members of the service on August 28, 1921, will, in fact, stay on for the full period.
However this may be, the Government take the view that the considerations which the Oaksey Committee had in mind, and which are fully set out in their Report, are overwhelming. The Committee point out that if any considerable proportion of the 7,000 men who have completed twenty-five years of service (and who would accordingly be entitled to retire on pension) were to retire during the next few months it would be a serious embarrassment to an already undermanned service. They go on to say that, in their view, it would not be right for policemen to secure a substantial improvement in their pensions as a result of the Committee's proposals on pay, except in return for some period of service under the conditions which they recommend. The Committee say that no other practicable way has been suggested to them of encouraging the large number of men whose continued service for a further period it is necessary to retain, and that they regard averaging as an essential concomitant of the substantial increases in pay which they have suggested.
The Government have accepted the Committee's recommendations as a whole, and would certainly not feel justified in departing from them in a matter of this importance. The House will, however, expect me to say something about the method by which it is proposed to introduce the new provisions for averaging. The Government wish to avoid any suggestion that, in implementing the Oaksey Committee's recommendations as regards pensions, the provisions of Section 2 of the Police Pensions Act, 1948, are being infringed. Had the Government decided to bring in amending legislation to deal with this point, it might have been necessary to delay the introduction of the new rates of pay for weeks, if not for months, while this was done. The only way of ensuring that there was no question of infringing the 1948 Act, and at the same time bringing the new pay scheme into operation by July 1, was to make the provision, contained in draft Regulation 87, for serving members of police forces to elect to accept averaging and to provide in the

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corresponding Police Regulations that only those members who accept averaging will receive the new scales of pay. It is important that the House should bear in mind, in considering these provisions for averaging in the new Regulations, that in no case will the pension based on average pay under the draft Regulations be less than the pension would have been if it had been based on the actual pay on the scales now in force, so that no officer will receive a smaller pension as a result of the introduction of the new pensions scheme.
I hope that, in considering this most important question of averaging, the House will not lose sight of the provision made in the draft Regulations for the implementation of the other recommendations of the Committee. The most important of these is probably the provision for increased scales of widows' pensions which are included in scheme 1 of Part I of the Second Schedule to the Regulations. It is proposed that in future scheme 1 widows' pensions (that is to say, the flat rate minimum pension which a widow is entitled to receive in addition to any National Insurance award to which she may be entitled) should be increased to £50 a year in the case of constables and sergeants, £60 a year in the case of inspectors and £70 a year in the case of ranks higher than inspector. Provision is made in Part l and paragraph 1 (a) of Part III of the Third Schedule for the corresponding increase in children's allowances recommended by the Committee. Provision is also made in draft Regulation 11 for widows whose husbands die before being able to compete the preliminary number of contributions necessary to qualify them to receive National Insurance widows' benefit, and who otherwise fulfil the conditions for the grant of such benefit, to receive a basic police widow's pension with the addition of the amount equivalent to what the widow would otherwise have received by way of National Insurance benefit.
Provision is also being made by an amendment to the existing Regulation for service below the age of twenty to be reckoned as pensionable, and the recommendation that the pension contributions paid by policewomen should be reduced 4½ per cent. is put into effect in Regulation 37. Finally, the draft Regulations also provide, as recommended by
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the Committee, that where a man is dismissed for misconduct he should not be granted a pension, even if he has more than twenty-five years' service, but that the contributions which he has made during his service should be returned to him or to his dependants.
I understand that it will be the wish of some noble Lords to refer to aspects of the C'aksey Committee's recommendations which are not directly concerned with the Police Pensions Regulations and do not require an affirmative Resolution. It will probably be convenient to your Lordships, therefore, if I say a few words about some of the particular points. Your Lordships will appreciate that a number of important matters within the terms of reference of the Committee are not dealt with in Part I of the Report, but will be dealt with in Part II. These include such subjects as representative organisation, negotiating machinery, promotion, discipline and housing. Part I deals with pensions, pay and conditions of service.
As regards pay, the recommendations provide for substantial increases throughout the Service. Appendix I of the White Paper sets out the amount of those increases for constables, sergeants and inspectors. For the higher ranks the increases will be prescribed under the Police Regulations which are being made by the Secretaries of State after consultation with the Police Councils. It may be that in the case of higher ranks the immediate effects may be unevenly distributed in individual cases, and that one officer will obtain much greater immediate benefit than a colleague whose merits do not appear to the officer himself to be in any way superior. This is, however, inevitable in any broad settlement of this kind, and I hope the broad principles will not be obscured by the ventilation of exceptional or marginal cases where, because of exceptional circumstances, the advantages gained may fall below the average. It must be borne in mind in this connection that when any average is struck there is as much weight above the average as there is below it and, on balance, the Government feel that the scales recommended for the ranks of superintendent and above, based as they are in the case of England and Wales on the recommendations of earlier Committees which have examined these

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problems, represent a fair and just recognition of the responsibilities of the higher ranks.
In this connection I may say that in the last few days a meeting has taken place in the Home Office between the representatives of the superintendents and the police authorities of England and Wales, at which substantial agreement was reached as to the measures for applying equitably to serving officers the Oaksey Committee's recommendations with regard to grading and pay. As a result of this meeting, it is hoped that most, if not all, of the earlier criticisms of the Report which were made by superintendents have been met—apart, possibly, from that in connection with the loss of detective allowances which will be incurred by detective-superintendents. This is a particularly difficult point to meet, as at present the allowances received by detective-superintendents amount to £65 a year, which in future, under the Oaksey recommendations, will not be payable. The authorities have been unable to find any ground for disagreeing with the clear intention of the Oaksey Committee that a detective allowance should not be payable to officers of the rank of superintendent, but they recognise the financial loss which its discontinuance will entail to existing members, and it has accordingly been decided that upon its discontinuance, any superintendent whose new rate of pay would be less than his present pay with the detective allowance, shall be given a personal allowance sufficient to ensure that he is no worse off than he has hitherto been.
In addition, the Report provides for not inconsiderable improvements for the lower ranks in matters of overtime and time off and, as the Oaksey Committee themselves point out, they would have been able to recommend still further improvements in the general field of conditions of service if these improvements had not been given already over the past few years as the result of normal discussions and negotiation, on the Police Council and through its committees. I think I can safely say that the recommendations of the Committee on conditions of service generally are regarded with considerable satisfaction by the service and, so far as I am aware, they
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have not been subject to any adverse criticism.
Apart from the matter of averaging, the main subject of criticism in connection with the implementation of the Oaksey Committee's recommendations has been the failure of the Government to grant the recommended increases of pay with retrospective effect. There has undoubtedly been disappointment in the service at this decision, and unfavourable contrasts have been made with the action taken in 1919, when retrospective effect was given to the Desborough Committee recommendations. The absence of retrospection bears particularly hard on chief constables and superintendents in England and Wales, who before the Oaksey Committee was set up received an assurance that improved scales of pay, substantially in accordance with those now recommended by the Committee had been accepted in principle and would be granted as soon as the financial situation of the country enabled them to be paid. We are not unsympathetic to these officers, but the short position is that in respect of pay given by or under statutory instruments there is no power to grant retrospection. We are, however, anxious to grant the improved pay at the earliest possible moment, and ever since the Part 1 of the Oaksey Committee's Report was received every effort has been made to accelerate the reaching of final decisions as to its implementation, and it is proposed to introduce the new rates, with effect as from July 1, for all men who elect for averaging.
Too short a time has so far elapsed since the publication of the Report to enable me to express any firm opinion as to the effect of the improved conditions upon recruiting, and it may be that many would-be recruits are still holding back until this debate has taken place. The Government hope that in the course of the coming month there will be a steady improvement in recruiting, and that the tendency which has been observable during the last two or three years, for men with substantial periods of service to retire before they become eligible for pension, will disappear. That is the view of the Government with regard to the Oaksey Report. Your Lordships will perceive that we accept the Report in toto, and accordingly I ask your Lordships to approve these Regulations.
Moved, That the Special Order, as reported from the Special Orders Committee on the 1st instant, be approved.—(The Lord Chancellor.)
3.9 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF WORKS (LORD MORRISON): My Lords, in accordance with the statement made by the noble and learned Viscount the Lord Chancellor, it may be for the convenience of your Lordships if in a word or two I draw your attention to the fact that there are two sets of Regulations which your Lordships are asked to approve—namely, the Police Pensions Regulations and the Police Pensions (Scotland) Regulations. For the convenience of the House I think it would be better to have one debate on the two sets of Regulations.
The substance of the two sets of draft Regulations is, for all practical purposes, identical, but each set contains certain provisions which apply either only to Scotland or only to England and Wales, as the case may be. The special Scottish provisions included in the Scottish Regulations are three: Regulation 29—provisions consequential on the abolition of the rank of lieutenant; Regulation 36—provisions as to the members of the Orkney and Zetland Police Forces; Regulation 37—provisions as to unattested service prior to 1924 of policewomen in Glasgow. These provisions are similar to the provisions contained in the Police Pensions (Scotland) Regulations, 1948. The draft Regulations for England and Wales contain four provisions which are peculiar to England and Wales and do not apply to Scotland. For instance, Regulation 54 deals with funds out of which and into which payments are to be made. In Scotland there are now no separate police funds. Regulation 58 deals with special arrangements for pensions to Commissioners and Assistant Commissioners of Police of the Metropolis. Regulation 63 refers only to Lincolnshire, and Regulation 85 to references. There is no corresponding provision in the Scottish Regulations, because references are dealt with differently in those Regulations. That is all I need say.
3.11 p.m.
VISCOUNT TEMPLEWOOD: My Lords. I find myself in general agree-
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ment with not a few of the Lord Chancellor's observations. First, I gladly associate myself with him in thanking one of our most respected members, Lord Oaksey, for the time and trouble he has given to this Report. If in the course of my speech I make criticisms of the Report, those criticisms will be due to the inherent difficulties of the problem rather than clue to any disparagement of the noble Lord's effort. Secondly, I agree with the noble and learned Viscount on the Woolsack in hoping most sincerely that these proposed changes will stimulate recruiting to the police, and will keep the recruits in the service when once they have entered it. In the course of my speech I shall have to throw several doubts on whether that is likely to happen. Thirdly, I agree with the Lord Chancellor that we must treat these police problems as a whole. I think he used words to that effect at the end of his speech.
Our trouble to-day is that, owing to the fact that the Oaksey Committee have dealt only with part of the problem, and the Government dealt in another place first with pay and are today dealing here with pensions, it is very difficult for us to consider the problem as a whole. Indeed, the last observations the Lord Chancellor made upon this subject show how difficult it is. He suggested in general outline certain changes that were going to be made in the position of superintendents, and so on. We have at our disposal none of the details upon which we can form a final decision. I would, therefore venture to say that, in my view, the Government are placing this House in great difficulty in dealing with the question piecemeal; and they are much less likely to make the police service attractive if they deal with it first in one chapter and then in another. I prefer what Lord Desborough did after the First World War, when he produced a comprehensive Report in which the advantages and disadvantages of the police service were set out over the whole field, instead of dealing with it step by step and by beginning with the two steps that matter least.
I remember the debate that took place in this House in February, 1948. I do not think I am misrepresenting what then took place when I say that it was the general view—I think the Lord Chancellor himself agreed with it—that the two

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most important factors of the problem were living conditions and housing conditions, and that pay came only third. To-day we are asked to deal with the pensions part of the pay. We were asked to deal at the end of May with the pay. All we can do is to put before noble Lords the difficulties of the problem, as we see them, and to look to Lord Oaksey and his Committee to take into account what is said in this debate and embody in their Second Report, if they can, the suggestions we make.
Let us look at the facts of the problem. The facts are very serious. On the one hand, the figures of crime have increased to a formidable degree; on the other hand, the police forces of the country are greatly under strength, and a wastage is going on that takes almost as many men out of these forces as are going into them. I will not weary your Lordships with many statistics, but let me give one or two figures to illustrate what I am saying. Let me take, first of all, the figures of indictable crime. The figures of indictable crime have been rising in the years since the war by anything up to 70 to 80 per cent. They have been rising particularly in the case of juvenile crime and delinquency, the part of the subject in which I personally am very interested. If noble Lords will look at the figures, they will find that the greatest rises in crime and delinquency are taking place in the ages between ten and twenty. That is a formidable side of the problem. On the other side, the police forces of the country are 17 per cent. below their establishment: they are 3,725 below their establishment in the provinces, and 4,280 below their establishment in the Metropolitan district.
The figures however, are really more serious than that. In the case of the Metropolitan figures, you find that in the Metropolitan Police district there has been no raising of the scale of the establishment, as there has been in most of the provincial authorities. I am told upon very good authority that the Metropolitan Police to-day, upon what should be their post-war establishment, are short by no fewer than 8,000 men. I think any noble Lord who analyses the position will find that I am not exaggerating when I give that figure. At the same time—and this is another serious factor—the standards,
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physical and so on, have been considerably lowered since the war.
There is the problem: an increase of crime, a decrease in the police forces and a wastage going on that to me is almost appalling. I have here the figures of wastage that are given by Lord Oaksey's Committee in their Report. I take, first of all, the figures of the men who have been from six to nine years in the force, and subsequently those from ten to fourteen years. Those were the age groups that Lord Oaksey's Committee took, I suppose because they were most significant. They showed the men who had gone into the forces and passed through a certain amount of training, and to whom in the ordinary course of events we should have been looking to till the posts of inspector, superintendent and so on, in the future. In the case of men from the sixth to the ninth years, the average wastage in the years 1927 to 1939 was 1.9 per cent. In 1946 it went up to 12.1 per cent. In 1947 I am glad to say it fell, although not by very much, to 8.1 per cent. If I turn to the figures of men from their tenth to their fourteenth years, I find that these men are leaving the force five times as frequently as they did in the years before the war. That surely shows a very serious state of affairs—I am not speaking so much now from the point of view of the police service as from the point of view of the community and of crime and delinquency.
I take the view that the first essential in the checking of crime and delinquency is an efficient and sufficient police force. I believe that that is particularly the case with the young. I do not believe that the young boy or girl who is thinking of breaking into an unoccupied house wonders whether he will eventually be convicted in a court and sent to an approved school or Borstal, or whatever it may be. I believe he is thinking chiefly: "Am I going to be caught by the policeman who is walking up and down outside?" What is happening here is that great areas—particularly in the building areas round great cities like London—are left practically without sight of a policeman from one end of the week to the other. I need not delay upon these facts, for they seem to me to be so obvious that one need not argue them.
I go on to ask how far the Oaksey proposals will help to re-establish the position. I own that I am not very hopeful.

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I take first of all the case of pay. I admit that, under the scale announced by the Home Secretary at the end of May, scales of pay are going to rise. They are not going to rise, however, to anything like the extent which was asked for by the Police Federation and the Police Council. The fact remains that, at the end of these rises, the policeman will no longer have—I will not say the favoured position, but the advantageous position that he had in the past, as compared with comparable workers in the country. His profession will no longer be a profession which has marked special advantages over and above the advantages of other walks of life.
I pass from the question of pay to the question of pensions. There again, I admit that in certain respects pensions are being satisfactorily increased, particularly the widows' pensions and pensions for orphan children. At the same time, I cannot take the view that has just been expressed by the Lord Chancellor about the new plan of averaging pensions. I think it is a bad plan. If it is not an actual breach of the undertakings given to the police, I think it is very nearly a breach. As things have been in the past, a man has received a pension based upon his pay, whatever the pay might be. The pay is now being put up. That being so, I maintain that the pension should continue to be based upon the pay. If the Ciovernment think that an increase in pay is necessary, it seems to me to follow necessarily that the pension should go up pari passu.
I believe that this three years' average will create very great discontent. I think also that it will keep some men, who have already had their period of service extended against their original contract, in the service for three years longer and that this will create discontent. It would have been much wiser, both in the case of pay and in the case of pensions, if it is really our intention to make the police service an attractive service, to face the statutory difficulty and to make payments in each case retrospective. There are many analogies of making payments retrospective. Every noble Lord in this House must have noticed how often it happens in industry. A long inquiry takes place and, at the end of it, advances in pay are made retrospective to a date which may be quite a long way back. I believe that
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it would have been much wiser if, in this case also, the rises in pay and pensions had been made retrospective.
I shall not linger upon these questions of pay and pensions, for before I sit down, I want to say a word or two about what I consider to be even more important than these actual money questions—namely, the conditions of police service, the living and service conditions. I have particularly in mind the problem of housing for the police. That is a question which has been raised time after time in this House, and we have never yet had a satisfactory answer. I cannot sec what is the objection to priority in every housing scheme being given for whatever police houses are necessary. As it is, the policeman has to take his chance with the rest of the community, and it does happen—and I am sure noble Lords can confirm this from many parts of the country—that great housing schemes are started, possibly at some distance from the older police stations, and that no accommodation whatever is provided for the police in those housing schemes. I greatly hope that when Lord Oaksey makes his next Report he will give particular attention to this housing question, and that he will give particular attention to the point I have made—namely, that definite priority should be given by every building authority to the building of police houses.
I come to the last point which I wish to press upon the noble and learned Lord. It concerns the service conditions of any young man who goes into the police. I am convinced that the conditions will have to be made so attractive that an enterprising young man will go into the force feeling that he has the chance of rising to the very top, and does not see, time after time, all the highest posts in the service—or most of them—given to outsiders. In other words it is necessary by some means or other to find merit in the police force—and to find it soon; otherwise you will break the hearts of these young men who enter the service. At present, they do their routine work, year after year, and they see no chance of getting any further; and they leave, as they are leaving now, after their sixth, seventh or eighth year. I know that around this question there has raged a great controversy over Lord Trenchard's scheme for the Police Colley. The noble Lord

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had a scheme; he faced this very difficult problem of attempting to reconcile the question of seniority with that of efficiency. The scheme did not meet with general support (I am not now going into the reasons for that), and it was scrapped.
What I want to say to the noble and learned Lord. Lord Oaksey, to-day is that, now the Trenchard scheme has been scrapped, it is essential that some new scheme should be introduced which would do what we all wish to see done—namely, give the young men encouragement and make the police service an attractive career. As it is, we have gone backward and not forward. I remember that in a debate which we had eighteen months ago the noble and learned Viscount, the Lord Chancellor, had some argument with Lord Trenchard on the subject and, in the course of this argument (I think I am giving an accurate account of what the Lord Chancellor said) he gave the impression that young men of twenty-four and twenty-five years old would be selected for the Police College, and—after having undergone a necessary period of routine work in the streets—that they would be marked out for future promotion. I would not demur at such an age as twenty-four or twenty-five, but the present position, so I am informed, is that the average age of attendance at the Police College is from thirty-seven to forty. What chance or hope is given to a young man who goes in, full of enterprise, anxious to make a career, when he sees that one of the channels for promotion is restricted to men of thirty-seven to forty? I will not pursue the argument, except to say that here is one of the key questions for the second Report of Lord Oaksey's Committee. I hope it will take a very prominent part in that Report, and that one of the results of the next Report will be to make an opening for talent and to give these young men a chance of rising to the top.
I have now dealt with the matters which seemed to me to need criticism or comment. I hope that what I have said will prove to be pessimistic, and that recruitment for the police in future will be better than I expect it to be. I hope that wastage will not be so great. But from the information I have at my disposal,
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and the inquiries that I have made, unless the second Part of the Oaksey Report can give a much more attractive picture of conditions in the police service than the first Report has done, I am afraid my prophecies of woe will be fully confirmed.
3.38 p.m.
THE MARQUESS OF READING: My Lords, after looking at the list of speakers I hope I may be allowed one anticipatory word: that is to say how gladly we welcome tile prospect of hearing "the sound of a voice that is still" with us—happily now in a more unbridled capacity. Earlier debates on this subject revealed that there was a substantial volume of discontent in the police force which was reflected, first, in the difficulties of obtaining suitable recruits and, secondly, in the alarming wastage which was going on. No one can doubt that all over the country there have in the last few post-war years been a series of crimes, especially of burglary and theft of jewels and furs, far in excess of anything that was known in the past. Equally, no one can doubt that at least one of the reasons for the profusion of these crimes is that the intending criminal knows that he has a very considerable chance of escaping detection. In that context, I hope that it is not as irrelevant to this subject as it might at first sight appear if I venture to make one more plea to His Majesty's Government that they could now, four years after the end of the war, make up their minds to grant a complete amnesty to deserters from the armed Forces of the Crown. I say that that is a not irrelevant consideration, because it is obvious that no small proportion of the men who are committing these crimes, largely undetected, are men who have been driven to a criminal course of life, not by any inherent vicious instinct but by the force of circumstances which have placed them in that position and which have disabled them from earning a normal honest livelihood. The number of those potential desperadoes would be reduced by extending to them at long last that amnesty, and the sooner that is done the lighter will be the task of such police as we possess.
In the Oaksey Report there occurs the sentence:
"In our view it is essential that members of police forces should be contented and reasonably free from financial worry."

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My Lords, that is an unexceptionable sentiment with which we should all agree—perhaps in connection not only with life in the police force but in many other walks of life. But, equally, all of us who have ever had any connection with the Services have been confronted with the problem of what was known as "the anxious soldier"—the man who was so afflicted and obsessed by his own personal troubles that he was below the proper standard of efficiency, and so disqualified by his worries from carrying out his duties in a proper mariner. I believe that for some time past this has been, and still is to a large extent, the case in regard to members of the police force, who of all occupations ought to be able to devote themselves with single-minded alertness to the carrying out of their duty.
Great as, in common with all others of your Lordships, is my respect for the noble and learned Lord, Lord Oaksey, who was Chairman of this Committee, I must regretfully say that such information as I have been able to collect does not indicate that the causes of discontent have yet been, or are likely to be, removed by this first instalment of the Report. I appreciate that it is a first instalment but, while recognising the need for speed in the preparation of the Report, I regret that it has had to be published not as one volume but as a serial story. As the noble Viscount who has just spoken said, it is obviously to be regretted that it was not possible to put before serving members of the force and, equally, before potential recruits, a picture which would show them the entire field of conditions in which they would be called upon to serve. It is not easy for them to make up their minds on a piecemeal survey of the territory.
There will certainly be a further instalment of the Report, but it will not deal again, as I understand it, with the question of pay and pensions, which is the subject of the first Part. From all my information, the matter which is causing dissatisfaction, and considerable dissatisfaction, is in the main this question of pensions, with the obligation upon a man to extend his period of service if his pension is to be added to on any worthwhile scale. The noble and learned Viscount on the Woolsack—rightly, if I may say so—appealed to us not to give
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individual cases. I would merely ask this one question: Is it the position that, under this new scheme, it may be possible for a man to have to stay on for a period of up to six years in order to obtain an accretion to his pension of not more than £30 a year? If that is so, it will not satisfy the grievances of even the least rapacious of men.
I realise that the next volume will in all probability deal with housing. Therefore, I do not want to spend too much time upon that subject at this stage. I believe that to be of pre-eminent importance in the whole discussion of this matter. From time to time, one reads in the papers examples of local councils having before them an appeal to make special provision to allocate accommodation on their housing list for the benefit of the local police. I do not think that I have ever yet read a report which states that a council agreed to that course. It seems to me astonishing that a local authority which, after all, is charged with the whole interests of those who reside within their area, should refuse to give a priority to the police force, in order that they may be able to carry out their duty in reasonable personal comfort and with a measure of professional accessibility to the area in which they are called upon to work. I very much hope that the recommendations of the next volume of this Report will so strongly emphasise the need for such a priority that steps may be taken to make it no longer a question of caprice but a question of general, definite duty. It is difficult to think that the other inhabitants, or potential inhabitants, of an area would find themselves aggrieved if they were moved down two or three places on a list of those waiting for houses, in order to make room for the police. After all, it is the people who are going to live in that neighbourhood who are most deeply interested in having the police on the spot, and not miles away. If the councils would show a little more courage and resolution in these matters, the police would probably be better housed.
There are also considerations, upon which I do not dwell now, in connection with the provision of married quarters in general, and certainly of unmarried quarters for the police in the neighbourhood of the police station. It may be that
"Stone walls do not a prison make,"

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but stone walls in their old age make very unattractive accommodation for unmarried constables. I understand there is a considerable entry into the force of young men of good education, and equally there is a substantial wastage of just that type of young man. No doubt it is partly due to the fact that in these days there is no shortage of labour and there are other occupations available for them if, perhaps after an inadequate period of probation, they decide that life in the police force does not attract them as a final career. I think it is also the case that they find their prospects of promotion blocked by the older men. I think it is also the case that, in many instances, they meet friends of theirs, from school or regiments and so on, who are earning £8, £9 or £10 a week, and getting Saturdays and Sundays off regularly, and that rapidly alters the attitude of mind which originally persuaded them to take service in the police force. Yet it is of importance that those men should be retained.
I have sometimes wondered—and it may or may not be of value as a suggestion—why it is that in the police force, and, so far as I know, only in the police force, the first what I may call noncommissioned rank is that of sergeant. A man steps straight from constable to sergeant and, according to the establishment, the number of sergeants permissible is not very large. I have sometimes wondered whether it would not encourage men and provide them at an earlier stage of their career with some additional pay if there were to be instituted a rank—for instance, that of corporal—intermediate between constable and sergeant, which would give them a first step towards responsibility and a first increase of pay, although I am prepared to admit that experience has shown that corporals are apt more to disturb than to preserve the peace!
The Government have accepted this Report en bloc, but I do not imagine that they, any more than we, are of opinion that, even on those subjects covered by the Report, it is a conlplete and final answer to the case which the police are presenting. The Government will have to think again and act again if there is to be what we desire, what the police deserve and what public security demands—a force adequately and indeed
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generously treated, strong, stable, and satisfied with the terms and conditions upon which it carries out the inestimably valuable service of protecting the interests of the citizen.
3.50 p.m.
LORD BADELEY: My Lords, I feel that I should be guilty of what was once called a "terminological inexactitude" if I put forward as a plea for your Lordships' consideration the fact that I have never addressed this House before. I would rather rely on a continuance of that kindness which made my service in the House so supremely happy. Indeed, I should not have strained what I may perhaps call my mature maiden modesty so far as to make a speech at all so soon after admission to your Lordships' House were not the subject under discussion this afternoon one which is very near to my heart. As there is so much business before the House I promise to be very brief. My close association with the police—which I hasten to say has an athletic and not a criminal origin—has gone on for many years, and I have made many friends among both the officers and the men of the police force. I think all your Lordships have a deep appreciation of the value of that force.
The subject before the House is, of course, the consideration of the Police Pensions Regulations, but I think I know enough of your Lordships' strict views on the rules of Order to be comforted by what the noble and learned Viscount said, and that I shall not be infringing those rules by discussing for a moment or two the Oaksey Report on which these Regulations are founded. Anyone who studies the Oaksey Report—and it needs study—cannot fail to be struck by the extraordinary and meticulous care and diligence with which the Committee have examined the subject entrusted to them. The Report is beautifully edited and as full of facts, figures and diagrams as any pre-war plum pudding was of plums—or whatever it was stuffed with. But beautifully-painted miniatures do not make good posters, and I am rather afraid that when a man who contemplates going into the police force reads that Report, if he ever does, or receives a digest of it, he will not be attracted as one feels he should be.
I would like to emphasise what the noble Viscount, Lord Templewood said

