Lords Sitting of 30 June 1949

Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

  HOUSE OF LORDS OFFICES
  THE CHAIRMAN OF COMMITTEES (THE EARL OF DROGHEDA): My Lords, I beg to move that Lord Badeley be added to the Select Committee on the House of Lords Offices.
  Moved, That the Lord Badeley be added to the Select Committee on the House of Lords Offices.—(The Earl of Drogheda.)
  On Question, Motion agreed to, and ordered accordingly.

SUPERANNUATION BILL
3.5 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(Lord Pakenham.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL OF DROGHEDA in the Chair]
Clauses 1 to 25 agreed to.
Clause 26 [Avoidance of nominations]:
THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM)THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM) moved to leave out subsection (4). The noble Lord said: I hope the Committee will allow me to speak to the first two Amendments standing in my name together. Noble Lords will remember that Part II of the Bill proposes a contributory scheme whereby civil servants can provide for dependants, other than widows and their own children, up to a maximum of three. Subsection (4) of Clause 26, which it is now proposed to omit, was designed to cover such a case as that of a woman civil servant who had nominated two or three children other than her own—the maximum, as I have said, being three—and had later married. The marriage of itself would not invalidate these nominations, as would be the result in the case of a man nor would the birth of a child by that marriage, unless her husband was incapable
618
of providing for the child to that the child was dependent on her. But once she has a child of her own who is dependent on her—for example, on widowhood—then under subsection (3) of Clause 23, the existence of a dependent child of her own automatically invalidates the earlier nominations she had made.
The object of this Amendment, which gives effect to the original purposes of the clause is to make provision for the case where a civil servant is bona fide unaware of these consequences until death or retirement, when it is too late to correct the situation. The proposed new subsection to Clause 27 makes provision for such a case by allowing the Treasury in such circumstances to direct that the same results are to follow as if the nominator had taken immediate steps as soon as she had a dependant of her own, to nominate her own child and such of the other children as were within the quota of three. This Amendment is to correct a minor technical defect in the clause. I beg to move.
Amendment moved—
Page 20, line 36, leave out subsection (4).—(Lord Pakenham.)
On Question, Amendment agreed to.
Clause 26, as amended, agreed to.
Clause 27 [Renominations of nominees under previous nominations which have become void]:
LORD PAKENHAM: This is the Amendment which connects with the Amendment which we have just carried. I beg to move.
Amendment moved—
Page 21, line 9, at end insert—
("(2) Where a nomination validly made has become void at any time on the ground that a child of the nominator might then have been but was not a nominee of his and the nominator has died or retired without having made a new nomination, the Treasury may, if in the circumstances they think fit so to do, direct that the provisions of this Act shall have effect as if the nominator, immediately after the event by which the nomination was avoided, had nominated the person who was the nominee under the nomination (or, where more than one nomination was avoided by that event, such of those persons as may be specified in the direction) and had also nominated his child.")—(Lord Pakenham.)
On Question, Amendment agreed to.
Clause 27, as amended, agreed to.
Clauses 28 to 35 agreed to.
Clause 36 [Additions to pensions, etc., for service after retiring age in certain cases]:
LORD PAKENHAM: This Amendment also corrects a technical defect in the clause, as it appeared hitherto. The intention of subsections (7) and (8) was to enable any person who had rendered service after the retiring age before the passing of the Act and who was in post on or after December 3, 1948, to count any such service. Your Lordships will observe that it makes provision for civil servants to count such service for pension if the retiring age was reached after December 3, 1948, but before the passing of the Act. There is at present a small gap. This Amendment remedies the anomaly and enables such service to count. I beg to move.
Amendment moved—
Page 30, line 28, leave out from ("Act") to ("the") in line 29.—(Lord Pakenham.)
On Question, Amendment agreed to.
Clause 36, as amended, agreed to.
Clauses 37 to 44 agreed to.
LORD SCHUSTER LORD SCHUSTER moved, after Clause 44, to insert the following new clause:
Provision for computing amount of superannuation to persons holding professional and other special offices.
"—(1) This section applies to employment in any such office or class of offices as the Treasury may by Order specify as being of such a nature that, for the due and efficient discharge of the duties thereof, such professional or other specialised qualifications or experience not ordinarily acquired in the civil service as may be specified in the Order are required, and that it is in the public interest that persons should be appointed thereto at an age exceeding that at which persons ordinarily become civil servants.
(2) When a person is admitted to the civil service with a certificate from the Civil Service Commissioners for the purpose of undertaking employment to which this section applies, the said certificate shall specify the number of years spent in acquiring such professional or other specialised qualifications or experience as aforesaid by that person while between the ages of twenty and forty years and before the date of such admission:
Provided that for the purposes of any such certificate no account shall be taken of any years in respect of which any such person at the date of his admission to the civil service is entitled under any superannuation scheme to a superannuation allowance or other money payment on attaining the appropriate age specified in that scheme.
(3) Subject to the provisions of this section, in computing the amount of any superannuation allowance, additional allowance or
620
gratuity in the case of a civil servant who was recruited for employment to which this I section applies, there shall be reckoned in addition to the number of years which would, apart from this subsection, fall to be reckoned for any of the purposes aforesaid—

(a) if he has attained the retiring age, the number of years specified in the said certificate from the Civil Service Commissioners; or

(b) if he has not attained the retiring age, a proportion of that number varying with the number of years of his actual service:

Provided that this subsection shall not apply to any person in respect of whom the Treasury has directed that he shall be subject to the provisions of subsection (1) of section two of the Superannuation Act, 1946 (which enables the service of certain late entrants to the Civil Service to be reckoned at eight fifths of its actual length) and whose service would be of greater length, if reckoned in accordance with that subsection, than if reckoned in accordance with this subsection.
(4) The Treasury may make rules for securing that, in such circumstances and subject to such conditions as to proof of professional or other qualifications or experience and of such other matters as may be specified in the rules, the amount of any superannuation allowance, additional allowance or gratuity in the case of any person who at the date of the passing of this Act is a civil servant and employed in employment to which this section applies shall be computed in accordance with the provisions of subsection (3) of this section.
(5) Any order under this section may be revoked or varied by a subsequent order of the Treasury.
(6) The powers conferred by this section to make orders and rules shall be exercisable by statutory instrument."
The noble Lord said: I have for far too long been either an Officer or otherwise in this House not to feel a sense of great diffidence whenever I address it; and my diffidence on this occasion is increased by other circumstances, among them the fact that I am conscious of standing between the Committee and the resumption of the discussion on the Iron and Steel Bill. Another reason is that this matter to which I am drawing attention is a highly technical one, and can be dealt with only in technical language. I therefore fear that I am not likely to arouse or sustain your Lordships' interest. Lastly, I am told that it is of great importance that this Bill should receive the Royal Assent at the earliest moment possible. Every day that passes increases the risk that someone may be deprived of the benefit which he would have received if the Bill had passed. I fear that I can take no responsibility, however, for

621
any delay that occurs if I succeed in in-clueing the Committee to approve and accept my Amendment. It is always open to the Government to insert a clause making the benefits retrospective, say, to the date of Second Reading. If the proposals for the benefits are meritorious, there is no real reason why the Government should not take that course.
I feel hound to move for these reasons, among others. This is an almost age-long controversy and this, though perhaps not the final, is a later stage in that controversy which has continued now for something like a hundred years. This may he our last chance for a long time to bring the matter before Parliament and to cause it to be debated. I have the support of the Law Society, with whose assistance this Amendment was prepared. I have the support of the Bar Council. I have the express support of the Royal Institute of British Architects and, though I am not entitled to vouch for it, I believe I have the support of the British Medical Association. Above all, apart from these supports, I have at heart the interests of the Service which I served for many years and in which I had every opportunity of observing how matters worked.
I must trouble your Lordships with a little technical detail and a little history. The first Superannuation Act was passed, I believe, in 1834. It is actually on the basis of the Act of 1859, passed just ninety years ago, that the present large field of legislation is based. The idea of the Act of 1859 on the whole has been adhered to since, though with many alterations, so that, for instance, a man who entered the Service at whatever age should, by the time he left it, have passed in it a certain number of years in accordance with which his pension should be reckoned, and that that number of years should be such as to give him what is sometimes called a two-thirds' pension on his retirement. Forty years was, and is still, the normal period for the purpose. The ordinary entrant into the administrative grades enters the Service practically as soon as, or very soon after, he comes down from the university. Therefore, the possible or probable retiring age being between sixty and sixty-five, he will complete his forty years and earn his full pension before the end of his service comes.
But the lawyer, the architect and the doctor, if they are to be properly chosen in respect of their possession of legal, architectural and medical qualifications, must necessarily enter later. The Treasury regulations lay down the age of between twenty-six and thirty-five years as being the normal age of entry for that kind of person. If you enter at thirty-five years of age and you are going to be retired at sixty years of age (which, I am sorry to say, is often the case now) you cannot earn a full pension or anything like it. Although people probably did not anticipate that the retiring age would have dropped from sixty-five to sixty, the framers of the Act of 1859 still had regard to that principle. They desired that these extraneous people (if I may call them so) should have the same opportunities as the administrative class of earning full pensions before retiring. Therefore, they inserted a provision enabling the Treasury to grant what we call "added years" to the years which the man had actually served when he left the Service. Of course, it was not intended that the Treasury should act capriciously in respect of particular cases, but that they should make orders in relation to certain classes of men—for instance, the people we now call legal assistants—granting seven, ten, or five years as attaching to the holding of that office, so that the lawyer, architect or doctor should have the same opportunity as the man in the administrative class had of earning a full and proper pension by the time he retired. For some reason which it is difficult to understand, that particular provision was always greatly disliked in certain directing quarters, and, ever since I can remember, the Treasury have always wished to get rid of it.
In 1888 the Ridley Commission recommended that it should go, and they joined with that recommendation this curious recommendation:
"Such a man,"
they said, having described the kind of person I have just mentioned,
"is better remunerated by sufficient salary, which, by an immediate charge, is likely to receive greater attention than a prospective addition to pension."
On that argument, all I can do is to adopt an observation made by the Barlow Committee, to which I shall have to allude in a moment, who said:

623
"The reasons for which it was condemned are nowhere clearly stated and we are not satisfied that we have fully understood them."
I certainly have not fully understood them, and I do not think that anybody else has either, because, in spite of that recommendation and the fact that subsequently "added years" have been taken away, special arrangements have still been made for special classes of people, which comes to much the same thing. By these "added years," numbers of legal officials have their pensions arranged so that, for example, in twenty-five years they can accumulate as much merit as they would have accumulated in forty years under the original plan, and so on.
I do not want to go into more technical detail than I can help. The object of the Amendment, therefore, is as I have just stated, and I do not think its merits require much argument. What I propose to do is to use arguments which have been stated by persons much more capable of judging than I am, and much more capable of putting what they have to say into words, and particularly the two Committees, one presided over by the noble Lord, Lord Chorley, and the other presided over by Sir Alan Barlow. Sir Alan Barlow's Committee, which was the first of the two, was appointed in, I think, 1944, or it reported in 1944—I am not sure which it was—and it had to deal with this particular matter when considering the question of the legal departments generally. I have already quoted one sentence from their Report, but they go on to say:
"One at least of the reasons for the abolition of 'added years' does not hold good to-day, namely, that given by the Ridley Commission in 1888, who expressed the view that cases in which men entered the service after the normal recruiting age were better dealt with by increased remuneration than by increased pension. The cases of officers serving in the departments to which this report applies have not in fact been dealt with by that or any other method, and, in view of the effect of taxation … the method suggested in 1888 would clearly be unsuitable now."
Then they make various recommendations for the improvement of salaries in the department, and they go on to say—
"Our other recommendations cannot be expected to produce the desired results unless substantial improvements are made in the pension conditions applicable to members of
624
the legal civil service either by the re-introduction of a system of 'added years' or otherwise."
When I say "the legal civil service" I hope your Lordships will remember that I am thinking about architects and doctors just as much as about legal people, and the arguments apply to them all. The Committee therefore went on to make certain recommendations, and guarding provisions which I have endeavoured to incorporate in my Amendment. Lastly they recommend:
"the raising of salaries to the scales shown in"—
a particular column which they specify—
"and the provision of adequate pensions for legal civil servants."
I do not like using the names of civil servants in this House or anywhere else, either for praise or for blame, but in this case I am bound to mention the people who formed that Committee so that your Lordships can judge of the authority they had to make recommendations of this kind. That Committee was presided over by Sir Alan Barlow, who was then Second Secretary at the Treasury, and other members were Sir Granville Ram, who is Senior Treasury Counsel, Sir Frank Newsam, who was Deputy Under-Secretary of State at the Home Office and is now Permanent Under-Secretary, and Mr. S. H. Brown, who is a partner in the firm of Linklater and Paines which is probably known to your Lordships as a well-known firm of conveyancers and general solicitors in Lincoln's Inn. That is the first of the two Committees.
The other, one on which I very greatly rely—and I hope Lord Chorley will support me—made very similar proposals. I am sure he will be glad to hear his own words of wisdom. After dealing with this problem they say:
"Another problem is raised by the fact that certain classes of civil servants, that is doctors and lawyers, do not as a rule enter the service until they have had some postgraduate experience in other fields, and thus do not serve for long enough to qualify for maximum pension. Special arrangements have been made in exceptional cases, under Section 2 of the Superannuation Act, 1946,"—
I will come to that later—
"to credit late entrants with 'added years' for superannuation purposes; we think those arrangements ought to be extended more widely."

625
That is what my clause is designed to do. Unless you require, as I was going to say, Moses and the Prophets, I do not think I need add anything to what both those Committees have already recommended.
I have not yet heard nor has anybody else, any reasoned argument to the contrary. It is quite true that when this matter was debated in the House of Commons they, or the Committee, were told that they ought to wait and see how things worked under Section 2 of the Superannuation Act, 1946, which does, to some extent, but to a very distant extent, deal with this matter. If your Lordships will look at the Superannuation Act, 1946, of which I am afraid I must read the two relevant subsections, you will see there is very little reference to this particular question. It begins:
"If with respect to any person becoming a civil servant after attaining the age of forty years"—
then something happens. As I have already told your Lordships, the normal entrance age for the people of whom I am talking is 26 to 35, and under that section they can obtain no advantage whatever, nor does it help recruitment in any way.
The Act also says:
"If with respect to any person becoming a civil servant between the ages of thirty-five and forty years the Treasury have directed that he shall be subject to the provisions of the last foregoing subsection, the provisions of the last foregoing subsection shall apply in his case accordingly."
The knowledge that possibly the Treasury may make an order dealing with a person after he reaches the age of 35 again will not help to recruit people between the ages of 26 and 35. I think only five orders of this kind have ever been made and they cannot affect the particular class of person of whom I am thinking. There are other limiting provisions in the Act of 1946, but they are too technical for me to trouble your Lordships with them.
In those circumstances I wish to press the Government very hard indeed to meet me on this matter. When I was discussing it earlier, and before I came here, somebody said to me "What you want to do is to spend more money?" The last thing I want to do is to spend more money, above all on civil servants. But if we are to spend money, it should be spent so that it is likely to produce the
626
best possible result. You do not produce the best possible result if you do not offer to entrants coming into the Civil Service such advantages as are likely to attract the best people for the purpose in view. The result may be very serious indeed. Some of these men when in the Civil Service will have to deal with matters of very great importance, socially and financially. The officers in the office of the Treasury Solicitor deal continuously with sums running into millions of pounds. It is very desirable indeed that those men should be of the highest possible quality. Ban these Committees have reported that people, of the highest quality cannot be obtained in present circumstances.
This service in the past has produced very distinguished civil servants. Looking back, I would mention such men as Lord Tring, who was the original Parliamentary Counsel, the late Lord Dysart, who many of us remember was Treasury Solicitor, and among those who fortunately are still alive although no longer in public service is Sir Maurice Gwynne. All these men received "added years" on entrance. They all lived laborious lives. They all made an immense contribution towards the administrative life of this country and to the Government in particular. Such men must be obtained if the work is to be done. I do not want to say anything unpleasant about His Majesty's Government or of anybody, but of late years undoubtedly legislation has greatly increased the number of legal problems as against the conditions fifty years ago, just as it has increased the number of problem; with regard to health, architecture and architectural planning; and, regrettable as it may be, unavoidably it has extended the Civil Service.
The sources from which entrants can be drawn, so far as the Bar and the solicitors' profession are concerned, are very limited, and, of course, there is great temptation to take just anyone who comes along. It is very desirable to find the kind of man who is prepared to work hard and to sacrifice his possible prospect at the Bar or in practice as a solicitor, the kind of man who is usually inspired to leave the Bar or leave the solicitors' profession because he wishes to make some more definite contribution towards the national life than is

627
possible if he is carrying on an independent practice and is not engaged in public affairs. These are the people we want to attract. Both Committees have reported that they cannot be attracted in sufficient numbers without some arrangement like this. I earnestly press upon His Majesty's Government that such provision should be made, and I beg to move the Amendment.
Amendment moved—
After Clause 44, insert the said new clause.—(Lord Schuster.)
3.32 p.m.
LORD CROOK: Before speaking on this Amendment may I remind your Lordships of the personal interest which I am under obligation to declare? I am a member of the National Whitley Council, Staff Side, the body which negotiated with His Majesty's Government the Bill which is now before the Committee. May I say how much I appreciate the kindly thought expressed by Lord Schuster in moving this Amendment? May I also congratulate him on the way in which he has put over a very difficult case? My noble friend and I do not find this a new doctrine to discuss because over twenty years ago we were both members of the National Whitley Council. We sat then, as now, facing each other, and we tackled this problem as one which, even then, had been outstanding over a long period of time. There can be no doubt of the validity of the case which has been made by the noble Lord or of the complete justification for a claim for added years. Over a long period, the National Whitley Council, Staff Side, have agitated for this and many other desirable reforms of the Superannuation Acts, and, in the result, have secured from Parliament a succession of amending Acts—the Acts of 1935 and 1946 being notable Acts which have improved Civil Service superannuation.
The Bill now before the Committee, and on which I had the privilege of addressing your Lordships when it was read a second time, is one which carries out the largest-scale improvements of Civil Service superannuation ever undertaken. In negotiations on this kind of thing, as one would expect, we did not always come out with everything that we had hoped to obtain. In the course of those negotiations we failed to secure for the Civil Service three important items.
628
Added years, to which the noble Lord has referred in moving his Amendment were one, an additional amount of money for the gratuities of temporary staffs dismissed from the Civil Service was another, and more important than both of those together was the third—the counting of unestablished service for superannuation purposes. It was agreed that those who signed the agreement having failed to obtain those three items were at liberty to make use of their constitutional and democratic right to approach Members of both Houses of Parliament to try to secure alterations in the Bill during its passage through Parliament. As a result, in Standing Committee B of the other place there was a defeat of the Government on the major issue I have mentioned—that of counting unestablished service for superannuation purposes.
When the Bill came before the other House on Report, the Chancellor of the Exchequer resisted the change, and the decision of Standing Committee B was reversed. The Bill, therefore, went back into its original form, with none of the three additional items which I have mentioned embodied in it. That, naturally, was something which those of us who had been taking part in the agitation regretted. We realised, however, that we still had an agreement to which we were parties and that we had a magnificent Bill, though there are many more things which we shall ask the Government to introduce in due course, including the three items that I have mentioned. When the Bill came to this Chamber, I had to look at my own humble position, and to consider whether I would table an Amendment which I was not debarred from tabling by any undertaking to the Treasury. I also looked with great interest to see whether any other noble Lords, particularly from the Benches opposite, would move Amendments. But what we were conscious of was that anything which we did at any stage of the Bill's progress in this House—if I may say so candidly—would be nothing more than a gesture.
If we "propaganded" here by moving Amendments, and if we were fortunate enough to secure for them the approval of your Lordships, thereby bringing about defeat of the Government, those Amendments would have gone back to the other

629
place. We should have had the same battle all over again, and eventually the result would have been the same. We had no reason to expect that the Chancellor of the Exchequer, who had resisted the large cost of counting unestablished service for superannuation purposes, would give way on the second occasion. If this Amendment is carried now, much as l like it in principle and pleased as I should be to see it enacted, the truth is that, from the Civil Service point of view, the whole balance of events will be upset. Those who have been handling these discussions in the formative stage during the last eighteen months would be bound, if this Amendment were sent to the Commons, to want to suggest on the Report Stage these other Amendments that I have indicated, which are all important. We should have a battle on those and, eventually, there would probably be rejection of all of them in the other place on the grounds of their cost. To carry an Amendment of this kind and not to carry one embodying the major reform which we are seeking—that of counting unestablished service, a question which is causing great agitation in the Civil Service—would, in the opinion of many of us, be most unwise.
If we carried this very desirable Amendment all we should do would be to cause unnecessary delay in the passage of the Bill, which is something which we are anxious to avoid. It is no mere figure of speech to say that every day worthy men in His Majesty's Civil Service pass on without the benefits of the widows' pension and other benefits contained in this measure. May I remind the noble Lord, Lord Schuster, that there are one or two dear colleagues, in the Treasury and elsewhere, and known to both of us, who have passed on in recent weeks without recieving the benefits which will be conferred by this measure. Therefore, I have reached this conclusion. Though this Amendment is one which I should dearly like to see inserted in the Bill, though it does something which I shall hope to see both Houses of Parliament adopt and pass into law before I pass on, I think it is right now to urge my noble friend, having ventilated this matter so fully, to withdraw the Amendment so that the passage of the Bill may not be delayed.
3.40 p.m.
LORD ROCHE: I desire to say just a few words in support of the Amendment which has been moved by my noble friend Lord Schuster. I venture to do so despite the persuasive advice which has been given to him by the noble Lord who has just sat down. I think I can put in the briefest aril simplest fashion the point which I want to make. If your Lordships will look at the Amendment you will see that it relates to a class of persons who al e professional and who have specialised qualifications which can be secured only outside the Civil Service and before they enter it. It is therefore only natural that they should enter the Service late. The class of such persons whom I know best are lawyers, but of coarse all those concerned are not exclusively lawyers. To the question: "Is there a class of persons whom it is desirable to have in the Civil Service with special qualifications secured outside?" the answer I give, with some emphasis, is, "Yes."
For some years—from 1914 to 1917— on the invitation of that very eminent and able civil servant, Sir Eyre Crowe, I advised the department which he set up on legal matters and spent some hours most days between 1914 and 1915 in contact with the Civil Service. The impression I derived then was that a lawyer in a department like that was absolutely, useless unless he had obtained his qualifications beforehand in practice and in experience of life. That is the only class to whom this provision applies. I am satisfied that to obtain such persons at the proper age and with proper qualifications we must have a provision like this. I have never heard of any other satisfactory way of doing it. I think it would be an economy and not an expenditure to pass this. With regard to the plea of the noble Lord who has just sat down, it really amounts to this: that because he cannot have the whole loaf, he will not give my noble friend this little bit of bread. I do not think your Lordships should assent to that proposition. It is an egalitarian doctrine, no doubt, but the conditions are different and the qualifications are different, and I think the House should provide for people with qualifications such as are the subject matter of this clause.
LORD WRIGHT: I do not want to prolong this discussion at this stage and