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—namely, that it would have been much more satisfactory to have a Report dealing with housing and other things as well as the mere question of pensions and pay. However, that may come, and we shall be glad to see it when it does. I am sad about the three-year-average pensions scheme. It is obvious what the Committee were after. They wished to retain in the force men who had experience and standing, who would form a sort of backbone to the force. To a certain extent, they seem likely to attain their object. The chief inspector who, under the new scheme, will be entitled to an extra £140 a year on his pension, is not likely to let a lapse of two years stand between him and that increase, and I. anticipate that a great many men will stay on in the force with a view to drawing the increased pension.
The Police Pensions Act, 1948, gives them the option of choosing whether they will retire on the old basis of pay or whether they will stay on and gain the extra advantage. But there are two repercussions. The first that has been voiced to me by a considerable number of men in the ranks is a sense of bitter disappointment at the fact that at the age of retirement they are likely to have to prolong their time in the force. The second, which is much more serious, is that there is almost certain to be a three years' block in promotion. Where frustration arises from a block in promotion, it is hound to breed discontent, and I look upon that with great apprehension. The Home Secretary was conciliatory About this matter in another place and I hope he will go some way to meet it. I trust that in the future some steps may be taken on behalf of the younger men to meet that real grievance.
I will not keep your Lordships much longer, but I would like to say a word or two on the question of pay. We have heard a great deal about "concealed emoluments." I would like to say a word in regard to the question of pay, as it will affect the constable who is going to join the police force now. He will receive a salary of £330 a year, as against the £268 which lie had before the scheme was introduced. That is an increase of about 21s. a week. Out of the £330, taxation has to he paid, and 4s. 11d. for National Insurance contributions, for Medical services—which up to date he
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has received free of charge—will be deducted. And I think I am right in saying that under one of the Regulations now before the House he has to pay a contribution towards his pension. What does that leave him? Not very much. Out of what is left he has to pay for food and such civilian clothing as he wants, and, if he is a cigarette smoker, he has to buy his cigarettes. I do not think that is an attractive picture.
I was sorry to hear the noble and learned Viscount say that the figures are not ready, because it would have been very instructive to the House to know how the Oaksey Report has affected enlistment and wastage from the force, both of which are most important matters. I should like to put this point to Lord Oaksey before I sit down. There has been suggested an allowance of £10 per annum to the man in the Metropolitan or the City Police to meet the extra cost of living vis-à-vis his brother in the country, who can, so to speak, grow his own cabbages and lay his own eggs. Many people think that that is not enough, and would advocate an additional payment of £25 a year for the extra expense of living in city. The other point in regard to accommodation will, of course, arise from the second Part of the Report. I only hope that that second Part will make some helpful recommendations on this point. I will not detain your Lordships any longer, but I hope—and I know I speak for many of your Lordships—that the result of all these efforts will be to put the force on a much better basis of security.
3.58 p.m.
VISCOUNT TRENCHARD: My Lords, it is a pleasure and a privilege but I feel it is almost a presumption that I should be the first to speak after the speech we have just heard from the noble Lord who used to counsel me and who has given such wise advice to many in your Lordships' House. I feel that I am not the best person to congratulate him on his speech, but I do say that he has shown the same wisdom in his first public speech here as he has always displayed to all of us who have been helped personally by him. I hope we shall hear him many more times in this House.
The noble Lord ended on a note upon which I feel I would like to begin. My sole object in speaking to-day is because

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I feel very strongly about the subject with which we are dealing—namely, the vital necessity of having and maintaining a contented and happy police force, one that is up to strength and is proud of its position and its conditions of service. Is that too much to ask? I would like to begin by saying that I agree with all the noble Viscount, Lord Templewood, said. This debate on the police is long overdue. The last time we discussed the subject was in February, 1948, well over a year ago, and our debate now really deals only with pensions and pay. I gather that the Report of Lord Oaksey's Committee that has been published so far has not been received with the satisfaction the authorities thought it would give. I realise to the full the difficulties of making a Report on the police that will carry conviction throughout the force. 'You are trying to lay down Regulations for different men in different forces—for those in London and in the big cities, in the small cities and in the country districts. It cannot be done, because they are not working under the same conditions. You must face the fact that it cannot be done.
There is another point about which I know Lord Oaksey and his Committee took a great deal of trouble. I hope the noble and learned Lord will not feel that I am in any way unfair in criticising his Report, because I consider that he had an almost impossible task. It is impossible to deal with the question of police pay and police pensions separately, yet it seems that the practice has been to deal, as it were, with pensions one day, promotion another day, housing another day and welfare conditions yet another day. The more you separate these matters, the more you argue about them and make recommendations, the more likelihood is there that the recommendations which you make will be objected to by a certain number of people. The difficulties will be accentuated and the objections will be multiplied. Instead of a comprehensive Report being issued with recommendations which, while they might not advantage a man in one way would confer benefit on him in another and would benefit other men in yet other ways, the various matters which I have mentioned have been dealt with
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separately. That, in my view, is going to make for continuous trouble.
In this connection, I would like to ask the noble and learned Lord, Lord Oaksey, whether he even knew that there was another body sitting at the time and considering the same subject. I have here a report published on June 21 called The Fourth Report of the Police Post-War Committee. There have been three earlier reports but this one, as I say, came out about seven days ago. I criticised the first report very severely and the Lord Chancellor replied in February, 1948. Since that time three other reports have been issued. I do not know whether it would be improper for me to ask Lord Oaksey if he knew that this committee was still sitting. The subject of the report is described as the "Standardisation of Responsibilities of the Higher Ranks of the Police Service." A list of names of the members of the committee is given. Does this not exemplify what I have been saying about dealing piecemeal with this subject? This report went out to the police forces after the first part of the Report of Lord Oaksey's Committee had been issued. Is that the way to deal with police questions? Any young man who wants to join the police force, if he takes up this Report and reads in it what officers have to do to qualify to become superintendents, will I think receive a set-back to his ambitions. I would like to ask the Lord Chancellor what paragraph 5 of Part II means. I have read it myself and it has also been read by others with whom I have discussed it. Nevertheless it remains to me quite incomprehensible. It certainly will not tend to induce one young man to join the police force.
Questions relating to pay have been discussed to-day and there is no doubt that generally what is suggested has not been received with satisfaction. I hope that on closer examination the police will be more satisfied with the proposals than they have shown themselves to be up to the present.
Now to turn to the Oaksey Report. I see that besides pay and pensions, the Report deals with one other point, the alteration in the ranks, as mentioned in paragraph 47, where it says that the Commissioner of the Metropolitan Police recommended that in future sub-divisional

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inspectors should be called chief inspectors and chief inspectors should be called superintendents. The Committee saw no reason to dissent from that view, but pointed out that it would have other consequences than a change of titles, such as an allowance of annual leave, entitlement to a weekly rest day, widows' pensions et cetera. I think that the last point is confusing to the police, as I have heard it said that the sub-divisional inspector's rank is being discontinued and that a new senior rank above that of superintendent will be introduced. I think that that shows that some of the police do not thoroughly understand what the paragraph means. I am not sure that I understand it fully myself and I hope that the Lord Chancellor will, with his clear mind, explain exactly what this means, as some of the police believe that the sub-divisional inspectors now being called chief inspectors will get the advantages that go with this rank at present. Is that so? And will their pay be graded up to that extent or not.
I want now to refer to the background of this Inquiry. The noble Lord, Lord Templewood referred to the debate in your Lordships' House in February, 1948. I recall that everything I suggested on that occasion was turned down by the noble and learned Viscount who replied to the debate. I asked for a Committee of Inquiry to be set up at once. That request was refused. Within a month it was granted in another place. I hope that after this debate we may have some improvement, even though it may be refused to-day. The Lord Chancellor also said that he thought the question of accommodation was a more important point than that of pay—in fact, he was very emphatic upon it. And yet the first Part of this Oaksey Report, the only Part of the Report which has so far been published, deals with pay. It deals with pay, and not with the other matters which have been under consideration. Why? I hope that when he replies, the Lord Chancellor will give the reasons why pay was chosen as the subject of this Part of the Report when there are so many other matters to be considered, matters which I gather are, in the Government's opinion, more important.
In the debate which I have just mentioned, I referred to the conditions of police quarters and I described them as
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deplorable. I think I was criticised severely because I had not done more about them during the time I was at Scotland Yard. I thought that the Lord Chancellor was almost cross with me that day. He seemed to complain that the difficulties of accommodation had been handed on to the present Government by their predecessors; and he seemed to blame me and the Government of that day. I would like to point out that it was over a year ago that this inquiry was set up, after attention had been drawn to the deplorable condition of the quarters, and it is four years since this Government took office. Yet we have not even had the Report about improving the housing. The Government have had longer to deal with this matter than I had during my period of office. I feel that if the Government do not move more quickly, the new Government that comes in next year will rightly say, when they are attacked on the question of quarters for the police, that this question was handed on to them by the previous Government who had not used their great majority and some of that great energy of which they are capable to deal adequately with the housing question. Will the Government tell us to-day how many section houses they are aiming at constructing in the Metropolitan Police area now, and will they say to-day how many are under orders for construction? It would be interesting to hear also how many more married quarters they are constructing to-day. Or are they waiting for the second Part of the Oaksey Report?
Again, we asked on the previous occasion whether the Government would use their powers or take new powers—this has been mentioned by two previous speakers to-day—to insist that local authorities give priority to the police in the housing which they own and control. Has anything at all been done about that yet? The question of pay has been adequately dealt with by previous speakers in this debate. The police authorities, I gather, recommended that the increased pay should start at £7 a week, but the Committee have recommended an increased rate to start at £6 6s. 11d. a week. The noble Lord, Lord Badeley, has dealt with the whole question of pay much better than I could do. How much, he asked, does it cost to live in London, in

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view of the conditions in which police officers have to live and carry out their duties? I hope that the pay offered will produce the recruits, as that was the chief object of the increase in pay. The Lord Chancellor said in his opening speech that the Government thought it too early yet to say whether any extra recruits are coming in as the result of the increase. Would it be possible for him to tell us, when he replies, whether there has been any indication one way or another in the last month? I strongly agree with the noble Lord, Lord Badeley, that the system of granting pension on the average of the last three years' pay before retiring is a retrograde step. It will cause the force to become still older in the average age of its members.
I am sorry to detain your Lordships, but I look on the police as exceedingly important. Some sixteen months ago, in a debate in your Lordships' House, I gave some disturbing figures about recruiting; I pointed out that in 1947 470 men left the police voluntarily in their first year's service. The Home Office have informed me now that in the first part of this year, from January 1 to April 30, 330 recruits joined the Metropolitan Police and 306 left—a total gain of 24. On a deficit of between 4,000 and 5,000 men that is not very much. Of the 306 men who left, no fewer than 139 were post-war entrants; therefore the departure of young men from the force is going on almost at the same rate as when I spoke sixteen months ago. I emphasise the point made by the noble Viscount, Lord Templewood. In some forces the establishment has been increased, but the Metropolitan Police Force have not increased their establishment. I cannot believe that the Metropolitan police authorities are not working on the increased establishment necessary to combat the crime which exists in London today; and if they have a new establishment, why cannot we be told?
The Government may say, "What is the good of publishing an increased establishment when we cannot even fill the present establishment?" I feel that concealing the true deficiency in the police force in London is doing a great deal of damage. Why is it that the young men do not join the police force? I do not want to weary your Lordships, and
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I know the importance of the subject we are to discuss later, but this is a really important question. If we do not induce a few of the very best young men to join, we shall never persuade second and third-rate men to come in. We must get a few young men who have made their name at school, or who established some kind of record, to join; then they will attract others. To answer the question, why do we not get a few of the best young men to join, we must go back to the question of what we do with them when they do join. It is vitally necessary to get them. They are to be found in the Army, the Navy and the Air Force, in business and in other walks of life. If the young men cannot find a real career in the police force, they will not join.
In last year's debate I spoke at some length on the subject of the old Police College, to which men went in their early days and remained for two years; and I criticised the new college set up in Warwickshire, which has courses which last only six months and to which men go at an older age. The noble and learned Viscount who answered that debate made some severe comments on my views. He said definitely that the Government objected to the sort of college I had envisaged and gave as an analogy what would happen if senior members of your Lordships' House, like the noble Viscount, Lord Templewood, and the noble Earl, Lord Halifax, went into the Foreign Service. The noble and learned Viscount the Lord Chancellor said:
"If eminent people from this House and another place are sent abroad to fill diplomatic posts, I have no doubt that we shall have most worthy and excellent diplomatic representatives. We have only to think of the excellent work done by Lord Templewood in Spain, Lord Halifax in Amer.…However, if we make a habit of doing this, what effect will that policy have on the Foreign Service!"
Could anything show more clearly how the Government misunderstand the whole question? If the Government are still using that argument for doing away with the police college, then I understand why they cannot get recruits. The whole object of the police college was to train police officers so that they could have a chance of rising to the highest posts. The Commissioner, Sir Harold Scott, and the Deputy Commissioner did not start their careers in the police force. Even the

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Commandant of the new police college which the Government have set up did not begin his career in the police force. If we go on like this, we shall have a second-rate force.
Your Lordships will remember that the noble and learned Viscount on the Woolsack, referring to my statement that men entering the new college would be too old, said that it was wrong to talk as though these people would be greybeards when they reached the college. He said:
"…If they enter the service at about 20, at 24 years of age surely they will he young enough to develop the qualities of leadership which we all want."
The noble Viscount also said:
"We can, of course, promote constables, but a constable after four years' service is entitled to sit for his examination, which is a competitive examination. There is no harm in a man doing four years' service."
The noble Viscount talked about men of 24 years of age. But the average age of the men going out of the college today is about 40. The present college has two courses. At the first course, 24 men attended, and their average age was 37 years. At the second course the average age was 40, and I believe that at the third course it is over 41. So we are going gradually up the scale. I know that it will be said that the police are working off men who are seeking promotion, and that they are being given a chance; but that was said to me in the past in regard to Hendon. On that basis, there will be no chance of training young men at an early enough age. A few days ago I picked up a paper in which it was stated:
"London's youngest crime chief has been appointed Scotland's youngest chief constable. He is only 35, yet he has been in charge of crime in a large area of London's East End."
He was another product of the Hendon Police College. I should like to congratulate the noble Lord who answers for Scotland; I am glad that the Scottish police authority concerned was so wise. If this officer had not been Hendon-trained and had come under the present system, he would not have been trained for the job at 35—and he would not have been during the next twenty years. But he chose the police force, and went through the ranks and the Hendon College. In the debate in
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February, 1948, the Lord Chancellor said:
"Quite likely we shall fail"—
that is the only remark in his speech with which I thoroughly agreed—
"but we shall learn from our experience."
I only hope the Government will not take so long as the average age of the recruits going through the police college—40 years. Before I sit down I would ask whether the Police College papers were referred to the Oaksey Committee by the Government, or whether it is decided that the Government will not re-examine the question of reopening the College. Is that still their intention after all this experience? I would repeat: the establishment of the Metropolitan Police Force is dangerously low, and crime is dangerously high.
4.22 p.m.
LORD OAKSEY: My Lords, I intervene only for the purpose of answering the noble Viscount, Lord Trenchard, where he criticised tie making of this first Part of the Committee's Report on the ground that everything had been done piecemeal. He referred to the fourth post-war report of the Police Council under the impression, I think, that that had not been before the Committee over which I presided. As a matter of fact, I am told that that Report was issued in 1947, and it was before us in the evidence which was presented to us by the Home Office. The only other thing I desire to say is this. The reason why we presented an Interim Report upon the subject of pay and pensions was that we were urgently requested to do so I think by every rank in the police force and certainly urgently and repeatedly by the Police Federation.
4.32 p.m.
LORD CROOK: My Lords, may I say straight away, as one who also proposes to offer some criticisms of the terms of the Report, that I do not think the noble Lord who has just sat down could, with any Committee, have produced a Report which would clear up the mess of thirty years and gain universal praise. Certainly I am bound to say that the division of the Report into two makes it difficult to get a complete picture, but the division of the Report is not something for which the Committee are responsible so much as some of us who

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have wanted to see pay and conditions dealt with, and who even now think those matters have not been dealt with quickly enough. We were content to see the Report in two parts, even if it did mean a rather disjointed picture.
Those of us who are concerned with the trade union movement are certain that over a period of thirty years the police force have drifted into a state of grave discontent through being completely unable to discuss effectively their own affairs. For many years even the Police Council—which was a very poor form of organisation to offer the men—was not even summoned by the Home Secretaries in office. The Whitley machinery and the revised form of organisation which we hope the noble and learned Lord is going to recommend in his Second Report, may do as much as anything else to help the police force in the future. As there is to be another Report on that subject, and clearly this House will then want an opportunity of discussing the matter, I do not propose to detain your Lordships by developing those points now. I propose to reserve what I want to say on that matter until we see the recommendations of the noble Lord and his Committee.
In respect of the Report now before us, and the deficiency in the Metropolitan Police, I agree with the noble Viscount, Lord Templewood. From the information at my disposal, I would say that the deficiency in the Metropolitan Police is much nearer the 8,000 which the noble Viscount quoted than the 4,280 referred to in the Report. It specifically tells that the force is 4,280 under establishment. What we have not been told is the establishment which the Metropolitan Police ought to have to deal with the state of things in London as they are to-day. Obviously there has been a larger volume of recruitment. Here again I develop a point made by the noble Viscount opposite. What has happened in regard to recruitment is, first, that the standards as to physique have been reduced; secondly, standards as to education have been lowered, and thirdly, recruitment has benefited fortuitously from various things, such as the absorption of war auxiliaries, former members of the Pakistan Force and the Palestine Force, and so on.
I agree with the statement in paragraph 17 of the Report that it would be
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rash to claim that the recommendations on pay will do much to improve the situation. I do not think they go far enough. I want to say a few words on that subject and on a few other points, specifically at the request of the police force. I consider—and this is the only reason why I venture to address your Lordships—that the view they have to put on this subject should be brought before your Lordships' House, particularly because they are deprived of the full and effective opportunity normally given in Whitley machinery for the discussion of their business. The police would have been satisfied with the £7 a week minimum. They wanted a higher maximum than that proposed by the chief constables, but the chief constables agreed on the £7 a week minimum. I would remind your Lordships of the comparison made by the noble Lord, Lord Sandhurst, when he spoke in the debate last year, of the advertisement in the newspapers of that day for the position of a dustman at £5 19s. a week. A dustman works a five-day week, organised on the basis of a clear and set day each day, and not a 48-hour week, as in the case of the police, with alternate duties at night, with bad splitting up of the times of duty, and so forth. We who live a normal life must keep in consideration the abnormal kind of life the police have to live.
I would associate myself with those of your Lordships who have said the date of application of this pay award is causing concern in the police. I do not pretend to be able to argue with the noble and learned Viscount on the Woolsack as to the statutory difficulties which present themselves in respect of dating back an award of this kind. All I would venture to observe, with great humility, is that if difficulties of this kind exist in respect of the servants of the State and do not exist in respect of the rest of the community, it is time we looked at the position to see whether they can be removed.
How absurd those difficulties are your Lordships will realise when I say this. The Oaksey Committee was appointed in May last year, and there was an agitation for an interim settlement on pay. The police force, controlled by the Government, could not have an interim award of pay (I make no complaint about that, because clearly we had to wait for

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the Interim Report of the Oaksey Committee) but the police employed by British Railways, who had their pay brought level with that of the ordinary police some two years ago, also agitated for an interim award, and, unlike the police employed by the Government, having the right to go to arbitration, threatened arbitration. In the result, the British Railways police were given a rise in pay of 11s. to 19s. a week from July 1 last year, while they awaited the Report of the noble Lord, Lord Oaksey. What we are, in effect, saying to the police of the decision now reached, is: "If you are in the position to threaten arbitration because you happen to be employed by British Railways and not by the Government, you can get the improvement dated back; but it is forbidden to you if you are employed in the Home Office." I do not know whether that knowledge is in the possession of the noble and learned Viscount on the Woolsack, but I suggest that he might take it into account and refer it to the Home Secretary.
If I may, I would like to say this about the present Home Secretary. In my contacts with the police, the one thing I have found them insistent upon is the way in which the present Home Secretary has tried his hardest to understand their problems, has shown them kindly consideration and has done everything in his power to improve their position. There is not one member of the police force with whom I have had contact who has wanted to say anything other than praise for the right honourable gentleman, Mr. Chuter Ede, nor would they for a moment want me to say one word critical about him. I suggest, purely personally, that it might be possible for the Government to consider a compromise by making the payment retrospective to the date on which the award of the Committee was issued. If the noble learned Viscount on the Woolsack tells me that that is completely illegal, then my suggestion clearly fails. I knew that restrospection to a previous financial year was never liked—that was the highest I have heard it put until to-day—but as the date of the Report was the date of a new financial year, I had hoped that my compromise might have some merit in it.
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I will not keep your Lordships by dealing in detail with housing, but we are all conscious of the terrible conditions under which the men have been living for thirty years. I think the words "thirty years" are very important; it is the long period of neglect in years gone by which is producing the difficulties this Government have to overcome to-day. The noble Viscount, Lord Swinton, in the debate last year, told us how thirty years ago he was on a Committee of Inquiry to try and improve the conditions of housing, and of the bad conditions he saw then. These conditions were still existing when, in 1933, the noble Viscount, Lord Trenchard, made the drastic recommendations for improvement in the housing conditions of which he told us when he spoke last year. He also told us that, having made those recommendations in 1933 and 1934, hardly anything had been done about them by the time the war commenced in 1939, and that constant policy of "drift and do nothing," whatever Reports were received, is something which stands out as a very clear picture of these conditions in general. I did not quite follow the noble Viscount, Lord Trenchard, in what he said about a new Government next year. I was not quite clear whether he was prophesying the return of the Labour Party to power to continue their good efforts on behalf of the police.
VISCOUNT TRENCHARD: Does the noble Lord ask me to explain? I meant that the next Government, when it comes in, will find police housing in a very bad condition, and they will say that in the four years of the Government which preceded them, with their immense energy and great majority, they did nothing to improve it.
LORD CROOK: At that rate, the noble Viscount must have been suggesting that some other Government would come in next year. If that is so, what they would be having handed back to them would be the conditions which they failed to cure during the long period of years before the present Government came to power, and I have no doubt that they would find it just as difficult to handle as have the present Government.
I have referred to housing mainly because it is one of those concealed emoluments to which the noble Lord, Lord

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Badeley, referred. In the calculation of pay scales in the Oaksey Report, every single thing has been added together in order to produce a comprehensive figure, to show how well remunerated the police are; and the bad housing conditions are included in the figure. Indeed, it was put to me that if the police want a rise in pay, all they need do is to go to the Chancellor of the Exchequer and ask him to put up the income tax. Even the amount of income tax paid on the housing which they do not receive has been included in the Report of the noble Lord's Committee. One of the members of the force asked me whether, if income tax not paid is included in remuneration, they may go along and ask for the extra shilling which is due to them when income tax in future comes down.
Others of the concealed emoluments, as they are called, are, of course, uniform and boot allowances. For some reason, which I have been completely unable to understand, the Committee take the amount of 10s. a week which is paid to plain-clothes men, and say that that is the value of the uniform which the uniformed men received. Now the plain truth is that 10s. a week is paid to the men in order that they may use their suits and, in the words beloved of writers of thrillers, that they may have disguises available. They may need an old suit and a couple of good suits. They need to have evening dress or dinner jacket, or both; and if they are unlucky and do not possess those, they have to repair to those institutions beloved of other folk than the members of the police force in order to hire for a few guineas the appropriate clothing in order to make their way to the evening event to which they are seconded.
I am told that the contract value of the clothes in fact issued as uniform to the police in a period of six years works out at under £40. But we are asked to accept for that same six-year period, in the terms of remuneration in the Report, a figure of £156. Let me go on to add to your Lordships that I am being generous in saying "up to £40." That would be the value if the police kept their uniforms, but in fact they have to hand them back, so that they may either be sold or issued to somebody else. I am told that the boot allowance of £6 10s. 0d. a year covers only part of the cost. I have seen the costing sheets,
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which show that £8 8s. 0d. a year is the minimum upon which a policeman can expect to maintain the effective footwear that he needs.
There is one essential thing which I must mention before I sit down, and that is the subject of hours. When the Report was first published, one of the first items I looked for was a recommendation about the future hours of the police. I realised that when you are dealing with a force which is short of men and trying to get more men into it, you cannot go along and say: "The men's hours will be reduced," because you are merely making worse an already difficult position. I think that the Committee—or, if not them, the Government—ought to make some encouraging statement on hours. If they made a statement as to the future to which the men could look forward, giving them an 88-hour fortnight, with three days off instead of two, every fourteen days, it would do something, to make them feel that they were being considered. Other noble Lords have referred to the attractions of factory and other kinds of work. One of the bitter things the policeman sees is that not only are his hours longer and badly spaced from the point of view of his health and his enjoyment, either in his home life or other entertainment, but he has the galling experience that when you and I repair to Lord's or Wimbledon—or wherever it is we may want to go in the time that is free to us—the police are not able to go to those events, but are busy controlling the traffic and seeing to the regulation and arrangement of those events.
I know that I have spoken too long. There are many other points on which I should have liked to say something. On overtime, for instance, I feel that, while no precise recommendation has been made, the recommendation in its general terms is satisfactory, provided that it does not mean the introduction of a complicated system. I regret that I have found it necessary to keep your Lordships so long. I speak not so much from any personal desire to do so as because the suggestion was made to me by members of the force that, as I was a trade union representative, I might make some contribution to your Lordships' House—particularly since the police force have yet to receive the report of the Whitley

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Committee. I hope your Lordships will bear with me. I sympathise with the noble and learned Lord, Lord Oaksey, on the task he has had to perform. It is a task which will never bring him bouquets, and I am bound to say that it was very well done, though not everybody perhaps, would agree with recommendations of the kind which the Committee made. I thank your Lordships, and I look forward to an opportunity of discussing the second informative Report of the Committee presided over by the noble and learned Lord. I also look forward to seeing a further improvement in the conditions of our police force.
4.41 p.m.
LORD CLYDESMUIR: My Lords, I propose to respond very briefly to the invitation extended by the noble Lord, Lord Morrison, to say a word about Scotland, since the two Instruments are being taken together. It would be a pity if the Scottish force should go by default when the matter is being discussed. We in Scotland think very highly of our force; it is second to none, and indeed, a notable Scottish export for many years past has been policemen to London. One cannot say at this stage whether the improved Metropolitan allowances will still tempt these men away from Scotland or whether they will decide to remain there. That remains to he seen. I should like to echo what the noble Viscount, Lord Templewood, said about the value of the work done by the noble and learned Lord, Lord Oaksey, and his Committee. It is an extremely valuable Report, and obviously much hard work has been done. Nobody would expect to find it free from criticism, for few important Reports have ever been free. In Scotland the criticism has been fairly active. Perhaps that is because Scottish policemen have said what the English policemen thought; certainly they have been very vocal in their criticism of certain points in the Report.
But I would ask your Lordships to bear in mind that, in taking evidence for the Report, the Committee met with varying evidence in Scotland as to the desirability of the proposed changes. We find that, while the county councils and the Convention of Royal Burghs were in favour of improving the scale of police pay, three of the great cities—Edinburgh, Glasgow, and Dundee—reported generally against
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any such increase. But Aberdeen led the way in asking for a very substantial increase in pay. I am glad that Lord Oaksey reported in favour of an increase, and that the Secretary of State has accepted the proposal. My only comment is that I agree strongly with the noble Viscount, Lord Templewood, that these increases should have been made retrospective. If this had been done, much, if not all, of the criticism we have heard would have bee avoided.
I should like to ask one specific question which I hope that the noble Lord who is to reply can answer. In his opening speech the noble and learned Viscount, the Lord Chancellor, referred to a meeting which had recently been held at the Home Office—presumably by the Home Secretary—with the representatives of the superintendents to deal with their observations about the pay of the higher ranks, particularly with regard to the pay of detective-superintendents. I should like to know whether that discussion is also being held in Scotland with the Scottish superintendents. I imagine that the Home Secretary would not discuss Scottish questions, but I know that we in Scotland are also interested in this matter.
Finally, housing conditions are extremely difficult in Scotland—more so than even on this side of the Border. The difficulty has of course been aggravated by the war, and I am sure there are many in the Scottish police force who await eagerly the second Part of the Report of Lord Oaksey's Committee. I hope that it will be possible for this second Part to deal specifically with the matter of police housing conditions in Scotland. It may be possible to lay an obligation on local authorities to give a priority to police houses, where these are necessary. I welcome the Report so far as it goes. I wish it had gone further in the matter of retrospective payments, but none the less I am sure it goes a long way towards improving police conditions.
4.46 p.m.
LORD MORRISON: My Lords, I am sure that the noble Lord who has just spoken will not expect me to go into detail on this matter. In reply to his question, I am informed that, in view of the fact that these Regulations come into force the day after to-morrow, there has not been sufficient time to gather together

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the Scottish police officers, but any improvements which may result from the meeting to which the Lord Chancellor referred will, of course, apply to Scotland as well as to England and Wales.
LORD CLYDESMUIR: I thank the noble Lord.
4.47 p.m.
THE LORD CHANCELLOR: My Lords, perhaps I may reply briefly to some of the matters that have been raised in this most interesting discussion. So far as the matters outside the immediate discussion are concerned, I am anxious not to say very much. They are, of course, matters which Lord Oaksey's Committee will be considering on their second Report. The discussion has been extremely useful in calling attention to certain matters which should be considered and presented to the Committee, and I do not think it is right for me in any way to pre-judge the position by giving any decision of the Government, as it were, on these matters.
I should like to emphasise one matter again—I think that the noble and learned Lord, Lord Oaksey, referred to it. It is the question of this Report coming before your Lordships in a kind of piecemeal form. I am fully conscious of the disadvantages of that from many points of view. But in view of the fact that a Statutory Instrument cannot have retrospective effect, it was essential to bring this recommendation into force without retrospective effect at the earliest possible moment. The earliest possible moment is July 1, and therefore all the police authorities have been anxious that this course should be adopted. If we had waited until we had the whole Report, and had had time to digest and consider it, there would have been many advantages, but from the point of view of getting these improvements operative from July 1, it would have been very bad. It is the fact (I think I am right in saying) that Lord Desborough's Committee a long time ago also reported in two parts. But the representations were clamant and insistent that in the present case pay and pensions should be taken in a separate Report. That is why this has been done.
I do not accept the suggestion that the shortage of Metropolitan police is 8,000, although I do not necessarily tie
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myself to the figure of 4,200 mentioned in the Oaksey Report. This matter is now receiving the personal attention of the Home Secretary and probably the actual figure is 'between 4,000 and 8,000. On the other hand, there are indications that the crime wave is beginning to recede. So far as the Metropolitan police are concerned, I have before me some figures. I am not going to give them to your Lordships now, because I want to check them with some figures I gave on a previous occasion which formed the subject of a debate. If any noble Lord likes to put down a Question during the next few days with regard to this matter I shall have an opportunity of saying whether these figures are correct as I believe them to be. The figures do, however, show a considerable improvement so far as the Metropolitan Police area is concerned.
The noble Viscount, Lord Temple-wood, also dealt with the question of averaging, and rightly said that we had to try to make the terms of service sufficiently attractive to attract new entrants of the right type. I do not think that making those terms retrospective will have any attraction or inducement for new entrants. The real problem we have to face up to is this. You have at the present time some 7,000 men serving who have done their twenty-five years' service. It is most important to see, if we properly can, that those men do not all leave now, as they are entitled to leave, because that would make an embarrassing situation much more embarrassing. Of course, if they stay for these extra three years, then, from the point of view of the police service, that is manifestly all to the good. I will say a word or two presently, in a dogmatic form, about housing, to which I attach, and have in the past attached, the greatest possible importance, and about the Police College which the noble Viscount, Lord Trenchard, has mentioned.
The noble Marquess, Lord Reading, asked me one specific question. He said he had been told that it was necessary for a constable under the new scheme to serve six extra years to get £30 more by way of a pension. In the long run, a man will not have to stay on at all to secure an increase of pension because of averaging, since he will have been on his maximum rate of pay for three years by the time he has done twenty-five years'

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service. But in the next three years, a constable who now has twenty-five years' service—in the next three years, not six—will get an increase of £60 a year by staying on. That compares with the £30 a year for staying on for six years. A sergeant will get an increase of £76 by staying on an extra three years, and an inspector will get £88. In no case will a man have to stay on more than three years to have the Oaksey pay increases fully reflected in his pension. I hope that deals satisfactorily with the query raised by the noble Marquess.
I come now to the observations of the noble Viscount, Lord Trenchard. With regard to the meaning of Part V, paragraph 2, of the document to which he referred, I hesitate to express an opinion, because I have never seen it. But I am happy to think that the noble and learned Lord, Lord Oaksey, answered the noble Viscount and said that it had been brought before his Committee. There is one specific question which the noble Viscount asked me with which I would like to deal. Sub-divisional inspectors are to he regarded as chief inspectors, and will receive the pay and allowances of a chief inspector. Now may I turn to the Police College? I assure the noble Viscount that I am never cross with him, even on the hottest, day, when wearing the hottest wig. But I think—I hope he will forgive my saying this—that it is rather his "King Charles' head." I do accuse him, if I may, of having a rather closed mind about it. I would invite him, and I should like him, to visit the existing College. We should greatly value his judgment and his expression of opinion. The police are rather proud of what they are doing. They think the scheme is working well, but there is no man better able to judge that than the noble Viscount. I would beg him not to close his mind until he has seen all the evidence, on the one side and on the other.
If the noble Viscount desires to see, as he does and as I am sure we all do, a happy and contented service, I can assure him of this (I speak with no personal knowledge in this matter; I speak the words which the Home Office put into my mouth, with a certain amount of latitude which I always demand!) that the serving police are happier with a college on these lines than
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with a college on the lines the noble Viscount instituted and advocated. That is the information I am given. Again, he is able to check up on that. I do not believe that, if we were to depart from the type of existing college which we have—and we do not intend to do so—and institute the type of college which the noble Viscount advocates, we should carry with us any considerable number of the police force. I do not believe that he can reconcile having his sort of college with a happy and contented police force.
VISCOUNT TEMPLEWOOD: Would the noble and learned Viscount deal with the question of age?
THE LORD CHANCELLOR: I am coming to that. I have not the figures for the three years' course which your Lordships had, comparing one year with another—one was 37 and the next was 40—but I have the average age for the courses so far. It is right to say that the average age for the first two courses, and the third course which is about to begin, is 37–38, but it is hoped to reduce this figure in the future. The reason for the high average age at the present time is that many of those policemen went to the late war, thus experiencing a considerable gap, and necessarily so, in their police experience and police practice. There are police who have been away for five or six years, and obviously that is reflected in the higher age at the College. For the course now starting, we have two officers under the age of 30, and it is hoped that we shall have an increasing number of the younger men. It is important to emphasise, however, that there is no intention on the part of the Government of excluding from the College officers who are above the present average age if they are thought by chief constables to be worthy of promotion. You may have either the brilliant young man coming on at an early stage, or you may have a late developer. If the chief constable thinks that the latter man is worthy of promotion, I am sure all your Lordships will agree that he should not be precluded from going to the Police College.
THE MARQUESS OF READING: Could the noble and learned Viscount give the figures of those attending these courses?
THE LORD CHANCELLOR: I think I can answer the question put by the

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noble Marquess. There are 297 men and 9 women who have attended the two junior courses, and 94 men and one woman who have attended the two senior courses. Whether that agrees with the noble Marquess's figures I do not know. Two is a very small proportion, but it is an indication that so far as youth is concerned the position is better than we have had before, and we intend to try to continue in that direction.
VISCOUNT TEMPLEWOOD: Did the noble and learned Viscount not tell the House that he contemplated an age of 24 or 25? From the figures that he has given us, it certainly appears that there is nobody as young as that; and, in fact, that there is hardly anybody under 30 years of age.
THE LORD CHANCELLOR: I certainly did not mean to convey that I contemplated that everybody would be of the age of 24–25. I contemplated that there would be some people of the age 24–25. That has proved wrong. There are, in fact, going to be some people under 30. Owing to the delay of six years of war, it is natural that we cannot get men of 24, at present, but now that that difficulty is removed, I hope we shall get some people of that sort of age in future.
Now, my Lords, with regard to the question of housing. This again is a matter which is now before the Oaksey Committee, and I do not want to say very much about it. If this Government are to be blamed for the difficulty with regard to police housing, I think it would be right to point out to Lord Trenchard—what indeed is obvious—that, owing to the situation and circumstances of today, it is much more difficult to provide houses than it was in the inter-war period. It costs far more; we now have full employment, whereas we then had a mass of unemployment and many builders unemployed. Although I do not make any attack on the noble Viscount, Lord Trenchard (I am perfectly certain he used all his great energies to try and get the Governments of those days to move in the matter), he relatively failed to get the Government to do what it was easy to do then and what it is very difficult to do now. Responsibility for housing, as your Lordships all know, rests on local councils; they have
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many heartbreaking questions to solve, and they have a points system and so on. They have tried to deal out their new houses fairly, and it is the fact (it would be wrong to condemn them) that some of these councils have given satisfactory preference to the police. I confess that there are some councils, particularly in the Metropolitan Police area, which have not given adequate preference to the police; but that is a matter which at the present time it is for the councils to determine.
What is the position in broad outline? Here are some figures for you. Up to the end of last month, we had provided since the war dwellings for married officers in the Metropolitan Police district to the number of 200. Dwellings for 100 more are in the course of erection, and will be finished shortly. In addition to building new houses, we have purchased or rented other houses, and that gives us another 50, so that we have, or will shortly have, 350 houses. We hope, now that the housing problem is beginning to get slightly easier (although Heaven knows! it is by no means solved) to invite tenders during the next twelve months for a further 450 new dwellings—I am talking only about the Metropolitan Police district. We have schemes for the improvement and modernisation of single men's quarters which have been carried out during the period mentioned, and the number of quarters available has so far been sufficient to meet requirements. There are similar schemes being prepared which, it is expected, will provide a sufficient number of quarters to meet all demands in the immediate future.
At the end of last month 128 men with children were living apart from their wives and families because of housing difficulties, and 106 men without children were living apart from their wives for similar reasons. Then, of course, we have a considerable number of married men, with or without children, who live in furnished rooms, and also a considerable number living in rooms which are unfurnished by the landlord but which the men themselves have furnished. I have those figures with me, but I do not think they would convey very much. I said before, and I say again: I attach the greatest importance to this matter of housing. I attach at least as much importance to housing—and I think more—

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as I do to any question of pay and pensions. That gives your Lordships some sort of indication of the progress being made with the very intractable problem of housing.
Two noble Lords spoke on the question of concealed emoluments. We were all delighted to hear a maiden speech from the noble Lord, Lord Badeley. It can have been given to few men, if any, to listen to so many speeches in the course of his life and yet to have delivered so few. I hope that he will now make up for the paucity of his speeches and that we shall hear him on many occasions, particularly on this sort of matter about which he obviously has a great knowledge, accompanied by a great sympathy in regard to the people for whom he is talking.
I do not pretend to know—how can I?—how one ought to assess all these various allowances. What we did was to refer the whole matter to the Committee presided over by Lord Oaksey. When I am asked to spare one of my colleagues to embark upon a Committee, knowing how heavy is his judicial work I consent only in the most important cases. It was because I regarded this as a most important case that I consented, and your Lordships were fortunate enough to have Lord Oaksey to preside over this Committee. If I have a Committee of that calibre going into the details of this matter and presenting a Report I say only, knowing Lord Oaksey pretty well, that there are strong indications that his conclusions are probably right on pure questions of fact. And I have certainly heard nothing to lead me to suppose that his conclusions are wrong. Lord Crook referred to the inclusion in concealed emoluments of income tax which the men did not pay on the value of the houses they did not have—or words to that effect. If you are comparing two things, one an income and a concession, such as a free house, and an income, without any concessions, out of which the man has to provide a house, you have obviously to remember that the latter is an income which has to bear tax in full, while the former is an income which does not bear tax in full. Surely that is a legitimate thing to
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bear in mind when comparing the two. That is pretty obviously what Lord Oaksey had done, and I confess that I should have thought it was a proposition of plain common sense.
However, my Lords, here we are. We want to do everything we can for these police. We are going to have a Second Report—I hope shortly, though I have no knowledge—and Lord Oaksey has had the benefit of hearing the speeches of your Lordships on many of these points. I have deliberately abstained from giving any Government view on these matters because I do not want in any way to pre-judge the matter or to cramp his style. Here we are debating the first Part of the Report. At the request of the police themselves the Report was divided in this way, so that we might have these reforms starting from July 1. That is why—and there is no other reason—your Lordships are today debating the first Part. I hope that we may have the second Part before long. I do not believe that the first Part of the Report has been greeted with that somewhat faint praise which some of your Lordships seem to think. On the whole I believe the First Report has received a considerable welcome, although of course it is impossible to satisfy everybody. I have never known a case of that. Moreover, what chance would a fellow have if he admitted that he was satisfied? He would he reminded of that for ever thereafter. I venture to think that a large number of people are satisfied with these Regulations, and I am satisfied that they have not been made without very careful consideration and a desire to do that which is fair to a body of men who deserve the sympathy of all your Lordships.
On Question, Motion agreed to.

POLICE PENSIONS (SCOTLAND) REGULATIONS, 1949
THE PARLIAMENTARY SECRETARY, MINISTRY OF WORKS (LORD MORRISON): My Lords, I now beg formally to move that this Special Order as reported from the Special Orders Committee on the 1st instant be approved.
Moved accordingly, and, on Question, Motion agreed to.

IRON AND STEEL BILL
5.10 p.m.
House again in Committee (according to Order).
[The EARL OF DROGHEDA in the Chair]
Clause 7:
Compulsory purchase of land
7.—(1) The Minister may authorise the Corporation to purchase compulsorily any land required for the exercise and performance of their functions or the carrying on of any activity by a publicly-owned company, and the Acquisition of Land (Authorisation Procedure) Act, 1946 (except section two thereof) shall apply as if the Corporation were a local authority within the meaning of that Act and as if this Act had been in force immediately before the commencement of that Act.
(2) Paragraph (b) of subsection (2) of section five of the Town and Country Planning Act, 1947 (which enables land to be designated in a development plan as land subject to corn-pulsar), acquisition by any Minister, local authority or statutory undertakers) and section nine of that Act (which provides that in certain circumstances such land may cease to be so designated) shall have effect as if the references therein to any Minister, local authority or statutory undertakers included references to the Corporation and as if, in the said section nine, the words "who could be authorised to acquire it compulsorily under the provisions of this Act" were deemed not to apply to the Corporation.
LORD LLOYD LORD LLOYD moved to add to subsection (1):
"Provided that the Corporation shall not be authorised under this section to purchase compulsorily any premises which for the time being are used or held by any other person wholly or mainly for or in connection with the carrying on of any activity which the Corporation or any subsidiary of the Corporation is authorised to carry on."
The noble Lord said: This clause gives the Corporation compulsory powers to acquire land. These powers are similar to those introduced in the past by most public utilities, and a similar clause to this appears in most of the previous nationalisation Bills. But this particular Bill differs from previous nationalisation measures in two important respects. First of all, in previous measures the undertakings which were to be nationalised were all public utility undertakings, like gas and electricity; whereas in this case iron and steel is a competitive industry. Secondly, while in previous cases the whole of the industry was acquired by His Majesty's Government, in this case only a part of the industry
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is so acquired and there will be a large number of private concerns remaining in operation if this Bill becomes law.
If your Lordships look at the clause you will see that it is drawn very widely indeed. It enables the Corporation to acquire any land it likes for any of the activities which it is authorised to undertake. Moreover, I am advised that the expression "land" includes buildings and fixed plant erected on that land. The fact that this clause was drawn so widely in previous Bills was not so important as it is on this occasion, because in previous Bills the nationalised industry had no competitors. In this case the Corporation has competitors, and although in Clause 2 it is provided clearly that no new businesses can be acquired by the Corporation except by agreement, yet in this clause the Corporation can acquire the land and thus can compulsorily acquire the works and the buildings of any of its competitors. The object of the Amendment is to safeguard private firms against this possibility. If the Amendment is accepted, the Corporation will still be able to acquire land compulsorily for development purposes, and will even be able to acquire the land surrounding its competitors and so prevent their development. In both ways the Corporation will still have great advantages over its private competitors. I am not at all sure that it has not got too great an advantage, and I am not at all sure that it is right that it should have these great advantages, if competition is really to be fair.
We are anxious to try to meet the Government on this, and to meet the point that the Minister made in another place when he said that the Corporation must have compulsory powers to enter land, where necessary, for the extension of a steel works where, may be, the landlord was holding the Corporation to ransom. If this Amendment is accepted the Corporation will still be able to do that, and the only restraint that will be placed upon the Corporation is this proviso that under this clause they shall not be able to acquire the works of their competitors. We have had a great many assurances from the Minister and other members of His Majesty's Government that they genuinely desire competition—in fact, they have said that competition will be a very healthy thing. I am sure they are sincere in that desire, and I am

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sure that by competition they mean fair competition. But if their assurances are sincere, as I think they are, it seems to me inconceivable that the Government should envisage the Corporation using this clause for the purposes I have outlined. Indeed, if they do not envisage such a possibility I must admit that I can think of no good reason why they should resist this Amendment and, therefore, I hope I shall receive a sympathetic reply from the noble Lord opposite. I beg to move.
Amendment moved—
Page 9, line 26, at end insert the said proviso. —(Lord Lloyd.)
THE EARL OF BUCKINGHAMSHIRE: In other nationalised measures, as Lord Lloyd has said, public utilities, such as gas and electricity, were given compulsory powers to acquire land. But the iron and steel industry is not a public utility; nor, I would add, was coal. These powers were not granted to the coal industry when it was nationalised. I would like to ask the noble Lord this question: Why grant these powers to the nationalised iron and steel industry, especially when, as appears from the Bill at the moment, such wide powers for acquiring land, including apparently the works and factories, seem to be given?
THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM): The noble Lord, Lord Lloyd, in his very persuasive speech, if I may so describe it, asked for a sympathetic answer, and I can offer him my sympathy without restraint. But I am torn between a desire to be sympathetic and a desire not to mislead the Committee or to encourage elaborate discussions which might lead nowhere. I believe the Committee is anxious to make fairly rapid progress this afternoon, but of course I am entirely in their hands as to how long we spend over this matter. The noble Lord accepted, at any rate for the purposes of discussion, the principle that in general one acquired powers of compulsory acquisition of this kind in nationalised measures.
LORD LLOYD: For public utilities.
LORD PAKENHAM: Well, I do not know how he defines "public utilities." They are given in the Civil Aviation Act, which concerns a competitive industry in more senses than one, and there are pro-
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visions in the Town and Country Planning Act which enable the Coal Board to be invested with powers of this kind. I feel he will accept a small correction with regard to that part of his speech. However, he summed up his case—and the noble Earl, Lord Buckinghamshire, supported this point— by saying that the Government does not need these powers unless it is intended to misuse them. That puts one essential pact of his case, and I would venture to suggest that that is not so. Admittedly we all agree, whether we like it or not, that the powers conferred on the Corporation under this Bill will be very wide, but I am afraid that if the noble Lord's Amendment were accepted it would have a purpose which I do not think is at all in his mind, because it would in fact prevent the Government obtaining land where some not very well-disposed person insisted on retaining the land for the purpose of parking vehicles or for the storage of timber. These powers are permitted to the Corporation under the Bill, and if anybody else were doing those things then the Government could not use, the powers of compulsory acquisition if the noble Lord's Amendment were earned. I am not saying that the noble Lord could not think of some other form of words, but I am bound to say that we have ourselves looked at many possible forms of words and have reached the conclusion that the kind of thing he has in mind cannot be put into the Statute.
I would only say that the safeguards are quite considerable in this case. They are rather more substantial than perhaps some noble Lords are aware. The powers under Clause 7 can be exercised only on the authority of the Minister, who will be answerable to Parliament. The Minister made it clear in another place that this measure was not to be the vehicle for nationalising industries outside the iron and steel industry—for example, the motor industry. So if any noble Lords have anxieties upon that point I can allay them to that extent. I add these further words: that as a matter of fact it would be very costly to acquire a going concern, which I think is particularly in the noble Lord's mind under the powers of Clause 7. It would be very costly indeed. We are advised that the cost would certainly be a price not substantially different from the open market willing-seller price, plus compensation for disturbance

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and, possibly, plus cost of reinstatement. In our view, that would effectively prevent the clause being used for wholesale acquisition of undertakings, which is certainly not its purpose. I hope, therefore, that the noble Lord will feel that in desiring to keep the clause as we now have it in the Bill we are not intending to misuse it. His Amendment would, in fact, in certain respects hamstring the Corporation, and I therefore ask him seriously to consider whether he cannot agree to withdraw it.
LORD BALFOUR OF INCHRYE: This is a very important point which was hardly touched upon in another place. While we are all anxious to progress, I think the Committee will agree that the matter is deserving of a few moments' consideration. We want, if possible to try to arrive on common ground with the Government, and Lord Pakenham did not give us much encouragement in what he said. The principle to which we take exception, and with which I believe the Government themselves would not agree, is that the Bill should be so drafted as to allow—if you like to assume such things—an ill-intentioned Corporation and an ill-intentioned Minister of the future to take steps to enable the Corporation to acquire the land or the prospective land or buildings of a competitor. Lord Pakenham has told us that the Minister has said that there is no intention at present of using the powers—
LORD PAKENHAM: Not in a wholesale way.
LORD BALFOUR OF INCHRYE: At present we have, I am sure, a good Minister, though we may disagree with him politically. I am sure also that we are going to have a Corporation of good honest men, though they may be misguided in certain ways. In future that may not always be the case, and we on this side of the Committee feel that we should not allow a measure to get on the Statute Book which contains these very wide powers which could be so used by the Executive, should they so wish, at some time in the future. I would like to ask the noble Lord whether I misinterpret the feeling of the Government when I say that they would be willing to see some Amendment in the Bill to ensure that the powers should not be
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misused. If I do not misinterpret the noble Lord's willingness to go that far, then I think we could withdraw the Amendment on the understanding that the Government would use their best endeavours to think again, and we on our side would co-operate with the noble Lord and others to see whether we could find an appropriate form of words. If he says that the Corporation must have these powers as a matter of principle, then we are differing in principle, but I hope that is not so. From what he said I do not think we are. I think we are differing simply as regards our ability to find a method to achieve what we desire. If so I believe we could proceed on the lines which I have suggested. If, however, it is a matter of principle, perhaps the noble Lord will be good enough to tell me so.
LORD PAKENHAM: Lord Balfour of Inchrye was right in saying that this was an important issue. I am afraid I cannot give him a categorical pledge that the Government are looking for a formula that would make it impossible in any circumstances for the Corporation to acquire an enterprise which would be in competition with them. I cannot give an undertaking that such a formula would be accepted. I have made plain what the Government feels upon this matter but I must not give the impression that some sort of guarantee will be written into the Bill. Our object is to prevent the Corporation being hamstrung in any of their many activities. To take action in the circumstances which have been described would mean that the whole procedure of the Acquisition of Land Act, 1946, would have to be gone through. That Act makes provision for the hearing of objections and generally provides a substantial form of safeguard. I do not want to bang the door if there is any chance that by keeping it ajar we might catch sight of one another in the end. But the Government have looked at this very often, and it would, perhaps, be misleading to suggest that as the result of having another look at it they are likely to reach some solution which has not hitherto been revealed to them. The noble Lord would not only be welcome but would be given a friendly reception by myself and my colleagues if he wished to discuss this point between now and the next stage of this Bill. Whatever the outcome of any discussions, it will still