631
at this time. It is unfortunate that it cannot be ventilated more fully because it is a very important matter. It would be an act of elementary justice to a very important body of people who enter the Civil Service later in life and who bring to it special qualifications which they have learned in their experience outside. I feel the House is indebted to the noble Lord, Lord Schuster, for raising this question, and I wish to express my complete sympathy with all that has been said in favour of some alteration, if it can be secured.
THE MARQUESS OF SALISBURY: I do not intend to intervene at any length in this matter, on which I am afraid I am not qualified to express a view, but I feel sure that the Government will realise that the noble Lord, Lord Schuster, speaks on this subject with a very special authority, derived from a lifelong experience of it. I am sure that they, like us, have been impressed by the deep conviction with which he spoke. I imagine that it is not the intention of the noble Lord to press his Amendment to a Division for, as he knows, this is a question on which varying views are held in all Parties, but I hope that the noble Lord, Lord Pakenham, when he comes to reply for the Government, even if he is not in a position to make any commitment for them—as I imagine may well be the case—will at any rate be able to assure the noble Lord that the Government will give further serious consideration to this matter in the light of what he said.
LORD PAKENHAM: The noble Lord, Lord Schuster, began by saying that he was diffident about his capacity to address the Committee and hold its attention. I feel that if the noble Lord, with his remarkable grasp of fact and language, is to feel diffident, some of the rest of us should possibly quake at the knees. I hope that the noble Lord will never feel that he will not hold the attention of all members of the House capable of following a rational argument delivered by a great authority—and that means literally the whole House. I followed him not only with great care but with great interest. Of course, I will assent to the suggestion of the noble Marquess that I should ask the Government to look further into this matter, but it would be wrong for me to suggest that there is
632
much, or indeed any, likelihood, so far as I know, of change of view. I say that, not because the noble Lord did not put his case with great force, but because this has been very carefully considered by the Government already. I cannot do more than say I will lay the noble Lord's remarks before my right honourable friend, but I am afraid I must not raise his hopes to any degree.
I think the noble Lord was again perhaps too modest in saying that he did not feel the merits of the case needed argument. I think they do need argument, from both sides, and it seems to me that he put the arguments of one side very clearly. He was answered, from a slightly different angle from the one which preoccupies me, by the noble Lord, Lord Crook, who made a very effective contribution from that angle. But perhaps I may state the reasons why the Government have not been able to adopt the suggestion of the noble Lord after all this consideration going back some years—indeed, in the view of the noble Lord, going back over a hundred years. As the noble Lord has explained, broadly speaking the object of the proposed new clause is to allow professional civil servants to count for pension the years during which they were acquiring their professional qualifications. Take the simple case of a solicitor who joins the Civil Service, shall we say, at the age of twenty-seven, after four years of experience as a solicitor. Under the noble Lord's proposition, he would count for pension the four years prior to his entering the Service. That is the point, put very briefly. It is intelligibly argued by the noble Lord that it is impossible for some of these civil servants who come in later to serve sufficiently long for a maximum pension unless they count their years of training. That is the case which the noble Lord stated and which was reinforced by a strong legal authority behind him.
This is not one of these cases where one sweeps aside the point and says there is nothing in it. I can appreciate the force of the argument, but one has to balance it against a great many other arguments. The noble Lord said that the last thing he wanted to do is to spend more money on the Civil Service. It is not the last thing I want to do; it is one of the first; but it is the last thing

633
I am afraid I am able to do this afternoon. In that sense we come together. There is a strong case for doing still more, if we had the money, for all branches of the Government service, including the very important people whom the noble Lord has specially in mind.
Let me set out the arguments against this proposition, apart from the broad economic position of the country. Pension, like pay, is part of the remuneration for the work, and we see no reason why civil servants of this kind, in the normal course of events, should receive a pension for forty years' service if less than forty years have been served. Whatever people say about training for service, it cannot be regarded as the same as service, and we would be conferring a special advantage on these people if we treated training for service in that Way. Statistics on this matter are not easy to come by, but I would mention that the classes the noble Lord has in mind tend to get higher pay not only during their career but also at the time of their retirement, and it is at that time that pay is taken for calculation of pension. On the whole they tend to be rather higher paid than the average. Thirdly, in so far as special pension provisions are needed for late entrants, the Government view is that the existing powers given by Section 2 of the Superannuation Act, 1946, which deals with late entrants, are adequate. This Act, to which the noble Lord alluded, authorises the Treasury in the case of any individual—I stress the word "individual"; I am not now talking of an actual class—who enters the Service after the age of 35, to pension him, not on his actual service, but on his actual service multiplied by a maximum factor of eight-fifths, which I take it would be more generous in the case of such individuals than what the noble Lord has in mind. The object is to supply an incentive to a few professional men of high attainments, whose acquisition to the Civil Service is essential to the efficiency of a limited number of departments. I must make it plain that the Government do not feel that that Act could be, or should be, applied to whole categories; indeed, it could not be on a ratio of eight-fifths.
It is difficult to argue—though I do not want to lay too much stress on this —that the marginal difference in these cases between the pensions secured under
634
the noble Lord's plan and the pensions provided by the Government would make the difference in late life between hardship and a reasonable standard, since in the majority of cases the new clause would tend merely to increase very slightly what are already adequate pensions. Finally, I would mention a small point—I agree that this could be corrected—which is that the clause as drafted by the noble Lord is technically defective, since it is based on the assumption that there is a normal age of recruitment to the Civil Service. As the noble Lord knows, there is no normal age for recruitment.
LORD SCHUSTER: I do not accept that. I do not think any court would have difficulty in determining in a particular use what the normal age of recruitment is. Everybody knows what the normal age is.
LORD PAKENHAM": I am sorry to have introduced the paint, if the noble Lord questions it.
LORD SCHUSTER: I think that is playing with words. Everybody knows at what age people enter the administrative class. The ages are actually fixed by regulation. What the difficulty is in determining the normal age, I cannot imagine.
LORD PAKENHAM: Recruitment varies from 16 to 24 years. I am advised that this alone makes the clause as drafted by the noble Lord unworkable.
LORD SCHUSTER: I am quite prepared to alter the drafting of the clause in any way that is agreeable to the noble Lord. I am trying only to assert a principle. I endeavoured to put in as many guarding provisions as I could find for the sake of the Civil Service and the Commissioners. I am not in the least attached to the drafting of the clause. I am not much of a draftsman, and it is very difficult to draft a clause accurately.
LORD PAKENHAM: I mentioned that as an additional point. It is the fifth objection, and I am ready to leave that out of the discussion. I thought it necessary to put on record that the clause as drafted by the noble Lord is unworkable. No one likes turning down any proposal which is commended with so much sweetness and authority as this has been by the noble Lord and his colleagues. No one likes doing anything at all which

635
might seem in any way chilling to this most reputable clause in relation to entrants into the Civil Service. But the noble Lord, Lord Crook, has explained that, in the view of the Civil Service as a whole, there are other claims more pressing than these, and I have given three important reasons, at any rate, why the Government cannot accept the Amendment. I will certainly ask my colleagues to reconsider the matter but, as I said at the beginning, I am afraid I really cannot hold out any hope.
LORD SCHUSTER: In courtesy to the noble Lord, and possibly in justice to myself, perhaps the Committee will bear with me if I reply. Running through the speech of the noble Lord there was this kind of thread: that we are trying to confer some benefit on some particular persons or class of persons. That is not the object of this clause. The object of this clause is to try to ensure that those persons who are recruited at the beginning, and enter with professional qualifications, are the best who can be found for the purpose. Of course, we cannot hope to recruit persons of such legal eminence—I will not mention any names—as some of those who sometimes sit on these Benches and on the Benches behind me. But we do hope, by holding out reasonable prospects, that we shall recruit the best people. Having recruited them, what we want is that they should be able to do their work in the way in which it is described in one of these Reports, where it says that the civil servant when he is doing his work ought not to be worrying himself about details of wretched, trivial finance, as to what will happen to him next and whether he is going to be ruined and have nothing to live upon. We are not trying to confer benefits upon people, but on the Service. It is for the sake of the Service, and that only, that we make these proposals. I entirely adopt what I think my noble friend Lord Roche said, that, in fact, improvements in the conditions of the recruitment of the legal Civil Service are likely to be highly remunerative to the State itself.
I would like to mention one further point which I think arises from the noble Lord's reply. If it does not, I hope he will pardon me. I attach great importance to the recruit being in the rather later than the earlier ages of the period
636
of from 26 to 35 years. I do not believe we want a lawyer who is merely a man who has passed a good examination. What we want is the man who has come to know the law as an active, living thing, operating on men's minds, on their bodies and on their fortunes. That is equally true of a solicitor or a barrister. Therefore, if I were sitting on a Board—and I have sat on many of this kind—I would tend to select the older rather than the younger man, because I would prefer a man with knowledge gained from the world rather than the man with knowledge gained from books. I say that only because it adds to the point which I made, that we are trying to get the best men and are not hoping to give men we already have further advantages.
Meanwhile I am grateful to the noble Lord for his courtesy, for his kind observations about myself and for his patience and forbearance in listening to me. If I have the matter put to me as it has been put by the noble Marquess, Lord Salisbury, I have no choice I cannot go on. In the circumstances, I would ask the leave of the Committee to withdraw this particular Amendment. I would, however, like to press on the noble Lord, Lord Pakenham, how greatly we desire that the matter should be investigated. If I may venture to say so to my noble friend Lord Crook (we have been "enemies" for so many years, he will, I am sure, not mind my calling him that), I really cannot see why, because some great reform such as he desires cannot be carried out, this comparatively small reform, which is within an easy compass, can be implemented without great financial cost, and which speaks for itself on merits, cannot be carried out. Having said that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clauses 45 to 52 agreed to.
LORD PAKENHAM LORD PAKENHAM moved, after Clause 52, to insert the following new clause:
Application to employees of Cable and Wireless, etc.
"…Section six of the Commonwealth Telegraphs Act. 1949 (which enables the Postmaster General to make regulations with respect to the pension rights of employees of Cable and Wireless Limited who enter the civil service of the State) shall have effect

637
as if the references in paragraph (d) of subsection (2) of that section to the Superannuation Acts, 1834 to 1946, included references to this Act."
The noble Lord said: This new clause is required to extend the benefits of the Bill, in addition to those of the earlier Superannuation Acts, to the staff due to be transferred to the Civil Service when the Post Office take over Cable and Wireless. I beg to move.
Amendment moved—
After Clause 52 insert the said new clause. —(Lord Pakenham.)
On Question, Amendment agreed to.
Remaining clauses and Schedules agreed to.
House resumed.

HOUSE OF COMMONS (REDISTRIBUTION OF SEATS) BILL [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.

IRON AND STEEL BILL
4.0 p.m.
House again in Committee (according to Order).
[The EARL OF DROGHEDA in the Chair]
Clause 15:
Compensation to holders of securities.
(9) For the purposes of this section, the value of any securities not being securities to which subsection (2), (3), (4), (5) or (6) of this section applies, shall be such value as may be agreed between the Minister and the said stockholders' representative or, in default of such agreement, as may be determined by arbitration under this Act, to be the value that the securities would have had under the preceding provisions of this section if they had been quoted in the Stock Exchange Official Daily List on all the dates mentioned in subsection (2) of this section or, in the case of securities of a class issued on or after the earliest of the said dates, on such of those dates as occurred after the date of issue, and the arbitration tribunal, in determining the value that the securities would have had as aforesaid, shall have regard to all relevant factors including, as far as may be, the value of securities to which subsection (2) or subsection (3) of this section applies (as determined under that subsection), being securities which, as regards all matters affecting their value, are most nearly comparable to the first named securities:
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved to omit subsection (8). The noble Viscount
638
said: In the temporary absence of my noble friend Lord Rennell, I think I am right in saying that this first Amendment on the Order Paper is to be regarded as consequential on the Amendment taken last night.
LORD LUCAS OF CHILWORTH: Accepted on the understanding that it is only consequential.
VISCOUNT BRIDGEMAN: Yes. I beg to move.
Amendment moved—
Page 17, line 37, leave out subsection (8). —(Viscount Bridgeman.)
LORD RENNELL: This is one of the consequential Amendments which the Leader of the House discussed yesterday.
On Question, Amendment agreed to.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved, in subsection (9) to omit "as far as may be" and insert "where applicable." The noble Viscount said: This next Amendment deals with a slightly different aspect of this problem; that is to say, of the non-quoted companies. The Committee will remember that yesterday we were dealing entirely with the question of the quoted companies. In this subsection we come to the provisions for the non-quoted companies, which are to be valued on an agreed value between the Minister and the stockholders' representative, where regard has to be had, "as far as may be," to the value of comparable Stock Exchange securities.
We spent a good deal of time last night explaining how difficult it is to use Stock Exchange values as a measure of value of the quoted securities. How much more difficult is it, then, to use it as a measure of value of the unquoted securities? In order to do this, under the previous nationalisation Acts, where there are certain comparable provisions, assumptions of every kind were necessary—and will be necessary here. You have to make an assumption of when the stock was issued; what were the conditions prevailing at the time; what was the attitude of the market, including the stags, and so forth. All the time you had to bear in mind that there were probably good reasons why these stocks should not have been introduced in the market at all. I say that, because I feel that it will be extremely difficult to claim that every case where a non-quoted

639
security is being valued has any counterpart in any quoted security.
To go further, there are thirteen companies where there is no comparison whatever. The Committee will recollect that altogether there are ninety-six companies in the Third Schedule, of which twenty-six are quoted and seventy are not. Some of those are subsidiaries, and that leaves a figure of about fifty-five companies which will have to be valued under this subsection. Now of those fifty-five companies, thirteen do nothing but produce iron ore—they have no other business. Curiously enough, it so happens that there is no company which is quoted on the Stock Exchange which has, as its sole business, the production of iron ore. I am submitting to the Committee that there are cases where there is no analogy at all between any Stock Exchange value and the value of these non-quoted companies. That is the reason why I am moving the Amendment which stands in my name and in the names of my noble friends. It is coupled with the next Amendment on the Marshalled List which is to leave out the words "most nearly." Those two Amendments go together, and what I have been saying applies to both of them. I think this is a reasonable Amendment. It brings this clause into line with what I think are the actualities of the case. I beg to move.
Amendment moved—
Page 18, line 9, leave out ("as far as may be") and insert ("where applicable").—(Viscount Bridgeman.)
LORD LUCAS OF CHILWORTH: The answer to the noble Viscount is that the case will go to the arbitration tribunal only if the stockholders' representative and the Minister cannot agree. We say that if the noble Viscount's Amendments are accepted the arbitration tribunal's discretion and powers, and their whole operation, will be handicapped. If it is true, as the noble Viscount says, that there are shares where there is nothing comparable, then the arbitration tribunal will not be able to take that into consideration. But why let them disregard, or require them to disregard, something that is "most nearly" comparable? I suggest that in practicalities this Amendment is unnecessary, because experience suggests that the Minister and the stock-
640
holders' representative have never yet fallen out—a fact which shows once again that the stockholders' representative is only too glad to take the Minister's offer. So far as electricity and the other nationalised industries, where there is an arbitration tribunal, are concerned, there is not one case where this matter has had to go to the arbitration tribunal. With that explanation, I hope the noble Viscount will see fit not to press his Amendment.
VISCOUNT BRIDGEMAN: I feel to a certain extent reassured, if not convinced, by what the noble Lord has said. I do not think this will handicap the tribunal because my Amendments substitute the words "where applicable" for "most nearly." Therefore, they would not preclude the tribunal from taking into account Stock Exchange values in cases where they thought it right to do so. But I am reassured when I hear that they will not be asked to stretch the analogy beyond a reasonable point. I think we can leave it at that. I am glad to have had the noble Lord's assurance, and in withdrawing this Amendment, may I say that I shall not be moving the Amendment which immediately follows?
Amendment, by leave, withdrawn.
LORD RENNELL: This Amendment is consequential on the Amendment which was moved last night to Clause 15. I beg to move.
Amendment moved—
Page 18, line 26, at end insert:
("( ) If any question arises under any of the foregoing provisions of this section as to the value of any securities it shall be settled by agreement betweeen the Minister and the stockholders' representative or in default of such agreement, by arbitration under this Act:
Provided that in the case of any additions or deductions to be made to or from the Stock Exchange values of two or more classes of securities of a company the total amount of the additions or deductions shall be settled as aforesaid and the proportions in which the total amount is to be allocated to the different classes of securities shall be settled by a scheme assented to by such majority as is specified in subsection (2) of section two hundred and six of the Companies Act, 1948, of the holders of each class of securities concerned or in default of such assent determined by arbitration under this Act.")—(Lord Rennell.)
LORD LUCAS OF CHILWORTH: This Amendment is only consequential and we in no way accept it.
On Question, Amendment agreed to.
Clause 15, as amended, agreed to.
Clauses 16 and 17 agreed to.
Clause 18:
Control of dividends, interest and other payments
(2) The payments of interest or dividend permitted under this section are as follows:
(b) in the case of securities forming part of the share capital of the company—
(i) if the securities fall in the class, or in one of the classes, which ranks or rank lowest in order of priority for payment of dividend (in this section referred to as "ordinary shares"), payments of dividend at the rate of four per cent. per annum or the rate calculated as an annual rate, paid on that class of securities in respect of the last financial year in respect of which a final dividend was paid before the twenty-ninth day of October, nineteen hundred and forty-eight, whichever is the higher;
VISCOUNT BUCKMASTER VISCOUNT BUCKMASTER moved, in subsection (2) (b) (i), after "rate" (where that word occurs a third time) to insert:
"which would absorb the same proportion of the net revenue of the company (as certified by the auditors or one of the auditors of the company) for the period in respect of which the payments of dividend are made as the dividends."
The noble Viscount said: Before touching on the two Amendments standing in my name I would like, if I may, to say something about one or two remarks which fell from the noble Lord, Lord Lucas, last night. I am somewhat handicapped because I have not had an opportunity of seeing Hansard which published the end of last night's debate, though I think my noble friend excluded me from the references he made concerning other noble Lords who spoke. Still, speaking purely for myself, I wish to make it quite clear, that if I attempt to the best of my ability to press a case home with such force as I may possess it in no way impugns the political integrity of the noble Lord, Lord Lucas, which has never for one moment been questioned by me. The noble Lord will appreciate that Ministers in responsible positions are not altogether guarded in their remarks about noble Lords who sit on this side of the House and we might not be expected to observe too nice a standard of behaviour if we fell into the category to which we have been relegated. Be that as it may, I am sure the noble Lord is now quite happy on the point, and I am sure he
642
understands that I did not impugn his political integrity in any way at all.
I would like to thank my noble friend Lord Swinton, who is not here at the moment, for saying that those who supported the Amendment were not voicing the view merely of one half of one per cent. of the population. I was not voicing the views of any section of the community, and the noble Lord, Lord Lucas, knows that if I had a personal interest in this matter I would have freely declared to it; I have in fact no iron or steel shares, and do not think I have ever owned any; I am not in the City or now a member of the Stock Exchange. Indeed, I am doubtful whether many can be more divorced from iron and steel than I am. I would like however to remind the noble Lord, Lord Lucas, that there are over 100,000 small shareholders in these great steel companies, and all that I and other noble Lords who spoke were seeking to do was to secure that what we believed to be right should be done. If we pressed the case home it was because once or twice Lord Lucas has shown signs of seeing what we on these Benches believe to be the light, and our purpose in pressing home the case was to drive away and dispel what we feel are the mists which cloud his judgment in this matter. Having left him, I feel sure, completely happy, and asking your Lordships forgiveness for my digression, I will now apply myself to the Amendment.
I think it will be convenient to your Lordships if I were considered to be addressing myself to the two Amendments at the same time. The Amendment relates to a clause the purpose of which is to prevent the distribution of assets by an excessive or improper increase of dividend. That is a purpose in which I am entirely in accord with noble Lords opposite. It would be quite wrong, once the principle of nationalisation has been accepted, that it should be possible to empty the till in order to defraud the Government. But, having said that, I would say at once that this Amendment has no such purpose and contemplates no such thing. This Amendment is designed to give relief to those companies which have, over a period of years, embarked on very large sums of capital expenditure, expenditure which is now beginning to fructify and the fruits