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be open to him to move an Amendment at the Report stage.
VISCOUNT SWINTON: If we really intend the same thing, I expect some way can be found to deal with this matter. The noble Lord, Lord Pakenham, said that the Minister had given pledges that he would not go outside the iron and steel industry—for instance, to nationalise the motor business. That is not what we are directing our minds to here. What we feel is that certain businesses, competitive businesses, are exempted from being nationalised, and you ought not, while exempting those businesses, to take a power which—though admittedly it might be very difficult to exercise such a power—will enable you to acquire one of these businesses against its will. The noble Lord said that to do such a thing would be expensive. I dare say that is so. Compulsory purchase is expensive. Also it is common knowledge that when you buy a business against its will, you have to give a large price. What one is anxious about—because this is to be permanent—is that there should not be a power, even though it involved paying a considerable price, to acquire compulsorily a business which desires to carry on itself. If that is common ground between us, I think words can be found. I appreciate that the noble Lord also said that a business might do something, I will not say mala fide, but just rather mischievously, to prevent the Corporation acquiring some land which it wanted to have.
LORD PAKENHAM: That is a wide definition.
VISCOUNT SWINTON: This land would, we will suppose, be something which the private business did not really require for its own purposes. I agree that if a power of compulsory purchase is given at all, some unwilling person ought not to be able to make it nugatory in that sort of way. If we really mean that no business is to be acquired compulsorily against its will, that this power is to be exercised only to acquire land, or land which might have some odd building or other upon it or some stock, then I think words could be found to meet the situation. If the noble Lord can give me an undertaking—and I rather gather he can—that it is not desired to use this power to acquire any business which is exempt from the Bill at present, I feel that between us we ought
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to be able to find some words which will give that assurance to people in private businesses who might be concerned, and would let them know that the power would be exercised by the Ministry in only a reasonable way.
LORD PAKENHAM: The noble Viscount has expressed himself, as he always does, most clearly, but he has gone a little further than I am authorised to go, and I think it would be unwise for me to give any more assurances to-day. I must consult with the Minister. I am sure he would welcome discussions, but again I am anxious not to suggest to the House that he is optimistic about finding a formula. Nevertheless, let us try hard to find one.
VISCOUNT RIDLEY: Before the noble Lord withdraws his Amendment, if he has decided to do so, I should like to make one point. The Amendment concerns itself with buildings belonging only to competitors of the Corporation, but I think it is worth considering the possible effect on other industrial undertakings not at all connected with iron and steel. The power given would cover the purchase of land and buildings belonging to such undertakings and I have some doubt whether the safeguards referred to by the noble Lord, Lord Pakenham, are really adequate in that respect. The 1946 Act, which lays down the procedure for compulsory purchase, allows arbitration or appeal to the Minister, but so far as I know there is nothing in the Act which defines the grounds on which the Minister must or must not confirm a compulsory purchase order which has been applied for. In connection with either land already bought for use or land on which are existing factory buildings in the genuine use and employment of industrial concerns, I would like to see laid down some guidance or some conditions about which the Minister must satisfy himself to ensure that by confirming such a compulsory purchase order he is not doing serious harm to any other branch of industry.
It might well be that the Minister of Supply would consider that the extension of a steelworks was more important than allowing a textile factory to continue in operation. It would be natural that he would be influenced by the fact that iron and steel was his concern, though it might be in the real interest of the

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country that the other activity should continue. I wonder whether the whole matter could be solved by treating both the Corporation and other industrial concerns in the same way and inserting words to say that before confirming an order the Minister must he satisfied that no undue harm is done to industrial production of any kind. That might relieve some of the anxiety.
LORD LLOYD: I am grateful to the noble Lord for coming so far as to agree to discuss this point, and on that understanding I agree to withdraw my Amendment, reserving the right to put it down again on Report.
Amendment, by leave, withdrawn.
5.34 p.m.
LORD LLOYD LORD LLOYD moved to omit subsection (2). The noble Lord said: This Amendment is on the same lines as the previous one but it is perhaps slightly more complicated. Subsection (2) of this clause treats the Corporation in such a way that, by going to a planning authority, it can get land designated in a development scheme. As your Lordships will be aware, any land can be so designated if the Minister considers that it is likely to he used within ten years of the time of planning, and it would be possible for the Corporation to have land designated and in effect freeze that land effectively for ten years. In the event of land being designated by a planning authority, twelve years would have to elapse, even if nothing were done to the land, before the unfortunate firm whose land was so designated could put in an application to have it decontrolled. We feel that under subsection (1) of the clause the Corporation has all the power it requires for the acquisition of land. I apologise if I seem to harp on this point, but under the Bill the Corporation will be competing with private firms who have no such advantages, and who are unable to have land designated under the Town and Country Planning Act. The Corporation ought not to require this subsection.
Amendment moved—
Page 9, line 27, leave out subsection (2).—(Lord Lloyd.)
THE EARL OF BUCKINGHAMSHIRE: I should like to support this Amendment. As my noble friend said, subsection (1) gives the Corporation all the power they
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reasonably need for compulsory acquisition. I want to emphasise what my noble friend said about the ten years' period. If a Minister designates land, it will take twelve years before the owner can get it freed again. I hope that the Government will consider accepting this Amendment.
LORD PAKENHAM: On my side I hope that the noble Lords, now they have explored the subject, will not wish to press this Amendment. I labelled it in my mind, perhaps too optimistically, as an exploratory Amendment. The short answer, as the Committee are aware, is that this designation procedure was one approved by Parliament in the Town and Country Planning Act as a desirable method of giving advance notice that certain land is likely to be acquired compulsorily within a limited period. It does not give the Corporation power to acquire land they would not otherwise acquire, but it does enable them to give notice and therefore avoid waste of effort and time on the part of people who might otherwise embark on long-term operations. I should point out that this is common form. The designation procedure is applied in other Acts. While I am perfectly ready to discuss the Town and Country Planning Act with the noble Lord at any other time, I feel that now we can hardly go into the merits or otherwise of the 1948 Act which was approved by this House at the time. If we are going to have compulsory acquisition by the Corporation, as the Government think is necessary and as I understand the noble Lord accepts, subject to reservations to be discussed, it would be very peculiar if we did not carry out this procedure, which does not enable the Corporation to get land they would not otherwise get but which gives advance notice for the great convenience of all concerned.
LORD BALFOUR OF INCHRYE: I think the noble Lord, Lord Lloyd, has raised a good point and one well worth the attention of the Committee. If he were to ask me, I would suggest that we did not press this Amendment any further, for this reason: that the whole Town and Country Planning Act, as many noble Lords on this side of the House expected, and as noble Lords on the other side denied, is working so badly and is having such ill effects on development that when we come into power, as we on this side of the Chamber hope may be

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the case, one of our first tasks will be to overhaul the whole of that Act. Therefore, the comparatively minor effect the Act has in this particular case is something with which we need not concern ourselves at any length to-day.
LORD STRABOLGI: Are the noble Lord and his friends going to throw out the present Bill as well?
LORD BALFOUR OF INCHRYE: It is not law yet.
LORD PAKENHAM: It is not for me to question the reasons that have led the noble Lord to his very helpful conclusion. Whatever may be in his mind, he has, at any rate, suggested to the noble Lord, Lord Lloyd, that he should withdraw the Amendment, and naturally I am hopeful that he will follow that advice.
LORD STRABOLGI: I am sorry, but I would like to ask the noble Lord, Lord Balfour, or his noble Leader, the Marquess of Salisbury, to reply to my question. We have had statements made outside, more or less from members of the Conservative Party, that if they are returned to power they intend to repeal this Bill. We are spending many hours of the day and night on discussions—in some cases laborious—of this Bill. Is all that shadow acting? If it is their intention to repeal this Bill if they come to power, why do they take up so much time in examining the Bill so meticulously and in such detail?
THE MARQUESS OF SALISBURY: If the noble Lord wants an answer, it is very easy to give one. It is our job in this House to make every Bill the best Bill we can, irrespective of what happens in the future.
LORD STRABOLGI: With great respect to the noble Marquess, several of the Amendments which he and his friends have moved, I should have thought—and the noble Lord, Lord Pakenham, has thought with much more authority than I—were not to make the Bill better, but to wreck it.
THE MARQUESS OF SALISBURY: We would not accept that.
LORD LLOYD: I have been anxiously waiting for some time to respond to the noble Lord's invitation to withdraw the Amendment, but owing to the desire of
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the noble Lord opposite to make a speech it has been very difficult for me to do so. Now that I have at last managed to get to my feet, I would say that I am always responsive to the noble Lord's blandishments, and I am prepared to withdraw the Amendment. However, there is one thing I would like to mention. I do not think the noble Lord is quite clear on what. I said. He said that this is common form. It is common form for public utilities, but this is the first Bill of its kind where we have had competition between a public Corporation and private companies. That seems to me to raise an entirely separate issue. However, I do not press the Amendment, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 agreed to.
5.43 p.m.
Clause 9:
Corporation not to be exempt from taxation, etc.
9. Nothing in this Act shall be deemed to exempt the Corporation from liability for any tax, duty, rate, levy or other charge whatsoever, whether general or local.
LORD HAWKE LORD HAWKE moved, after "exempt" to insert or relieve." The noble Lord said: We now come to Clause 9, which embodies the national pastime of exemption from taxation. With your Lordships' permission, I will discuss this and the next three Amendments together. With these Amendments the clause would read:
"Nothing in this Act shall be deemed to exempt or relieve the Corporation from or in respect of liability for any tax, duty, rate, levy, or other charge whatsoever, whether general, local or otherwise."
I feel that on the general principle there can be nothing between us. Clearly, the Government do not wish to relieve or exempt this Corporation from any taxation. If they desire in the Bill to refrain from exempting them, it would clearly be logical to add the words "or relieve," because at a certain stage relief might almost become exemption. Our object in moving this Amendment is three-fold. We want to see that there is always fair competition between this industry and its unnationalised competitors; we want to see that the public, accounts are comparable; and we want to explore the tax

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position of the Corporation and their subsidiaries. I think what I have said covers the first two objectives.
I do not propose to go into the tax position at great length on an exploratory basis, especially as we cannot expect an answer from the noble Lord this afternoon, as he will not have had an opportunity of making himself fully acquainted with the points. In the first exploration comes the question of profits tax. The ordinary law for an ordinary company is that it pays profits tax at 10 per cent. on its profit, and it pays an extra 15 per cent. on anything that it distributes to its shareholders by way of ordinary dividend. On the other hand, it secures relief for amounts required to pay interest on fixed capital. Under Section 40 of the Finance Act, 1947, it is laid down that where the Crown is the sole beneficiary in the ordinary capital of a company, then that company does not bear the extra 15 per cent. if it pays a dividend; but against that, the company does not obtain the corresponding relief in respect of the interest on its capital. The doubt arises that it is by no means certain that the subsidiaries of this Corporation will he regarded as having their capital held by the Crown as sole beneficiary. If that is so, it means that a subsidiary of this Corporation will pay tax in a different manner from one of its competitors. It will pay 10 per cent. on the lot, whereas its competitor will pay nil on some portion, 10 per cent. on another portion, and 25 per cent. on the rest. This, of course, might react to its advantage or its disadvantage, but in any case the position would be the same. The position would be much as the noble Lord will remember we had in the question of the pension rights of the coal industry employees. The Regulations provided something better or worse, but not the same. We should like to know whether it is the intention of His Majesty's Government that this section of the Finance Act shall apply and, if so, whether they have any proposals to make whereby the incidence of taxation on the subsidiary companies can be made to be the same as that on their competitors.
There is one further point that I would like to explore on a different problem—namely, the question of income tax and discontinuance. Certain companies will
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have split into half; one portion will be nationalised, and the other portion will stay outside. It will make a great deal of difference in taxation as to their treatment by the Inland Revenue under the discontinuance rules. The most favourable treatment would be that they were regarded as being in discontinuance to the extent of the business that passes to the Corporation. It would be more unfavourable to them if the Inland Revenue, seeing the portion the business carried, said: "You are not a discontinuance business at all, and discontinuance cannot apply." Perhaps the Government will look into that point, and on the Report stage we may have an answer from the noble Lord. I beg to move.
Amendment moved—
Page 10, line 1, after ("exempt") insert ("or relieve").—(Lord Hawke.)
LORD RENNELL: I certainly am not going to inject anything to upset the atmosphere of sweet reasonableness that has reigned on this discussion to-day, but I would like to raise a point on the question of taxation. However, I, too, do not expect the noble Lord to be able to give a definite answer to-day. I raise the question because, for various reasons, the question of the type of taxation to which the Corporation and subsidiaries will be subjected was not discussed fully in another place, and it does, I submit, merit a certain amount of discussion and a good deal of attention, if only for the reason which the noble Lord, Lord Hawke, mentioned, of the complicated effects on income tax under the discontinuance rule and under another set of rules brought in by the 1945 Act and known as balancing charges. There is an analogy between what is proposed to be put down under this Bill and what in fact was done in the nationalisation of the coal industry, where, as your Lordships will remember, in the case of certain companies parts of their activities were hived off, and a similar procedure is likely to be followed in some, at any rate, of these companies. I think I am right in saying that only the one scheme of hiving off has been discussed up to date, but there are a certain number pending, and in each case both the discontinuance rule and the balancing charges rule of income tax apply.
In the case of the coal mining industry, assurances were made at the time that

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consideration would be given to the special situation in which these companies, who either had a bit of themselves left outside the nationalisation scheme or who continued their activities, having transferred part to the nationalisation scheme, found themselves. Those assurances were, in fact, carried into effect by the Finance Act, 1947. The rules in the 1945 Act to which the noble Lord, Lord Hawke, referred were not complete at that time. The 1947 Act made provisions for these special cases and did, as a matter of fact, carry out the assurances given at the time, but those provisions refer specifically to the coal industry and not to any of the other industries. Therefore, the section in the 1947 Act—or so I understand—would not apply to the iron and steel industry unless or until a similar clause were inserted in some future Finance Act. I refer as, the noble Lord will be aware, to Section 29 of the Finance Act, 1947, and the Seventh Schedule of the same Act. Both of them refer to the coal industry. In fact, the Seventh Schedule is entitled:
"Income tax in relation to assets transferred under the Coal Nationalisation Act, 1946."
What I am seeking at the moment—and if the noble Lord is unable to give it now, I will seek it again on the Report stage—is an assurance that some similar provision will be made in the next appropriate Finance Act to deal with income tax problems under these very complicated rules applicable to the companies which will be taken over in the Iron and Steel Corporation when the time comes—if the time comes.
LORD PAKENHAM: I am sure that the four Amendments on the Marshalled List are not such as would seem to the noble Lord, Lord Hawke, to be matters of principle. They are in order to provide an opportunity for information, and I am sure that he will not seek to press them.
LORD HAWKE: I said I thought there was nothing between us, and I assumed they would be accepted.
LORD PAKENHAM: As a general rule in life, I do not know whether it is wise or foolish to accept the nugatory, but in our view these Amendments make no difference. They add nothing, and they take nothing away. On general grounds, I think it would be wise to stick to the words of other Acts, and
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more still to use as few words as possible to express anything, rather than add words which have no meaning. However, I recognise the important questions which have been put and which will require a considered answer at a later stage. Through the courtesy of the noble Lord, Lord Hawke, I am in a position to answer one of his questions of which he gave me notice. I understand that the subsidiaries of the Corporation would not in fact be regarded as owned by the Crown, so that particular difficulty will not arise. But I would desire an opportunity of studying the other points at greater length.
I would just say this generally, because I think it should be understood and should be said without qualification. No special advantage is conferred upon the Corporation or its subsidiaries in respect of taxation by the fact of nationalisation. The fact of nationalisation does not give any kind of taxation advantage. I am not saying that none of the subsidiaries may be affected for good or ill by the grouping which takes place under the measure, and that is something upon which noble Lords might require more information. But so far as nationalisation is concerned, there is no taxation advantage at all, and I think it right to make that plain without any doubt. I hope the noble Lord will feel that our words do as much as his, and that he will sec lit to withdraw his Amendment.
LORD RENNELL: Could the noble Lord say anything about the question I asked: Whether he is able to give an assurance, such as was given at the time of the Coal Industry Nationalisation Bill, about the introduction of suitable clauses or legislation under the, Finance Act in relation to the iron and steel industry?
LORD PAKENHAM: I think the noble Lord was perhaps rather kinder in his opening observations, when he said it was most unlikely that, without notice, I should be able to give that information. The noble Lord was right, for I could not possibly give an assurance of that kind, although I will gladly look into the matter and help him in any way.
VISCOUNT BRIDGEMAN: I think the noble Lord, Lord Pakenham, has gone quite as far as we expected him to go at this time in a discussion of this kind.

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But if my noble friend behind me is going to withdraw his Amendment, I think we should all be quite clear that we have not had anything like an answer—I am not saying we expect it—and we have touched only the fringe of three important problems: that is to say, profits tax, the discontinuance rule and the balancing charges. They are all extremely important, not only to the industries themselves, if and when they are nationalised, but to those who are now the proprietors of those industries, and very important indeed in the case of industries which have either been hived off or have claims going forward to hive off. Sooner or later all these questions of tax will have to be put in a very clear form, not merely as undertakings in Parliament but as definite regulations put forward in the proper way. I know the noble Lord opposite will agree that the sooner that happens the better. Therefore, if this Amendment is to be withdrawn, it is obvious that sooner or later—and probably sooner—something will have to be done to make it clear to the large number of people affected. I hope the noble Lord is going to take steps to that end.
LORD PAKENHAM: I entirely agree with what the noble Viscount has said, but I am bound to warn him that at a later stage I shall be no better equipped to answer the many complex questions that may arise unless I am given notice in advance, because obviously there are any number of questions which might arise although they do not spring to the eye under these rather demure Amendments. I only hope that before the next stage I shall be told what information the House requires, because I shall be only too anxious to supply it.
LORD HAWKE: With those assurances, and understanding that the word "exempt" is the same as "relieved," I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 9 agreed to.
Clause 10 [Liability of Corporation in actions, etc.]:
On Question, Whether Clause 10 shall stand part of the Bill?
LORD STRABOLGI: I wish to raise a point on Clause 10. I regret that I did
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not give longer notice, but I have had a word with the noble Lord, Lord Lucas, and he is seized of the particular matter about which I wish to ask for information. Your Lordships will notice that in subsection (2) the limitations against actions at law allowable against the Corporation is reduced from six years to three, and I suggest that this requires a word of explanation. Subsection (1) of this clause leaves the Corporation open to action at law and deprives them of the protection of the Public Authorities Protection Act, which I believe I am right in saying prevents an action being started against a county council or other local authority after twelve months.
Yesterday I listened with great interest to a closely argued debate, principally conducted by the noble Viscount, Lord Swinton, hanging upon the words "public interest" in paragraph (b) of Clause 3. I heard him argue, with great eloquence, as always, about the rights and liabilities, and so on, of the poor private employers who are left outside this Bill and who would have no recourse in law. This clause provides for recourse to the law courts in case of unfair discrimination, but I think we ought to be told why the limitation is being reduced in this clause from six to three years. That has been done in other nationalisation measures—coal, electricity, railways and so on, but these undertakings are rather different, as has been pointed out by noble Lords on the other side of the House. As a result of this Bill certain undertakings will remain in private hands and similar undertakings will be in public hands. I welcome this; I think it is an excellent thing. But at the same time I suggest that the period of the right of appeal should not be reduced.
I am speaking with some little knowledge here because I have a considerable personal interest in a concern which makes a certain commodity from steel. There is only one other concern in the country making the same commodity. Both of us produce very large quantities, both of us export the commodity and both of us sell it in the domestic market. Our friendly rivals are now coming under the harrow of this Bill; they are one of the scheduled firms. We do not manufacture steel and so we are being left out; we start only at the steel strip stage. It will be possible in the future for discrimination to be used against us, just

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as the noble Viscount suggested in his efforts to frighten your Lordships yesterday. We should then have recourse to the law courts. Although I am not a lawyer, I know a good lawyer when I hear one, and if I could get the noble Viscount, Lord Swinton, to return to his practice at the Bar and fight our case I should be well content. Why is a limit imposed upon people such as myself? I repeat that this Bill is rather different from previous nationalisation measures, for the reasons I have explained. I suggest that we should look very carefully at any apparent limitation. There may be good reasons for it, but it seems to me a limitation of the rights of the subject against the Corporation.
LORD PAKENHAM: We have not had notice of this point and therefore I must speak with some reserve. I understand that it is felt that in certain circumstances six years would give encouragement to speculative litigation against a Corporation with such large funds. Three years is regarded as a suitable compromise between twelve months, which is the normal period for a public authority, and six years, which is the normal period for everybody else. Three years, therefore, seems a reasonable period. If the noble Lord desires to discuss the matter further I am ready to do so, but I should be very much surprised if any further discussion would alter this workable, and common-sense arrangement.
LORD STRABOLGI: I do not want to embarrass the noble Lord or waste the time of the House, but I feel that this is a point of substance. I apologise for not giving longer notice, I would ask my noble friend if he would be good enough to look at this matter. There may he very good reasons with which he could satisfy me. Perhaps he could explain the matter to me in private.
LORD PAKENHAM: I shall certainly be glad to discuss the matter further, and I hope that as a result of discussion the noble Lord will feel that the reasons for this course are entirely satisfactory to him.
Clause 10 agreed to.
Clause 11:
Transfer to Corporation of securities of scheduled companies
11.—(1) Subject to the provisions of this Part of this Act, all securities of the companies
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specified in the Third Schedule to this Act shall, on the first day of May, nineteen hundred and fifty, or such date later than the date aforesaid, but not later than the expiration of eighteen months from the passing of this Act, as the Minister may by order substitute for the date aforesaid, vest in the Corporation by virtue of this Act, free of all trusts and encumbrances:
Provided that—
(2) References in this Act to "the date of transfer" shall be construed—

(a) in relation to any company whose securities vest in the Corporation by virtue of this Act, as referring to the date on which those securities so vest; and

(b) in relation to any other company which comes into public ownership under this Part of this Act, as referring to the date on which dial company comes into public ownership;

and references to "the general date of transfer" shall be construed as referring to the said first day of May, nineteen hundred and fifty, or the date substituted for that date by order of the Minister under the preceding subsection.
6.7 p.m.
THE MARQUESS OF SALISBURY THE MARQUESS OF SALISBURY had given Notice of five Amendments, the effect of which was to alter the vesting date of the companies referred to in the Third Schedule front May 1, 1950, to July 1, 1951, or such later date as the Minister might, by order, substitute, but not later than eighteen months from the coming into force of the Act. The first Amendment was, is subsection (1) to leave out "May" and insert "July." The noble Marquess said: I rise to move the important group of Amendments standing in the name of myself, the noble Viscount, Lord Samuel, the noble Viscount, Lord Swinton, and the noble Lord, Lord Rennell. As your Lordships will see, there are five of these Amendments and I suggest it would be convenient if we discussed them together. In view of the hear of the weather I shall try to be as brief and as uncontroversial as possible.
These Amendments, of course, even if you take the five, do not stand by themselves. They deal only with the vesting day, when the shares of companies which are to be taken into public ownership under the Bill are actually transferred to the Steel Corporation. They are subsidiary to, and indeed almost consequential on, the new clause which we are proposing to introduce on the Committee stage, which postpones the coming into operation of the scheme until

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October 1, 1950. It may, however, be to the convenience of the House that we should take at one time the debate on both these questions. It would be somewhat absurd to pass over this Amendment and defer until the very end of the Committee stage all discussion on what is, I suppose, the main issue between the Government and the Opposition. If, therefore, the Government will agree—and I understand they will—I propose to deal to-day with the whole question of postponement, in order that we in this House and the country may hear the views of the Government on that particular point as soon as possible.
THE LORD PRIVY SEAL (VISCOUNT ADDISON): May I interpose? I am quite agreeable to the course proposed by the honourable Marquess. I take it that if that is done, whatever may be the decision arrived at on the Amendment immediately before us, there will not be a repetition of the discussion when we come to Clause 60.
THE MARQUESS OF SALISBURY: No; one advantage of this proposal is that that will not be necessary.
I do not want to traverse again all the ground I covered in my speech on the Second Reading. But I would urge once more that the proposal contained in these Amendments and in the new clause is both moderate and reasonable. It would have been possible for your Lordships' House to have taken a much stiffer line. Not only do the great majority on both Conservative and Liberal Benches dislike and distrust this Bill, not only do we believe that it is against the best interests of the country, but we have every reason to think that we have behind us a substantial majority in the country. During the Second Reading debate, I mentioned the fact that the Government were elected on a minority of the votes cast at the last General Election. I would emphasise this by quoting the figures. At that Election, the Labour Party received just under 12,000,000 votes—very little below, a few thousands below. The Liberal Party received 2,200,000 votes and the Conservative Party received 10,000,000 votes. If noble Lords will add those last two figures together, they will see—and I do not suggest otherwise—that there was a majority against the
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Government. It was a very small majority, but it was certainly not a majority in favour of a Bill of this kind.
As I explained before, I fully recognise that at the Election the anti-Socialist vote was split, and it was for that reason that the Government got in by a very large majority. But Liberals and Conservatives are at one on this particular Bill. They are absolutely at one, and surely on an issue of this importance, which affects the whole industrial future of this country—maybe, indeed, its very existence—the fact of this preponderance of opinion, even on the Election figures, against the proposal ought to be taken into account. Moreover, I think that everything goes to show that there has been a further swing of opinion since that date. In 1945 nationalisation had never been tried in practice, and there was a large section of the voters who still thought that it was the cure for all our ills. A new spirit was to inspire industry; men would be working for the community and not for the private employer; strikes and industrial troubles would be a thing of the past. There were a great many people who really believed that. But it now transpires that that is not at all the case. Strikes and industrial troubles are continuing as before. What is more, as I tried to point out yesterday, they are concentrated in, if not entirely confined to, the nationalised industries. It is the coal and transport industries where friction is most evident. And the reason given by the men themselves is even more revealing.
Let me quote only one instance within recent weeks. At a mass meeting of the London and Essex District Councils of the National Union of Railwaymen, the Secretary of the London District Council, who is quite an important person, said:
"After eighteen months of nationalisation, money is being squandered here, there and everywhere. At the top of British Railways at the present time jobs have been created, and superintendents in every department you go into have increased."
That is a quotation from the Daily Herald of June 14 of this year. A further confirmation of the dissatisfaction of the workers is to be found in the decision of the National Union of Railwaymen which, unhappily, was announced this morning. Therefore it is evident that nationalisation has not produced the results that were sincerely hoped for by