643
of which are altogether denied to the unfortunate shareholders. This great industry, as the noble Earl, Earl Dudley has said, has not been afraid to spend, in a very large way indeed, sums running into hundreds of millions. In my submission it is altogether wrong that shareholders should be denied any possibility of any return from this expenditure, which was obviously undertaken not only in their interest but in the interests of the nation as a whole. As is perfectly plain, owing to the operation of dividend limitation they must be denied any such participation. Since the year 1946–47, to which I think dividend limitation relates and to which therefore the restriction in this clause relates, the output of steel has increased by 3,750,000 tons, owing to the great expenditure which was undertaken by the companies concerned.
Now dividend limitation was introduced as a voluntary measure, to exist for one year, and that period was subsequently extended for a further year. Under this Bill, with a vesting date which may not have effect until August, 1951, you get a very substantial extension of a period of voluntary limitation which was supposed to come to an end in twelve months time. I feel sure that, whichever noble Lord replies to this Amendment, he will give due weight to that particular point. There is in this particular case a long and somewhat indefinite extension of a purely voluntary principle which should have terminated approximately twelve months from the present date. I would further put to noble Lords opposite this point: that, in the words of the Chancellor of the Exchequer himself, the money which might have been distributed in dividend, but which has in fact been ploughed back into the assets of the companies, should increase the value of the shares. It seems that that can be only because, in the final resort, the shareholders expect to participate in it. If the Chancellor's argument was sound—and I do not accept that it was—it can have been only because in the end the shareholders hoped and expected to receive something; but in this case they can receive nothing for the greatly increased assets, because the State takes them over. Out of the very words of the Chancellor of the Exchequer himself I
644
hope that I have proved the hardships of the circumstances of this particular case.
This Amendment does not propose, and certainly I would not support, any reckless or extravagant increase of dividend. All this Amendment proposes is that if, as result of this great expenditure which has been undertaken, the net revenue of a company should increase, the company should be permitted to pay dividends of the same relative percentage. To put it into somewhat simpler form, if the net revenue of a company were £100,000 and it paid out £4,000, then if net revenue were £200,000 it would be entitled to pay out £8,000—and no more. I hope that I have made that clear to the noble Lord—the wording of the Amendment is necessarily rather involved. It cannot in justice be argued, I submit, that such a proposal is inflationary. The steel industry, quite rightly, pays very high rates of wages: roughly £10 in money is paid out for wages and pensions for every £1 of dividend. I feel that the modest increase of dividend permitted by this Amendment only in certain circumstances is a just and proper reward for expenditure which has been entered into. It is surely not an unreasonable or wrong thing to ask in the circumstances which I have tried to put before your Lordships, with a moderation and restraint which I hope may appeal to the noble Lord. I beg formally to move the first Amendment standing in my name.
Amendment moved—
Page 2, line 28, after the second ("rate") insert the said words.—(Viscount Buckmaster.)
LORD RENNELL: I should like to support this Amendment. I am sure the noble Lord, Lord Lucas, and other noble Lords opposite would agree that there is an element of unfairness unless some such provision is made. I entirely agree that there ought not to be any question of companies dissipating their dividends after an announcement has been made of the nationalisation of the industry. We are all agreed on that. But in the case of steel companies and notably the larger companies, there is another aspect. It will be known to noble Lords that at the urgent request of the Government a great deal of capital has been raised for the production and the increased output of iron and steel, and, above all, to modernise plant. In the heavy industry the period during which capital takes to

645
fructify must inevitably be a very long period—years and not months. It is a matter of fact that a great part of the capital raised for these purposes in 1945 and since is now about to fructify, and the profits from that invested money will be reflected in the balance sheets of certain companies this year and a great many next year. The limitations and restrictions which this clause, as drafted, applies mean that there are many shareholders who are not going to benefit by the capital they have invested, the value of which will not be reflected in the price of the shares at the time of the takeover.
There is a further fact. Not only will they not derive benefit from the money which has been invested but they have indeed had the burden of carrying that money. They are having to pay interest, either preference interest or dividend on ordinary shares, so that they have the double disability of being deprived of the profits of the concern in which they have invested their money and of having the additional burden of carrying that capital whilst it was unproductive.
There is yet another point. A great number of these companies have as yet not settled with the Inland Revenue about their tax claims and counter-claims in connection with excess profits duty and similar debts arising out of operations during the war. Some companies are still receiving refunds of tax overpaid which, in the normal course of events, if paid out of revenue, could be used for increasing the distribution of dividends. It does not seem fair that because the Inland Revenue have in the first instance taken more tax than they were entitled to, and have then spent some time making up their minds about how much to give back, the benefits should inure to the Government and not to the shareholders. I cannot see how it is possible in equity to maintain a position by which the shareholders are going to be deprived of this benefit. This Amendment or an Amendment of similar purport should be accepted—always safeguarding the principle that there will be no dissipation of assets. That can be achieved by ensuring that the proportion of the money paid out by way of dividends shall not be greater than it has been hitherto, as was explained by the noble Viscount, Lord Buckmaster. I cannot see how in fairness and equity a case can be made
646
against this contention, and I hope, therefore, that the noble Lord will accept this Amendment or something like it and thus prevent what believe would be a very serious injustice.
LORD PAKENHAM: The noble Viscount, Lord Buckmaster, expressed the hope that he had spoken with moderation and restraint. I can assure him that I think he displayed both those qualities, as did the noble Lord, Lord Rennell. Perhaps I may be allowed to say, on behalf of the noble Lord, Lord Lucas, and myself, that we much appreciate the earlier part of the noble Viscount's remarks, and Lord Lucas has asked me to say that it was never in his mind to suggest that Lord Buckmaster had any selfish interests in this business or that the noble Viscount, for his part, used improper language in any way.
VISCOUNT BUCKMASTER: I felt sure it was so. Thank you very much.
LORD PAKENHAM: I now come to the Amendment. I do not honestly think it will come as a great shock when I say that the Government regret that they cannot accept this Amendment or an Amendment on these lines. In another place an Amendment was moved which was not quite the same as this but had very much the same effect. It was to the effect that where the net revenue of a Third Schedule company was higher than its net revenue in the last financial year before October 29, 1948, the dividend payment should be increased proportionately. In this case, if the revenue were higher the dividend could go up, and if lower the dividend could go down; it is a movement each way, and the noble Viscount may say that this is not a move only to increase dividends. But there is really little doubt that if this Amendment, or anything like it, were carried, it would mean in fact a considerable increase of dividends. I am ready to go into this matter at whatever length is required, but such a proposal cuts right across the financial policy of the country with regard to dividends.
It will have been observed by the Committee that in recent nationalisation measures the policy of restricting dividends has been similar to the one adopted in this Bill. Similar provisions were included in the Gas and Electricity Acts. In short, in regard to this provision, or

647
something very close to it, I suggest that here is perhaps an opportunity where discussion might produce agreement. But I am bound to point out to the Committee that any Amendment of this kind would in some measure defeat the purpose of the Government to continue the policy of dividend limitation. While the noble Viscount did not put his view quite clearly, he implied that, if the Government were reasonable, they would perhaps take off this dividend limitation fairly soon. I myself have no authority to predict anything about the future financial policy of the Government.
VISCOUNT BUCKMASTER: I did not mean to imply that if the Government were reasonable they would take it off. I was not expressing any view in that regard. What I meant was that they have asked for dividend limitation to be worked as a voluntary measure for a period of one year. That voluntary measure has now been extended for a second period of one year. Under this Bill, the vesting date of steel companies is August, 1951, which would be a great extension on that voluntary period which expires at approximately twelve months from the present dale.
LORD PAKENHAM: I appreciate that point but, as the world is to-day, I have no power whatever to hold out any hope of an alteration in the policy of dividend limitation. I think I am right in saying that that policy carries with it the support of all responsible people in the country and all members of your Lordships' House. I pay my tribute—though perhaps it is not necessary to do so because it has been paid by more authoritative persons than myself, including the Chancellor of the Exchequer on a number of occasions—to those who have had the power and have used it in the way in which the Government have asked them to use it, acting most patriotically in the policy of dividend limitation. I do not think there would be very much use in my promoting a prolonged discussion on this Amendment when agreement is not possible. I can only ask the noble Viscount in relation to this Amendment—and I say this quite solemnly—to exhibit the same attitude that he and others have exhibited in relation to dividend limitation. I ask him to withdraw the Amendment in the spirit
648
in which industrialists and financiers have acted in limiting their dividends. I beg the noble Viscount to withdraw his Amendment.
LORD RENNELL: May I ask one question? I do not want to be personally unfair, but from what the noble Lord has said, I draw a conclusion which is not one with which we agree.
LORD PAKENHAM: I hope that the noble Lord will not be unfair at all, personally or otherwise.
LORD RENNELL: A consequence is this. Let us take the case of a windfall return, of tax overpaid. Does the noble Lord think that it is fair and right that those overpaid moneys to the Inland Revenue, refunded in the near future, should inure to the benefit of the Government and not to the benefit of the shareholders? Secondly, does the noble Lord think it fair that the shareholder who has put up money for the carrying on of the business ought not—this is the conclusion—to be allowed to receive any benefit from that capital when the profits come in?
LORD PAKENHAM: The noble Lord has swung on me, as he is apt to do with that genial smile behind which lurks so crafty an intelligence, one or two points which occur more readily in the practice of his profession than in mine. I understand that a similar point was put to the Financial Secretary in another place, No doubt the noble Lord is perfectly aware of his answer.
LORD RENNELL: No, I am not.
LORD PAKENHAM: I am amazed that the noble Lord, who is so interested in this question, did not even bother to look at it. I should have thought that would be an elementary practice.
VISCOUNT SWINTON: No doubt the noble Lord thought he would get a wiser reply from the noble Lord opposite.
LORD RENNELL: My answer to the noble Lord is that so much is said in another place that I have not time to read it all.
LORD PAKENHAM: I appreciate those compliments from the noble Lord, who did not put it in quite so genial a way but meant very much the same thing. However, the noble Lord who puts to me

649
this teaser is not himself informed on the subject. Speaking without proper opportunities of preparation, I would say that the same case was put to the Financial Secretary, and he said:
"I cannot imagine that the case the right honourable gentleman gives is likely to arise. I have told him that, if it does and if there is a particularly blatant case where an obvious injustice would be done unless something of the kind were permitted, it would be possible under the clause for my right honourable friend to look at it. I hope that the Committee will not assume that I am promising that a case of this kind will be looked at favourably; if such refunds are made they obviously become assets of the company as a company and not of the individual shareholders as such."
That is the answer given. History does not relate precisely what followed in the discussion but, if the noble Lord feels dissatisfied, he can return to the attack at the next stage. That was the answer given on what I believe to be the same point that has been raised by the noble Lord. I thank the Committee for the genial way in which they have received my unpalatable remarks and once again beg the noble Viscount to withdraw his Amendment.
VISCOUNT BRIDGEMAN: We have not quite finished receiving the noble Lord's unpalatable remarks, and I would like to say a few words in summing up before my noble friend has the opportunity of considering the noble Lord's request. First, I was rather astonished to hear a proposition that fell from the noble Lord, if I understood aright, that there can be any difference between the ownership of assets by a company and the ownership that the shareholders have in those assets. Surely, the net assets of the company cannot belong to anybody but the proprietors of the company. May I go on to some of these other points? What the noble Lord said really was that, because the Chancellor of the Exchequer has asked industry as a whole not to increase their dividends for the forthcoming year, that is a reason why the Government should seek to make a law preventing one particular industry from increasing its dividends at all. However long the gap may be between the passing of this Bill and the vesting date, dividends are not to be increased at all. Therefore, no account is to be taken—and this is the point I want to get on the record—of the circumstances of the steel
650
industry. Industry as a whole—and the noble Lord himself paid tribute to it—was called upon to accept a policy. Some companies accepted an absolute policy of no increase in dividends, while most companies adopted a policy of moderation and restraint.
We claim that the words of the Amendment are entirely in line with the policy of moderation and restraint, and that in the steel industry you cannot act as you did in the case of the gas and electricity industries and say it is fair that the dividend should remain unchanged. Over and over again in this debate, we on this side have attempted to point out that the steel industry has certain features which distinguish it sharply from other industries which follow a more even course. One point which has been mentioned so often that I will not go into the details again is the question of unfructifying expenditure. The position in that regard has been made quite clear by my noble friends, and the answer that the noble Lord opposite has given whatever may be its merits, has not taken any account of what we claim to be the special circumstances of the steel industry. In his reply, the noble Lord opposite might have taken a leaf out of the book of his noble friend, Lord Hall, and added "This is politics." I think the point I have made ought to go on record before there is any question of my noble friend withdrawing his Amendment.
VISCOUNT BUCKMASTER: To the other qualities which I have endeavoured to exhibit, the noble Lord, Lord Pakenham, expects me to add one of belief in, and conciliatory acceptance of, the arguments which he has propounded. Certainly I would not wish wholly to reject them, but I would remind him, that apart from the differences to which my noble friend Lord Bridgeman has so clearly drawn such attention, there is this main and major difference in the Steel Industry—namely, that it is the only industry which has been nationalised since the limitation of dividends. That is the particular point I have been endeavouring to make. Not only is this period of dividend limitation tinder the Bill extended, possibly, to August, 1951, but because of nationalisation since the limitation of dividends the Government are able to secure the benefit of the

651
increased output of steel, already 3,750,000 tons, which surely should in some degree or other accrue to the shareholders. I do not propose to detain the Committee further in this matter. While I cannot quite achieve the humility which my noble friend expects of me, I will at any rate, with regret, ask permission to withdraw the Amendment.
LORD PAKENHAM: I would like to thank the noble Viscount for withdrawing his Amendment. I am sorry I cannot make a special exception in favour of the steel industry, but I am none the less grateful to the noble Viscount and to the noble Lord, Lord Rennell.
Amendment, by leave, withdrawn.
Clause 18 agreed to.
Clause 19 agreed to.
Clause 20 [Power to acquire securities of certain additional companies]:
LORD LUCAS OF CHILWORTH: Perhaps I may ask the indulgence of the Committee to move together the Amendments at page 25, lines 8 and 10, and at page 26, lines 25, 26 and 32. I give the Committee an assurance that these are purely drafting Amendments. In the interests of time I had better do it this way. I beg to move.
Amendments moved—
Page 25, line 8, leave out ("(a)").
Page 25, line 10, after ("which") insert ("(a)").
Page 26, line 25, after ("that") insert ("the company does not operate or own the whole or a substantial or essential part of works which fulfil").
Page 26, line 26, after ("be") insert ("that the conditions specified in paragraphs (a) and (b)").
Page 26, line 32 leave out ("said conditions are fulfilled with respect to the company") and insert ("contention of the company is correct").—(Lord Lucas of Chilworth.)
LORD TEYNHAM: We are grateful to the noble Lord for putting down these Amendments, which we certainly accept—especially the one at page 26, line 25, which makes it clearer, I think, on what basis a company can serve a notice on the Minister.
On Question, Amendments agreed to.
Clause 20, as amended, agreed to.
Clauses 21 and 22, agreed to.
Clause 23 [Recovery of assets transferred by company which conies into public ownership]:
4.44 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, after subsection (4) to insert:
"( ) Where a notice of acquisition is served under this section in relation to any rights in respect of the user of any invention and is not withdrawn or revoked and the person on whom the notice has been served has so developed the invention that there is a substantial difference between the invention as so developed by him and the invention in respect of the user of which the rights were transferred or granted that person shall be entitled to use make and vend the invention as so developed on such terms as shall be agreed between him and the Corporation or in default of agreement settled by arbitration under this Act."
The noble Lord said: This Amendment deals with persons to whom patent rights have been transferred. The clause as drafted deals with the period between October 29, 1948 and the date of transfer. This Amendment seeks to ensure that where patent rights have been transferred between those two dates, and a person has developed new applications in respect of the patent rights which have been so transferred, those rights should be retained by that person in connection with such new development. It is questionable, I think, as to whether the Corporation should be able to reclaim patent and design rights held by companies which will come under public ownership. The Bill as drafted gives that right. I do not want to argue that point; we must concede it. This Amendment says, that if, since that transfer, there has been improvement and development of such patent rights then the benefit of such improvement and development should not go to the Corporation but should remain with the holder. An Amendment was moved in Committee in another place seeking to debar the Corporation altogether from those rights. I do not intend to beg the point on those grounds, as I have said, but it seems only fair that if someone has developed and improved the patents then the benefit of such development and improvement should not accrue to the Corporation. The Minister justified the taking over, or the transfer, of the rights by saying that of course Corporation stock would be given in compensation for such rights. That, I think, is admissible in respect of

653
the original rights, but that argument cannot apply with regard to any improvements, and we feel that the rights should continue to be enjoyed, not by the Corporation but by the holder, and that the user should be entitled
"to use make and vend the invention as so developed on such terms as shall be agreed between him and the Corporation or in default of agreement settled by arbitration…"
The point is a perfectly clear one. It is not one on the merits and justice of which there can be much debate. I beg to move.
Amendment moved—
Page 31, line 30, at end, insert the said subsection.—(Lord Balfour of Inchrye.)
LORD LUCAS OF CHILWORTH: I am grateful to the noble Lord for narrowing the issue, but I want his further help because I am slightly confused in regard to the wording of his Amendment. The noble Lord states that this should apply in respect of the user of an invention—by which I assume he means either a patented or a non-patented invention. As regards a patented invention, I suggest to the noble Lord that what he seeks is adequately covered by the Patents and Designs Bill which has just passed through your Lordships' House and is now in another place. If I may make a slight digression, I would mention that only yesterday, during the Second Reading in another place, your Lordships' House was profusely congratulated on the excellence of the work which your Lordships had done when the Bill was passing through this Chamber.
To return to this Amendment, it will perhaps assist the noble Lord if he will refer to Clause 6 of that Bill. I would also refer him to Clause 16 on page 11, and particularly to subsection (2) (d) and subsection (3) (c). I am in some difficulty because the noble Lord speaks of a "substantial difference." In the Patent Law a "substantial improvement" means that the improvement makes a substantial contribution to the art. That means that there is subject matter patentable in the invention. The noble Lord will realise that a "substantial difference" might mean anything, and might have no inventive merit. If there is a substantial contribution to the art, the holder of the patent can get a
654
patent of addition, and there is a reciprocal arrangement in this Bill for the granting of a licence to use a patent of addition on terms which, if not satisfactorily agreed between the two negotiating parties, can be settled on reference to the comptroller. I want to tell the noble Lord that he is absolutely covered if the invention has been patented.
Now we come to non-patented inventions, and that is where we get into some heavy seas. One has to ask a lot of questions. For example: Why, if it is patentable, has the invention not been patented? If there has been a substantial difference or improvement why has not that been patented also? Let us accept the fact that there will always be unpatentable inventions. I suggest to the noble Lord that he is fully covered under Clause 23 of this Bill. If he will consider that clause he will realise that it does not give any right to the Corporation to acquire anything without compensation. I suggest that he reads subsection (4) of that clause and also sub-paragraph (c) of paragraph 1 of the Sixth Schedule. He will see that while in the case he cited the Corporation has the right to require the transfer it can be only if mutual arrangements cannot be made between the two parties, and the matter goes to arbitration. Those are factors which the arbitration tribunal has to take into consideration.
If the noble Lord will refer to the Sixth Schedule and look at paragraph 1 (c) at the top of page 76 he will see it is there stated that
"such other property and rights, being property or rights held by the transferor for the purposes of the business carried on by him, as may be so agreed or determined to be property which cannot reasonably be severed from property or rights referred to in sub-paragraph (a) or sub-paragraph (b) hereof and ought to be held in the same ownership."
If the noble Lord considers subsection (4) of Clause 23 I think he will see that where satisfactory terms as between the Corporation and the aggrieved party cannot be arranged, and the matter goes to arbitration, it is laid down that compensation is payable. Therefore I hope the noble Lord will agree that the Amendment is not necessary.
LORD BALFOUR OF INCHRYE: May I ask one question? The noble Lord has dealt with the case where the

655
Corporation take over a patent, and compensation is payable. The point I want to put is this. Supposing the original user wishes to continue the use of his patent—we agree that terms must be settled with the Corporation—and also wishes to continue to use the improvements he has made, is he entitled then to use the improvements, without having to pay the Corporation?
LORD LUCAS OF CHILWORTH: This is a very involved matter, and the noble Lord has my entire sympathy. We are now talking about a patent and an improvement to a patent. The noble Lord wants to know what happens in a case where someone has acquired a patent from a company and, having considerably improved the invention, is then compelled to transfer the patent to the Corporation. The noble Lord asks what happens to his improvement and the value attached to it. If the man has patented the improvement—as he can do—he can say to the Corporation: "If you want to operate under the patent of this improvement my terms are so much, and if that is satisfactory to you I will grant you a licence to do so." If it is an unpatented improvement, and he does not want to patent the improvement then the Corporation cannot take that back unless it comes under the terms of Clause 23. So, although the noble Lord has my entire sympathy, for this is a very complicated point, I would assure him that nothing in this Bill cuts across the rights conferred upon the holder of a patent of improvement under the Patents and Designs Bill, and of any unpatented invention, whether original or improved, is covered by the compensation clause here, in lieu of an amicable arrangement between the two parties.
VISCOUNT SWINTON: As I see it there are two cases—the first being that in which a patent belongs to, and is operated by, a company which has been nationalised. That seems quite a simple affair. The patent belongs to the company. Nobody is concerned except the company, which is the owner of the patent or an exclusive licensee. Under this Bill, if it ever goes through, the Corporation can buy all the assets of the nationalised company, including patents. I understand that what my noble friend is anxious about is a third party. It may be that a company which
656
is to be nationalised is operating under patent and an entirely independent person, who is not to be taken over, is also using the patent under licence. We are concerned with the rights of the independent person. He may be operating either under a patent or as a licensee. He may be operating an improvement, which he may or may not have patented. He has a right to take out a supplementary patent, if he has added something of substantial value to an invention. On the other hand, he may not have taken out a patent and prefers to rely on the "know-how"—a practice which is probably spreading. Whether he is operating a patent or an improvement, patented or otherwise, it is part of his business. Under this Bill can the Corporation come to him and say it is going to acquire his rights and stop him from carrying on manufacture? If it can, it seems to me to be wholly wrong.
It is quite inadequate for the noble Lord to say that if the Corporation stops a third party, he will get compensation, and if he does not like the amount of compensation he can go to arbitration about it. The third party might say that he does not want to be paid compensation; he wants to carry on his business. If that is so, should he not be allowed to carry on? It seems to me that Clause 16 of the Patents and Designs Bill is irrelevant to this. What Clause 16 does is to provide that if the Government or anybody else wish to obtain a licence to use a patent which is not being used, or is being inadequately used, there is a jurisdiction to grant a licence. But all that is irrelevant here, unless I have misunderstood what we are anxious about. Where a company which is not being nationalised is operating a patent, are we going to prevent it, under this provision of the Bill, from carrying on its business and using that patent exactly as it pleases? If the noble Lord tells me there is no such power under the Bill, and that the company will continue to be free to do what it is doing at present, I shall not worry about it.
LORD LUCAS OF CHILWORTH: I understand that when the noble Lord, Lord Balfour of Inchrye, moved the Amendment, he specifically stated that he did not contest the right of the Corporation to obtain these patents