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its champions. This, beyond all doubt, has already made an impression, not only on the workers themselves in the nationalised industries, but on the minds of many electors who were ready in 1945 to give it a chance and judge by results. Even if, therefore, the Government could claim a mandate for this measure at the time of the General Election—and I think that is not borne out by the figures—I should have thought it inconceivable that they should say that they are confident that they have a mandate now. Moreover, the issue before the country in 1945 was not the same as that before Parliament to-day. What was then contemplated, as I understand it, was nationalisation of the primary processes in iron and steel production. Even in 1946 the Government confined themselves to "appropriate sections" of the industry.
But this Bill goes much further than that. It enables the Government to engage in far more extensive operations, with potential ramifications over a wide field of British industry. That proposition was never before the British people. For these reasons I say again that I believe this House might well have felt justified in rejecting this measure on Second Reading and, in doing so, they might fairly have claimed that they had the majority of the people behind them. If I did not advise that course to your Lordships it was because I have always believed that it is the function of your Lordships' House not so much to interpret the will of the people as to give the people an opportunity of expressing their own views. If that could be done without a direct clash upon the principle of the Bill, so much the better. In this case, fortunately, as I tried to explain on Second Reading, it is very simple to obtain that result; it does not even involve any very material delay with regard to the Bill. By great good luck—or possibly because of some disagreements within the Government's own ranks—the Government have postponed the introduction of this measure until the last months of a dying Parliament. Even if they hang on to the last moment, the final stage, the vesting day, under the Government's own scheme, can take place within only a month of the latest possible date for a General Election.
Surely, in such circumstances, the proper constitutional course would be to give the electorate a chance of expressing
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a further considered view. Our simple device—and it is extremely simple—for producing that result is to postpone the coming into operation of this Bill until October 1, 1950, and the vesting date until July 1, 1951. That is the subject of this particular group of Amendments which we are now discussing. They would enable the Government to make certain whether they have the support of the people with regard to this measure before they actually bring it into force. We are happy to have been able to give them the chance of adopting this thoroughly democratic course. I hope they will take it. If, unhappily, they feel unable to do so, I am afraid they will have some very pertinent questions to answer. The first is this: Why are they so absolutely sure that since the General Election there has been a powerful swing of opinion in the country in favour of the nationalisation of iron and steel? There was no majority at the time of the Election. Why do they think there is a majority now? If they are not confident that there has been any such swing, why are they so reluctant to test public opinion at the cost of a very few months' delay?
Secondly, if they ate determined to go ahead without further expression of view from the British people, what reason have they to believe that the nationalisation of this industry will lead to an increase of production or to a lowering of costs and, what is perhaps most important of all, to an improvement, and not a deterioration, in the spirit of this industry, which hitherto has been so good? Up to now, no economic reason has been given in this House—nor, so far as I am aware, anywhere—to justify this measure. On the Second Reading we were treated by the noble Viscount, Lord Hall, if he will forgive my saying so, to a set of arguments unsupported by any effective facts or figures. Indeed, the noble Lord went so far as to say (I quote from column 985 of May 24):
"I am not going to base the case which I will submit to your Lordships on the question of the efficiency or otherwise of the industry."
Those are the noble Viscount's own words. At the end of that debate we had some agreeable trifling (I can describe it only in that way) from the Leader of the House, which he delivered with his own inimitable charm. He talked about roads, he talked about the licking of stamps, he talked about this

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and he talked about that. He covered an immense amount of ground in a very short time. But he never really dealt with any of the main issues of the debate. He said indeed at one moment, coming to the point, or coming somewhere near the point, that not enough steel was being produced at the present time, although he admitted that the industry had already passed the target set for them by the Government. But he did not adduce one single argument as to how nationalisation would increase that production. And that, after all, is the one thing which this House, and indeed the country, wants to know.
Surely a measure of this scope, with all the implications involved, deserves a weightier advocacy than that. Your Lordships may have read a powerful speech that was made by the Attorney-General at Atlanta, Georgia, which was reported in The Times of yesterday. In the course of this speech the right honourable gentleman said:
"No doctrinaire theory, no political ideology is allowed to affect the adoption of what seems to be the best policy in the circumstances. We approach these matters in an empirical way; we do that which seems best for the country."
If that means anything, it means that the Government are basing their case for this measure, not on Socialist theory but on hard economic facts. That, according to the Attorney-General, and presumably according to his colleagues, with the possible exception of the noble Viscount, Lord Hall, who we already know takes a different view, is to be the test. It is to give the Government time to produce convincing economic arguments in favour of this measure, which they have certainly not done up to now, and the British people time to consider those arguments, if they exist, and to declare their views on them that we propose this Amendment. As I have said before, our proposal is moderate, it is democratic and I recommend it with confidence to the judgment of the House. I beg to move the first of these Amendments.
Amendment moved—
Page 10, line 21, leave out ("May") and insert ("July").—(The Marquess of Salisbury.)
VISCOUNT SAMUEL: The noble Marquess who has just spoken has said he would be brief and, so far as possible,
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uncontroversial. I shall be at least as brief, but possibly not quite so uncontroversial. On this occasion we on the Liberal benches find ourselves in the not very usual position of seeing eye to eye with the Conservative Party. We have given to this Amendment in particular the wholehearted support which is indicated by the fact that our own names are added among its proposers. The one purpose of this Amendment, and of all the consequential Amendments attached to it, is to secure that this Bill shall not come into operation until after the next General Election. That was made clear to be our joint purpose in the debate on the Second Reading, and this Amendment does no more than give point to the speeches and arguments in that debate. For good reason which was explained at the time, we did not invite the House to divide against the Second Reading, but it is necessary that we should ask the Committee to declare its opinion very definitely on the merits of this Amendment.
Necessarily, the argument to be addressed to the Committee on this occasion must be substantially the same as on the previous occasion. We urged then, and we urge now, that there is no real mandate, based upon a clear expression of the popular will, in favour of this Bill. It is not to be denied that in the programme at the last Election this Bill was present, but in the electoral campaign it was wholly inconspicuous. It was in the queue, the long queue of measures to be proposed, but coyly hidden at the end of all the others. Mark the difference between the nationalisation of steel and the nationalisation of mines. The whole country knew about the mines; it had been argued for years; everyone knew the pros and cons, and the country was alive to it. When the Bill for the nationalisation of the mines was introduced in the first Session of the present Parliament, no one for a moment said that it had not been approved by the judgment of the electorate. But how different with steel! Can anyone here honestly assert, with his hand on his heart, that when the people voted in 1945 they did know, understand and expect that in this Parliament this tremendous change (for this Bill is quite different from all the other nationalisation measures; it does not deal with a natural monopoly

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such as many of the others were but with an important portion of our foreign trade, an industry of great complexity on which a great number of others were dependent) was to be made law and placed upon the Statute Book without any further reference to the people?
I have never known, during a lengthy political life, a Bill of the first importance which has been received with so little attention at the beginning and supported with so little enthusiasm from any quarter at the end. The crisis in the fortunes of this Bill occurred in recent weeks. Just now there has been a gathering of all the forces of the Government Party at their annual assembly at Blackpool. Their forces were arrayed, the trumpets were sounded, the banners were flown and many able speeches were made by the leaders of the Party, all of whom spoke. I read purposely all these speeches, as fairly fully reported in the columns of the Press, with a view to seeing what they would say on nationalisation of steel. Would your Lordships believe it, from beginning to end not one word was said by any of the Party leaders on nationalisation of steel—or perhaps I should not say that not one word was said, because the reports may not have been conclusive. But was there any sign that the Party were making this a battle cry for the Election which is now only a few months away? Is it not strange that when they had the whole of their Party gathered together on the most important occasion of the year, dealing with all important questions, with speeches from the Prime Minister, from the Deputy Prime Minister and Leader of the House of Commons, Secretaries of State, and Party managers, not a single word was said with regard to this most important act of this Administration? The banners were there, no doubt, but so far as steel was concerned, they were like the banners one might see of the trade unions on a miners' gala clay when the weather was wet: they were there but furled, and kept in cases out of the rain.
The reason why this course has been taken is quite clear. This is not a Bill which can be defended on its merits but only as part of a general principle. I believe the Labour leaders now realise that. And the reason they are playing down this Bill is that they realise it has
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been destroyed in argument on merits. Until now they have been very skilful, both in strategy and in tactics, in the conduct of their legislative business during the whole of this Parliament. But I think they have made a mistake in judgment in the presentation of this particular Bill, which will prove fatal. On Second Reading I quoted from the speech that had been made by the noble Lord, Lord Kershaw. There were not many noble Lords in the House then, but we have a bigger attendance now, and I feel bound to refer to it again, because the noble Lord gave the essence of the matter. He did not express only his own view but prayed in aid the principal spokesman of the Government on this Bill, the noble Viscount, Lord Hall. This is what Lord Kershaw said:
"My noble friend Lord Hall touched on the fundamental basis of this matter when he said yesterday that the logical sequence of social democracy is economic democracy. If democracy is to govern, it must take over basic industries."
That is the fundamental reason for this Bill. In another part of his speech the noble Lord said:
"If a Socialist Government were to be untrue to the principles which they have adumbrated for a generation …"
then their own Party would be much discontented.
There is no question there of legislation seeking to deal empirically with the needs of the country, as the Attorney General said a day or two ago, in the speech quoted by the noble Marquess. Noble Lords opposite say that in spite of all opposition, apart from all other considerations, at any sacrifice, they will promote their own fundamental principle of Socialism, which they interpret to be the nationalisation of industries in general. They are, in fact, intoxicated by their own theories—Eke the old Irishwoman who said that she was "a martyr to the drink." But I believe that the Government are now inclined to think they may have made a mistake; that they are uneasy in their consciences as to whether they are justified, in view of the course of events at the last General Election, and the entire absence of any large body of public opinion now in support of this Bill, in carrying through this scheme.
So, with the noble Marquess, I would offer them an easy way of satisfying

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those consciences. Let them accept this Amendment. Why not? Let them accept this Amendment and say, "We refer this to the electors. We do not wish to take the responsibility of carrying out this really revolutionary industrial Bill without the plain and obvious consent of the whole country. We will accept this Amendment and put the responsibility on to the nation itself." By accepting that, with a graceful bow, they may let the curtain drop on the tragi-comedy of this Bill, with perhaps some little measure of faint-hearted and partial applause.
6.34 p.m.
VISCOUNT HALL: We have just witnessed a complete political marriage between the Liberal Peers and the Conservative Peers.
VISCOUNT SAMUEL: A temporary marriage.
VISCOUNT HALL: Well, divorce comes very easy to some individuals in political Parties. This is politics—there can be no question at all about it—and I do want to reply in the sense that it is a political issue. It reminds me of the debates which took place on the Amendment of the Parliament Act. Then the Liberals sided with us. Now the Liberals are quite prepared to join up with the Tories in an attempt to defeat the will of the people. It is all very well noble Lords laughing and adopting an attitude of that kind. I want to challenge the figures which were given by the noble Marquess in relation to the last General Election. He said the Labour Party never had a majority mandate for the nationalisation of any of these industries. Well, I deny that. I say the Labour Government did have a majority. Let me take the figures as I extracted them only to-day. I rather expected this would be the line adopted by the noble Marquess. At the last General Election the Labour Party received 11,985,700 votes—
THE MARQUESS OF SALISBURY: That is approximate?
VISCOUNT HALL: The Conservative Party received 8,693,000 votes. I will give the figures, and then if the noble Marquess desires to dispute them afterwards I shall be quite prepared to hear what he has to say. Now I come to the Liberal Party. What a situation has
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been brought about as a result of the policy of the Liberal Party and the Liberal leaders during the course of the last twenty years! It is because the Liberal Party will not face up to the economic issues which to-day are the real political issues that they find themselves in the condition in which they are at present. They cannot hope to revive their position until such time as they give much more attention to the political issues, and not side with the Conservative Party when economic questions such as this are raised. At the last election the Liberal Party polled 2,253,000 votes. It is true that the Liberal National Party, which I have no doubt the noble Marquess included in the Conservative vote, polled 759,000 votes. The combined vote of the Conservatives, the Liberals and the Liberal Nationals, was 11,706,000. Those are the figures which I have obtained today. It is true that there are other votes such as those of the Ulster Nationalists and all the others. You will find that even then the Labour Government received a majority of votes for their policy at the last election. I can give the noble Marquess the figures if he cares to have them, but if we add the Commonwealth, the I.L.P. and the anti-Conservative vote to the Labour vote, then it will give a complete majority over all the other Parties including—
THE MARQUESS OF SALISBURY: Do you include the Communist vote?
VISCOUNT HALL: If the noble Marquess added that to his vote to get the number up, we are quite prepared to give him it, but even without it we have a majority.
THE MARQUESS OF SALISBURY: I think that my figures do not entirely coincide with those of the noble Viscount. But what it comes to—and I think he will not disagree with me—is that it is a question of one or two hundred thousand either way. That is what it comes to. But the point is that it does not constitute a mandate for a revolutionary measure of this kind.
VISCOUNT HALL: It is a majority, and the Conservative Party during the twenty years between the two wars, when the Liberal vote was very much higher than it is now and because of the split vote, with the exception of 1931, seldom had what might be regarded as a majority

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vote behind them in the House of Commons; and the whole of the legislation from 1918 to 1939, damaging and damning as it was, was legislation based upon a minority vote of the people of this country. Now the Labour Party has a majority, and it is surprising that almost at the end of the Parliament this matter has been brought into question.
VISCOUNT SAMUEL: May I ask the noble Viscount whether, in view of what he has just said, he does not think it is time that we reformed our electoral system, so that we should have Governments based on majorities and not on minorities, whether of one kind or another?
VISCOUNT HALL: That has been one of the planks in the political platform of the Liberal Party for the last twenty years. They wanted Proportional Representation only when they could see that they were going down and down, because of their lack of knowledge of economic conditions and, indeed, because of their desire to get away from and not face up to realities in relation to that matter. The noble Marquess also, in the course of his speech, referred to certain dissatisfaction amongst individuals in the nationalised industries. I have no doubt there are certain individuals who are dissatisfied. But I would challenge him to take a plebiscite of the workers in any of the nationalised industries—because that would be a true test—on the question whether they would be prepared to go back and to work under private enterprise. That would be a true test, and I have no doubt what the result would be.
The noble Viscount, Lord Samuel, suggested that the present Government had no mandate based on the popular will. I deny that. They have that mandate and they are entitled to use the mandate which was given them at the last Election. The noble Viscount also rather suggested that the electorate of this country did not really know what they were voting, for. That might be the opinion of noble Lords opposite, but those of us who have been engaged in electoral contests for almost the whole of the last fifty years will not write down the intelligence of the electorate of this country to the very low standard to which the noble Viscount is apparently prepared to write it down.
VISCOUNT SAMUEL: Nothing of the sort.
VISCOUNT HALL: Why should you suggest, then, that the electorate of this country did not know what they were voting for?
VISCOUNT SAMUEL: Because it was not properly put before them at the General Election by the Party which is now in power. It was obvious that the Labour Party did not bring it home to the electorate. It is the business of Parties to tell the electorate plainly what are their intentions and what is to be expected if they are returned to power. I have the highest opinion of the intelligence of the electorate.
VISCOUNT HALL: The Labour Party published its election programme almost a year before the election, and in that programme was included the nationalisation of the steel industry. To say that that is not so is just not true. In addition, the Prime Minister, speaking in the House of Commons on November 21, 1947, used the words which the noble Marquess (as one would expect of him) has quoted quite correctly. That was a clear declaration by the Prime Minister. But how easy it is for noble Lords opposite and the Opposition in another place to change their ground! Take the statement of Mr. Oliver Lyttelton. Speaking during the committee stage of this Bill he did not suggest that there was no mandate. What he did say was:
"It has long been recognised that a mandate, like most things in human life, gets a little stale with the passage of time"
The noble Marquess on the Second Reading of the Bill in this House did not use the word "stale"; the word he used was "faded." Mr. Oliver Lyttelton went on to say that much of the action of noble Lords opposite was designed to prevent a mandate which had become stale from being put into force.
THE MARQUESS OF SALISBURY: I cannot speak for Mr. Lyttelton, I can speak only for myself. I understood the noble Viscount to suggest that I changed my ground and that I spoke of a "faded mandate." I always said, from the Second Reacting onwards, that there had been no mandate for this Bill, and that is the position to which I hold now.
VISCOUNT HALL: I. looked through the report of the noble Marquess's speech on the Second Reading and the only reference I found in it to the mandate was

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in the terms which I have just mentioned—namely, that it was a "faded mandate." Then there is another aspect which must be remembered with regard to public opinion, if public opinion is to be the deciding factor. An unprecedented situation has developed, for the Labour Party has not lost a single by-election since the last General Election—not one by-election. If there has been the swing which has been alleged, and if these issues such as the nationalisation of steel were not brought out in the by-elections by the Liberal Party or the Conservative Party, it is not the fault of the Labour candidates. If the project for the nationalisation of the steel industry could have been made the subject for speeches which would have adversely affected the prospects of the Labour candidates, then the Liberal candidates, if any, and the Tory candidates could have brought it out with all the force at their command. They could have drawn attention strongly to what, in the opinion of the noble Lords opposite, is likely to happen in the event of this industry being nationalised.
I am afraid that this is a political matter, but I am not going to apologise for referring to it because it was introduced by the noble Marquess and the noble Viscount. I think that the crux of the whole question is, as the noble Viscount, Lord Samuel, said in the debate on the Parliament Bill, where is there any Government which will tolerate a situation in this country in which the House of Lords can interfere with legislation which has been introduced in the last two years of the life of Parliament? I have no doubt, for my own part, that if in the programme of the nationalisation of industry steel had been placed at the top of the queue, and the steel industry had been nationalised in 1946 instead of the coal industry or the Bank of England, and the nationalisation of the coal industry and of the Bank of England had been left until 1948 or 1949, we would have heard exactly the same arguments and the same speeches, and the Parliament Act would have to be used to get the legislation through.
VISCOUNT SAMUEL: I am sorry to interrupt the noble Viscount again, but I do so only because I do not recognise the quotation which he has given from my speech. I do not recollect those
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words. I do not think I could have said any such thing as he has quoted.
VISCOUNT HALL: It may be that the noble Viscount did not, but it seemed to me that that was running through his speech. As a matter of fact he did support us in getting the Parliament Bill through, and the whole purpose of that was to enable Governments of the future to get placed upon the Statute Book legislation introduced in the last two years of a Parliament. That was the whole position.
VISCOUNT SAMUEL: I do not want to argue the point; it is a side issue. But I would say, for the sake of the record, that I do not concur that I ever used the words which the noble Viscount previously used; nor in substance.
VISCOUNT HALL: If the noble Viscount did not use these words, I regret referring to them. But I am as concerned with actions as with words, and all the actions of noble Viscount, and his support of the amendment to the Parliament Act, led towards that purpose. Now he is going to use his support for quite another purpose.
I do not want to detain your Lordships for any length of time, but I would say this. The date, May 1, was put into the Bill by the Government because they thought it was in the general interests of the industry to have the vesting date as early as possible, while giving a reasonable time for the Corporation to get down to the job. In the normal course of events the Bill will become law by the end of July. If that is carried out, it will allow nine months after the Royal Assent for the necessary arrangements to be made before the vesting date. It has been suggested that it is impossible for the Corporation to reorganise the iron and steel industry in nine months—or indeed to reorganise it at all. No one suggests that the industry will be reorganised before transfer to the Corporation. It is because of the experience with other nationalisation schemes that the Government can say with confidence that it is expected that within nine months the persons who will be invited to serve on the Corporation will be able to secure, without any difficulty and by the date fixed, all the information and knowledge necessary for the transfer.

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There is a little inconsistency in the argument against the method adopted both with regard to the fixing of the date and the flexibility which follows. In previous nationalisation measures the Government inserted a fixed date. In this Bill, as I shall indicate a little later, the Government provide for some flexibility. It has been generally ignored that the Government have taken power under this clause to deal with all possible eventualities which might arise, so that the date of transfer can be postponed for eighteen months after the Royal Assent. I think that is the right way to proceed with this proposal. On the assumption that normal development will take place then, in the opinion of the Government, the right date is May 1. But there might be industrial or political difficulties which would make it harmful for the iron and steel industry to be transferred at that date; so the Minister of Supply is given the power, which he will use if it is in the interests of the industry and in the national interest, to postpone the date of the general transfer until any time under eighteen months after the Royal Assent. Therefore, ample flexibility is provided by the Bill. We consider that no case has been made out for the postponement of the fixing date. I am afraid the Government cannot accept the series of Amendments which have been proposed.
THE MARQUESS OF SALISBURY: We have listened to the speech made by the noble Viscount, Lord Hall. It was the type of speech we should have expected from him and we have no complaint about the manner in which he delivered it. It was a good, straightforward statement of the Government case; but it intensified the feeling that this is a vital issue, because he made no bones about it—this is not an economic issue. The noble Viscount implied that he did not care very much about the economic implications of this Bill; it was a political issue, and part of a long series of evolutions
by which the Government are to take over one after another the industries of this country. That is an important admission to all of us. I shall not take up the time of the House any longer. I cannot say we are convinced by the arguments of the noble Viscount, and we have no option but to take the matter to a Division.
VISCOUNT ADDISON: My Lords, before this matter goes to a Division—and I will not detain the House for more than a minute—I want to make one matter clear. Putting; aside all the various points which have been raised, and it would take too long to go over them, the issue before the House is this. Under the Parliament Bill, as we have introduced it, we have sought to go to the utmost limit to provide that a Government not of a complexion acceptable to noble Lords opposite shall be able to give effect to their legislation during at least the first four Sessions of the life of a proper Parliament. There is not a doubt that this proposal could have been brought in earlier, in which case the same arguments that we have had to-day would have been transferred to whatever proposal was brought in during the fourth Session. We have taken the view, and we stand unalterably upon it, that we will not accept that this unrepresentative House, completely unelected, shall be able to demand a second mandate of the people and shall refuse to give authority to Bills introduced in the fourth Session of a Parliament by a Government with a large majority in the representative Chamber. We refuse absolutely to accept that position. I say to your Lordships that the Labour Party never will accept it, and it will be a very undesirable thing if this House insists upon it.
On Question, Whether the said word shall stand part of the clause?
Their Lordships divided: Contents, 22; Not-Contents, 89.

CONTENTS

Addison, V. (L,. Privy Seal.)

Foley, L.

Morrison, L.

Hare, L. (E. Listowel.)

Nathan, L.

Hall, V.

Henderson, L.

Pakenham, L.

Stansgate, V.

Holden, L.

Pethick-Lawrence, L.

Kershaw, L.

Piercy, L.

Ammon, L. [Teller.]

Lucas of Chilworth, L.

Shepherd, L. [Teller.]

Chorley, L.

Macdonald of Gwaenysgor, L.

Strabolgi, L.

Crook, L.

Marley, L.

Williams, L.

NOT-CONTENTS

Aberdeen and Temair, M.

Long, V.

Grenfell, L.

Cholmondeley, M.

Monsell, V.

Harris, L.

Reading, M.

Ridley, V.

Hawke, L.

Salisbury, M.

Samuel, V.

Hindlip, L.

Willingdon, M. [Teller.]

Swinton, V.

Howard of Glossop, L.

Templewood, V.

Layton, L.

Buckinghamshire, E.

Llewellin, L.

De La Warr, E.

Aberdare, L.

Lloyd, L.

Dudley, E.

Airedale, L.

Lyle of Westbourne, L.

Fortescue, E. [Teller.]

Ashton of Hyde, L.

Milverton, L.

Gainsborough, E.

Baden-Powell, L.

Monkswell, L.

Halifax, E.

Balfour of Inchrye, L.

Moyne, L.

Howe, E.

Balinhard, L. (E. Southesk.)

O'Hagan, L.

Iddesleigh, E.

Barnby, L.

Polwarth, L.

Munster, E.

Belstead, L.

Rea, L.

Onslow, E.

Brand, L.

Remnant, L.

Radnor, E.

Brassey of Apethorpe, L.

Rennell, L.

Rothes, E.

Braye. L.

Ritchie of Dundee, L.

Selborne, E.

Broadbridge, L.

Rochdale. L.

Carrington, L.

Roche, L.

Allenby, V.

Clanwilliam, L. (E. Clanwilliam.)

Rockley, L.

Bledisloe, V.

Royden, L.

Bridgeman, V.

Clwyd, L.

Saltoun, L.

Buckmaster, V.

Clydesmuir, L.

Sandhurst, L.

Cecil of Chelwood, V.

De L'Isle and Dudley, L.

Sherwood, L.

Cowdray, V.

Derwent, L.

Stamp, L.

Elibank, V.

Dunleath, L.

Swaythling, L.

Falmouth, V.

Ellenborough, L.

Teviot, L.

FitzAlan of Derwent, V.

Foxford, L. (E. Limerick.)

Teynham, L.

Hailsham, V.

Gifford, L.

Waleran, L.

Harcourt, V.

Gorell, L.

Wolverton, L.