657
originally. That disposes of part of the noble Viscount's argument.
VISCOUNT SWINTON: Subject to any rights which third parties may have in these patents.
LORD LUCAS OF CHILWORTH: Always, I agree. It may be that the Corporation will require to obtain back something that has been improperly transferred, to evade some benefit accruing to the Corporation under nationalisation. There are such cases, of the kind the noble Viscount called "fishy"—I know he does not want to defend them. Or it might be an invention which in the national interest should be developed in one of the Corporation's research laboratories. In such a case there would be an amicable arrangement between the Corporation and the man who held the right, properly acquired. For the Corporation to get back the right, there would have to be a substantial arrangement. If the man was not satisfied with the terms, or conditions, price or compensation, whether it was wholly or partly to go back, or whether future rights would be limited—if he was not satisfied in any way with his bargain with the Corporation, he would have the right to go to arbitration, subject to the provisions of Clause 23 and the Sixth Schedule. If the rights of the acquirer of a patent have been properly acquired, I can see nothing in this Bill to force him to give them up without a mutual and honourable arrangement.
VISCOUNT SWINTON: A free arrangement and not a forced one?
LORD LUCAS OF CHILWORTH: If there is a dispute about the arrangement, the matter can be taken to arbitration. The noble Viscount may rest assured that the third party is absolutely covered.
VISCOUNT MAUGHAM: I should like to say a word with respect to the last point in dispute between my noble friends. It is not the case, is it, that after the company in question has acquired an invention (and I will assume for this purpose that it is not a patented invention) and has granted a right to a third party, the Corporation will have no power compulsory to acquire that right from the third party? In that respect
658
the Bill seems to me fairly clear. It provides, in page 30, line 41:
"…that the rights so transferred or granted,—
here are the material words—
"or any rights derived from those rights,"—
that answers precisely the point the noble Viscount, Lord Swinton, has been putting to us—
"should vest in or be surrendered to that company;"—
that is, the publicly-owned company. The third party may have the rights derived from the company, and ultimately from the inventor, taken over by the notice given under the provision which follows—namely, that the Minister
"may authorise the Corporation to serve, at any time within three months after the date of transfer of that company a … notice of acquisition'"—
now note these word—
"on any person in whom any such rights are vested"—
that means third parties as well as other parties—
"stating that those rights are to vest or be surrendered in accordance with the Sixth Schedule to this Act, together with such other property and rights as are mentioned in the said Schedule:"
It seems to me, with respect to anybody who has a doubt, that there is no doubt that the third party rights may be acquired by the Corporation. On the other hand, it seems 10 me that the Corporation have got to pay for them. Whether that is sufficient to satisfy all circumstances that may arise, I do not know. I agree that there are cases in which the third party might be ruined. But the value of the rights taken over has to be paid for.
5.10 p.m.
VISCOUNT RIDLEY: The noble Lord referred to transactions of this kind improperly carried out. It is true that under Clause 23 they will be capable of being reopened. But from the point of view of the purchaser of a patent, it would not be an improper thing for him, between these two material dates, to buy a patent right from any company, as he might not be familiar with this provision in the Bill. So that to the outsider, from the purchaser's point of view, it is not improper. It is he who needs protection. I cannot pretend to follow the intricacies of the legal explanation that has been given. I think all we really want to know is that this covers the case where, as the

659
noble Lord, Lord Balfour said, the person who bought the patents has himself relevant supplementary patents, which he wants to use and has a right to use but which he cannot use unless he call also use the original patent. I do not question the fact that the Corporation can buy back the original patent rights, so long as the original quotation which the noble Lord, Lord Lucas, read from the Patents and Designs Bill covers the second party, as he might be called, so that he can obtain a licence to operate the original patent, and so be able to make use of his own patents. I think that is what the noble Lord was saying, and I find it difficult to follow.
VISCOUNT MAUGHAM: I hope what I said was clear, but it may not have been. All I was saying was that third party rights are included in this measure, and can be acquired by the Corporation. I do not express any opinion about this particular Amendment.
LORD BALFOUR OF INCHRYE: It seems to me that the noble and learned Viscount, Lord Maugham, has put a case which is in direct contradiction to the case which was put by the noble Lord, Lord Lucas. I understood the noble Lord, Lord Lucas, to say that a third party holder of rights could not have his rights taken away from him unless he entered into an agreed, amicable arrangement.
VISCOUNT MAUGHAM: I think that was a slip on the noble Lord's part.
LORD LUCAS OF CHILWORTH: May I clear that up? The noble Lord, Lord Balfour, is right. He could not have them taken away from him without compensation.
LORD BALFOUR OF INCHRYE: We are not worried about compensation. It is the possession of the rights which is worrying us on this side of the House. If what the noble and learned Viscount, Lord Maugham, has said is correct—and I am sure it is—then we have the position that the Corporation, who we are told are to be in no different position from other enterprises in the same field of competition—they are not to have an advantageous position—are placed in the position whereby the Minister can authorise them at any time within three
660
months compulsorily to take those rights I grant the noble Lord that compensation would be payable, but does he agree that the Corporation would have the right compulsorily to acquire such rights and to use them themselves?
LORD LUCAS OF CHILWORTH: The noble Lord conceded that point. I thanked him for narrowing the issue. He said: "I do not contest the right of the Corporation to acquire these rights." I then proceeded upon that basis. The noble and learned Viscount, Lord, Maugham, is quite right in saying that it covers the third party, but the Corporation will have to pay, Unless the consideration is satisfactory it has to go to arbitration.
LORD BALFOUR OF INCHRYE: I am sure the noble Lord does not wish to misrepresent me. What I said was that I did not contest the right of the Corporation to acquire the rights which have been disposed of by a concern which has been taken over if such disposal has occurred between October 29, 1948, and the date of transfer. My Amendment deals with the improvements of such rights. It is on that point that I am taking the stand that the improved rights should not be compulsorily taken away from someone who has developed them, and wishes to continue to use them.
LORD LUCAS OF CHILWORTH: I can only repeat what I said. If you are talking of a patented invention, you are completely covered. I would suggest that you are also covered in an unpatented invention, because the arbitration has to decide this point if the arrangement between the Corporation and the individual is not satisfactory. Let me take a hypothetical case, The Corporation acquire the invention, and the individual says: "What am I going to do? I cannot go on with the improvement unless I can work the invention. My addition to the invention is useless to me if I cannot have the original invention." It is covered in the Sixth Schedule as plainly as anything could be; it uses almost specific words to cover it. Thus, if the Corporation want to do that, then they have to buy the man out at a price which I can only assume will be satisfactory to the individual. If it is not, then he can go to arbitration. If the noble Lord looks at the Sixth Schedule

661
I do not think he will have the slightest doubt.
VISCOUNT SWINTON: I now understand it, and the more I understand it the less I like it. I certainly do not want to catch anybody out on what he said or did not say, because, after all, we are trying to do what is right here. We achieve, it only by a process of exploration, thinking aloud and making suggestions. I want to say at once that I do not in any way want to defend what we call a "fishy" transaction. If someone has done something in order to evade the purpose of this Bill, then I am not concerned. But do let the Committee remember that what we are concerned with here is not just making ingot steel; we are concerned with hundreds of different sorts of manufactures down to racquets, and I do not know what. I saw a list of the things that are to be done that went into pages. We were saying last night that we want all these firms to go on and conduct their business in the most businesslike way, and not to be held up for fear of something in this Bill. I am concerned with the perfectly genuine transaction, where a publicly-owned company has given a licence to an outside firm to manufacture something, and that firm may, or may not, have made an improvement. I think it is a little strong that the Corporation, when they come into being, should be able to "claw back" rights which have been quite genuinely, and in a businesslike way, alienated to somebody else. I should have thought the reasonable thing was that it should be taken over subject to the contracts which were entered into.
Let me concede to the noble Lord that as from this date—October, 1948, is it not?—when the Corporation come into being they may use this process of manufacture (which I assume is permitted to them as one of the processes under the Bill) whether it is patented or not. Let them have the power to do that, though it is a power which no steel company or any commercial company in the world has to-day. It is, oddly enough, a power which even a Government Department do not possess to-day, unless under Clause 16 of the Patents and Designs Act they get a licence to do it. I concede to the noble Lord that the Corporation will have the right to use that process on whatever are fair terms. What I cannot see is why they
662
should claim to have the whole of that right surrendered to them exclusively. Supposing Dunlop's had a licence, or the right to use a patent, in making racquets, not only could the monopoly Corporation compulsorily take the right to carry out that manufacture under that process, but they could say: "We are going to stop the licensee going on with it." The licensee may well say: "But I do not want you to compensate me, except as to what is fair for your using it as well. I did not obtain this patent in order to make any money in dealing with it as a patent. I obtained this patent because wanted to use it in my manufacture.' Why should you stop him?
LORD LUCAS OF CHILWORTH: But you cannot.
VISCOUNT SWINTON: But you can, according to the noble and learned Viscount, Lord Maugham. Look at line 40. It is said that
"Where … it is in the public interest"—
I do not know what that is. "In the public interest" may mean in the interest of the Corporation. It says in paragraph (b)
"… for the purpose of securing the efficient currying on of the business of any publicly-owned company"—
I am not saying that it would not make that company do its work more effectively—
"that the rights so transferred or granted…."
That is what is vetted in the outside party.
VISCOUNT MAUGHAM: No, it is the next words.
VISCOUNT SWINTON: It goes on:
"or any rights derived nom those rights, should vest in or be surrendered to that company."
As I read it, that means that the Corporation, or one of its subsidiaries, can acquire the exclusive right of manufacture. Am I wrong?
VISCOUNT MAUGHAM: I think that is quite right.
VISCOUNT SWINTON: The noble and learned Viscount, Lord Maugham, says that I am right, and the noble Lord, Lord Lucas, says that I am wrong.
VISCOUNT MAUGHAM: I say that you get the monopoly if you acquire all the rights that you want to monopolise.
VISCOUNT SWINTON: That is exactly what I say, and really I do hope the noble Lord is not going to ask for that. It surely is enough that he should say: "My monopoly would be able to acquire a concurrent right of manufacture." I cannot see why he should stop the outside company from going on with the manufacture for which it acquired the right.
LORD LUCAS OF CHILWORTH: I think it would be advisable if we got back to the Amendment. The Amendment is in specific terms.
VISCOUNT SWINTON: I do not think so. It is perfectly simple to dispose of this Amendment and I hope the noble Lord will do so. If not, I will move to strike out this clause. That is perfectly simple and perfectly in order, but I think it would be for the convenience of the Committee that we should discuss the whole issue.
LORD KENILWORTH: May I be excused for saying a few words as one who has had much to do with patents in the past? They are taken out either in the name of an individual, or the company employing the individual and the individual. In the latter case, it is generally agreed that the company has right rendered to them exclusively. Sup-the individual. Now, as I understand this matter, it is a question of the company taking over the undertaking which has these patent rights. These matters are always covered by agreements, and the agreements always stipulate as to how they should be dealt with and what royalties should be paid. It seems to me a simple matter of ordinary business, and there should not be any misunderstanding about the matter. If you buy a patent from a man who is not in your employ, he has an agreement with you. He either grants you exclusive rights or retains the rights for himself. Now where does this matter stand? It seems to me that you are talking of a patent owned by a company, or else being used by a company under licence. If it is owned by the company and it is taken over, the company goes with its patents. If it is using the patent under a licence, the terms of the licence are quite definite. I fail to follow the intricate arguments which are now passing to and fro from one side of the House to the other.
VISCOUNT RIDLEY: Before the noble Lord takes the discussion any further, may I ask one question which I hope will be simple? I am prepared to accept the noble Lord's explanation of the patented invention, but I do not follow how an unpatented invention could come into this argument. A patented invention can, in fact, be bought by anybody. I do not quite see how that is a matter which can be bought or sold. One firm will no doubt pay another something to send people to their works to show them a process. I do not see how you can buy that back.
VISCOUNT MAUGHAM: It may be a secret process.
VISCOUNT RIDLEY: It belongs to the original company who gave the information which was sold to the other company. They do not sell their knowledge, because they cannot forget matters of that sort.
VISCOUNT MAUGHAM: Very often they do sell their knowledge, and they covenant not to use that particular invention.
LORD LUCAS or CHILWORTH: I hope I am not intruding in this debate, but I think we had better get back to the Amendment. Therein lies the secret of the whole thing. The noble Lord, Lord Kenilworth, is absolutely right. Nothing in this Bill can upset the patent law, so we can dismiss from our minds completely any patented invention. We now get to the unpatented invention. As I said when I started, we are then in the deepest of deep waters, so well illustrated by the noble Viscount, Lord Ridley. It becomes nothing less than a property which has to be established. The noble Lord is very anxious to know how the man stands who wants to carry on the improvement. As there is no patent and, as the noble Viscount, Lord Ridley, says, if somebody can get the "know how" by putting a spy into somebody elses works—which I believe is done every day of the week.
VISCOUNT SWINTON: Is it?
LORD LUCAS OF CHILWORTH: Yes. If that is done, anybody can make it. There is no legal redress against the copying of a non-patented invention,

665
because I do not know what a non-patented invention is. The legal profession will have the dickens of a job to determine what is a patentable invention or what an invention is. I need not go into that—we went into it on the Patent Bill. But this is what the noble Lord, Lord Balfour, really wants to know. Here is a man who owns some property, the "know-how," or whatever you like to call it. The Corporation, having satisfied certain arrangements, say it is in the national interest that this should come back to the Corporation. The man says, "Very well, but how am I to be compensated; because I have spent a lot of time on this?" I say that in Clause 23 and the Sixth Schedule every conceivable thing that we can think of is covered. If the noble Lord can think of anything that is not covered that should be covered to compensate a man for any loss, then I will consider it.
VISCOUNT SWINTON: Nobody challenges the right to compensation. It is the right to continue.
LORD LUCAS OF CHILWORTH: It may be that with a non-patented invention the first negotiations must be between the Corporation and the individual. He cannot conclude anything until he has had some discussions. Somebody must arrive at some conclusion, and I expect eventually the lawyers on both sides will do that. What has the man to take back? What has he to claim compensation for? You are talking about a "substantial difference" and I do not suppose any lawyer knows what a "substantial difference" is. I suggest to noble Lords that this cannot upset anything in the patent law but that anything of an unpatented nature must be the subject of negotiations between the two parties, and if an amicable settlement cannot be reached, then I suggest it had better be settled by the courts, because I do not think we can settle it here.
LORD BALFOUR OF INCHRYE: 'This is very deep water for a layman who is not a lawyer to be debating. I do not think I can carry the matter any further this afternoon. We shall read what the noble Lord has said in Hansard and we shall take advice from our legal friends. We may have to return to the matter on the Report stage, not only on this Amendment but on the
666
whole matter of rights. Having said that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Clause 24 agreed to.
Clause 25:
Other transactions resulting in dissipation of assets.
25.—(1) This section shall apply where any company which comes into public ownership under this Part of this Act has, after the twenty-ninth day of October, nineteen hundred and forty-eight and before the date of transfer—
(a) made any payment to any person without consideration or for an inadequate consideration;
and the payment, sale, disposal, acquisition, agreement or variation thereof, or other transaction was not reasonably necessary for the purposes of the company or was made with an unreasonable lack of prudence on the part of the company, regard being had in either case to the circumstances at the time:
5.33 p.m.
LORD HAWKE LORD HAWKE moved, in subsection (1) to omit all words beginning "reasonably necessary" down to the start of the proviso, and to insert:
"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: My Lords, we have already had discussed a very similar clause in Clause 13, when we moved the Amendment to page 12, line 31. There is, however, some slight difference which I will outline. The first clause was to undo leases or agreements which ought not to have been made. This clause seeks to place responsibility for undue dissipation of assets. In the other case the Corporation could serve a notice on the company to disclaim the lease or agreement, and the company had its remedy in going to arbitration. In this case the Corporation may refer the transaction to arbitration and the arbitration determines the degree of, and the responsibility for, the loss. In neither case is it definitely clear in the Bill on whom the onus of proof lies before this arbitration tribunal. On the Amendment to Clause 13, Lord Lucas told us that the onus is on the Corporation. His words

667
are in the record and we are to have conversations with him to see whether it can be made more certain in the Bill. In this case I should have thought that the onus was more definitely on the Corporation, but I would suggest to the noble Lord that he should agree that our consultation should cover this clause as well as Clause 13. If that is so, I am perfectly prepared to withdraw this Amendment. I move.
Amendment moved—
Page 34, line 13, leave out from ("not") to end of line 17, and insert the said new words.—(Lord Hawke.)
LORD LUCAS OF CHILWORTH: I am very grateful to the noble Lord, Lord Hawke, for raising this Amendment in the manner he has, because I think it has provided me with an opportunity of removing the last lingering doubt that may be in his mind that his interpretation now is quite correct. Just as in Clause 13 the burden of proving that the agreement or lease ought to be disclaimed is on the party seeking to disclaim it, so, under this clause, the burden of proving that a transaction complies with the test laid down in subsection (1) will be on the Corporation. That is secured by subsection (3).
LORD HAWKE: Are you referring to this or the previous Amendment?
LORD LUCAS OF CHILWORTH: I am referring to the clause we are discussing now, which requires the arbitration tribunal to be satisfied that a transaction referred to them is a transaction to which this clause applies. This is what the clause involves. The, transactions are set out in paragraphs (a) to (e). The tribunal can hardly be satisfied that the transaction in respect of which the application was made was a transaction to which the clause applies unless they have evidence to prove that it did so, and the onus of proving the facts within subsection (1) would certainly not be discharged by the defendants; it would have to be discharged by the Corporation. If the arbitration tribunal are not satisfied that the transaction falls within subsection (1) they cannot make an order against any party to the transaction by subsection (3), so a similar result in this case is arrived at as would be arrived at in Clause 13. I
668
hope that instead of taking up the noble Lord's time in consultations (which I shall be only too happy to have because I know they will be very agreeable) I have removed the last lingering doubt in his mind that the burden of proof on the Corporation in Clause 13 and in this clause is definite. I hope, therefore, that he will withdraw his Amendment.
THE MARQUESS OF READING: Having intervened in the earlier debate, perhaps I might be allowed to say one word. I confess that the noble Lord, Lord Lucas, has not yet convinced me of the accuracy of his argument. I quite realise that the word "satisfy" is in this clause, and the tribunal have to be satisfied ultimately as to what is the true position. What is not clear in either of these clauses is whose responsibility it is to undertake the task of satisfying. That does not appear anywhere. There are two possible approaches, in the first case (the Clause 13 case, if I may go back for a moment, because it is convenient) the Corporation may say to the company: "You have shown an unreasonable lack of prudence." They may begin by saying that. The company may reply: "No, we have not." The other way is that the company has to begin and say, "We have in those circumstances not shown an unreasonable lack of prudence," and the Corporation say, "Yes, you have." Now the tribunal have to be satisfied which of those two contentions is right in either of those methods of approach. But what is nowhere set down is what we on these Benches think ought always to appear, and that is the correct method of approach. We think it is the one in which the person taking exception is put in the position of a plaintiff having to carry the burden of making out a prima facie case.
LORD LUCAS OF CHILWORTH: I thank the noble Marquess for his helpfulness now and on previous occasions. We say that it is our intention to employ the approach mentioned by the noble Marquess. The Corporation say to some company, "You carried out this transaction without reasonable prudence, and you ought not to have done it." The company reply, "We did no such thing." Then the burden of proof lies on the Corporation to satisfy the tribunal that their contention is correct. That is what we are saying in this Bill. The noble Marquess

669
says: "Yes, that may be your intention, but the words are not quite specific enough for me."
THE MARQUESS OF READING: Not nearly specific enough.
LORD LUCAS OF CHILWORTH: I would invite the noble Marquess to take part in the discussion which Lord Hawke and I are to have. We should be grateful if the noble Marquess would give us the benefit of his profound knowledge of these matters.
VISCOUNT SWINTON: I am very much obliged to the noble Lord for repeating this statement, that wherever the Corporation seeks to pray in aid the right to set aside a contract on the grounds that it was entered into with an undue lack of prudence, the onus of proof must always be on the Corporation. We obviously have a common intention, and it ought therefore to be extremely easy, when we get down to drafting, for us to see a way of satisfying both sides. I think the right course to adopt would be to withdraw the Amendment as it is now worded and let our draftsmen get together and look at it. I think they should have a very easy task.
LORD LUCAS OF CHILWORTH: I hope the noble Viscount is right in saying that the draftsmen's task will be easy. I think that perhaps the hardest task we shall have now will be to get the respective lawyers to agree.
VISCOUNT SWINTON: I do not think so.
THE MARQUESS OF READING: I disclaim any of the profound knowledge which the noble Lord has been good enough to attribute to me, but if he thinks I can be of any use by joining these discussions I shall be very happy to do so.
THE EARL OF DUDLEY: It is essential, in my view, that the words "reasonably necessary" should be eliminated. Who can possibly judge what is "reasonably necessary"? Let me give your Lordships an example. Some time ago I built a range of new furnaces which I think I can charge with two charging machines, though I am not sure. I am advised by an expert that I should have a third charging machine. In the national interest I cannot take the risk of not ordering that third charging machine. This is a costly piece of machinery, and
670
it takes two or three years to deliver. Now, if I find when the workshop is complete and the Government take over that two charging machines are sufficient, the third becomes redundant—and by that time it will probably be possible to buy a charging machine at a much lower price than now. The Government can say to me "You did not exercise reasonable judgment when ordering that charging machine and we are not going to take it over it will be your responsibility." That is the sort of thing that is liable to put one in an extremely difficult position. I hope, therefore, that these words "reasonably necessary" will be eliminated altogether and that we shall have some such words as, for instance, "a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time."
VISCOUNT SWINTON: It is our hope that in the course of the discussions which we are to have on the question of getting the right words concerning the onus of proof, the point which the noble Earl has just raised will be dealt with.
LORD HAWKE: In the light of those undertakings and assurances, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn,
Clause 25 agreed to.
Clauses 26 and 27 agreed to.
Clause 28:
Transfer of certain assets of Ministers and Government Departments to the Corporation
28. The Minister may, after consultation with the Corporation, provide for the transfer to the Corporation, on such terms as may be determined by the Treasury, of any property or rights held by any Minister of the Crown or Government Department for the purpose of the carrying on, whether by that Minister or Department or any other person, of any of the activities specified in the first column of the Second Schedule to this Act or any other activities which the Corporation are for the time being authorised to carry on.
5.47 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved to add to the clause:
"and the terms upon which any such property or rights are transferred to the Corporation shall be published in the report of the Corporation to be made under section four of this Act."
The noble Lord said: In rising to move this Amendment I am very optimistic that here we have one to which the Government cannot possibly take any

671
exception. The Amendment aims at ensuring that the terms of transfer to the Corporation of a Government-owned undertaking are made known to the public by publication in the annual report which the Corporation is obligated to provide. I am quite sure that your Lordships on all sides of the House would feel that everything should be known about the financial transactions and that these transactions should be judged upon their merits. In respect of assets taken over by the Corporation from privately-owned concerns these facts are known, and we cannot see why the same revelation should not apply in the case of publicly-owned companies. In fact, I suppose, the largest number of acquisitions of Government property will be in the early life of the Corporation, and therefore the first and second annual reports would be the reports that would contain most of this information. But I think the public is entitled to know on what terms the Corporation acquire Government property, because if the Corporation acquire Government property cheaply at a bargain figure, the taxpayer should know. If, on the other hand, the Corporation acquire assets at an inflated price, we know that the Corporation will be taking on an unnecessary capital burden, on which they will have to earn interest. I sincerely hope that the Government will not find any objections to this Amendment and will be able to accept it. I beg to move.
Amendment moved—
Page 36, line 40, at end insert the said words.—(Lord Balfour of Inchrye.)
VISCOUNT RIDLEY: I should like to support this Amendment. It seems a simple enough matter. Any Government property such as this will be subject to review by the Public Accounts Committee or may be referred to the Select Committee, so it is not information which would normally be kept secret or which there would be any point in keeping secret. It seems rational to ensure that these items of expenditure are put in their proper place.
LORD MORRISON: I am much obliged to the two noble Lords for the manner in which they have moved and supported this Amendment. The noble Lord, Lord Balfour of Inchrye, said he was in an optimistic spirit. I am sure he will have reason to be satisfied with
672
my reply, for I can reply in an optimistic spirit by saying that we have considered this matter and think the Amendment is a useful one. I have pleasure in accepting it.
On Question, Amendment agreed to.
Clause 28, as amended, agreed to.
Clause 29:
Activities in Second Schedule not to be carried on except under licence
(2) A licence issued under this section may be issued on such terms and conditions as the Minister thinks fit, which may in particular include conditions—

(a) limiting the period for which the licence is to be in force;

(b) limiting the extent to which any of the said activities is to be carried on; and

(c) imposing restrictions as to the persons to whom the products of those activities may be sold, and in particular for conferring on the Corporation an option to purchase any such products;

and before issuing a licence under this section, the Minister shall consult with the Corporation.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, in subsection (2) to omit "such terms and conditions as the Minister thinks fit, which may in particular include." The noble Lord said: We now take a most important clause in this Bill which deals with licensing powers. There is a series of Amendments down on the Order Paper. I wish I could suggest that we should take them all together, but we cannot do that as, with the exception of two of them, they deal with different subjects. The first Amendment which I move is to provide that the Minister, in issuing a licence, may impose only the conditions specifically enumerated in the subsection, and no others. I find it difficult on general grounds to understand why the Government should require any licensing provisions at all. If, as the Government claim, the establishment of the Corporation results in more efficient working and more economical production of iron and steel products, it must be difficult for independent producers to compete with this very efficient instrument, in which case there seems to be no need to license them. Independent producers will find it difficult to stay in business at all against this new and efficient instrument. But if, as I suspect, the Government really feel that the

673
Corporation need protection against substantial competition, then, of course, the corollary is a licensing system such as is introduced in this clause. For that reason, and in the interests of planning, if a licensing system is required, it seems to us that a licence should contain only conditions which would limit the extent of the output and the life and duration of the licence, and possibly, it is arguable—we shall come to it later—give the Corporation an option to acquire the production of the competitors.
LORD STRABOLGI: May I interrupt? How many of the Amendments to Clause 29 hang together? Do they all?
LORD BALFOUR OF INCHRYE: No.
LORD STRABOLGI: Then which do?
LORD BALFOUR OF INCHRYE: I am sorry if I have not made it clear. The two Amendments that hang together are the Amendments to page 37, line 15, and page 37, line 16. I will deal with the others separately.
LORD STRABOLGI: The Amendment the noble Lord is moving is the one to page 37, line 10?
LORD BALFOUR OF INCHRYE: Yes. That is the first one, with which I am dealing now.
LORD STRABOLGI: Then the other two Amendments are not dependent on that?
LORD BALFOUR OF INCHRYE: No. It is very complicated. I will not take up longer time than is necessary. The Committee will appreciate that they are different points.
LORD STRABOLGI: And very important ones, too.
LORD BALFOUR OF INCHRYE: Yes. We feel that those are all the conditions that the licence should contain. We take exception to the broad powers given the Minister for imposing conditions, because, if your Lordships will read subsection (2) you will see that it says:
"A licence issued under this section may be issued on such terms and conditions as the Minister thinks fit, which may in particular include"—
674
and then certain provisions set out. "As the Minister thinks fit" are really omnibus words which would allow the Minister to include any number of conditions. The effect of this Amendment is to limit the conditions. I suggest that, in the interests of the competitors who will be struggling against this Corporation in not easy circumstances, they should know under what conditions they can apply for and obtain a licence, and that the Minister should not have these wide powers. I beg to move.
Amendment moved—
Page 37, line 10, leave out from beginning to ("conditions") in line 11.—(Lord Balfour of Inchrye.)
LORD MORRISON: Having made such a good beginning in the last Amendment, it would just be my luck that I am unable to keep up the pace. The issue which the noble Lord has raised is not, in my opinion, such a very important issue. Compared with some of the other issues raised in this Bill, it is comparatively unimportant. As no doubt my noble friend knows, it was discussed in another place, both in Committee and on Report, but on that occasion the Opposition argued that the licences should be granted unconditionally; or, alternatively, that the Minister should have no right to impose the conditions shown in paragraphs (a), (b) and (c). In his present Amendment, the noble Lord is not now asking for licences free of conditions. What he is asking is that the conditions imposed by the Minister shall be strictly limited to those contained in paragraphs (a), (b) and (c).
LORD BALFOUR OF INCHRYE: As they may be amended later.
LORD MORRISON: Yes, by the other Amendments; that is without prejudice to the subsequent Amendments that may be moved. I agree that the conditions shown in paragraphs (a), (b) and (c) are the principal ones and we will deal with that when we come to them. The point of my reply, and the only point of my reply, on this particular Amendment, is that there is a possibility that there may be other conditions. If the noble Lord will grant for the moment the fact that he now agrees that the Minister should have authority to issue a licence, and that the licence should contain certain conditions, I now put to the noble Lord that it is not possible to

675
foresee, for the purpose of including a comprehensive list in the Bill, every matter that may have to be the subject of a condition in a particular case. In other words, it seems to me that it is necessary in an important Bill of this kind not to tie the Minister upon whom you are putting the responsibility of issuing the licences—not to bind him hand and foot so that he is unable to meet some position which possibly at the moment we cannot foresee. I hope, therefore, that noble Lords will see that it is necessary to retain the words as drafted. While, as I have already said, paragraphs (a), (b) and (c) as contained in the Bill now, and which we shall discuss presently, may give the principal conditions which the Minister is most likely to impose, it is possible that there may be others. It is in order to meet that contingency that I resist this Amendment.
LORD LLOYD: I should like to say a word on this matter because I feel that the noble Lord has not quite seized the point that my noble friend was trying to make. Perhaps I could bring that out more fully if I were to read to your Lordships the main point in the Minister's speech when he defended this particular provision and said that the Government's case for licensing was necessary. He said:
"To ensure that there is no waste of resources and that they are not devoted to the creation of steel making capacity which is unnecessary, we say that anybody who wants to enter the iron and steel field can only do so as part of our general plan."
I am prepared to concede to the noble Lord that there was something in that point. All I think that my noble friend was saying was that that is the only real condition about which it is reasonable to impose a licence, and that all these other conditions are unnecessary. I do not feel that licences should be issued on a lot of unspecified conditions. I do not feel that the noble Lord has really quite met that argument.
LORD STRABOLGI: I am reluctant to support any argument on this Bill from the other side of the House because I do not think their intentions are quite so correct as mine. But in this particular case I feel a little anxiety. I think the words
"such terms and conditions as the Minister thinks fit"
676
are a little wide. If my noble friend would turn to page 63, to the Second Schedule, he will see specified the first three items for which licences are required—namely, the fabrication of steel or the getting or smelting of iron ore. But the fourth is very wide—namely,
"the changing of the cross-sectional dimensions or cross-sectional shape of steel by hot rolling in a rolling mill."
That is a very intricate process which is continually improving and progressing, and it is not strictly a part of steelmaking at all. I should have thought that it would be to the advantage of everybody, including the general public, if licences were granted in approved cases. I think the withholding of the licence should not be made too easy, as I feel it is under the wording of this Bill. The words
"such terms and conditions as the Minister thinks fit"
are very wide, and particularly with reference to the fourth paragraph of the Second Schedule. I think we should consider this matter again. As I say, I am not anxious to embarrass my noble friend by sniping him from behind—that is not my intention at all—but I think this is a point of substance.
6.2 p.m.
THE EARL OF DUDLEY: New techniques are coming into force every day and will continue to come into force in these modern days. Suppose that a concern develops a new technique in iron and steel-making and wants to enter the field of iron and steel-making with this new technique, or, alternatively, suppose that a concern which did not come under the Second Schedule, and was granted a licence of right Wished to develop a new technique and applied for a licence to increase its tonnage. The concern would go to the Minister to apply for a licence and the Minister could—and probably would, in the ordinary course of business—say, "Yes, I will grant you a licence to cover that technique up to a certain tonnage within the limitation set down under the clause, but only on the condition that you grant all rights and patents appertaining to that technique to the Corporation and its subsidiaries." Is that a fair condition, or is it not? Those are the conditions we are trying to guard against in this Amendment.
LORD BALFOUR OF INCHRYE: If I may say so, I do not think the Minister has dealt with the cases which we had in mind, an example of which has just been given by the noble Earl, Lord Dudley. Let me reply to only one point of his, with regard to the difficulty of defining conditions. That is not an original difficulty. In engineering industries there are many licences given by one firm to another and they are all specific documents setting out exact terms. If all the terms and conditions in ordinary industrial life can be set out, it is not really very convincing to be told by the noble Lord that it is impossible for the Corporation to set out terms. It is done in ordinary engineering. I wonder if we can find common ground to meet the point made by Lord Dudley, and also by Lord Strabolgi. Supposing, to use the words of the Minister himself, the subsection were amended to read:
"A licence issued under this section may be issued on such terms and principal conditions…."
The drafting would have to be looked at, but the point I am trying to make is that if we had something showing the principal conditions of paragraphs (a), (b) and (c), it would imply that there was to be no great restriction imposed in the licence such as has been envisaged by Lord Dudley; though it would give the Minister that freedom for small alterations and amendments and conditions of a licence beyond paragraphs (a), (b) and (c) which he might find necessary. Would the noble Lord consider that between now and a later stage of the Bill? I think we have a common desire, and that we could find common ground through some agreed Amendment.
LORD MORRISON: I have already said that paragraphs (a), (b) and (c) are the principal matters and therefore what the noble Lord has said follows, although the word "principal" is not in the Bill at present. I agree largely with the noble Lord, but what I am trying to cover is something which happens but which no one can foresee—the unexpected. The noble Lord says that it is necessary to put dawn the conditions upon which the licence is obtained, but there may be something else that will arise. For example, it might be necessary for the Minister—I do not know—to put down conditions as to the submission of returns
678
of the licensed output—I give that as one example of what might be done. However, I do not think we need spend a great deal of time on I am willing to look at any modified Amendment put down by the noble Lord at the next stage, I say nothing beyond the fact that I will promise to look into it. I am advised that the reason for this Amendment is that conditions may arise which it is impossible to foresee. That is an entirely different thing from assuming that the Minister is going to try to trip everybody up. I do not think that argument would cut any ice. But if the noble Lord will withdraw his Amendment and put down some other words, I will see that they are examined between now and Report.
LORD BALFOUR OF INCHRYE: I am bringing the noble Lord towards me slowly. Could he come a little further and say that between now and the next stage we might have consultations in order to see whether something we put down is acceptable, because we do not want suddenly to confront the Government with an Amendment at the last moment on Report stage. It would be much better to come to some agreed Amendment to achieve the common purpose.
LORD MORRISON: I agree to that—all the more because on Report stage we do not have the free and easy debate we have now. Therefore, I shall he happy to join in any consultation.
LORD BALFOUR OF INCHRYE: I thank the noble Lord, and I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD BALFOUR OF INCHRYE: This is a different point. The purpose of this Amendment is to ensure that the Minister, in limiting the period for which a licence shall be in force, takes into account the capital cost of the undertaking which he is licensing. This matter was discussed in another place, when I think the Minister undertook to consider re-drafting paragraph (a), but unfortunately no re-draft has appeared in the Bill. The Solicitor-General in another place said, in point of fact:
"The Minister will consider what will be a reasonable duration for a licence in the circumstances, and obviously he will take into account the amount of capital expended on the venture."

679
The Amendment really seeks to read into the Bill the assurance which the Solicitor-General gave in another place. If there is no such reference in the Bill, the Minister might issue a licence for, say, five years or some other period too short to allow the capital expended to be amortised. It might require amortisation in ten, twenty or more years, and it would obviously be unacceptable to any enterprise to acquire a licence for such a very limited period in respect of plant which had to be written off over a lone time. I think the purpose of the Amendment is quite clear, and I trust the argument in support of it is, too. I beg to move.
Amendment moved—
Page 37, line 13, at end insert ("so however that the Minister in limiting the period shall have regard to the capital expenditure involved").—(Lord Balfour of Inchrye.)
THE EARL OF DUDLEY: I should like to support this Amendment which has been so comprehensively moved by my noble friend, Lord Balfour of Inchrye. Obviously, a person desiring to apply for a licence to manufacture iron and steel in any shape or form is not going to be much encouraged unless he knows that the licence will be granted for such a period that he may be sure there is "some future in it," and that he will have an opportunity to recoup himself in respect of his capital expenditure. My noble friend has quoted the statement of the Solicitor-General in another place in reference to this matter. He said also:
"It would not be very attractive for any new entrant, if he were offered a licence which did not enable him to recoup himself in respect of the amount of capital involved in the undertaking upon which he was embarking."
I agree that in such circumstances it would be foolish to go in for the project at all. I hope very much that the Minister will see the point of this Amendment. It is a very reasonable and very harmless one. If that is what the Minister and the Solicitor-General think, then by all means let us have this put into the Bill in the form of this harmless Amendment. Surely the Minister wants to encourage these entrants in the field of iron and steel. These small men who make specialities are very important to the consuming trade—they are what you might term hucksters. If they are not encouraged the trade will suffer. It is impor-
680
tant that some longer time than they can look forward to at present should be provided for in the Bill. Under this clause as it would be amended by this Amendment they would, at any rate, know that the Minister was bound to take into account, when granting a man a licence, the amount of time it would take him to recoup himself for the capital he put into his business.
LORD MORRISON: It seems to me that on some of these Amendments, and on this one in particular, noble Lords are rather apt to take up a position which suggests that the Minister will merely give a decision, that he will grant a licence or not grant it, without paying full attention to all the relevant circumstances. I think that this Amendment is quite unnecessary. Noble Lords have already accepted the position that the Minister may either refuse or grant a licence subject to conditions. Surely it is only common sense that when the Minister has been given the power to refuse or grant a licence, the final say as to the conditions should be his. It seems to me also to be obvious that before deciding to grant a licence at all the Minister will have to take into account the duration factor and also the capital expenditure involved in the project which is put before him. In practice, of course, I am sure that no one would expend capital and so incur a loss, as he would if the period for which the Minister was prepared to grant the licence was not reasonably sufficient for him to recoup himself.
The noble Lord who moved the Amendment said that this point was discussed at some length in another place. The Opposition there argued that the Minister might use his power to impose a time limit with the object of excluding new entrants to the Second Schedule field. My answer to that is that the Minister—any Minister of any Government; I emphasise that—will grant a licence when he is satisfied that there is a good case for it. If he does not consider it proper to issue a licence he will not do so. If he is satisfied that the proposed production is desirable, there is no reason why he should obstruct the development concerned by proposing awkward conditions as to the duration of the licence. For these reasons I am unable to accept this Amendment. I

681
would add two further reasons which are on another plane altogether. As I am advised, the legal effect of this Amendment would be that the Minister's decision as to the period for which a licence should run could be challenged in the courts. This would create an impossible situation. The second reason is that from a technical point of view this Amendment could not possibly be accepted because it leaves entirely undefined what the words "the capital expenditure involved" are intended to comprise.
LORD CLYDESMUIR: I had not intended to intervene, but I feel unhappy about the Government's attitude towards this Amendment, because it deals with a very real point which is seriously regarded in the steel trade. In the steel trade, particularly, capital expenditure is bound to be high, and any entrant into a process will have very high costs in preparing his plant. Assuming that the Minister is anxious to see reasonable development and is studying the public interest—and that, of course, will be his main wish—is it not desirable to give as much security as possible to the man who it is agreed (otherwise he would not get a licence) is to be allowed to enter the trade? I appreciate what the noble Lord, Lord Morrison, has said about the wording of the Amendment. Perhaps the wording is not wholly acceptable, and indeed, we were expecting that after what was said in another place there might have been a draft put forward for our consideration here. If the noble Lord cannot accept the Amendment it might be possible to consider whether between now and the Report stage some form of accommodation could be devised that would allay the anxiety of people entering into this trade as regards the period of licences. It is most undesirable to discourage those who will be making a real contribution to the welfare of the country.
LORD LLOYD: I listened with great care to the speech of the noble Lord, Lord Morrison, and I must confess that I was slightly fogged by it. At the end of his speech he raised a couple of legal objections to the Amendment upon which I am not qualified to speak. Other noble Lords present to-day certainly are, and perhaps they will give us their views as to the validity of those objections. I do
682
not presume to say anything. Apart from those two legal objections the noble Lord's main contention was that this was what any Minister would do. Any Minister, the noble Lord said, would have regard to the capital expenditure. Having said that, could he not possibly accept the Amendment? I cannot quite see why, if it is agreed that any Minister is going, to do this, there should be any harm in putting it in the Bill.
LORD MORRISON: The answer to the noble Lord's point is that there must be an objection on the ground of common sense to putting unnecessary things into a Bill. Why should it be assumed, as would seem to be indicated by Amendments such as this, that any Minister who is going to be in charge of this scheme is almost bound to be a first-class fool, and that he should therefore be told to do the most simple and commonsense things? While the noble Lords are about it, as well as proposing that the Minister in limiting the period should, have regard to the capital expenditure involved, why not say also that he should have regard to the labour available or the materials available, or that he should have regard to the steel situation? Of course, the answer is that the Minister will have regard to all those things, and it is not necessary specifically to draw his attention to them.
With regard to the point raised by the noble Lord, Lord Clydesmuir, I am sorry that if what was said in the course of proceedings in another place led the noble Lord and his friends to expect that there was going to be some concession on this point. I gather that perhaps that was so, but I am not responsible for it. If the noble Lord thinks that, arising out of the discussion in another place, he will be able to find an alternative form of words, I have no control over the further Amendments put down on Report stage, and it is for noble Lords to act accordingly.
LORD ROCHDALE: The noble Lord, Lord Morrison, has just said, apropos of this Amendment, that it is obvious that any Minister would take account of the time concerned. May it not also be that an enthusiastic Minister will consider that a case put up by somebody who wants to establish a plant in such an obvious