On Question, Amendment agreed to.

Resolved in the negative, and Amendment agreed to accordingly.
VISCOUNT ADDISON: I take it that the other Amendments will be moved formally. We shall raise no objection, but it will be understood that we retain our view.
THE MARQUESS OF SALISBURY: Certainly.
Amendments moved—
Page 10, line 22, leave out ("fifty") and insert ("fifty-one")
Page 10, line 23, leave out ("passing") and insert ("coming into force")
Page 11, line 11, leave out ("May") and insert ("July")
Page 11, line 12, leave out ("fifty") and insert ("fifty-one").—(The Marquess of Salisbury.)
VISCOUNT HALL: In another place the Opposition moved certain Amendments to secure the deletion of certain firms which were on the borderline for acquisition. My right honourable friend agreed that, in the case of some of them, exclusion might be justified, and following discussions agreement was reached on a formula which would have the desired effect. The formula was believed to exclude only those firms which had been the subject of the agreement, but it has
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since been found that the drafting was faulty. The present Amendment, therefore, is in the nature of a drafting Amendment to give effect to the understanding to which I have referred. I beg to move.
Amendment moved—
Page 11, line 48, at end insert ("no account being taken in either case of persons wholly or mainly employed in administrative or clerical work or on the provision of services common to the said activities and other activities of the company, including welfare and recreational services").—(Viscount Hall.)
LORD TEYNHAM: I am grateful to the noble Viscount for this Amendment. It improves the drafting and emphasises the intention of the subsection.
Clause 11, as amended, agreed to.
[The Sitting was suspended at thirteen minutes past seven o'clock, and resumed at half-past eight.]
Clause 12 agreed to.
Clause 13:
Disclaimer of agreements and leases
13.—(1) Where any company which comes into public ownership under this Part of this Act has made or varied an agreement or lease on or after the twenty-first day of October, nineteen hundred and forty-seven, and before the date of transfer, and the

569
agreement or lease remains unperformed or unexpired, in whole or in part, on the date of transfer, and the Corporation are of the opinion that the making or variation of that agreement or lease was not reasonably necessary for the purposes of the activities of the company, or that the agreement or lease was made or varied with an unreasonable lack of prudence on the part of the company, regard being had in either case to the circumstances at the time, the company shall, if so directed by the Corporation, by notice in writing given to the other parties to the agreement or lease at any time within six months after the date of transfer, disclaim the agreement or lease:
Provided that any of the said other parties may, within two months after the date on which the notice is served, refer to arbitration under this Act the question whether or not the agreement or lease ought to be disclaimed under this section, and the Corporation (as well as the publicly-owned company) shall be made a party to the arbitration.
(2) If the arbitration tribunal are satisfied on any such reference that the making or variation of the agreement or lease was not reasonably necessary for the purposes of the activities of the company, or that the agreement or lease was made or varied with an unreasonable lack of prudence on the part of the company, regard being had in either case to the circumstances at the time, the tribunal shall confirm the notice and if not so satisfied shall revoke it:
Provided that, if the arbitration tribunal are satisfied of the matters aforesaid but are also satisfied that the making or variation of the agreement or lease was a proper transaction made in the ordinary course of business, regard being had to the circumstances at the tame, and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision, the tribunal, shall revoke the notice.
LORD HAWKE LORD HAWKE moved, in subsection (1), to omit all words from and including "was not reasonably necessary" down to and including "at the time" and to insert:
"was not a proper transaction made in the ordinary course of business regard being had to the circumstances at the time and was connected with a provision made by this Act or with an anticipation of the making of such a provision."
The noble Lord said: It generally falls to my privileged lot to move Amendments which I can see no reason for His Majesty's Government not accepting, and this is no exception to the general rule. Both sides want to achieve the same object here, which is to provide that those gentlemen whom His Majesty's Government consider of evil mind, the directors of companies, shall not be able to flout
570
the provisions of this Bill by any actions directed towards dissipating their assets.
This clause deals with the question of improvident leases or deals. His Majesty's Government's method of dealing with this matter is as follows. They say, first, that the Corporation can challenge these leases or agreements on the grounds that they are not reasonably necessary or were made with unreasonable lack of prudence; and thereupon the other party can go to an arbitration tribunal. In that tribunal the criterion is slightly modified, and it lets out any transaction which is a proper transaction made in the ordinary course of business, regard being had to the circumstances of the time, and in no way connected with the provisions of this Act. This is precisely what we seek to do in the first instance by this Amendment. We in fact believe the criterion of a lease or agreement in the first instance to be the same as that which His Majesty's Government lay down for the arbitration tribunal. I really do not quite know why they have chosen their way to do it, because I should have thought it was being unnecessarily suspicions—and it still lays them open to the charge, which I think they have merited on occasions, that they are wedded to the principle that a man shall be deemed to be guilty until he proves himself innocent. We on this side of the Chamber, the guardians of a thousand years of liberty in this island, always subscribe to the traditional view of British justice that a man is innocent until he is proved guilty; and this Amendment is directly in accordance with that view.
LORD PAKENHAM: May I ask the noble Lord whether he will apply that principle—that a man is innocent until he is proved guilty—to Ministers?
LORD HAWKE: Ministers, I admit, have a natural and automatic taint of guilt! As His Majesty's Government would have this clause worded, it means that all sorts of transactions could be questioned—and questioned two to three years after the event—including transactions which were concluded in good faith on the basis of the commercial conditions of the covenant. Three years later a transaction may look very different. For instance, there may be great extensions planned for the steel industry. These things may haw: gone ahead on the

571
basis, perhaps of a Minister's speech. But in three years' time we may be in the midst of a slump and the Corporation might be tempted to challenge some of these decisions that were taken in good faith at the time. Can one say that to follow a Minister's speech, for instance, is an unreasonable lack of prudence? Of course, when the transaction came to be considered by the arbitration tribunal it would undoubtedly be passed, but why should the company be put to the onus and the expense of proving to an arbitration tribunal that the perfectly genuine opinions of its directors at the time were in fact genuine and not imprudent? For those reasons, I think that his Majesty's Government ought to accept these words. They do, in fact, practically reproduce the machinery that they provide under the arbitration clause a little later on. I beg to move.
Amendment moved—
Page 12, line 31, leave out from ("lease") to the first ("the") in line 36, and insert the said new words.—(Lord Hawke.)
LORD ROCHDALE: In supporting my noble friend's point, I want to emphasise the extraordinary inconsistency between what more than one Government spokesman in another place has said about this very matter, and what the clause, as it now stands in the Bill, actually says. On one occasion in another place, the Minister said this:
"I want to make it clear now that no proper action taken by any company in the normal course of business would be challenged."
He said much the same thing again on the Report stage. The noble Viscount, the First Lord of the Admiralty, made exactly the same point. He said:
"No proper action taken by any company in the normal course of business would be challenged."
I think it would have been more in keeping with the words in the Bill if he had said that they would not be "disclaimed." If he really meant "challenged," if that was the intention of the Government, I should not have a great deal with which to find fault but, when I read the clause, the impression I gain is completely different. Apparently, as my noble friend Lord Hawke has said, any agreement in existence on the date of transfer, if it has been made on or after October 21, 1947, may be
572
"challenged" on one of the two grounds which my noble friend has pointed out. Who is to say three years afterwards whether at the time that a particular course was taken it was "reasonably necessary" or prudent? Surely that must be always a matter of opinion. One man may consider that one course was right; another may consider that another course was right. It may be that in time events may prove that one or the other was right in his judgment; or perhaps that both were right, or that neither was right. One could go on arguing indefinitely without coming to any clear decision on that point.
In point of fact, the two criteria in the clause as it now reads have nothing whatever to do with whether the intention of the boards who take the particular courses that are being questioned was wrong or not. According to the present criteria the courses taken may depend not so much on whether the intention was wrong as on the particular skill or good fortune of the people making the decisions. These conditions are so wide that, considering that a company can be exonerated by the arbitration tribunal only after it has been challenged and made its appeal, a sense of uncertainty and hesitancy is bound in my view to arise, now and since the date mentioned. And that is the last thing one wants at this time, when everything depends on industry being run at the highest possible tempo. What is so objectionable, to my mind, about this clause is the fact that there is a danger, as my noble friend said, of `trading conditions worsening. We can already see that happening, and it may make it all the easier for perfectly proper intentions to be challenged.
It is true that there are one or two safeguards. There is subsection (7) which, as your Lordships well know, says:
"The section shall not apply to any agreement ֵ which … has been approved by the Minister."
But of course that can apply only to individual cases that are put up to the Minister. No man is completely safeguarded there for it would be impossible for a board of directors to go to the Minister on every single decision on which they might be challenged. I hope very much that my noble friend will press this Amendment. It may be that the Government will accept it so that he will

573
not have to go to that trouble but it seems to me right and proper if only to make the clause agree with what Government spokesmen have said on more than one occasion.
LORD LUCAS OF CHILWORTH: My Lords, I agree with the noble Lord, Lord Hawke, that both sides here are anxious to do the right thing, and I shall address an argument to the noble Lords opposite which I think will convince them that what we propose to do here is the right thing. The purpose of Clause 13 is to enable the Corporation to disclaim certain agreements or leases which may have been entered into by publicly owned companies between October 21, 1947, and the date of transfer of the company.
As the clause is drafted—this is a close technical argument, as I know the noble Lord, Lord Hawke, appreciates—it enables the Corporation to serve a notice of disclaimer if they are of opinion either (a) that the making or variation of the agreement or lease was not reasonably necessary for the purposes of the activities of the company, or (b) that the agreement or lease was made or varied with an unreasonable lack of prudence on the part of the company. If the notice is challenged, the Corporation must satisfy the arbitration tribunal on one or other of these points, and then, under the proviso to subsection (2), the persons responsible have the opportunity of proving that the agreement or lease was a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time, and that it was in no way connected with any provision made by the Bill or with anticipation of the making of such a provision. The purpose of the Amendment, coupled with the proposed Amendment to page 12, line 46—and I am assuming that the noble Lord's arguments were as much directed to that Amendment as to this, because they are really interlocked—
LORD HAWKE: If the one is accepted, the other becomes automatic.
LORD LUCAS OF CHILWORTH: Then I ask the indulgence of the Committee to argue them both at the same time. The Amendment to page 12, line 46, is to take away the existing liability of the Corporation to prove what I have just stated, and in its place to make them
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prove the two matters which at the present lime are the two grounds of defence under the proviso. The Amendments are not really effective for this purpose, because the first one deals only with the matters upon which the Corporation have to form their opinion, and the second fails to make clear that the arbitration tribunal must be satisfied on those matters.
I suggest to the Committee that it is reasonable enough that the Corporation should have to prove one or other of the matters covered in (a) and (b) that I have already mentioned, but it would be quite unreasonable that the Corporation should instead be required to prove the two matters covered by the proviso to subsection (2). These are matters of motive rather than of fact. The Corporation can hardly be expected to prove them, especially after a considerable interval of time. The noble Lord, Lord Rochdale, mentioned three years. He expects the Corporation to prove something after three years when all the evidence is with the other side. The noble Lord, Lord Hawke, said it was a principle of British justice that you are innocent until you are proved to be guilty. But surely that presupposes a fair distribution of the evidence. If all the evidence is on one side, what can you do? I suggest that this clause, as drafted, has a most reasonable history. So reasonable is it that I am going to charge the noble Viscount. Lord Swinton, with being either the father of it or the mother of it—or the foster parent.
VISCOUNT SWINTON: I cannot be both.
LORD HAWKE: Is the noble Lord denying the right of this House to make history?
LORD LUCAS OF CHILWORTH: The noble Lord makes history every time he stands up. A section in substantially the same terms, but without the additional safeguard contained in the proviso to subsection (2), is included in the Transport Act and the Electricity Act; and when the Gas was introduced it contained a clause similar to the corresponding sections of the two Acts I have mentioned. On the Report stage in your Lordships' House we made a concession to the Opposition and inserted what is now the proviso to subsection (2) of

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Section 22 of the Gas Act, a similar proviso to subsection (2) of the present clause. If I may be allowed to do so, I will quote what the noble Viscount, Lord Swinton, said upon that occasion. I quote from column 936 of Hansard of July 19, 1948. This is what the noble Viscount said:
"… the noble and learned Viscount the Lord Chancellor said that whether a contract was a personal one or an ordinary commercial contract, what we ought to do (and I think his was a more practical proposal), was to see whether there was evidence that that contract had been entered into to get round the anticipated nationalisation Bill, or whether it was an ordinary business contract, which might be good or bad business, but in any case was entered into in the ordinary course. If the latter, nobody wants to stop it; if the former, there ought to be the right to revoke it. I have had two 'shots' at proposing alternatives in these five Amendments. The noble and learned Viscount has just shown me a manuscript Amendment which I think is better than mine, and which the noble and learned Viscount will move later. On that understanding I will not move any of the Amendments which stand in my name to this clause."
The manuscript Amendment referred to was this:
"Provided that, if the arbitration tribunal are satisfied that the agreement or variation thereof was made in the ordinary course of business and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision, the tribunal shall revoke the notice."
That was inserted in the Gas Act, and it is practically the same as the proviso already in this Bill. There is an alteration which I will point out to your Lordships. The latter reads:
"… that the making or variation of the agreement or lease was a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time."
That is the new proviso. The new words inserted are "a proper transaction" and "regard being had to the circumstances at the time."
The truth is that by a process of trial and error through these nationalisation Bills we think we have now got this clause and the proviso right. It is, in our view, thoroughly satisfactory, and I hope to persuade noble Lords opposite that it holds the balance fairly between the necessity of protecting the legitimate interests of the Corporation and giving every opportunity to the parties to the transaction to prove that they behaved
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honestly and ought not to come within the clause. I hope noble Lords will see the fairness of my argument and will not press this Amendment.
VISCOUNT SWINTON: I am greatly interested, equally honoured, and somewhat embarrassed to hear that my speeches are regarded by the noble Lord now in charge of the Bill as having such an inspirational value and authority that they must always be accepted as a precedent. I take note of that. I did not speak on the last Amendment, but I commend this to the notice of the noble Viscount the Leader of the House who, with admirable, synthetic indignation, just before we adjourned expressed in short words his view of my speech on the Second Reading, and also of some other Amendments which have been put forward. But, after all, the same action is not always required in different circumstances. If a man bowls you a half-volley and you have a fairly decent eye, you hit it for six. But you do not play the same stroke if he bowls you a yorker. If you do, it is not likely that the result will be the same. The noble Lord has proceeded on the assumption that history always repeats itself. I would commend to his notice a very admirable chapter in a recent book with which I am sure Lord Pakenham is acquainted—I refer to Professor Arnold Toynbee's recent work—which points out the danger of assuming that history does or does not repeat itself. What was, I think, quite a reasonable compromise on gas and transport really does not have much application here.
This, I think, must be a generally accepted proposition—that when someone is charged with doing something wrong and you seek to set aside an agreement, not only in the ordinary principle of law but in ordinary equity—and law and equity are one in this country, happily—the onus of proof is on the person who wishes to set aside the agreement. It is true that in the case of the Gas Act and, I think, in the Transport Act we rather grudgingly made an exception, because in those cases the only contract which was likely to be challenged was some contract which had obviously been made in anticipation of the Bill and in order to defeat the aim of the Bill—a piece of nepotism or something of that kind. It being common ground that that was the kind of contract we wanted to get at, it was not

577
unreasonable on the whole to say that where it looked obvious that it was, if I may use a vulgar phrase, a "fishy" contract, the onus should be on the person who had made the contract to justify it and say it was reasonable. I was prepared to go against the ordinary principles and practice of the law on that occasion and accept it.
There was another reason. In both transport and gas, legislation followed rapidly on the announcement that legislation would be made, and the legislation, which was of a comparatively simple kind, was to come into force rapidly after the Act of Parliament had been passed. There was no great variety of contracts which the people concerned with the business had to carry on. For example, in the railways it was not a difficult thing to do because in fact they were already carrying on as agents of the Government. The gas company ordered its coal—there was not much room for nepotism there. I understand the noble Lord has two grandsons. If he had put one into a gas company and another into an electricity authority as general managers, there would have been a natural presumption that that was "a bit of a racket," particularly if it was done on the eve of the Bill becoming law. We are dealing with a wholly different situation here. Here we have the Government taking over ninety-six firms and Heaven knows how many subsidiaries, all of which are engaged every day in making contracts, not only for the great development schemes which are to run into £150.000,000—
THE EARL OF DUDLEY: Over £200,000.000.
VISCOUNT SWINTON: Into over £200,000,000, where hundreds of contracts have to be placed in very difficult market conditions, but also for hundreds of day-to-day commercial transactions. It is extremely easy to be wise after the event. In the writing of history, one of the hardest things is to put oneself in the position a man was in three or four years ago. We can all say to-day exactly what ought to have been done. Noble Lords opposite tell us all the things we ought to have done between 1918 and 1939. And even when we were happily together in the years of the war there are many things we might have done differently if we had possessed then the knowledge
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which we have to-day What are you going to do here? You are going to say: "I may challenge a contract, because it was entered into with an 'unreasonable lack of prudence.'" Look at the state of affairs in the world to-day; look at the markets!
VISCOUNT ADDISON: They can go to the tribunal.
VISCOUNT SWINTON: I know that they can go to the tribunal, but I am not dealing with that now. Contracts are entered into to-day when nobody knows what the price will be to-morrow. At the same time, you are saying to them—and the Chancellor of the Exchequer has been saying it, quite rightly—"For heaven's sake take your courage in both hands; go forward and make your contracts; be aggressive in foreign markets." If a firm is going to take risks of that sort in a falling market it may easily lose money. In the long run, it is probably the right thing to do. Then, in the cold light of two years afterwards, as it may he, somebody sitting here—I do not know how the Board is constituted probably a careful civil servant, trained not to take risks—will say: "I wonder whether it was wise to do that? Was this contract entered into with reasonable prudence? If I had been in your place I would have kept my talent in a napkin and done nothing." That is the sort of thing that is going to happen. If the Government carry this clause in its present form, without this proviso, they will be encouraging everybody to sit back and do nothing. It will be encouraging them not to take risks, just at a time when they ought to be taking risks.
I know that I shall be told: "You can go to the Minister." How can ninety-four companies go to the Minister every morning and say: "Am I to enter into that contract?" In difficult times, when you are selling in foreign markets—as every one of us who has experience in international business knows—when the chance comes of doing something, you have to trust the man representing you outside to close on the spot. The venture may turn out right. Sometimes you will make losses, and sometimes you will make profits. The Corporation will not have regard to cases where the decision turns out right—where the gamble, if

579
you like, has turned out right; all they will be concerned with is to see the cases where a loss has been made. There they will say: "Was this entered into with a reasonable regard to prudence?" If the Government expect these people to carry on this business aggressively and venturesomely, they have no right to put this risk upon them.
I know the firms can go to the Tribunal. But when they get to the Tribunal with whom should lie the onus of proof in this case? I say that the onus should be upon the Corporation, if they are seeking to set this thing aside, as it would be in any other arbitration in the world and in any court of law in the world. Why should not the onus be upon them to prove that this contract was entered into with an unreasonable lack of prudence? I think this raises a great principle. I am bound to say that I think I was right to accept it in transport and in gas, but I think I should be wrong if I felt myself bound by those entirely irrelevant precedents and accepted it in the case of this industry. I think that on reconsideration the noble Lord will see that this Amendment, or something very like it—certainly an Amendment which changes the onus of proof—is a fair thing for him and the Government to accept.
LORD SALTOUN: There is one point in Lord Lucas's defence of this clause which I did not understand, and which perhaps he will explain. I understood him to say that in these cases the Corporation would be faced with a situation where the evidence was all on the other side. It would seem to me—perhaps I have not read the Bill with sufficient attention—that where any company comes into public ownership, all the minute books and all the correspondence of that company, which are the property of the company, would also come into public ownership. It appears to me, therefore, that on the contrary it would be the directors of the old company who, in seeking to defend themselves, would be without evidence. I should be glad if the noble Lord would explain that point, because it seems to me that either I am right or I am under a great misapprehension.
THE MARQUESS OF READING: May I put one suggestion to the noble Lord?
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It may or may not be helpful. The circumstances in which an agreement may be attacked is that it was "not reasonably necessary" or that it was entered into "with an unreasonable lack of prudence." If either of those two contentions is advanced, then either party may go to the tribunal, and the Corpora-will be joined. I was wondering whether the Government would consider putting into the proviso, beginning at line 40, words to the effect that the onus of showing that the contract entered into was not "reasonably necessary" or was entered into with "unreasonable lack of prudence" should be upon the Corporation. That might be a way out of the difficulty. It seems to me reasonable that, if exception is taken to the contract, it ought to be for the person taking that exception to show to the tribunal, by positive substantive evidence, that it is open to criticism on one or other of the grounds contained in the clause.
VISCOUNT ELIBANK: There was a similar provision in the Electricity Act, in which I was interested as chairman of an electricity holding company. We found that this particular provision had a stultifying effect when agreements were coming before us. A similar provision to this had been put into the Electricity Act, and our board then began to consider what would be the position of the directors if we made the agreement, or whatever it was. We were in the position of possibly finding ourselves mulcted in damages later, in the event of that section of the Act being carried out. In some cases the board applied to the Minister for approval before they entered into those agreements, but the general effect in the electricity industry throughout the country was that the board stopped making agreements unless they were absolutely satisfied that there would be no recourse against them.
To-day boards in the iron and steel industry are in the same position as boards were in the electricity industry; they will consider very carefully indeed before they enter into any fresh agreements, for fear that they might be brought into the courts or before this arbitration tribunal and be held liable for what has happened. I strongly support the Amendment of my noble friend and I urge that the position should be made absolutely clear, because this is not a

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moment in which we wish to hold up business in the country so far as the iron and steel industry is concerned. It might have a very serious effect in directions which it is not possible to foretell at present.
9.13 p.m.
THE EARL OF DUDLEY: I am very loath to intervene in this debate again, but perhaps I might be allowed to say a word or two, because I am more affected by this Amendment than anybody else in your Lordships' House, or perhaps anybody else in England. On October 1, 1947, I and all the other steel owners became in a large sense trustees for the Government. We are quite ready to accept that and to accept the fact that we must "take the rap" for anything we do in bad faith during the intervening period. We are ready to take the risk. But we are not ready to take the risk or the rap for anything we do in good faith.
I do not think your Lordships realise the enormous responsibility that rests on our shoulders in the vast development scheme which we have undertaken. As the noble Viscount, Lord Swinton, has said, the steel industry is committed, with the full approval of the Government, who are its potential owners, to a development scheme which may cost over £200,000,000. I am committed in my own works to an expenditure of over £3,000,000 for revamping my works, putting down new melting shops, new cogging mills and so on. I have an enormous potential future, which is to go to the State. I can assure your Lordships that I, in common with all my colleagues, are entering into our responsibilities with just as much energy and accepting just as much responsibility as if this Bill were not before us and as if this dreadful sword were not hanging over our heads. Your Lordships will perhaps appreciate the real risks and worries that attach to development schemes of this sort in these days: the rising costs, the frightful blows one gets from day to day in regard to the delivery of materials and so forth. It keeps me awake at nights. I have to spend my time in going to see contractors and sub-contractors all over the country and all over the world, using what persuasive powers I have to stop them from threatening to postpone their deliveries by nine months or sometimes a year and
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completely wrecking my scheme. I have all sorts of risks to take and all sorts of decisions to make, over and above the ordinary day to day business.
It really is not fair that we should have this added onus and this added responsibility. I submit to your Lordships, most sincerely and without any heat, that, if we are pressed too hard, we shall not take those risks. The money that I am spending is only partly mine. It is partly the money that we, as a works, have saved by the sweat of our brows over a good many years. The rest of it is borrowed from the Finance Corporation of Industry. It could not have been borrowed but for the goodwill that we have built up over years past. I take a little credit for that for myself, because I have worked hard for thirty years to build up that goodwill and I raised that money without difficulty. I owe an obligation to the Finance Corporation and to the Government. I am ready to accept that obligation, and anything I do in bad faith I am ready to suffer for—and that applies to all my colleagues—but for anything we do in good faith, allowance must be made.
I have been engaged in business all my life, and I have been fairly though not entirely successful. I have done many things on my own initiative and also under advice that have eventually shown a lack of prudence. Whether it was an unreasonable lack of prudence or not I do not know, but it has certainly turned out to be a lack of prudence. I shall go on doing that, and so will everybody. One cannot take risks without subsequently, at some time, suffering. The Greatest business man in the world is at some time or other guilty of imprudence. It is not fair that we should suffer for that. We take risks in good faith, and it is most difficult for us. These are the most difficult days in which we or any business men have ever had to live. If you put that added onus on our shoulders, it is not fair. The result is that we will not go ahead with this development scheme. We will not go on taking those risks, as we can and will so long as we are to be blamed only for acts that we commit in bad faith. I hope the Government will accept this Amendment.
LORD LUCAS OF CHILWORTH: I am grateful for what has been said, and

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especially for what has been said by the noble Earl, Lord Dudley. I do not find myself in disagreement with one word of anything that has been said, starting with the noble Viscount, Lord Swinton. What did he say? All we are out to do is to catch the "fishy" contracts. I agree with the noble Earl, Lord Dudley. We want you to take risks, and we admire the way you are going about the job. The noble Earl is quite right when he says that no business man in this world could ever say that he had acted with prudence in everything he had done. In the case of people such as he and, if I may say so, I myself in a small way, it is the mistakes we have made and the risks we have taken that have been responsible for the measure of success that may eventually have come to us.
So the issue between us is not one of principle; it is one of interpretation. I hope to prove to noble Lords that the wording we have here covers the point which the noble Lords have made. We quite agree that transactions which may be entered into in all good faith, in the light of time may be queried as to whether or not they were prudent. We can all be wise after the event. But may I direct your attention to what the clause says—perhaps the noble Marquess will follow me:
"… not reasonably necessary for the purposes of the activities of the company, or that the agreement or lease was made or varied with an unreasonable lack of prudence on the part of the company, regard being had"—
and these are the important words:
"in either case to the circumstances at the time."
Now the reason those words were put in was to make it clear that the clause does not affect agreements or leases, the making or variation of which seemed necessary at the time, even though subsequent events might expose this action to criticism. Then if the noble Marquess will look at the second proviso I suggest his point is met. Subsection (2) contains a proviso that
"If the arbitration tribunal are satisfied …"
and so on—I need not read that, because the noble Lords are well aware of what is said.
VISCOUNT SWINTON: On whom is the onus?
LORD LUCAS OF CHILWORTH: The proviso says:
"Provided that, if the arbitration tribunal are satisfied of the matters aforesaid but are also satisfied that the making or variation of the agreement or lease was a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time, and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision, the tribunal shall revoke the notice."
VISCOUNT SWINTON: May I just ask this—
LORD LUCAS OF CHILWORTH: I am going to answer your question. The tribunal can be expected to form only an opinion. They may say: "In our opinion this was a wrongful agreement to enter into." If the noble Viscount will look at subsection (7) of this clause, which was specifically put in to give the opportunity for anybody to apply, he will see that it says:
"This section shall not apply to any agreement or lease the making or variation of which has been approved in writing by the Minister for the purposes of this section either generally or specially and whether before or after the date of the making or variation of the agreement or lease."
That can apply retrospectively, and in every case which has been put to the Minister he has approved it retrospectively. Lord Saltoun asked me a question—
VISCOUNT SWINTON: Will the noble Lord answer the specific question that I put to him which is really the whole essence of this thing? The clause says if "the Corporation are of the opinion." Now that opinion is formed by the Corporation after the business is vested in them, which may be two or three years after the transaction was entered into. They have formed the opinion, in the light of after events, that a thing was unreasonable, and they claim to rescind the contract and there is a right to go to arbitration. I ask the noble Lord to say categorically on whom is the onus? I know what the tribunal has to find. On whom is the onus of proof? Is the onus of proof on the Corporation who seek to set aside the contract, or upon the defendant company—upon Lord Dudley who, two or three years after the event, is put in the dock as defendant? Upon whom is the onus? I have read this very carefully. I see that the Corporation have

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a right to take him there and that the onus of proof is then shifted because the Corporation say, "We are of opinion that he has been guilty of an unreasonable lack of prudence'." Do let us face this. Let us discuss this and get it absolutely clear as to what the clause means. If it means what I say, I think it is entirely unjust. If it means that the onus of proof that there was "unreasonable lack of prudence" is upon the Corporation, then I have no objection to the clause.
THE MARQUESS OF READING: May I say one word? The noble Lord, Lord Lucas, has drawn attention to the expression
"… that the arbitration tribunal are satisfied of the matters aforesaid."
I rather think that what he has in mind is that they must he satisfied of the truth of the allegation of "unreasonable lack of prudence" by the case advanced by the Corporation, and that from that point of view the onus is already on the Corporation.
LORD LUCAS OF CHILWORTH: Precisely.
THE MARQUESS OF READING: I am not sure that that is right, if I may say so, because in all these matters you have got what may be called a positive and a negative test. Somebody has to make a case; somebody has to endeavour to upset it. The whole question is: Who starts—not who ultimately brings evidence which the Corporation are prepared to accept, but who starts the proceedings; who makes the positive case; and whose business is it to make the negative, destructive case which may, or may not, in the end lead the tribunal to decide whether or not they are satisfied of the matters aforesaid?
LORD LUCAS OF CHILWORTH: I am very much obliged to the noble Marquess. He has put the case precisely. At page 12, line 46, it says:
"If the arbitration tribunal are satisfied on any such reference …."
I hesitate to say this in front of a lawyer, but they have to be satisfied that there is a prima facie case to go before them; on any such question they have to be satisfied that the Corporation has made its case to go before them.
VISCOUNT SWINTON: Let us have it quite clear. The Corporation give notice
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that they wish to rescind a contract—nobody denies they ought to have the right to do that. It is challenged by the other side. The matter then goes to arbitration. The Minister has said that the Corporation have to satisfy the tribunal that their claim is sound. If those words mean that—I do not think they do—and if that is the intention of the Government, then I am satisfied, because the Corporation have to prove their case.
LORD LUCAS OF CHILWORTH: It ill becomes me to enter into an argument between the noble Marquess, a learned lawyer, and the noble Viscount, who was and still is, perhaps, a learned lawyer. But I am advised that this clause means precisely what the noble Marquess has said it does—namely, that the onus is on the Corporation through that first line.
VISCOUNT SWINTON: To satisfy the tribunal that it was in imprudent contract?
LORD LUCAS OF CHILWORTH: Yes, that is what I am advised. I cannot say any more. We are as anxious as noble Lords opposite that this should be correct, and if we can receive any advice from noble and learned Lords we shall be only too pleased to have it.
9.28 p.m.
VISCOUNT SWINTON: I am extremely grateful to the noble Lord because he has greatly clarified what I had completely misunderstood. I gather that now we have a common intention. There is a right by the Corporation to challenge —nobody denies that that right ought to be there—and the Corporation may allege that a contract was entered into with—whatever it may be: I will not argue whether they are the right words or not, but that it was a wrong contract to enter into. The noble Lord says that if that is denied, the matter goes to arbitration, and the onus is upon the Corporation to establish, exactly as a plaintiff would in any civil action, that the facts are such that the Corporation, as plaintiffs, should win their case. If that is the intention of the Government—I aria bound to say I do not think it is well expressed—I am sure my noble friend will be perfectly prepared to withdraw his Amendment. If there is any doubt that the words of the clause fail to carry out what Lord Lucas has said is the intention—namely,

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that the onus of proof is on the Corporation—then let us take the words of the noble Marquess, Lord Reading, which I think are much better than our words, and, on Report, make it absolutely plain that the onus is on the Corporation. On that understanding, I feel sure that the noble Lord will be willing to withdraw this Amendment. We can consult together as to what are the best words to make it clear that the onus throughout is on the Corporation.
LORD SALTOUN: I gather that noble Lords are to consider this clause again. I do not know—not being a lawyer—what the precise force of the words "reasonably necessary" may be. I would ask them to consider whether the words "a reasonable step" would not carry out the intention better than the words "reasonably necessary."
LORD HAWKE: In the course of our consultations we shall certainly pay heed to the words of the noble Lord, Lord Saltoun. I hope I shall be able to persuade noble Lords that the words of my Amendment are not unreasonable. We are to have these consultations, and therefore I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 [Effect of Act on certain loan and other agreements]:
LORD LUCAS OF CHILWORTH: This is really an Amendment of a drafting character. I beg to move.
Amendment moved—
Page 15, line 17, after ("compensation") insert ("from the Corporation").—(Lord Lucas of Chilworth.)
Clause 14, as amended, agreed to.
Clause 15 [Compensation to holders of securities.]
LORD RENNELL LORD RENNELL moved, after subsection (7) to insert:
"( ) (a) If it is proved by the stockholders' representative or by the Minister that the values of a company's securities as agreed or determined under the provisions of subsections (2) to (7) inclusive and subsection (9) of this section (in this section referred to as "the Stock Exchange values") in the aggregate fall
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short of or exceed the value of the company's undertakings and assets on the first day of October nineteen hundred and forty-eight the amount of such short fall shall be added to the Stock Exchange values or the amount of such excess shall be deducted therefrom as hereinafter provided and the Stock Exchange values as adjusted by such additions or deductions shall become the values of those securities for the purposes of this section;
(b) for the purposes of this section the value of a company's undertaking and assets on the first day of October nineteen hundred and forty-eight shall be such amount as they might have been expected to realise if:

(i) they had been sold on the said date in the open market by a willing seller to a willing buyer;

(ii) in so far as they comprised a business capable of being sold as a going concern they had been so sold; and

(iii) this Act had not been in contemplation.

(c) if with respect to any company the stockholders' representative or the Minister desires to prove any matter which may be proved by him under this subsection, he shall so inform the Minister or the stockholders' representative (as the case may be) by notice in writing given within three months after the date of transfer."
The noble Lord said: Here we come to perhaps a slightly less legal and more controversial point. Before dealing with the exact terms of the Amendment, I wish to refer to two points which came up in the course of the Second Reading debate in this Chamber. I want to dispose of them because, although they are not really germane to what I have to say in support of the Amendment which stands in my name, they have aroused a certain amount of comment, and I feel it is proper that they should be dealt with. If noble Lords opposite wish to "shoot" at me I am standing on my feet for the purpose of being "shot at." The first of the two points arises out of something that was said by the noble Viscount the Leader of the House in his closing speech on the Second Reading debate. He quoted certain index figures dealing with the value of iron and steel share prices in the course of the last few years. I do not know why the noble Viscount quoted those figures because, as a matter of fact, no one on this side of the House had made any reference to the level of iron and steel share values on the Stock Exchange. If the noble Viscount will allow me to say so, I think the quoting of those figures was something in the nature of what might be called a "red herring."
VISCOUNT ADDISON: Oh, no, that is not so. The noble Lord used the expression "dishonest" as applied to the terms of compensation. I objected to the use of that expression, and in order to prove that they were not dishonest I gave actual figures of the rise in value of shares since the basis of the compensation was announced. If the compensation proposed had been dishonest, the opposite would have happened.
LORD RENNELL: I do not know that I agree with that conclusion. I do not think it has much to do with the subject. I had not referred to the level at which compensation was to be paid. In due course I am going to show that the Stock Exchange values are entirely irrelevant to the question of compensation, but before going on to that point I should like to comment on the figures which the noble Viscount quoted. So far as I am concerned, the index which the noble Viscount quoted is not recognisable. I am aware of an index which is very well known in the Press and in financial circles—the Actuaries' Index of iron and steel shares—but the figures he quoted are evidently not these. I am unable to recognise the index, and perhaps the noble Viscount or whoever is to reply will enlighten me as to how the index figures quoted are composed.
However that may be, I shall take the only index I know, the Actuaries' Index, and go on to say that it is perfectly true that the general value of iron and steel shares, as exemplified by this index, has shown an increase over the value of other industrial securities. Therefore it is perfectly correct also to say that if compensation is paid on the basis of Stock Exchange values the relative value which the holders will get in the market would be more than if the same compensation had been applied in the case of the nationalisation of other industries in the ordinary industrial field. What is peculiar, however—and I think it shows how irrelevant these figures are—is that if the noble Viscount had studied the Actuaries' Index of iron and steel shares he would have observed that, of the eighteen securities that go to make up that Index, no fewer than ten are not scheduled companies—that is, they are companies not to be taken over; and only eight of them are companies to be taken over. I am bound to suppose that
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the noble Viscount did not take the Actuaries' Index for fear of somebody saying that it was irrelevant because more than half the shares which are quoted are shares of companies not to be taken over. Had I been in his place, I would also have been wary of using that Index. He used another and, I must suppose (though here the noble Viscount will correct me if I am wrong, because I do not know how his Index is composed) that the Index was composed entirely of shares of companies that are to he taken over. Is it not rather peculiar, and does it not require a certain amount of explanation, that where there are two Indexes, one composed of shares of companies which in the majority are not to be taken over, and another of shares of companies which are to be taken over, they show not identical, but parallel results? It is logical to conclude that there must be an element in common in both the shares that are not to be taken over and those that are. It is perfectly clear what that common element is. It is the general prosperity of the heavy industries in this country since their rehabilitation during and after the war and the very high level of production at which they have been working. That is the explanation, but that is not a reason to put forward to show that the method of compensation is a fair one. It is an interesting fact, but it is, I claim, entirely irrelevant. So far as the indices are concerted, there I propose to leave that point.
The next point is one which I made, and which I think possibly is what provoked the noble Viscount to his rejoinder just now and to his rejoinder in the Second Reading debate—namely, that the mere fact of taking Stock Exchange values in the circumstances in which we are now situated must, by the nature of things, be unfair, leaving aside the question of whether the principle is right or not. This Bill is the first nationalisation Bill which has been introduced since the Chancellor of the Exchequer invited industrial concerns in this country to limit their dividends. Therefore, this is a new set of circumstances which was not applicable to the compensation terms of the other industries which have been nationalised. You have here something new. That "something new" is that the Chancellor of the Exchequer asked

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people voluntarily to agree to a certain course of action on the grounds that it was in the national interest for them to do so. By and large, the industrial world have fallen into line with his request; that is to say, by and large, industrial concerns, including iron and steel concerns, have limited their dividends, and have done so for over a year now. They were asked again in the spring of this year to repeat their undertaking, in a slightly different form, and they have done so.
The effect of that is—and it must be obvious to all your Lordships—that a great many of these concerns have not paid as large dividends as they could have paid. Had they paid higher dividends, the prices of their shares would have gone up. As I commented in the course of the Second Reading debate, it is idle to say that a company which does not increase its dividend increases the value of its shares. The Chancellor of the Exchequer referred in another place to the increase in the capital values involved. That is a very important point. It is, of course, perfectly true that if a company does not distribute a dividend, but puts all its profits to reserve, or ploughs them back into the business, the capital value of the business will be increased. But that is not the same thing as to say that the value of the shares will go up; it is a totally different thing.
If the scheme of compensation had been based on the capital or the assets value of these iron and steel companies, the values which the holders would have received would certainly have reflected the money which had been ploughed back into the business. As it is, the capital or asset value of the companies has not been taken as the basis for compensation. What has been taken as the basis for compensation is the Stock Exchange value. I referred in the course of my Second Reading, speech to one or two examples of concerns which did not, for one reason or another, fall in with the request of the Chancellor of the Exchequer, but in fact paid increased dividends. Two of those concerns—I have given private information as to which they are, and they are only two of quite a number that could be quoted —by failing to follow this particular injunction have secured very much
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increased compensation for their shareholders through the fact that the shares have increased in value as a result of the larger dividend being paid.
To show how illusory this idea is that money ploughed back into the business is reflected in the value of the shares (I do not want to quote any concern by name, because I do not like the practice) I may say that in recent days an announcement has been made about the profits of one of the large oil companies. A fantastic figure of profit was made and was ploughed back into the business—it was not distributed; the dividend was not increased. The amount of money which was ploughed back into the business runs into something between £10,000,000 and £20,000,000. The precise effect on the price of the shares of the ploughing back of that money into the business, and thereby increasing the asset value of the business, has not only been nil but has been less than nil, because the shares fell in value. So much for the idea, therefore, that the limitation of dividends can benefit a shareholder under the compensation scheme which is proposed in the Bill. I will now go on to the question of compensation itself. Those were the two points I had to discuss before coming to the Amendment.
The Amendment which is now proposed accepts the principle of Stock Exchange values which was put into the Bill as it came to your Lordships' House from another place, not because I—or, I think, most noble Lords on this side of the House—agree with that as a basis for compensation, but because it would seem to me that it would ill become your Lordships' House to propose a method of compensation which might involve the Exchequer in a larger expenditure by way of compensation. We have therefore decided to accept the basis of compensation of Stock Exchange values, but to amend it. I will come to that in a minute. Before going on to that point I would like to say that, though the Stock Exchange value had been admitted in other cases, and it was argued against in those other cases from this side of the House, there are other methods of achieving a basis for compensation. We have had the basis of compensation which was used in the case of the coal industry, and which, so far as I know, has been

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accepted by all Parties without complaint, either in regard to fairness or in regard to the method by which that basis of compensation was reached. I can see no reason why the same or a similar basis could not have been adopted for iron and steel shares—namely, to value the ninety-six companies which are taken over on their asset value. That is not a fantastic proposition.
I want to forestall any possibility of a noble Lord from the other side saying that it is a superhuman task, and that nobody could hope to achieve it in the next twenty years, during which time nobody would receive any compensation. Quite frankly, that position, in my view, is not tenable. It is perfectly practical to value these iron and steel companies which are to he taken over on an asset basis. In the first place, the major companies have all had recent valuations in connection with capital issues which they have made, and under the provisions of the Companies Act they are bound to disclose asset values which can be taken as a basis and from which an interim compensation could have been paid out, subject to later adjustments. The only fair and reasonable basis is to take what a company is worth—not what its shares are worth on the Stock Exchange.
May I give one example to show how absurd a Stock Exchange valuation can be? Let me instance this case or this proof. Your Lordships will be aware that there are a large number of investment trust securities quoted on the Stock Exchange. The majority of the holdings of those investment trusts consist of securities which are also quoted on the Stock Exchange. It is therefore possible to arrive by means of Stock Exchange values at the values of those investment trust securities. It will not surprise your Lordships on this side of the House, but it may be difficult for noble Lords on the other side to explain away, that in practically every case of any of the reputable investment trusts the ordinary share capital is quoted at a figure which is anything from 20 per cent. to 40 per cent. below the break-up value of securities quoted on the Stock Exchange which those companies hold. You there have a perfect example of how ridiculous a Stock Exchange security value can be. That valuation is the basis which His
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Majesty's Government propose to use for compensating the owners of the scheduled companies. I say that that is not a fair way—it is an improper way—of valuing those assets.
I now come to the Amendment. For the reasons I have given, it accepts unwillingly, without regarding it as either a proper or a right method of valuing, the principle of Stock Exchange values. But it introduces one element which might be described as an escalator and a "descalator" clause—in other words it enables the Stock Exchange values to be corrected by an element where the assets are largely in excess of the compensation which would be received on the Stock Exchange value basis and, equally, gives the right to the Minister to claim that the Stock Exchange values represent too high a compensation value for that company. It is not only reasonable, fair and proper that there should be a power to increase as well as a power to decrease the value, but there is another good reason for it. In the case of the major companies I believe the asset value is substantially in excess of compensation values that will be achieved on the Stock Exchange valuation basis, although I believe there are one or two companies where the Stock Exchange value would involve the payment of an excessive price for the assets. It is therefore only proper that the Minister should be able to decrease, as well as the owner to increase, the amount of compensation which he will receive.
I would add only this: that the view that the Stock Exchange basis of valuation is not a fair one is shared by two bodies who possibly should know more about this than anybody in this country. The first of these two bodies is the Council of the Stock Exchange. I will not deal with that, because the noble Lord, Lord Ritchie, who is on the Council, will no doubt deal with the matter himself. I want, however, to draw your Lordships' attention to a document which has appeared, and which I think needs further reference, and that is a statement addressed to the Minister of Supply by the two bodies that look after the corporate investors of this country—namely, the Association of Investment Trusts and the Investment Protection Committee of the British Insurance Association. A memorandum of this

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Association dated December 23, 1948, has been published in the Press. It is too long for me to read to your Lordships to-night to refresh your memories, but I commend to noble Lords opposite a further review of that document which I regard as of very great importance. The keynote of it is contained in a sentence which reads:
"Our Associations profoundly regret that a basis has been chosen which has the effect of penalising companies which have followed a conservative dividend distribution policy and raising doubts in the minds of their directors whether their caution has in fact benefited the shareholders whom they represent."
I do not think that any more unwise basis than that which has been suggested could have been found to guide the directors of companies in future regarding the proper policy to be followed in the payment of dividends or the creation of reserves. I beg to move.
Amendment moved—
Page 17, line 36, at end insert the said subsection.—(Lord Rennell.)
VISCOUNT BUCKMASTER: I am glad to have an opportunity of supporting my noble friend Lord Rennell in this Amendment. He has covered the ground fully and, as I am to be followed by my noble friend Lord Ritchie of Dundee, who now sits on the Council of the Stock Exchange, a position which I was once privileged to hold, it would be out of place for me to detain your Lordships for more than a few moments. T would say at once that, in the present state of the market, even noble Lords opposite may be relieved to learn that the Stock Exchange prices are absurd. That may be some consolation. However, in all seriousness, I suggest that Stock Exchange prices cannot be accepted as a basis for acquiring a company as a going concern. They do not purport and they cannot purport to be a valuation of the assets of a company. They are the isolated transactions of a few shareholders fluctuating according to the state of international affairs, or the whims and vagaries of the market. Some alarm may cause a collapse which might produce a fall in value of from 20 to 30 per cent. In the case of concerns which are expanding and increasing month by month and which are to be taken over, it would never be suggested that, because the shares had fallen in such a way, through some sort of panic, the assets of those great con-
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cerns had fallen in the same way. Such a suggestion bears no relation at all to reality.
While I have no connection with the City, I have tried to make some further examination into these matters. I find that in the week before last there were 301 recorded transactions in the shares of companies which are to be taken over. As my noble friend Lord Ritchie of Dundee knows well, it is not compulsory to record every transaction, but most transactions of any importance are recorded. Many of those that are recorded are really transactions of no importance and no substance. However, if we take a figure of 400 transactions in all these shares, that means that 200 shareholders only in the course of seven days have liquidated their holdings and, of those 200, a large part may be those who have sold because they had to. There are financial reasons not unfamiliar to members of your Lordships' House which sometimes compel the selling of shares. A few isolated transactions of such a nature can in no way reflect the asset values of these great companies which the Government are going to seize. If, as I suggest most seriously, this policy of Stock Exchange prices is unsound, it becomes not merely unsound but unjust when to it you add the fact that the prices are artificially depressed by the fear of nationalisation. And to that you add the crippling influence of dividend limitation.
My noble friend Lord Rennell dealt fully in his argument with the fact that if money is not distributed by way of dividend, if it is ploughed back in reserve, shares should retain their prices or should rise to a price equal to that which they would have achieved if the dividend had been paid, and I need not labour the point. I will give one example (I will not mention the name in this case because the noble Lords seem to think it is better not to mention names) but one of our leading' insurance companies recently increased its dividend, with the result that its shares rose £3 that afternoon. Does any noble Lord suggest that if that money had been put to reserve the shares would have risen by an equal amount? There is a further aspect of this matter. Not only have share prices been cut by the threat of nationalisation, not only superimposed

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on that is there dividend limitation, but there is also the question of the compensation which the shareholders will receive.
It may be argued that these shares are speculative. But, my Lords, what about Government securities? When Government securities fall 2¾ points in one afternoon cannot they be regarded as speculative? May it not be that the shareholder in a steel company, a great, powerful and growing and vital interest, would prefer to receive 5 or 6 per cent. on his stock rather than 3 per cent. on a stock which he knows he will never live to see paid off? I do not hold any steel shares myself but I have been forced to participate in this "Gas gamble." Your Lordships are well aware that certain gas companies have claimed additional compensation under Clause 26. They were not paid off when other companies were paid off, and these companies have now seen a large part of their capital disappear into thin air by the collapse of the stock which has been foisted upon them. In all the circumstances this Amendment is restrained, moderate and reasonable; it accepts as a starting-off point Stock Exchange prices; it agrees that if the basis for assessing the value is accepted, and if that basis should result in a lower value than the Stock Exchange prices would reflect, then the shareholders are to take that lower value. In addition the method proposed is a method proposed by the Government in the Sixth Schedule to this Bill. I cannot conceive any proposal to be more just, more reasonable or more fair, and I urge your Lordships strongly to support this Amendment.
10.4 p.m.
LORD RITCHIE OF DUNDEE: My Lords, I also regard it as a privilege to be amongst those who support the noble Lord, Lord Rennell, who has moved this Amendment so ably. I am glad that he dealt first—completely, to my mind—with this question of price indices, because we on the Stock Exchange take the view that, whatever price indices may or may not prove, Stock Exchange prices are not, and under no circumstances can be, the right basis for compensation of expropriated stocks. It may be that the shareholders are getting too little, or it may be that His Majesty's Government are paying too much, in
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which case, my Lords, the taxpayer is getting a bad bargain. But whichever way it is, to take prices as the basis is and always will be wrong. I would like if I may to quote a short passage from the Memorandum which was forwarded to the Minister by the Council of the Stock Exchange in December, 1946, at the time of the nationalisation of transport. The sentences in question read as follows:
"The Stock Exchange, whether as an institution or as a body of individual members, does not determine the prices of which the official list is a record. The Stock Exchange may be likened to a scientific recording instrument which registers, net its own actions and opinions, but the actions and opinions of private and institutional investors all over the country and, indeed, the world. These actions and opinions are the result of hope, fear, guesswork, intelligent or otherwise, good or bad investment policy, and many other considerations. The quotations that result definitely do not represent a valuation of a company by reference to its assets and its earning potential. Moreover, any valuation by reference to Stock Exchange quotations must introduce indefensible anomalies as between one stock and another of similar standing."
I would like now, if I may, to give one proved example of the kind of indefensible anomaly which is referred to in the Memorandum. The example I should like to give the Committee is in connection with railway stocks. I am fully aware that in doing sc I am on somewhat dangerous ground. It might be asked what the price would be to-day for some of the railway stocks if they had not been taken over. It might be said that stockholders did well. I say again, if stockholders did too well then the taxpayer did badly. But to give my example, I would ask the Committee for a moment to assume that there were two trusts, each of which some years ago had £5,000 to invest. In the first case, which we will call Trust A, Great Western Railway 5 pet cent. debenture stock was decided upon. In Trust B the trustees bought London and North Eastern Railway 3 per cent. debentures. Both those stocks were trustee securities and, for simplicity, I would assume that both purchases were carried out at what subsequently became the compensation price. In due time each trust received its proportion of 3 per cent. British Transport stock. Let us now see the effect on the beneficiaries in Trust A, which had Great Western stock. The beneficiaries income was reduced by some £25 a year. It might perhaps be held to