683
case that, a renewal of the licence is bound to be granted for some subsequent period, regardless of the fact that he may not be the Minister when the time comes for the licence to be renewed? If we insert this into the Bill now, however certain the Minister may be that the licence will be renewed in five or ten years' time—or in twenty years' time, the reasonable life of some plant—he will be bound to put it in the licence and the individual who holds the licence will be safeguarded in any enterprise that he may take up.
LORD BALFOUR OF INCHRYE: The noble Lord accepted an Amendment a few minutes ago and now refuses this one; we are all square. In asking that this Amendment may be withdrawn, I hope that I shall have another victory.
Amendment, by leave, withdrawn.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE had given Notice of an Amendment to omit paragraph (c) of subsection (2) and of a further Amendment to omit all words in paragraph (c) down to "conferring." The noble Lord said: I will not move the first of these two Amendments.
LORD MORRISON: It would be for my convenience if the noble Lord would move it.
LORD BALFOUR OF INCHRYE: If it be for the convenience of the Committee, I will do so. We take a strong line on the second Amendment, but not on the first. The first Amendment has the effect of deleting paragraph (c); the second has the effect of making paragraph (c) read
"conferring on the Corporation an option to purchase any such products;"
We do not like the restrictions on licences, and we have given prolonged consideration to this problem. I think there is a case for conceding to the Corporation an option to acquire products produced under a licence given under this clause. Indeed, licences granted under Clause 30(4) give the Corporation the right to acquire products. If this is given in one case, logically we ought to give it in the other. There seems no good reason why the Minister should seek to impose restrictions on the disposal of an undertaker's output. It is difficult to think what is the motive for
684
having power to impose such restrictions, except that it is feared that a public company may be harassed by the healthy competition of outside firms. A similar Amendment was put down in another place, and the Minister then made the point that in times of shortage he must have this power in order to direct supplies where he felt they were most needed. We do not accept that. We say that in an emergency or shortage the direction of supplies can be done by an emergency measure of a temporary character. As the clause stands, the Minister, if he were so inclined, could direct output of new undertakings or existing undertakings in excess of the normal permitted level at any time, whether in time of shortage or of abundance. We feel that it is basically a wrong power to give the Minister. It is a matter of principle to us that the Minister should not be given this power. I do not think there is any need to deploy the arguments further; I have tried to paint the broad picture.
Amendment moved—
Page 37, line 15, leave out from ("on") to end of line 19.—(Lord Balfour of Inchrye.)
LORD MORRISON: If the noble Lord is not satisfied with my reply perhaps he will take part afterwards, but the nature of my reply will probably not be altogether unsatisfactory to noble Lords opposite. There are two Amendments. The first is to leave out from "on" in line 15 to the end of line 19, which in effect leaves out paragraph (c). The second Amendment modifies this a little and proposes to leave out the words:
"imposing restrictions as to the persons to whom the products of those activities may be sold, and in particular for…."
I think I am about due to heap coals of fire upon the noble Lord's head. The noble Lord said that we were all square. I take the opportunity of getting ahead by saying that I am prepared to accept the first Amendment deleting paragraph (c). He will see that by doing so the second Amendment will not arise. I have no doubt that will be acceptable.
LORD BALFOUR OF INCHRYE: I am embarrassed. I think the noble Lord has made a bogey. I gratefully accept the offer of the noble Lord, which exceeded my hopes.
On Question, Amendment agreed to.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved in subsection (2) to leave out "and before issuing a licence under this section, the Minister shall consult with the Corporation." The noble Lord said: The purpose of this Amendment is to delete the provision that the Minister must consult with the Corporation before issuing a supplementary licence for an existing undertaking. The Corporation is the very body which will be interested in preventing the entry of new undertakings into the industry and will naturally look with suspicion on the expansion of existing small businesses. To require the Minister to consult only the Corporation seems to us further to weigh the scales against prospective new entrants or expanding firms, since the Minister's decision must be to some extent coloured by the views of the Corporation. In any event, it seems to us that the consumers are in the best position to give a reliable view of whether there is likely to be a market for the output which small and specialised undertakings would be likely to produce. The Minister would consult the Corporation as a matter of course, and it does not seem necessary to write this into the Bill. The noble Lord has just used the argument that as the Minister would obviously do something, it was not necessary to write it into the Bill. I would use the same argument to him in this case. It merely emphasises the restrictive character of this clause and the slight chance that the little man will have against the great State octopus. The score is going well, and in moving this Amendment I hope I shall score another victory.
Amendment moved—
Page 37, line 20, leave out from the beginning to end of line 21.—(Lord Balfour of Inchrye.)
LORD STRABOLGI: Frankly, I was amazed at the generosity of my noble friend in accepting the last two Amendments. In fact, the noble Lord opposite had moved only one of them. I am astonished, disappointed and hurt that the noble Lord, Lord Balfour, has responded by moving this Amendment, which I suggest is altogether unnecessary. If he had put into the wording of his Amendment, "and the Consumers' Council," of which he gave some hint in his speech, I could have understood it. But even that would have been rather too much.
LORD BALFOUR OF INCHRYE: May I interrupt the noble Lord? If he looks at the next Amendment he will see that it comes in there.
Lotto STRABOLGI: Is that being moved too? I understood that this was the end. However, the noble Lord himself admitted that the Minister, in the ordinary course of events, would consult the Corporation. Presumably, the Corporation would attract to themselves many of the greatest experts in iron and steel from all over the world. We made an attempt to get the greatest expert in iron and steel in the word when we tried to secure Dr. Van der Byle, whose death has been such a great loss to the industry and to the Commonwealth. I am sure the Corporation will attract to themselves the greatest brains in the industry. I am not without hope that the noble Earl, Lord Dudley, will perhaps give advice in some capacity.
VISCOUNT SWINTON: While the noble Lord is speaking on that very eminent man whose death we all regret so much, it would be of great interest to the Committee if he were able to tell us what his views were about the nationalisation of iron and steel.
LORD STRABOLGI: I happen to know them, but I do not propose to refer to them. Of course, the Minister will consult the Corporation. In that case, why not have it put into the Bill? I suggest that this Amendment is unnecessary, and I hope May noble friend will resist it.
LORD MORRISON: I have been too long in politics to expect any gratitude, and when I unexpectedly tried to overwhelm the noble Lord with my magnanimity a few moments ago I did not expect that he would declare his innings closed, if I may use a cricketing expression. The noble Lord has moved this Amendment, and I can say quite briefly that I am unable to accept it. As he knows well, the general purpose of this Bill is that the Corporation are given a virtual monopoly over the Second Schedule products, and in the enjoyment of this monopoly they are subject to the duties laid down in Clause 3. A licence to private enterprise to encroach upon the monopoly would make the discharge of the duties a matter of increased difficulty. It therefore seems to me right

687
and proper, before the Minister allows such an encroachment, that he should ask for the views of the Corporation, and give such weight to those views as he may think desirable. The Bill does not say that the Minister shall necessarily accept the views of the Corporation, but I think it is only common sense that, having appointed a very important body to carry out an important task, before issuing a licence under this clause he should, at least, consult them.
VISCOUNT SWINTON: I did not altogether expect the noble Lord to accept this Amendment. As he truly said, whether the words are there or not the Minister could consult with the Corporation. But the noble Lord has said one rather odd thing which I should like to emphasise. He said that the Corporation are going to have a virtual monopoly of the Second Schedule products. That is true. He also said that under Clause 3 we have imposed upon the Corporation the duty to produce all the steel that is required, at a reasonable price, and in the quantities which the consumer needs. The noble Lord then went on to say a most extraordinary thing—namely, that if anybody else is allowed to come into this business and produce some of these Second Schedule products it is going to make it much more difficult for the Corporation to discharge their duties. I really cannot understand that.
The noble Viscount the Leader of the House on the Second Reading of the Bill said that one of the troubles was that there never seemed to be enough steel—all sorts of things were held up for steel. Surely, the more people there are producing Second Schedule products, the more steel there is likely to be. I really cannot understand how the Corporation are going to be handicapped in their capacity to produce steel, and how the country is going to be handicapped, if there are a few more people in the business producing a little more steel. That seems to me to be a curious non sequitur. If he meant that the monopoly did not want any more competition than it could avoid, then I quite understand the argument. That is an argument which we are, alas, getting increasingly accustomed to as monopoly follows monopoly.
THE EARL OF DUDLEY: I am rather disappointed that the noble Lord oppo-
688
site has not accepted this Amendment, because it is, as he said, only common sense that the Minister will consult the Corporation in any case, and nothing we put in this Bill will prevent him from doing so. But the conditions of this clause, certainly until a few moments ago when the other Amendments were accepted, were most restrictive. Ten minutes or a quarter of an hour ago the Minister was going to say to a poor little man who was brave enough to pit his wits against this great octopus, the monopoly: "I will consider granting you a licence, but I do not know for how long it will be. It will be for quite a restricted period. I shall want to know what capital you are going to put into it. I shall have to limit the extent of your activities in all sorts of ways. I shall have to impose all sorts of conditions. I shall not allow you to sell your product to anybody except the persons to whom I say you may sell them, and I shall be your chief customer at a price which I shall determine." All those restrictions were included. He was also going to say: "I will consult with your chief rival, the Corporation"—this great octopus—"before you can be allowed to come into the circle at all."
It was the unnecessary emphasis on the restrictions of this clause to which we objected. I think it is rather foolish, if I may say so, for the Government not to accept this Amendment, because if they leave out these words it does emphasise their good will towards the small men whom they want to encourage and ought to encourage to a greater extent than they do at present. I hope the noble Lord will consider this point before the next stage of the Bill.
LORD MORRISON: I am sorry, but I cannot alter my decision. We have agreed that a licence shall be granted, and the Amendment is simply to leave out the words:
"and before issuing a licence under this section, the Minister shall consult with the Corporation."
I have explained why we feel that these words should be retained. I do not think anybody is really opposed to them. Lord Strabolgi, who is an old political friend of mine, may well have made a speech just now because he was so taken back with the concessions I made a few moments ago that he had an extra speech in reserve. I doubt very much whether

689
he is opposed to these words being in the Bill. In any case, I am sorry, but I cannot accept the Amendment.
LORD BALFOUR OF INCHRYE: I am sorry that the Minister feels unable to accept this Amendment. It is not one for which we would go to the stake and, therefore, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
6.40 p.m.
VISCOUNT FALMOUTH VISCOUNT FALMOUTH moved, after subsection (2) to insert:
"( ) A licence shall not be refused under the last foregoing subsection unless before refusing the same the Minister has satisfied himself after a consultation with the Iron and Steel Consumers' Council that it is in the public interest that such licence shall be refused"
The noble Viscount said: This Amendment deals largely with the consumers of steel. I am extremely fortunate that the noble Lord, Lord Morrison, is dealing with this particular question, because he was recently a distinguished member of the Metropolitan Water Board. That particular Board uses every conceivable type of steel, in every conceivable shape and form. I would like to ask the noble Lord this question. Suppose the Board decide to have a particular type of stainless steel for one of its valves, and the engineer applies to a firm and asks them to make it. That firm will say: "We are sorry, but we cannot get a licence to make that steel." The reply is "Why?", and the firm will reply, The Minister thinks they ought to be made in bronze," or something like that. Surely there should be some right of appeal to the Consumers' Council in order to state a case.
I imagine that that is the purpose for which the Consumers' Council is set up. If that is refused, the consumers will have a very real grievance in not being able to place before the Council the restraints which are put upon them for the obtaining of various classes of steel which are essential for the purposes for which they require them. The same arguments apply to the small steel maker, who is requested to make this article. He in his turn is entirely dependent upon the engineering industry, and it is on behalf of the engineering industry that I ask the
690
Government to accept this Amendment, which is surely entirely in accord with the purposes for which the Council was set up. I beg to move.
Amendment moved—
Page 37, line 21, at end insert the said subsection.—(Viscount Falmouth.)
LORD MORRISON: I thank the noble Lord for his kindly references about the time we spent together in the Metropolitan Water Board. I am glad I am not there now in these difficult days of drought. I am sorry that I cannot respond by accepting this Amendment. The Government feel that it is not necessary to have a statutory provision in order to ensure that the consumers' interests are taken into account. That would be done in any case through the machinery of Clause 6. They would be known not only to the Corporation but to the Minister himself under the provisions for keeping him informed of the Consumers' Council proceedings. Perhaps I should add that it will of course be open to the Minister at any time to seek the views of the Consumers' Council on particular matters. It will also be open to other interests wishing to provide new or additional production to represent their point of view to the Consumers' Council or its, committees, with the object of securing support for new manufacturing projects.
VISCOUNT SWINTON: The noble-Lord says that this will be dealt with under Clause 6, which is the clause setting up the Consumers' Council. Do I understand from that that somebody who is applying for a licence will be entitled, under Clause 6, to go to the Consumers' Council and say: "Will you give me a recommendation for this to the Minister?"
LORD MORRISON: That is almost exactly what I said. I said that it would also be open to other interests wishing to, provide new or additional production, to represent their point of view to the Consumers' Council or its committees, with the object of securing support for new manufacturing projects. With that explanation I hope the noble Lord will withdraw his Amendment.
LORD BALFOUR OF INCHRYE: The noble Lord said that it was not necessary to have a statutory provision, but it seems to me rather one-sided that

691
it is necessary to have a statutory provision that the Corporation be consulted in the granting of a new licence while, on the other hand, it is not considered right that there should be a statutory provision that the Consumers' Council should be consulted when a licence is to be refused. It does not seem to me to be logical. But at any rate, from what the noble Lord said I think we are on common ground: that the Consumers' Council have a position in this, in that they can represent the users and potential users. It seems to me a clumsy piece of administration that someone who wishes to start or expand an enterprise, goes to the Consumers' Council and, as it were, secures an endorsement of his proposals and then goes to the Minister. Nevertheless, it achieves the purposes of the Amendment. We have the position now where, in the procedure outlined by the noble Lord, the Consumers' Council can give a view as to whether a licence should or should not be granted. That is the purpose of the Amendment, and I should recommend my noble friend to withdraw the Amendment in view of the explanation of the Minister who says that the object will be achieved, although in a difficult and more clumsy way.
VISCOUNT RIDLEY: Is it absolutely certain that any intending producer could get his case referred to the Consumers' Council? Under the part of the Bill which deals with the Consumers' Council, they have to deal with matters referred to them by consumers. They have no specifically expressed contacts with any producer or intending producer. I suppose it would mean that a consumer will have to go to the Council and make out a case for being short of some particular product, or range of products, and then after that it will have to be referred to a possible producer. It seems to me that there is some doubt as to whether, in every case, such a matter would inevitably come before the Council.
LORD STRABOLGI: There is another consideration which I think is important, following the observations which fell from my noble friend Lord Morrison. I think that the little man referred to by the noble Earl, Lord Dudley—the poor little fellow who is going to start this vast steel works, with all the risks attaching thereto—will also be entitled to go to the Corporation
692
and put his case before them. I think that is only fair. If the Minister is to consult the Corporation, I suggest that this poor little fellow should also have the right to go to the Corporation.
LORD MORRISON: I do not think I need add any more. I have already said twice that it would be so, and my words may be read to-morrow in the OFFICIAL REPORT.
VISCOUNT FALMOUTH: In view of the assurance given by the noble Lord, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD HAWKE LORD HAWKE moved to add to the clause:
"( ) If an undertaking has been or is given by or on behalf of the Minister that a licence will be issued under this section when certain works have been completed or certain expenditure has been incurred, the licence shall be issued in accordance with the undertaking when the works have been completed or the expenditure incurred."
The noble Lord said: I believe that I am going to achieve two objects in moving this Amendment. First of all, I may get His Majesty's Government to accept it and, secondly, I hope to obtain the answer to the problem which has always puzzled me: Which came first, the chicken or the egg? The reason for this Amendment is that, after the passing of this Bill, there may be people who want to enter the field of Second Schedule activities. They may well not have a works with which to do it. The Minister can license a person to enter Second Schedule activities, but can he license a person who does not have the works? Which comes first, the works or the licence? We seek to provide in the Bill that where the Minister gives the entrant some form of assurance that he will eventually receive a licence, he will in fact get that licence, in spite of the fact that the Minister may have changed in the interval and the economic situation may be very different from what it was when the application was made. With those remarks I beg to move.
Amendment moved—
Page 38, line 3, at end insert the said subsection.—(Lord Hawke.)
THE EARL OF BUCKINGHAMSHIRE: Since any time up to two years may elapse between now and the vesting date, a company not so engaged can embark

693
on Second Schedule activities should the Minister choose to sanction it. The noble Lord, Lord Hawke, said that the Minister could give an assurance that he will issue that licence when the time comes. We want to make sure that that licence is issued whatever happens. We ask also: Why omit this provision unless there is to be no new undertaking of Second Schedule activities? I would ask the Government whether it is a pure mistake or whether the Minister does not intend to sanction Second Schedule activities until after the vesting date.
LORD MORRISON: As this is the last Amendment before the time when we shall adjourn, I had hoped to be able to finish up triumphantly, but that does not always happen. I think I can give the noble Lord a reasonable assurance on his Amendment. I start by saying that I cannot find any disagreement with its principle. The only reason I am unable to accept it is that it is unnecessary. Capital expenditure for a purpose requiring licence would obviously not be undertaken without first obtaining an undertaking from the Minister that a licence would be issued. So far we agree. I am perfectly sure that the noble Lord does not suggest that an undertaking once given by a Minister would not be honoured. If that is his suggestion, and I cannot believe it is, I will sit down, because have no more to say. He raises the point: Which comes first, the works or the licence? In reply to that, I see no administrative difficulty in issuing the licence in advance of the construction of the works, with an appropriate condition attached to it to the effect that it would come into effect on the completion of the works. I have no doubt that that is an administrative method which could easily be adopted, and I think will be adopted. On that assurance I think the noble Lord will feel that his point has been met.
LORD HAWKE: I think the noble Lord has met me entirely if in fact the entrant can obtain a licence notwithstanding the fact that he has not yet got the works. The point we seek to secure is there. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 29, as amended, agreed to.
[The Sitting was suspended at five minutes before seven o'clock and was resumed at a quarter past eight.]
Clause 30:
Rights of existing businesses.
(3) Subject to the next following subsection, a licence which the Minister is required by this section to issue shall not be subject to any conditions except the following, that is to say:
(a) a condition limiting the extent of any such activity to the annual production of—

(i) double the average annual output during the years nineteen hundred and forty-six and nineteen hundred and forty-seven of the works aforesaid used for carrying on that activity, or

(ii) the quantity specified in the second column of the Second Schedule to this Act in relation to that activity,

whichever is the less; and
(4) Where the Minister is required by this section to issue a licence to a person in whose case the average annual output during the years nineteen hundred and forty-six and nineteen hundred and forty-seven of the works used for carrying on any such activity of the business at the passing of this Act was greater than the quantity specified in the second column of the Second Schedule to this Act in relation to that activity, the licence shall, instead of being subject to the condition specified in paragraph (a) of the last preceding subsection, be subject to a condition limiting the extent of the production of that activity to the average annual output of the works during those years; and the licence shall be subject also to a condition that the Corporation may require the holder of the licence to tell to them so much of the output to which the licence relates as the holder of the licence does not require for purposes of manufacture in the works of the holder of the licence, at such price as may be agreed, or, in default of such agreement, as may be determined by arbitration having regard to the prices at which similar products are sold in the open market by the Corporation or publicly-owned companies.
LORD TEYNHAM LORD TEYNHAM moved, in subsection (1) after "Minister" (where that word occurs a second time) to insert:
"or, in a case where a question is referred to arbitration under subsection (5) of this section within three months after the determination of that question."
The noble Lord said: It may be for the Committee's convenience if I suggest that this Amendment and two other Amendments to page 39, line 35, and page 39, line 38, which are consequential, should be taken together. These are little more than drafting Amendments. The clause, as drafted, provides that the Minister shall issue a licence to an existing business within six months after the date of the receipt by the Minister of certain

695
particulars which are set out in subsection (2). These particulars may in some cases be disputed by the Minister, and subsection (5) provides for arbitration. It may happen that the arbitration may not be determined until after six months have elapsed. This Amendment provides for the issue of a licence within three months after arbitration has been determined. I beg to move.
Amendment moved—
Page 38, line 11, after ("Minister") insert the said words.—(Lord Teynham.)
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): I entirely agree with the noble Lord, Lord Teynham, that these three Amendments hang together; and in view of the very friendly relationship which has been established to-day I am almost inclined to do a deal with him, that we should go fifty-fifty on this clause: I will accept 50 per cent. of his Amendments if he will withdraw 50 per cent. I am quite prepared to accept not only this Amendment but the other two to which he referred. If he will formally move them when we reach them they will be accepted.
LORD TEYNHAM: I am grateful to the noble Viscount for accepting this Amendment.
On Question, Amendment agreed to.
THE EARL OF DUDLEY THE EARL OF DUDLEY moved, in subsection (3)(a) to omit all words after "double the" (in sub-paragraph (i)) down to the last word "and" and to insert in their place:
"quantity specified in the second column of the Second Schedule to this Act in relation to that activity."
The noble Earl said: This Amendment was to have been moved by the noble Lord, Lord Clydesmuir, but unfortunately he is detained elsewhere. In asking for your Lordships' indulgence, I am fortified by the thought that the noble Viscount, Lord Swinton, who will follow me later, with his unusual and rapid grasp of an almost unlimited range of affairs will fill in the gaps that I shall leave.
Clause 30, which incidentally was not discussed at all in another place, provides that existing undertakings not being taken over under the Second Schedule shall be entitled to licences as of right to produce
696
either double their average output in the years 1946 and 1947, or 20,000 tons a year (or 50,000 tons in the case of iron ore) whichever is the less. The proportion of output of Second Schedule products produced in 1946 and 1947 by firms which under this Bill will be licensed, or free, is less than 10 per cent. of the whole, except in the case of light sections and bars, hoop and strip, tinplate and alloy steel, which exceed the 10 per cent. by varying small amounts. It is unlikely that these tonnage proportions are going to jeopardise in any way the nationalised portion of the industry, and therefore we find it difficult to see that these restrictions are necessary.
These little men who are going to be left free and will be licensed fulfil a most important function. They are the hucksters of the industry. They roll all kinds of special qualities and ranges which the larger firm, with its continuance of rolling output, cannot do without considerable expense. As we have recognised all through the centuries, their initiative and enterprise are of inestimable value to the consumers, and particularly to the precision engineers, the export of whose product is of such vital importance to us at this moment. Some of these firms may have an output of, say, 18,000 tons. That means that under the present clause they cannot exceed a maximum of 20,000 tons, and it follows that they will be hopelessly restricted. They dare not proceed with development schemes, because a modernisation scheme would entail probably an increase in output of 2,000 tons, which would bring them up above the 20,000 ton mark, when they would no longer be free.
As noble Lords probably know, it really is impossible to modernise without increasing your output in some way. I am sure that the Government do not in any way wish to discourage the modernisation even of these small firms. It is just as important that they should be modernised as that the larger firms should be. Now, under this clause, you are directly discouraging modernisation. Through modernisation, these small people have increased their output very considerably in recent years. Let us see what they have done during the last decade, between 1938 and 1948. During that period, the ingot tonnage which the Government will control, if this Bill

697
passes, was increased by 45½ per cent., a very considerable figure. But, during the same decade, the output of these small firms to which I am referring was increased by 66 per cent. So noble Lords will see clearly that, if these small firms are to remain up-to-date, it will be impossible for them in the future to avoid some increase in output, which will put them at the level at which they will be claimed by the caucus of nationalisation. They will be greatly handicapped if they are restricted in this way, because, as noble Lords who have been in any productive business know perfectly well, it is on the last few tonnages that you get the profit. It is at the top of the tonnages where the profits are made. To get down to brass tacks, if the Bill passes the Government are going to control 99 per cent. of the ingot production and at least 92 per cent. of the finished products in an industry which, by the time they take over—if they ever do take over—will be producing something like 1'1,500,000 tons a year. This little tuppeny-ha'penny, though frightfully important, output—I say "tuppenyha'penny" not in any derogatory way, because this small output is vitally important to the consuming interests of Great Britain—this increase of 20,000 tons to 40,000 tons is not really going to make any difference to, or embarrass in any way, the nationalised part of the industry. It so happens that at least one firm in my knowledge in present circumstances have not been able to go ahead with development schemes. They have not gone ahead with them because, if they did, it would bring them over the 20,000 tons mark and they would be seized under the Second Schedule. That is a very undesirable thing, and the Government must grant more leeway in this respect.
The Minister was fairly encouraging in another place when on Second Reading he said:
"Critics suggest that it is undesirable for a publicly-owned company to be in competition with a privately-owned company. On the contrary, this is likely to be highly beneficial, in that both the publicly-owned and the privately-owned companies will be subjected to the competition of each other."
That is very desirable, and we agree with it. Then he said:
"We do not wish firms not taken over to be in any way handicapped in their ordinary activities, or even in extending their capacity
698
within reasonable limits.… We want all firms in the iron and steel industry, outside the nationalised sector industry, outside the nationalized sector, to have every opportunity to prosper. The only restriction placed upon them is that they may not extend their production to such a degree as to make the intergrated working and efficiency of the major publicly- owned sector impossible."
It is difficult to say how an output of 40,000 tons per annum is going to exceed what the Minister envisages. Noble Lords opposite are sensible people, and I am sure they want to make this Bill workable—although that will be very difficult, if not impossible, unless they accept some further elasticity. In this respect the Bill will be an exceedingly bad one, and they will be cutting off their nose to spite their face. I beg to move.
Amendment moved—
Page 38, line 46, leave out from the first ("the") to ("and") in line 6, on page 39, and insert the said new words.—(The Earl of Dudley.)
VISCOUNT HALL: We always heed the words of the expert who can put his case in such a pleasing manner as can the noble Earl, Lord Dudley. As we know, he has taken an active part in iron and steel production during his lifetime. He is not concerned only about the big combine but, as he has indicated in his speech, he is equally concerned about the small man. I fully agree with what he has said, that the small man with the small business, with initiative and enterprise, is a very important branch of this or any other industry. I think the Amendment goes a little further than the noble Earl intended. It must be remembered that in the clause which it is proposed to amend, if the little man is licensed, not only can he double his output if the output does not exceed the amount stated in the Second Schedule, but he is encouraged to continue that initiative and enterprise which we all expect of him. I cannot quite understand the position in regard to the firm which had an output bordering on, say, the 20,000 ton limit—as to why they did not go on with their development. If they had consulted the Minister of Supply, or the Ministry of Supply, I think they would have been given every encouragement to do so. I can understand that there may be a feeling that the present ceiling is unfair, in that it does not allow a reasonable margin for

699
expansion to firms whose production is near the permitted maximum.
It is recognised that the maximum could not be rigidly imposed in certain borderline cases. It is unreal, however, to suggest that every licensee, and in particular that the very small producers (and it must be remembered that there are about 80 of these small producing firms who are producing under 5,000 tons) would ever consider expanding to 40,000 tons. It has never been anticipated that they would ever consider expanding to that extent. We must assume that if the Amendment were accepted each licence would be fully exploited, and the potential total effect of the proposal must be considered. Where the maximum output under the existing formula would be 50,000 tons of iron ore, the Opposition's Amendment would make it 100,000 tons. The present maximum in the Bill is based on the principle of nationalisation and the creation under the Corporation of a monopoly in iron and steel, and no Government in those circumstances can contemplate the acceptance of a potential production on such a scale as would be given if, as this Amendment suggests, that is outside the control of the Corporation and without any reference to plans for the industry as a whole. For these reasons I regret that the Amendment cannot possibly be accepted.
My right honourable friend, speaking in Committee in another place, said how illogical was the Amendment proposed there to allow any newcomer in the industry to produce at least 40,000 tons a year, when companies producing not less than 20,000 tons a year are being acquired with the declared object of making them part of an integrated industry. The present Amendment now before this Committee is, I think, a little illogical. It is not the Minister's intention that every existing producer shall be rigidly restricted to the output permitted under the present subsection (3)(a). I would like to refer to the assurance which the Minister gave in the following words:
"… If there is any firm in that higher bracket making between 15,000 tons and 20,000 tons which can show good technical grounds for expansion to a reasonable extent—not up to 100,000 tons—and can show that it would be more economic if it did, or that
700
its capacity is needed in the industry. I should almost automatically give permission for that firm to expand reasonably over the 20,000 tons limit."
As I have said, His Majesty's Government cannot accept this Amendment, and I think I might mention now that they cannot accept the later Amendment to subsection (4) which I think is really consequential upon it. Perhaps I may indicate now the Government's intentions concerning the licensing of certain exceptional cases which the Minister proposes. Under Clause 30, as drafted, existing businesses whose average production in 1946–47 was less than 50,000 tons of iron ore or 20,000 tons of other Second Schedule products will be entitled to produce up to those levels or double their 1946–47 average, whichever is the less. Producers whose 1946–47 average output was over 50,000 tons or 20,000 tons, as the case may be, will be licensed Ito produce up to their 1946–47 average.
The Minister recognises, however, that there are a number of producers remaining in private ownership whose output since the end of 1947 has gone beyond the maximum to which their licence would entitle them under Clause 30 as drafted, or who have, with the approval of his Department, undertaken works of development which, when completed, would involve an output greater than that maximum. The Minister has always intended to provide specially for these cases, and to make his intention in this matter quite clear he has authorised me to give an undertaking in the following terms. Where a producer who is entitled to a licence under Clause 30 has an output in any calendar year between January 1, 1948, and the date of the licence which is higher than that to which Clause 30 entitles him, he will be licensed at that higher figure. Where approved capital development is in hand, the licensed output will conform to the planned production as approved by the Minister of Supply. I think that in this undertaking which the Minister has authorised me to give he has gone some distance to meet noble Lords opposite, and I hope in the light of that undertaking the noble Lord will withdraw his Amendment. If there is any question or any matter which they would like to discuss in relation to this undertaking, I should be prepared to meet the noble Viscount, Lord Swinton, or any of his

701
colleagues, for further discussion of the matter.
VISCOUNT SWINTON: I am indeed grateful to the noble Viscount, the First Lord, for meeting us on this matter in a spirit of sweet reasonableness, partly natural to himself and partly induced by the admirable advocacy of my noble friend, the Earl of Dudley, who has shown that heredity can justify both a seat in this House and the direction of a great family concern. What the First Lord has said goes a good way to meet us. We have passed the stage of principles on which we shall never agree, until noble Lords opposite are converted to a more reasonable frame of mind, but we now want to get everything that will make this Bill as workable as possible. We want latitude, but at the same time I am bound to agree with the First Lord that the Amendment, as it stands, while designed to give latitude, would also lead in a year or two, if all the producers were to get their 40,000 tons of Second Schedule products, to their falling into the voracious maw of the Government. On the other hand, it is common ground that we want reasonable expansion and we want people who are excluded to have a reasonable deal.
It is true of almost every industry of the country that it is when they are working to full capacity that they make a profit. If they carry on at 60 or 70 per cent. output, they make a loss. I think that is particularly true of the smaller businesses, doing the rather meticulous work—making the bits and pieces which are so necessary. If you are running full time, that makes all the difference between a profit and a loss. Works are not designed to fall into exact mathematical categories of under 20,000 or over 20,000. Therefore, what we on both sides want to achieve is reasonable latitude to these firms. We are dealing here not with the people who come new into the business, and are suppliants for licences, but with people who are left out of the Bill and are entitled to licences as of right. We want to enable them not only to carry on the business at a profit—that may be only a secondary consideration—but to make that contribution which even the Government, by leaving them out, admit they can and ought to make to the national productive effort.
What the noble Lord proposes is this. We start off, after all, with an artificial
702
date—well, we must start somewhere. As I read it, this clause starts with January 1, 1946. You then say: "If in the years 1946 and 1947"—and you take the average of the two—"you come up to a certain point, you may have the advantage of the average of those years." The noble Lord says he appreciates that we still want these people who are left out of the Bill to produce the maximum of their capacity. Therefore, he says, if I followed him aright, if any firm has an output in any year between January, 1948, and the time of licensing which is higher than he would get under Clause 30 as it stands, which is the average for 1946–47, he shall be entitled to the higher figure. I do not think that an unreasonable proposition in principle, and I say at once that I 'would accept it.
What I think the noble Lord will agree is that, having accepted that, we want to find the fairest possible date. There has been a great demand, and these people have been urged to produce as much as they can; and I imagine that the expansion has continued on a fairly steady rising curve. It may, be that a firm has a relatively low figure for 1946. The noble Lord will not accuse me of introducing a political element into this debate if I say that 1946 was a difficult year. There was the business of the coal; do not let us argue about it; we were all short of coal and, therefore, we could not get on with the production. On the other hand, in 1947, people began to get into their stride, and the curve begins to rise. Therefore I do not think it is fair to take the average for the 'two years. If the firm could show that the output in any year between January 1, 1946, and the time of the transfer was higher, I think it would be reasonable and entirely consistent with what the noble Lord said, that they should automatically be licensed for the higher figure. There is no difference in principle between us; the difficulty is to agree on what is the reasonable date on the mathematical curve.
The noble Lord well on to say—and I think this is entirely right—that where approved capital development has been undertaken, the licensed output should be in conformity with the planned production as approved by the Minister—I think I caught the noble Lord's words. I think that is also quite fair, and subject to the adjustment, upon which I do not think we need have much difficulty—1948 is

703
perhaps not a fair date to put in: I think it should be 1947 or 1946—I think we could reach a reasonable compromise on this. I have only one other thing to ask, and it is this. The noble Lord said that that is the way in which the Minister wants to do it, but I think we should have this in the Bill. I am not going into any of the old arguments as to whether or not we ought to trust the Minister to do things. The noble Viscount the Leader of the House, the right honourable gentleman Mr. Herbert Morrison and everybody have always said frankly: "If we give an undertaking here it binds us, but it does not bind another Parliament." We gave some undertakings together in the National Government to which noble Lords opposite did not pay regard—I am not going to argue whether they were right or wrong.
THE LORD PRIVY SEAL (VISCOUNT ADDISON): I was not in the Government.
VISCOUNT SWINTON: But you were an elder statesman outside.
VISCOUNT ADDISON: I am exceedingly interested in this, but I was not a member. My colleague, Mr. Morrison, was.
VISCOUNT SWINTON: But the noble Viscount does not dissent from the proposition I have advanced—of which he is at present taking advantage—that those undertakings which were given by the National Government no longer remained binding when, unfortunately for the country and everybody, we parted. I do not base it only upon that. The Government have laid down in this clause—and quite rightly—in very detailed terms exactly how the average is to be worked out, and upon what basis the licence is to be given. I think the First Lord of the Admiralty will agree that we ought to put in the clause—in whatever are the appropriate words—the undertaking which he has now offered to the House and which, subject to the slight adjustment which I propose—and which I do not think he will regard as unreasonable—I am inclined to advise my noble friends to accept.
VISCOUNT HALL: I am grateful to the noble Viscount for the way in which he has approached this declaration by
704
the Minister. I can assure him that the date is not a fixed date, in the sense of negotiating that matter. With regard to the second point, he rightly described the latter part of the announcement. With regard to embodying that in legislation, that is an offer which we will discuss, and I do not think we shall find the slightest difficulty.
THE EARL OF DUDLEY: Although I have not the whole slice of the cake that I asked for, I am grateful indeed for that part which the Government has conceded to me. I ask the Committee for leave to withdraw the Amendment on the understanding that the final details will be worked out by the Front Bench and the noble Viscount.
VISCOUNT SWINTON: And you.
THE EARL OF DUDLEY: With those remarks I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
THE EARL OF DUDLEY THE EARL OF DUDLEY moved in subsection (4) to omit "to the average annual output of the works during those years," and to insert:
"to such an annual output (not being less than the quantity specified in paragraph (a) of the last preceding subsection or the average annual output of the works during the said years, whichever is the greater) as the Minister thinks reasonable in relation to the activities of that company."
The noble Earl said: I hope the Government will see that this Amendment hangs in some way on the last Amendment, and the people for whom I plead now have very much the same claim as the people for whom I have just been pleading on the previous Amendment. This Amendment seeks to provide appropriate tonnage limitation formula for companies eligible for licences who produced more than 20,000 tons in the year 1946–47. This subsection (and I think the terms of the Amendment will be familiar to many of your Lordships, particularly those who have been used to reading the City columns of the newspapers, because the firms to whom I will refer presently have been excluded one by one from the Second Schedule and have received a certain amount of publicity) applies to those firms who, although they produced more than 20,000 tons a year on an average in 1946–47, are nevertheless excluded from

705
public ownership by virtue of the operation of the proviso to Clause 11, subsection (3) which reads:
"Provided that the Third Schedule does not include any company whose main activity on the said day consisted of the manufacture of motor vehicles or any company in whose case—

(i) the average annual output during the said years of the products of each of the said activities carried on by the company on the said day, being the output of works operated by the company on the said day, was less than fifty thousand tons; and

{ii) the total number of persons employed by the company on the said day wholly or mainly for the purposes of the said activities was not more than fifteen per cent. of the total number of persons employed by the company on that day."

This proviso, as it was when the Bill was first introduced, originally excluded from public-ownership only the Ford Motor Company, which produced an average of 172,000 tons a year of pig iron in 1946–47. But on the Report stage in another place the Minister widened the terms of the clause to exclude from public-ownership also five firms whose annual output of schedule products in the year 1946–47 averaged less than 50,000 tons and not more than 15 per cent. of whose labour was engaged in scheduled activities. Those firms were Bayliss, Jones and Bayliss, Limited (your Lordships will have heard about them) with an output of 37,100 tons of hot rolled products; the Carron Company, with an output of 37,200 tons of pig iron; the Clay Cross Company, with an output of 26,700 tons of iron ore and 41,600 tons of pig iron; Richard Johnson and Nephew, Limited, with an output of 41,100 tons of hot rolled products; and the Executors of James Mills, Limited, with an output of 31,000 tons of hot rolled products. All those companies will be eligible for a licence as of right, and they should not be subject to conditions less favourable than those applicable to their competitors whose output was less than 20,000 tons a year in the base years—the people we have been talking about in the last Amendment. The last preceding Amendment will now, thanks to the Government, allow those concerns a reasonable margin for expansion.
These other companies to which I now refer should surely enjoy privileges on the same scale. The output of these excluded companies cannot reasonably be limited to their average 1946 and 1947
706
output, since this would not allow any margin for expansion as of right. Because of the lack of appropriate tonnage relationship between Ford's and the other companies now covered by this clause, and because of the special circumstances of Richard Johnson and Nephew, it is impracticable to devise a specific formula fixing a limit fitting for each of the six companies concerned. Under this Amendment it is considered that the best course is to allow the Minister to fix limits himself for each of the companies, provided that none of the companies is obliged to operate below the 1946–47 level, or, in the three cases where this level is itself below the upper limit permitted to "normal" licensees by subsection (3) as proposed to be amended, below 40,000 tons a year. I hope this Amendment will commend itself to the Government. I beg to move.
Amendment moved—
Page 39, line 21, leave out from ("activity") to ("and") in line 22, and insert the said new words.—(The Earl of Dudley.)
VISCOUNT HALL: I should like to assure the noble Earl that the firms he has in mind will be beneficiaries under the announcement which I have already made in relation to the preceding Amendment. I would suggest that the discussions which we propose to have in connection with the preceding Amendment should cover this Amendment as well. I think that that will be the better way to deal with the matter, and if the noble Earl cares to withdraw his Amendment this joint discussion can take place in that form.
VISCOUNT SWINTON: I think that is the right course. Obviously, the basis of this Amendment was that if you give something to people with a production of under 20,000 tons you should take into consideration other people who start with a handicap or "bogey," so-to-speak, of over 20,000 tons. Though they have certain merits on their own, the Amendments are partly consequential. Therefore, on the understanding that we agree that logically whatever consequential adjustments should be made on the first Amendment must follow, I think this is the right course. Subject, therefore, to what the noble Earl, Lord Dudley, says, I think that this matter had better be made part of the discussion we are going to have.
THE EARL OF DUDLEY: I gladly accept the offer of the noble Viscount and ask leave to withdraw my Amendment, on condition that it will be discussed with the previous Amendment.
Amendment, by leave, withdrawn.
9.0 p.m.
LORD TEYNHAM LORD TEYNHAM moved, in subsection (5) to omit "he is required by subsection (1) of this section to issue a licence in respect of the business concerned" and to insert:
"the expiration of six months after the date on which the said particulars were received by him."
The noble Lord said: This Amendment is consequential on the first Amendment moved to Clause 30 and accepted by the Government. I beg to move.
Amendment moved—
Page 39, line 35, leave out from ("before") to end of line 36 and insert the said new words.—(Lord Teynham.)
On Question, Amendment agreed to.
LORD TEYNHAM: I beg to move this Amendment, which is consequential.
Amendment moved—
Page 39, line 38, leave out from ("Act") to ("but") in line 41.—(Lord Teynham.)
On Question, Amendment agreed to.
Clause 30, as amended, agreed to.
THE MARQUESS OF READING: Before the next Amendment is moved by the noble Viscount, Lord Bridgeman, may I, at the request of my noble friend Lord Rennell, express his apologies to the Committee for his absence? He is engaged in an inaccessible part of the country tomorrow morning, and therefore has been obliged to depart.
Clause 31:
Revenues of Corporation to be sufficient to meet outgoings
31. It shall be the duty of the Corporation so to exercise and perform their functions under this Act as to secure that the combined revenues of the Corporation and all the publicly-owned companies taken together are not less than sufficient to meet their combined outgoings properly chargeable to revenue account, taking one year with another.
9.2 p.m.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved to add to the clause:
"(b) their combined revenues from the activities specified in the first column of the
708
Second Schedule to this Act are not less than sufficient to meet their combined outgoings as aforesaid in respect of those activities taking one year with another; and
(c) their combined revenues from each of their principal activities not so specified are not less than sufficient to meet their combined outgoings as aforesaid in respect of that principal activity, taking one year with another."
The noble Viscount said: Like the noble Marquess, Lord Reading, I should like to express my regret that my noble friend, Lord Rennell, is not here to move this Amendment. I think it would be much better for the Committee if he had been in his place. I cannot disguise from your Lordships the fact that one of the reasons why we move this Amendment is our concern lest is should be possible, in the early stages of the nationalised Steel Corporation, to conceal losses on working. I am sorry to say that I am fortified in that suspicion when I recall that there was a loss of £23,000,000 to the National Coal Board in 1947, albeit offset by a small profit on the last accounting period, and also that there have been losses, to which attention has already been drawn in your Lordships' House, on civil aviation. We still do not know what the losses will be on the railways. I have another reason for moving this Amendment, and that is that the words now in the Bill,
"the combined revenues of the Corporation and all the publicly-owned companies,"
are not entirely clear from an accounting point of view. In the Bill as drafted the combined revenues are expressed as being required to be "sufficient to meet their combined outgoings." But we do not know yet (and we should like some statement in clarification of this point) how these combined revenues are to be calculated. For example, is the figure to be struck after transfers to the reserve fund which is mentioned later on in the Bill? Is the figure to be struck after allowing for interest and redemption moneys on stock? We shall come to that question later, when we discuss the Seventh Schedule.
Those are two main questions. They are important because there is a direct conflict of interest between the consumers of steel products, on the one hand, and the stockholders of steel stock on the other. Naturally the stockholders would wish to feel protected to the greatest extent possible by the feeling that transfers