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be reasonable, that in taking over a British Government security in place of a railway debenture, it was not unreasonable that there should be a small reduction in the income. Let us look and see what happened to the other beneficiaries, in Trust B. Did they make an equal sacrifice? Did they suffer a similar reduction in their income? No, they did not. The beneficiaries in Trust B were surprised and delighted to find their income increased by £5 a year. I ask what conceivable justification there can he for employing a method which can bring about such a lamentable muddle? I would remind noble Lords opposite that both the securities I have mentioned were full trustee securities, protected by the law; both were irredeemable debentures, and the one that suffered the loss was on all hands considered the better security of the two.
Finally, I would like to say a few words on the rather well-worn subject of dividend limitation and its effect on Stock Exchange prices. As the noble Lord, Lord Rennell, has already said, the Chancellor of the Exchequer in another place made some rather surprising statements on this subject. His actual words were that:
"limitation of dividends should, in fact, increase the capital value of industrial securities."
As my noble friend has already said, what one would like to know is whether that was intended to mean the intrinsic capital value, or the market price. And I would go one stage further than my noble friend If the intrinsic capital value was meant, then the price which is being offered to stockholders is by that much the more unfair If the market price was meant, that is a very different story. If a company which has been paying 10 per cent. suddenly doubles its profit and puts all that increase to reserve, the shares may or may not go up. As we all know, if this same company, which for some years has been paying 10 per cent. doubles its dividend then you see a substantial rise in the price of shares. With the greatest possible respect, to say that the opposite is the case is nonsense. I am anxious not to offend the noble Viscount the Leader of the House but if Ministers have a mind to talk nonsense that is their affair, but if by talking non-
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sense they make it easier to carry through what we call on the Stock Exchange "a fiddle" then we object. I say, in conclusion, that supposing these prices are used as a yardstick, the shabby part of the bargain—I have used that word in your Lordships' House before and I use it again—is that the yardstick is not only the wrong one but it is a yardstick which has been tampered with. And for that there is no polite word, and I make no apology for calling it what it is—a swindle.
LORD BRAND: I did not intend to say anything on this subject, but having listened to this debate, I wish to say how entirely I agree with what my noble friend Lord Rennell has said. I agree also with most of what those who have supported him have said. I personally consider that to take Stock Exchange prices as an indication of what a property is worth to those who own it is an entirely unfair measure of its value. I think I can give an illustration which proves that very clearly, as an addition to those which have already been given. I do not know whether any of your Lordships ever look at stockbrokers' lists or get hold of information cards which show all the assets, earning power and so on of different securities. If you do, you may be as astonished as I always am at the extraordinary fluctuations in the prices of shares of the same company in the course of a year. All these stock market cards quote "highs" and "lows" of the prices of the securities over the course of one year, and the difference between the "highs" and the "lows," even of non-speculative high-class securities always astonishes me. It cannot be that a price of say, 65s., which may he the "high" of a security and the price of, say, 35s., which may represent the "low" within a period of twelve months, can both represent the true value of the property. For that reason alone I consider that the Stock Exchange quotation as a measure of the value of a property is entirely wrong and incorrect.
I agree with the noble Lord, Lord Rennell, that one reasonable way of arriving at the value of a property is to take what is called its net worth—that is, the value of its assets. I think that earnings should also be taken into account. I believe the fairest way of all is to do what the Government did with Cable and Wireless Limited which they

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took over—namely, to take its net earnings and multiply that by so many years' purchase. Of course, one might find great difficulty in determining what is a fair number of years' purchase to take. Nevertheless, either of these methods—and better still, perhaps, a combination of both—would be a just and reasonable way of arriving at the value of a property, whereas Stock Exchange quotations are no proper measure at all.
I am not a lawyer, but what shocks me very much is to read in the papers that the Government consider that all they have to do is to pay the owner of a share its Stock Exchange value at a particular date or over a few dates. That is not what his property in fact is: his property is the true value of all that he owns, and he owns all the assets—that is his property. The Government do not say that they have to Lind out the real value of what he owns, but they assume that what he owns is the purely fortuitous value given on a certain number of days by the Stock Exchange to his shares. It may be, of course, that the Stock Exchange valuation gives him more than the real value of his property, but it may often be true that it gives him too little. In that case I should have thought that, according to the laws of property, it was only reasonable to give him what one has taken the trouble to find out is the fair value of what he owns, his property; and any other method which gives him less may simply be confiscation.
VISCOUNT BRIDGEMAN: I think it is worth looking to see whether both sides have not started at the same point, and if they have, trying to find where they have diverged. In this case I think both sides have started from the same point. First in another place members of the Government stated that the object was to give the owners of steel companies a fair price. So far so good; we were all together. I think we diverged at the next stage, because the view was held by noble Lords opposite, and by their friends in another place, that the Stock Exchange price was in all circumstances a fair price; and, therefore, that the aim of giving a fair price would be satisfied if Stock Exchange prices were paid according to a formula in the Bill. It needs no words from me to reinforce the arguments of my four noble friends who have already
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spoken, two of whom are active and important members of the Stock Exchange, and two of whom are closely connected with the investment business in the City of London. I will therefore say no more about the question as to whether or not Stock Exchange prices are fair.
I now come to this Amendment. We have started on the basis of Stock Exchange valuations, not, as noble Lords opposite will realise, because we think that is right, but because the Stock Exchange valuation is in the Bill. The Bill has come to us in that form from another place and, therefore, we have sought only the more limited objective of applying the corrective contained in the Amendment. I do not think one can have it both ways. If the intention is to give a fair price, and if the contention is that Stock Exchange values give a fair price, then the terms of the Amendment will stand up to the test. Either it will be proved that by an independent test—by a cross-bearing so to speak—Stock Exchange prices are right (and if so, all well and good), or it will be proved that they are wrong, in which case, surely., that decision ought to be accepted, whether it proves that the taxpayer is being "done down," whether it proves the proprietor of the company has been "done down." That is why, instead of taking going concern values as the starting point, we nave taken Stock Exchange values, and have applied the corrective in the Amendment. That corrective, if applied on the application of the Minister or on the application of the stockholders' representative, would lead to a valuation on going concern values.
A great deal has already been said in favour of going concern values. However, one or two things have not been said. One is the effect of what is sometimes called unfructified capital. Here we come to a state of affairs where a great deal of E.P.T. refund has not yet been used. That E.P.T. refund has been put into machinery and plant that is taking a long time to get into action. I have in mind the case of one blast-furnace company which is now engaged in using capital, partly from E.P.T. refund and partly capital that has deliberately not been paid to shareholders in increased dividends—whether in response to the Chancellor's request, or not—in increas-

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ing the number of furnaces in blast from two out of four to three out of four. All that value goes for nothing, as my noble friends have explained, in Stock Exchange values. The real value of all these concerns, again as my noble friends have explained, is not the theoretical value under Stock Exchange conditions, but the actual value of the plant, the stocks, the debtors—which are cash—and so on and so forth.
Let me now come to another point, which again I think is a corollary to a lot of what my noble friends have talked about. I think most of us have had in mind the question of the market leaders in the steel trade. Let me put this to noble Lords opposite. Market leaders are easy to sell and easy to buy, and they command a better price because the market is always good; and except in the most difficult times they can be sold and bought easily. But when it comes to the smaller companies—quoted if you like, but seldom dealt in; perhaps quoted in the provincial stock exchanges—you will find the value of those shares is depressed far below the real value of their assets, and depressed in proportion perhaps to the market leaders, because of the difficulty of selling, especially in difficult times.
So we are led on to another point, which I will not discuss now, because there is an Amendment down in my name later; that is, the question of the unquoted companies, and the small quoted companies are about the half-way house. So we come to the object of this Amendment, which is to see that justice is done if one side or the other feel they are not getting a fair value on the basis of valuation. That valuation is an expert matter, whether it is made purely on the basis of assets against liabilities, or whether the element is introduced, as mentioned by the noble Lord, Lord Brand, of the purchase value of the profits. That is not a thing we need go into now. The principle is in the Amendment; the practice, surely, is for expert advisers. But I would mention that there is at least one company which, according to the Stock Exchange valuation, will produce only a three years' purchase for the profits. I quote that knowing well there are many other examples, perhaps some with too
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many years' purchase, but certainly some with too little.
As the noble Lord, Lord Rennell, has said, this is not difficult. There are only twenty-six quoted companies in the Third Schedule, and nearly all of those have had the most exhaustive valuations made, in accordance with the Companies Act, in the last two or three years, for the purpose of the new issues which they had to make to finance the increased production of steel. Those figures have been tested many times from every angle. No one who believes in the honesty of British accountants can possibly doubt them. You have the experience of the transport concerns, Scottish Motor Transport and Thomas Tilling, where the valuation of the real assets showed an increase in the Stock Exchange price from 60s. to 120s. or thereabouts. You have the coal securities, all of which, so far as I know, have been accepted as satisfactory by everybody concerned on both sides of the bargain. This work would largely be done by those expert firms of accountants whom we were praising last night in the matter of price fixing. Their work in this matter has been accepted many times over in the past, and I have no doubt that it will be accepted in the future. There my noble friends and I complete the case for this Amendment, and I hope that we have convinced the noble Lord opposite that this is no frivolous Amendment but one well founded in the experience and figures behind it, and calculated to lead to the fair result which all of us desire.
LORD LUCAS OF CHILWORTH: I am in the hands of the Committee. I have no desire to stop this debate, but after having five Opposition speakers perhaps your Lordships would care to hear the Government reply. If not, I will resume my seat. We have had a most interesting debate (put with great courtesy with one exception, to which I intend to refer), the arguments being deployed with very great skill by noble Lords on behalf of that half per cent. of the population of this country for whom they speak. I make no complaint whatsoever. I would like to congratulate the noble Lord, Lord Rennell, the noble Viscount, Lord Buckmaster, and other noble Lords on their speeches. The one exception is the noble Lord, Lord Ritchie, who I regret should have found it necessary in this debate not to pay the com-

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pliment usually paid in your Lordships' House, that we on this side hold our opinions sincerely and are entitled to hold those opinions, just as noble Lords opposite are entitled to hold theirs. To apply the words "shabby," "fiddling," "swindle" and expressions of that kind to those views and opinions falls far short of that standard. I would inform noble Lords opposite that we are debating an issue upon which we fundamentally disagree; but the morals of noble Lords on this side will bear comparison with the morals of any noble Lord opposite. Our honesty of purpose, our sincerity and our intellectual integrity will bear comparison also. When the noble Lord has been in your Lordships' House a little longer he will perhaps learn that invaluable lesson, illustrated at all times by the noble Marquess the Leader of his own Party, that one duty of a noble Lord here is at least to pay the other side the compliment of believing that they hold their views with as much sincerity as he himself does.
And now I will address myself to the Amendment. I am afraid that if noble Lords opposite were to carry on this discussion at even greater length they would not convince us, and I do not suppose that any poor powers of persuasion I may possess will convince them. I am not at all certain that every argument that has been worth using, and a heap of arguments that were not worth using, have not been used on this subject for months past. Therefore, I trust noble Lords will not think I am discourteous if I do not go into a wealth of detail or use a mass of figures. I always shy at figures, because I am ever mindful of the saying of the cynic about figures and those who use them.
What is this Amendment'? The Opposition's case is this: that we should take an arbitration tribunal's estimate of the asset value of these companies because Stock Exchange prices under-value the shares.
SEVERAL NOBLE LORDS: Or over-value them.
LORD LUCAS OF CHILWORTH: I am coming to that. Yet the Amendment itself states that the Stock Exchange price might over-value as well as under-value shares. That is what the Amendment states and I treat it as a serious one; I would not dare to do otherwise after the
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noble Viscount told us the other night that every Amendment on this Marshalled List was a serious Amendment and should be taken seriously. And yet the noble Lord, Lord Rennell, seemed to suggest that that had been put in with little serious intent. But by the Amendment noble Lords opposite admit that there can be a Stock Exchange quoted price which over-values the true value of shares. I am very glad of that opinion, because that is part of my case. And so we come to this: that noble Lords opposite want to exchange one estimate—the estimate of a tribunal composed of some kind of experts to value the assets, for the estimate of another tribunal which is composed of the British investing public plus the Stock Exchange pundits, for whom the noble Lord, Lord Ritchie, had not got very much to say.
Let me state the Government's case without any equivocation. I do not expect noble Lords to accept it, but I ask them to believe that it is honestly and sincerely held. It is that we do not accept that the Stock Exchange price is not a fair basis and does not reflect the value of all those factors which should be properly taken into account in buying the shares of these companies. We do not accept the argument of noble Lords opposite that the Stock Exchange price is only a reflection of dividend yield. I am not going into a wealth of detail, but I can recall cases in my own personal experience of Stock Exchange values falling when dividends have increased. Why? Because, in the language of the Stock Exchange experts, there were not the assets behind to support the increased dividend. The Stock Exchange value takes into consideration the past record of the company, the future prospects of the company, the policy of the company and the integrity of the management, as well as the value of the assets of the company. That I maintain is the proper way, the only fair way and the least objectionable way in which we can acquire these shares on behalf of the 991 per cent. of the population whose interests we have to look after as well as those of the ½ per cent. whose case is now being specially pleated. I make no complaints against noble Lords on the other side for that.
Let me take the speeches made by the noble Lords, Lord Ritchie of Dundee and

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Lord Buckmaster. From them one would think that the only people who sold shares on the Stock Exchange were forced sellers, that there were no willing buyers to buy these grossly undervalued shares, that there was nobody—investment trusts, companies or individuals—sitting watching the Stock Exchange every day to snap up undervalued bargains. It is just the holders' way of getting out of undervalued shares. We cannot accept that. So let us examine for one moment the alternative which this Amendment puts forward. How is an independent arbitration tribunal going to arrive at the value of the assets of these companies? It naturally will go into the past record and the past history of the companies. What is that? Since 1932, the steel industry has operated under the protection of His Majesty's Governments of varying shades of political opinion. From 1932 onwards, it has had protection. It has been sheltered by a tariff wall. I suppose the arbitration tribunal will take that factor into consideration.
What other factors is it going to take into consideration? Is it going to take into consideration the war conditions under which these assets have been built up? Is it going to take into consideration the unprecedented demands at the present time—unprecedented because of the economic circumstances of the country? And how will it estimate the figure? Will it have to estimate a continuance of the boom conditions in the export market? Will it take into consideration the prospects of independent companies' net maintainable revenues competing in the home market against each other? Will it take into consideration that those who work in that industry are going to continue to work as they have done, to their credit, a continuous shift right round the clock? So how is an arbitration tribunal going to arrive at these problematic values? Is the arbitration tribunal going to visualise the future to be as black as the days of 1933, when the earning capacity of the steel industry after paying debenture interest was 1.6 per cent. of its capital, when no dividend was paid on 48 per cent. of its capital; or in the days of 1932, the year when the Government had to come to the rescue and 82 per cent. of the capital received no dividend at all? Are they going to value the shares on that basis?
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My Lords, rather than have that estimate—because it can only be an estimate—we would sooner have the estimate of the experts of the Stock Exchange and the investing public, with the result that the value can be paid out practically on the nail. Rather than set up a horde of experts and accountants who will take years (the valuations in the coal industry, I understand, will not be settled for seven years) to work out these figures, we prefer the method we advocate in this Bill.
May I deal with one or two of the arguments? There were only two to which I think I need reply. One was raised by the noble Viscount, Lord Bridgeman, and touched upon by the noble Viscount, Lord Buckmaster, about fresh development capital. My Lords, fresh capital or development capital comes into a company for one of two reasons or perhaps for both: either to replace obsolescence or to improve prospects. It is therefore reflected in the value of the assets and the shares. The next argument raised by noble Lords is based on one of the biggest fallacies possible and that is the argument about dividend limitation. Now what do the Opposition put forward? They say this: But for the voluntary limitation of dividends share values would be higher and therefore compensation greater. Was there ever such a fallacy?
The start of dividend limitation was the White Paper printed upon the Prime Minister's statement of February, 1948, on Personal Incomes, Costs and Prices, which set out the dire economic conditions of this country. He said there would have to be a limitation of personal incomes, costs and prices. That statement, and the action by my right honourable friend, the Chancellor of the Exchequer which followed it, was applauded by noble Lords opposite, and was accepted by industry in this country. Let it be said to their credit that the operation was voluntary. But they could see that unless voluntary limitation was put upon dividends we should have a rocketing inflation of prices and wages. What do the noble Lords now say, after having applauded Sir Stafford Cripps for his salvation of the economic position of this country? They now say, of course, if you put that policy upon everybody else but the iron and steel industry and let them increase their dividends as their pro-

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fits increase, they would now get more compensation.
My Lords, if I said that that was shabby, I expect noble Lords on the other side would take me to task. But let me tell you this: that if it had not been for the policy of His Majesty's Government as set out in that White Paper, there would never have been any steel profits at all, and so dire would have been the consequences upon the economy of this country that there might not have been a steel industry. If there had not been voluntary limitation of dividends, do you think we would have held the level of wages? What would have happened to profits then? Noble Lords opposite now want to take, in isolation, the value of steel shares, and then say, "Of course, if you had not put the limitation of dividends upon us but had managed at the same time, by imposing this limitation on everybody else, to keep the economy of this country steady, look what a position we should have been in." That is the essence of your arguments upon dividend limitation and Stock Exchange values.
SEVERAL NOBLE LORDS: No, no.
LORD LUCAS OF CHILWORTH: It cannot be anything else. So that is the Government's case. We think our way is the fairer. Never let it go out from your Lordships' House, I would beg of you, that you want to take advantage of the serious position in which this country found itself over these last two or three years in the way I have described to get what you might think might be an inflated value.
VISCOUNT SWINTON: I shall intervene for only two or three minutes to reply very briefly to the noble Lord. He began with a homily and a very severe stricture on my noble friend Lord Ritchie, and a rather glancing stricture upon Lord Brand and Lord Rennell. I am bound to say that I rather resented this. He said that Lord Rennell and Lord Brand were speaking for a half per cent. of the population. Their clients for whom they were advocates, as he called them in another part of his speech—
LORD LUCAS OF CHILWORTH: No such intention was in my mind. I said "all noble Lords on the other side." I
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did not single out, nor did I mention, Lord Brand by name at all. I said that all noble Lords who have spoken were the spokesmen of the shareholders of the steel industry, which was a half per cent. of the population.
VISCOUNT SWINTON: I am much obliged to the noble Lord. He said he did not in terms mention the names of Lord Rennell and Lord Brand, that he said "all the noble Lords who had spoken." Among noble Lords who had spoken were Lord Rennell, Lord Brand—
LORD LUCAS OF CHILWORTH: All of them.
VISCOUNT SWINTON:—Lord Ritchie and Lord Buckmaster. I do not think he is making it very much better. What he said of those was, that they were speaking as the advocates of the shareholders—one half per cent. of the population against the 99½ per cent. for whom he spoke. They were doing nothing of the sort. They were the advocates of justice and fair dealing. It will be a bad day in this House or in another place when people cannot stand up and speak for justice or fair dealing, whether it be for the few or the many, without being taken to task.
The noble Lord then said that if this Amendment were acceded to we should be taking advantage of the country as against the effort the Chancellor of the Exchequer had called upon the country to make. I have not complained of the limitation of dividends. I think it was quite right, and it was well responded to by industry. But the noble Lord forgot the advice and indeed the promise and the hope which the Chancellor of the Exchequer held out when he made that appeal. When the Chancellor of the Exchequer made his appeal to industry to stabilise dividends, to the workers to stabilise wages and to all of us to save, his words were, "Save now. Do this now, in order that you may be better off hereafter." The Chancellor did not say "Do this now in order that in a year or two if the Govern melt come along to acquire your business they may acquire it at a cheaper price because of what you have saved." So it really does not lie with the noble Lord to throw that in our teeth. As to the pledges that were given, there was an explicit pledge given by

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the Minister and by the Chancellor of the Exchequer to the effect that people who ploughed capital back into businesses should certainly not be worse off because of doing so. If he had meant to say: "You shall have that taken over at the Stock Echange value of the shares, as has been done under other nationalisation measures," it would have been a very simple thing to say. But it was because a distinction was sought to be drawn between what had happened under other nationalisation measures and this ploughing back of capital that that pledge was given.
I have only two or three more things to say. The noble Lord, Lord Lucas, said assessment of asset value would be very difficult. He underrates his own business knowledge. After all, he has been in business now for some time. Every day, in business, amalgamations take place. One company acquires another and goes into partnership with it. I ask the noble Lord and any other members of this Committee whether any one of you knows of a case where an amalgamation has taken place between two companies or where one company has bought another in which the Stock Exchange value has been taken as the basis. Some regard may be paid to it, I grant, but when you go into matters with a view to doing a business deal the first thing you do is to get an auditor's certificate. You put in your auditors to find out what is the real value. Sometimes it may be even smaller than the Stock Exchange value and sometimes a great deal higher. No one but a fool would buy a business on any other basis than its real value and businesses are not bought and sold on any other basis. I put this to the Government. Suppose this Bill went through and the scheme did not succeed as well as they hoped and they decided to sell something back. I wonder whether they would sell back at the price of "Dalton's" or at whatever figure their stock stood at the time, or whether they would not want to get the real value. When businesses were taken over under another nationalisation measure and the Government said, "If you want the extraneous assets back, you can have them back," on what basis did they return them? They had to be taken back on what was considered to be the
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real value. I think that was the practice followed in the Electricity Act.
One of the things said when the Transport Bill was going through Parliament was that there were a number of businesses which were to be acquired later on by agreement. What happened? Were they taken over at Stock Exchange value? No, they were taken over by the Government at what it was agreed (in default it was to be settled by arbitration) was the real value of the business. What was the result? In the case of Tillings, the actual value which the Government gave for the business was something like 100 per cent. above the Stock Exchange value—that is to say twice the Stock Exchange value—at the date at which it was taken over. I do not know whether the date which has been taken now comes in a time when Stock Exchange values were rather high or rather low. I do not think it matters, because—and here I speak not for ½ per cent. or for 99½ per cent. but on behalf of 100 per cent. of the people of this country, whether they be buyers or sellers—if there is to be fair dealing and these things are to work with decency and good will, the right course to follow is to give a fair price.
You should not give too much. If the Government think the Stock Exchange price is too high they should have the right to say a business is worth less. If the other side think the Stock Exchange prices are too low, they should have the right to get the real price. The shares which appear most speculative and which, under Stock Exchange valuation, are likely to come out best, are not those which ought to come out best. Those businesses which have ploughed back their profits and whose resources are solid, but whose solidity is not reflected in the dividends they declare, are the businesses which, on Stock Exchange valuation, come out less well, but they are the businesses which deserve best from the State and which ought to come out best. I think this is an absolutely fair Amendment and I cannot understand how in equity and fairness the Government can refuse it.
LORD RENNELL: My Lords, I am very much obliged to the noble Viscount for his intervention. I am not in the least interested whether steel shareholders are ½ per cent. or 50 per cent. of the

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population. I had always understood that justice was equal for all, irrespective of their numbers. The noble Lord has made out a very disappointing case, and I would like to comment on one or two points he has made. I do not think that the ridicule (and that is not too strong a word) which he poured on the idea of arbitration was fair. Arbitration on valuation is a common practice, as the noble Viscount, Lord Swinton, said. It is indulged in daily and is familiar to the Government and to all people in business. I cannot forbear to comment on his description of the Government as a tribunal. That is novel to me. I will not comment at greater length on the noble Lord's speech. I do not think anything he said improves the case for the Government and I despair of finding any common bridge between us. On this side we think that this Amendment imports a certain quality of fairness into an unfair proposition, an unfair basis which has been described both by the noble Lord, Lord Ritchie of Dundee, and by me, in hard terms which I myself am unable to withdraw. In
Resolved in the affirmative, and Amendment agreed to accordingly.
VISCOUNT ADDISON: I find that what I suggested does not appear to be practical,
these circumstances, I can see no other course but to ask your Lordships to divide.
VISCOUNT ADDISON: My Lords, I rise on a question of business. I shall be glad if the noble Lords will tell me whether it is in their minds that the issue now to be put to the House shall include the Amendment to page 18, line 26, in the name of the noble Lord and his friend. It appears to relate to the same subject.
LORD RENNELL: My Lords, if it is convenient to take it all at once, that certainly would be agreeable to me. In my view the Amendment to page 18, line 26, and to page 17, line 37, go together, the first being consequential on the second. If it is the pleasure of the House to take them together, I have no objection.
On Question, Whether the proposed subsection shall be there inserted?
Their Lordships divided: Contents, 59; Not-Contents, 19.

CONTENTS

Aberdeen and Temair, M.

Falmouth, V.

Kenilworth, L.

Cholmondeley, M.

FitzAlan of Derwent, V.

Layton, L.

Reading, M.

Hailsham, V.

Llewellin, L.

Salisbury, M.

Long, V.

Lyle of Westbourne, L.

Monsell, V.

Middleton, L.

Buckinghamshire, E.

Portman, V.

Moyne, L.

De La Warr, E.

Swinton, V.

Moynihan, L.

Dudley, E.

O'Hagan, L.

Fortescue, E. [Teller.]

Ashton of Hyde, L.

Polwarth, L.

Howe, E.

Balfour of Inchrye, L.

Remnant, L.

Iddesleigh, E.

Belstead, L.

Rennell, L.

Munster, E.

Brand, L.

Ritchie of Dundee, L.

Onslow, E.

Carrington, L.

Rochdale, L.

Radnor, E.

Cherwell, L.

Saltoun, L.

Selborne, E.

Clanwilliam, L. (E. Clanwilliam.)

Sandhurst, L.

Schuster, L.

Allenby, V.

Clydesmuir, L.

Stamp, L.

Bridgeman, V.

De L'Isle and Dudley, L.

Strathcarron, L.

Buckmaster, V.

Gifford, L.

Teynham, L.

Chaplin, V.

Hailey, L.

Waleran, L.

Elibank, V.

Hindlip, L.

Wolverton, L.

NOT-CONTENTS

Jowitt, V. (L. Chancellor)

Ammon, L. [Teller.]

Lucas of Chilworth, L.

Chorley, L. [Teller.]

Macdonald of Gwaenysgor, L.

Addison, V. (L. Privy Seal)

Crook, L.

Marley, L.

Darwen, L.

Morrison, L.

Huntingdon, E.

Hare, L. (E. Listowel.)

Pakenham, L.

Henderson, L.

Pethick-Lawrence, L.

Stansgate, V.

Holden, L.

Williams, L.

Kershaw, L.

owing to the way the Amendments are drafted, but I take it that it will be understood that the Amendments which are really consequential will be dealt with without debate to-morrow.

Civil Defence Corps REGULATIONS, 1949 CIVIL DEFENCE CORPS CIVIL DEFENCE CORPS (SCOTLAND) REGULATIONS, 1949
Report from the Special Orders Committee, That they have examined the Special Orders as required by the Standing Orders of the House; That in their opinion the provisions of the Orders raise important questions of policy and principle; That the Orders are not
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founded on precedent; That in the opinion of the Committee the Orders cannot be passed by the House without special attention, but that no further inquiry is necessary before the House proceeds to a decision on the Resolutions to approve the said Orders: Read, and ordered to lie on the Table.
House adjourned at ten minutes past eleven o'clock.