709
have been made to the reserve and appropriations have been made for redemption. On the other hand, it is possible to argue that those transfers and appropriations would be made at the expense of the consumer, because they might—I do not say they would—result in a higher price thereby for steel products. We should welcome an explanation on this point. If it is not possible to-night, then perhaps it may be possible for us to have it at a later stage of the Bill. Perhaps I have asked these questions without due notice. If so, let us have the answers later. We want to know how the Government propose to interpret the wording of their clause in regard to what is revenue and what is not.
Now let me go on to the substance of the Amendment. As the Bill is drawn, it is required that the combined outgoings shall be balanced by the combined revenues of the Corporation and all the publicly-owned companies taken together. By that, I take it, is meant the combined revenues of the Corporation and all the publicly-owned companies—that is to say all the activities lumped together. We feel there is a certain amount of danger in that. This point was hardly discussed in another place, owing to the procedure there. We feel that there is a danger that it might be possible for the nationalised Corporation and its companies together, by means of the Corporation giving directions to the companies, to sell what one might call the monopoly products at a high price and then, having made a big profit on those monopoly products, to be able to sell the non-monopoly products at a lower price.
May I explain that in a little more detail, because we all know by this time that there are certain products in which the Corporation will have not a complete monopoly but a virtual monopoly. The Second Schedule processes are largely (up to about 90 per cent.) owned by the companies which are to be nationalised—the figures have been produced and I need not go into them again. Therefore, for the purposes of sales it is possible to say that in those processes—in the hot rolled steel and other things, which are dealt with in the Second Schedule—the Corporation will have a virtual monopoly and will be able to fix the price, because there will not be suffi-
710
cient of those Second Schedule products manufactured other than by the Corporation to affect the price or to satisfy the consumers. If that profit were high—and in monopoly conditions it can be as high as you like—it would be possible to offset that profit against possible losses in the non-scheduled products, thereby making it possible to sell those products below their true cost price, that is to say, the price at which an ordinary company, having its ordinary overheads, its ordinary charges, and wishing to make an ordinary amount of profit, could sell those non-scheduled products.
That is why we are seeking to expand Clause 31 by adding to it two new subsections. If we succeed, the result will be that there will be three requirements to be satisfied. The first is the one which is now drawn in the Bill—namely, that the combined revenues of the Corporation and all the publicly-owned companies (that is to say, all the activities lumped together) shall be not less than sufficient to meet their combined outgoings. But remember: we are still slightly in the dark until we get a definition of "outgoings." By our Amendment we seek to add these two other conditions, the first of which provides for segregating the combined revenues of the Corporation and all the publicly-owned companies from Second Schedule activities. The second—which is the important one—provides that the combined revenues of the Corporation and of all the publicly-owned companies in each of the principal non-scheduled activities shall be shown in the accounts, and that it shall be possible to prove, because of compliance with those two provisions in this Amendment, that there is no risk of any unbusinesslike practices or underselling the market in nonscheduled products at the expense of an undue profit in the scheduled products, as would be possible without disclosure as the Bill is already drawn. This is a slightly complicated matter but I hope that what I have said has made it clear to the Committee. Your Lordships will see that there are two points: first, a definition of what is to be included in the revenue, and, secondly, the point which is specifically made by the two Amendments which appear in the Marshalled List. On behalf of my noble friend Lord Rennell, I beg to move.
Amendment moved—
Page 40, line 16, at end insert the said paragraphs.—(Viscount Bridgeman.)
LORD RITCHIE OF DUNDEE: I support this Amendment and I wish that I could add something useful to what the noble Viscount, Lord Bridgeman, has already said. If I may be allowed to do so, I should like to say a few words which I am afraid constitute a digression. I wish to make it abundantly clear that in the remarks I made last night nothing was further from my thoughts than to call in question for one moment the personal integrity of noble Lords opposite. If I gave that impression I deeply regret it, but the subject is one which has created widespread resentment, and I am afraid that in the heat of the moment I allowed myself to use words which are not normally used in your Lordships' House.
VISCOUNT ADDISON: In the first place let me say that we sincerely appreciate the intervention of the noble Lord, Lord Ritchie, and we accept what he has said in the spirit in which he has said it.
With regard to the Amendment, I feel rather embarrassed because the noble Viscount, Lord Bridgeman, was extraordinarily obliging and I would much like to follow his example. With regard to the items relating to revenue, I would call the noble Lord's attention to Clause 37, to which we shall come in due course. That clause deals with this specific matter. Therefore I will not say anything more about it now, but I was informed that the balance will be struck after appropriations to reserve—unless provided for under Clause 35—and revenue charges mentioned in Clause 37. There will be a proper allocation to reserve as is shown in the subsequent clause.
The particular Amendment before us relates to something quite different, as the noble Viscount has said. It asks that these companies should be called upon to have their accounts dissected and presented in separate parts. I think it is not a demand that is made on other companies operating in the same way, who are not called upon to segregate their activities and to show how this one balanced and that one did not. They are not obliged to have separate accounts for all their separate activities, and if we
712
do not ask anyone else to do it, why should we ask these concerns? I am informed by legal advisers that all these companies will be subject to the rules of the Companies Act and they will have to provide their accounts in the form required by that Act. It requires that their trade results should be taken as a whole but does not require, as would these Amendments, the dissection of their activities into separate accounts, which would assuredly provide a bewildering job for an army of accountants. Notwithstanding the example of my noble friend, I am sorry I cannot be so obliging as to accept the Amendment. Similar companies, whose activities in accordance with their Articles of Association are somewhat diverse, do not now feel called upon to present separate dissections of their accounts. Why should we ask them to do it hereafter?
VISCOUNT SWINTON: Does the noble Viscount really say that the great industrial companies do not know whether they are making a profit or loss on their principal activities?
VISCOUNT ADDISON: I did not say anything of the kind. I hope they do. I said they were not called upon to present the accounts of all their different activities separately. It is not reasonable that they should. That is what the Amendment will require. In Clause 38 and later clauses we shall see that the Corporation and companies have very strict obligations placed upon them, but a dissection of this kind, which would require the employment of an unnecessary army of accountants, is not reasonable. I am sorry I cannot accept it.
VISCOUNT RIDLEY: I do not think that the noble and learned Viscount the Leader of the House has really directed himself to what I might call the object of this Amendment. It was explained by the noble Viscount when he introduced the Amendment and I think it is worthy of serious consideration. I am not at all clear how it could be expressed in better terms, but I readily admit it looks as if this were a roundabout way of securing what seems to me a necessary provision of the Bill. There are a large number of manufacturers who must go to the public companies for raw materials, and they are very much concerned about what their position will be in competition

713
with the publicly-owned companies and the Corporation. They are quite a substantial section of the industry and I think is due to them to be satisfied, so far as it is possible to satisfy them. I do not think my noble friends who put down this Amendment would say it is the present intention of the Government or will be the intention of the Minister of Supply to instruct the Corporation to arrange their prices for the deliberate purpose of putting their competitors in these products out of business; but it is certainly something which well might happen under the Bill as it is drawn. It is something which in certain circumstances might appear to be in the public interest and may be generally adopted as the policy of the country.
I can see no protection in the Bill on this point. The Consumers' Council will have no means of deciding whether the prices of any particular product throughout its range of manufacture are correctly related to the stage of manufacture, either before or after, the point being that in making the finished steel you can perfectly well within one organisation take the profit on your hooks at any stage of manufacture, whether it be on ingots, semi-finished or finished products; and you can, as the noble Viscount, Lord Bridgeman said, sell these intermediate products at high prices, both to your customer outside and, in effect, to yourself. Therefore, you take a high profit on that particular stage of manufacture. Within one firm, of course, it is not a sale, but a transfer from one department to the next. That enables the large firm with continual processes throughout the whole operation to sell a finished product without taking any further profit on it, whereas the customer who has paid the intermediatory profit has to earn at least some profit in order to pay his way. This was not unheard of in the steel industry in the past, but it is a practice which the Federation have done away with. Unless the accounts were drawn in the way suggested, and were published, the Consumers' Council would not have any means of finding out whether or not that was being done. I do not think either that price control by the Prices Board, as proposed in a previous Amendment which was before the Committee, could touch the problem.
On the point of costs, I do not see how a large steel producing company could
714
undertake their operations successfully unless they had accurate costing of all the stages of production. The present practice is that at various periods the costs of these operations of iron making, steel melting, rolling, and so on, of the major products are collected by the Federation; they are summarised, averages are taken, and a hypothetical cost is found. That is what one would expect in a modern, efficient plant. That is the present system by which prices are arranged, with the help of the Ministry of Supply and the Iron and Steel Board, as it was. I do not think one should be alarmed at the suggestion that it will put extra work on the industry. It is, in substance, being done now.
As to the difficulty of publishing such a statement, I do not size how there could be any disadvantage to the Corporation in having these figures known. It may be argued that it would give an opening to their competitors abroad. If that were held to be the correct view, one would suggest that the accounts, as prepared in the form now proposed, should be available for inspection and scrutiny by the Consumers' Council, and kept confidential inside this country. I do not think the noble Lord who moved this Amendment desires in any way to embarrass the Corporation by making their trade difficult abroad. What I think is wanted is some method by which the Consumers' Council can find out at what stage in the manufacture the iron and steel makers are taking their profits, and whether or not they are deliberately either running at a loss or just failing to cover their expenses on the more finished products throughout the range of manufacture.
If the Consumers' Council could get real information on that point—and I repeat that that type of information is being collected and used at present by the Federation—I believe they could easily avert the danger which the Amendment seeks to avoid. It is a subject which is constantly discussed at present by all the producers of Second Schedule products who are not coming into the ownership of the Corporation. Rightly or wrongly, they are concerned lest they should be treated in that way. Is it not worth trying to contrive some procedure of this kind so as to set their minds at rest? It is only fair to them. I have no doubt the Government will give us the assurance that they do not intend

715
that the Corporation should try to drive such competitors out of business in a general way. As I have suggested, it might be worth making a further Amendment to make the Consumers' Council available to all stages of manufacfure, and to lay upon them the duty of satisfying themselves that the outside competitors are being dealt with fairly.
9.26 p.m.
LORD HAWKE: I have seldom been more astonished than when I heard the speech of the noble Viscount the Leader of the House on this particular matter. I can assure your Lordships that the army of accountants is already there, and they are already doing precisely the operations which the noble Viscount says they cannot do. There are only four activities which are concerned—iron ore mining, blast furnaces, making of steel, and the rolling of steel—and the turnover of each of those four activities runs into tens of millions of pounds. That is going to be the taxpayer's money, and surely the taxpayer is entitled to information to enable aim to judge which of these activities is being conducted efficiently and which is not. How is he to judge the efficiency of his Government if he has no idea what is the cost of getting iron ore into this country? The position of the private company is entirely different. The shareholders can go to the board once a year, and they can sack the board. We can sack our Board only every five years. Moreover, the shareholder can ask questions at the annual meeting, and he would probably get an answer on these particular points. In fact, many of these things are already published in the accounts. I really do hope that His Majesty's Government will reconsider their attitude.
LORD DE L'ISLE AND DUDLEY: I will not detain the Committee long, but I must try to find out where we agree or disagree upon this matter. I think the noble Viscount the Leader of the House, having heard so much weighty argument, would agree that the accountants are already there. We cannot define whether they are an army or a division, but the number is there. Although I speak as an accountant, it is not because I wish to give full employment to accountants, but simply that the accountants are retained in order to keep these cost accounts. Can we further agree that that
716
is desirable? The second point upon which I think we might agree is that if the Corporation, or the companies which it controls, do sell one product at a profit and others at a loss then it is desirable in the public interest that that should be known.
The third thing upon which I think we might agree—I hope we shall—is that the position of a public monopoly, set up by Parliament after long debate, is different from that of any privately-owned concern. Therefore it must be the concern of Parliament to see not only that that monopoly acts, so far as it can, in the public interest but that the public know, and the consumers of that product know, that it is acting in the public interest. It might be said that it would be in the public interest for one of the scheduled activities, or one of the principal products not in the Second Schedule, to be sold at a profit and for others to be sold at a loss. We maintain from these Benches that if that is so it should be known. I have listened to various parts of this debate in the Committee stage, and although I do not claim to have an extensive knowledge of this Bill it always seemed to me a not very strong argument by the Government that they should constantly be saying: "You would not do this if it were a privately-owned concern." We are here considering a monopoly set up by Statute, and I would remind the noble Lords opposite that it was Mrs. Sidney Webb, I think, who said that publicly-owned Corporations should work within glass walls. I do seriously recommend to the noble Lords opposite that, having set out upon what we regard as a disastrous course, they should follow their prophets.
VISCOUNT ADDISON: I have listened with great interest to these observations but I have on my brief some particulars of the divers activities of some of these concerns which are now being considered. It is well known that in the course of manufacture a number of articles may be moulded or partly manufactured because they contribute to the profitable employment of the machinery as a whole. But you do not have presented, and nobody has asked for, separate accounts of each individual item in these concerns, though that would be involved if we were to accept the Amendment. I am informed

717
that some of the activities, for example, of the concerns range as widely as steel tennis racquets and moth balls.
VISCOUNT SWINTON: Would the noble Viscount read the Amendment to which he is addressing his speech?
VISCOUNT ADDISON: I have read it many times.
VISCOUNT SWINTON: Then perhaps he would read it again and he would grasp it because it says:
"(b) their combined revenues from the activities specified in the first column of the Second Schedule to this Act are not less than sufficient to meet their combined outgoings as aforesaid in respect of those activities taking one year with another; and
(c) their combined revenues from each of their principal activities.…"
The manufacture of racquets is not one of their principal activities.
VISCOUNT ADDISON: That is all very well, but who is to decide where subsidiary activities end and principal activities begin? I hope the noble Lords who want minute dissection of these accounts will say that that has gone far enough. I am also reminded that in the debate in this House on the Companies Act, in which the noble Viscount took an active part, it was at one stage contended that the dissection of accounts was not a practical proposition in a trading concern—that was contended in the House by the noble Viscount opposite. I do not pretend to be an expert in these matters, but I have a certain amount of horse sense, and I am sure that it is not sense to place on them a demand of this character. I do not want to go into further details but as a matter of fact it would land the companies in a grotesque position.
May I say a word with regard to the other contention of the noble Viscount in his opening remarks, that some things can be sold at a loss and others at a profit? That situation exists now. I have no doubt that it will continue to exist in' certain forms—in some of these firms, perhaps. One product may be ancillary to something else, and one product may be more profitable than another. I honestly say that I do not like this suggestion. When these companies are working, and their shares are owned by a national Corporation, they will be just as honest and just as decent as they are now. We shall not try to deceive ourselves or anybody
718
else. I do not like that suggestion. It is not worthy of the noble Viscount. Anyhow, this Amendment would impose upon these companies a duty which is not placed on anybody else. It is not required under the Companies Act, and it is not a reasonable suggestion.
LORD DE L'ISLE AND DUDLEY: May I refer the noble Viscount to page 7, on which there is some definition of products and of the principal activities of the Corporation? It is in the Bill.
VISCOUNT ADDISON: They range very widely.
VISCOUNT SWINTON: Yes, but that is not what this clause means.
VISCOUNT BRIDGEMAN: The time has now come to say a word or two in answer to the various speeches. May I first go back to the question of revenue? I should like to thank the noble Viscount, Lord Addison, for the explanation which he has given, which is reassuring to us. But when we come to this other matter—that is to say, the real subject matter of the Amendment—then I should not like the noble Viscount to think that we have been reassured by anything he has said. I will give one or two reasons for that statement. First, as my noble friend Lord De L'Isle and Dudley said, the case is altered. For private enterprise companies, all starting level and under the same conditions, you substitute a large Corporation operating on a monopoly basis under Act of Parliament; and that is the underlying reason for these Amendments. There was a certain amount of comparison with the companies Act, but that comparison does not entirely lie here.
May I draw your Lordships' attention to the wording of the Bill as drafted? It says:
"It shall be the general duty of the Corporation so to exercise their powers as …"—
to secure that this and that happens. That does not say that these accounts should be published. The analogy lies, I think, not with the published accounts of public companies but with the cost accounts that public companies have to keep for internal circulation to make sure that they are not "going bust" by allowing Uneconomic production of this product or that. Whatever may be the view in Whitehall, I have taken the view of the

719
noble Viscount, Lord Ridley (and I am sure the noble Earl, Lord Dudley, would agree with me if he were here) and I have provided myself with a set of cost accounts of a steel-producing company partly in the Third Schedule, about which I know a good deal. I want to endorse very strongly what has been said by my noble friend Lord Hawke. The accountants are there, and it would be impossible for any company in the Third Schedule now to carry on their activities without "going broke" if they did not keep cost accounts sufficiently clear to show profit and loss. That is one thing; the publication of accounts, to which we shall come later in the Bill, is quite another.
Those are the points on which we differ. But I am not going to suggest that we press this Amendment any further. I should like to draw your Lordships' attention to the Amendment to Clause 38 in the name of my noble friend Lord Rennell. I think that the noble Viscount, Lord Swinton, will agree with me when I say that if we withdraw this Amendment we shall not, when we come to the Amendment on Clause 38, feel inclined to be so accommodating. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 31 agreed to.
9.40 p.m.
Clause 32:
Borrowing powers of the Corporation and of publicly-owned companies
(4) The aggregate amount outstanding in respect of the principal of any stock issued by the Corporation for the purpose of the exercise of their powers under this section, and in respect of any temporary loan raised by the Corporation or any publicly-owned company, shall not at any time exceed the sum of three hundred and fifty million pounds:
Provided that nothing in this subsection shall prevent the Corporation from borrowing in excess of the said sum for the purpose of redeeming any British Iron and Steel Stock which they are required or entitled to redeem or repaying any money temporarily borrowed under subsections (1) and (2) of this section.
LORD HAWKE LORD HAWKE moved in subsection (4) to substitute "two hundred and fifty million pounds" for "three hundred and fifty million pounds." The noble Lord
720
said: Here we come to the borrowing powers under this Bill, and our Amendment seeks to reduce the amount for which these powers may be exercised from £350,000,000 to £250,000,000—a large enough sum, in all conscience. At one time I used to keep a tally of the borrowing powers under the various nationalisation Acts and other Acts of a similar nature which came before us, but I am afraid I gave that up long ago. I think I had passed the £2,000,000,000 mark when I gave up, and they still go on. The consumption in individual Acts tends to go up and the saving of the nation tends to go down.
I must remind your Lordships of a fact that we are all apt sometimes to forget: that there are only three ways by which you can finance capital expenditure. You can do it from private savings, you can do it from a Budget surplus or you can do it by printing money. At the present moment private savings are an unknown but apparently diminishing quantity; Budget surpluses are here to-day and gone to-morrow, and we quite rightly eschew the printing press. Wherefore, whence are we to obtain these enormous sums? As a result of the borrowing powers in these various Acts we have landed ourselves into a position in which we have to exercise the utmost financial care. I submit that figures of this nature put into the Bill give the impression of the very reverse: that we are not using financial care. They produce an atmosphere of profligacy. I do not say that His Majesty's Government are going to spend that amount—they could not do it if they tried—but the fact that the figures are there in the Bill leads to a feeling that money does not count.
That applies particularly—as any of your Lordships know who have had such contacts—to planners and engineers. If there is one thing they like, it is the idea that somewhere around the corner is a gigantic sum of money upon which they can lay their hands before very long. Their schemes become more grandiose and their needs more exigent. We see this all over the world to-day. We have four-year plans, five-year plans and six-year plans everywhere. They are like the little doves that came back into the Ark, but instead of being harbingers of fine weather they are regarded usually as bringing bankruptcy in their train. All

721
over the world we have the same problem. There has been a redistribution of income all over the world. Unfortunately, the receivers have not yet learnt the saving habits of the payers. The result is that there is a general decline in savings everywhere, as in this country; and many countries, of course, are using the printing press. Any method of financing other than the printing press means that, in effect, you have to ask people to stop consuming something to-day which they want in return for something which they will not see for some time and may not see the benefit of in their lifetime.
This particular industry has a plan of reconstruction to cost a total sum of £240,000,000. That can be spent—though there are physical limits to the amount of spending one can do—at a rate of about £30,000,000 or so a year. So that in this Bill, at one fell swoop, we are writing in ten years' expenditure in its borrowing powers. Why should we do this? Why not let the Corporation come back to Parliament, say, in five or six years' time? Surely that would be much more in the public interest? I feel that His Majesty's Government have let their enthusiasm run away with them in matters of this kind. They overlook the fact that to spend these vast sums means that they must persuade somebody to stop spending money on themselves. There is a limit to what free people will do, and it looks as if that limit is very nearly reached at the moment. I believe His Majesty's Government are oblivious of this limit. If they were not, I do not believe they would write into this Bill such extravagant figures. I beg to move.
Amendment moved—
Page 41, line 12, leave out ("three") and insert ("two").—(Lord Hawke.)
VISCOUNT ADDISON: I was charmed by the noble Lord's speech. The earlier part had nothing to do with the Amendment, but it was very charming. Most probably it would have received great attention at a meeting of the Primrose League. But may I come to the other facts behind this particular figure? There are other facts, and I will inform the Committee of the precise calculations, after which I hope the noble Lord will feel satisfied that this is not the result of the activities of some fanciful person who draws notes. The figure in the Bill at
722
present is £350,000,000; that is the borrowing power of the Corporation, in the course of years, as these schemes develop. At the present time the modernisation plans of the industry represent a call, again in the course of time, of £250,000,000—that is the figure to which the noble Lord has referred. In addition to that, the British Iron and Steel Federation have considerable plans in the way of projects to be initiated during the period 1950 to 1955. I understand that those are excellent projects, and it is anticipated that in the course of time—of course, it will be several years—these projects will require a further £100,000,000.
Then there are various minor schemes which are already in contemplation and which may require an additional £30,000,000. There is also provision for the transfer of various assets with which I need not bother the Committee. Then there is a very important item of £50,000,000 which has been lent to the industry by the Finance Corporation which will have to be repaid out of these moneys—that is due For repayment. That is a further £50,000,000 which has already been guaranteed or loaned to these companies. These various things, which arise out of schemes which, as I believe, are excellent, and which are already conjectured or approved, added together in cold-blooded arithmetic, amount on their own to about £460,000,000. But there is money available in the Third Schedule companies amounting to £115,000,000, which leaves a net figure of about £350,000,000; and that is where the figure in the Bill comes from. If we were to take out "three" and insert "two" it would mean that the Corporation would not have sufficient borrowing powers to provide for the excellent enterprises which are already contemplated. That is how the figure is arrived at, and that is why I cannot accept the noble Lord's Amendment.
VISCOUNT BRIDGEMAN: I think this Amendment has served one useful purpose. It has cleared up one point, though not the other. If I understood the noble Viscount rightly, his contention was that in the period from 1950 to 1955—shall we say, five or six years—£350,000,000 would be required.
VISCOUNT ADDISON: No. It may not be possible to spend it in that time;

723
it may not be a practical proposition. But the plans which are contemplated to be initiated in that period would cost £100,000,000. Of course, they may not be completed. They will take many years to complete.
VISCOUNT BRIDGEMAN: I am very much obliged to the noble Viscount. Let me get this absolutely right. The £350,000,000 includes not only what will be required in the next five or six years but also an element for items which have been budgeted to start, but which may not be completed, in those years. That brings me back to the point which my noble friend behind me made—namely, that we think it would be desirable that the amount of money allocated at any one time should not be so much as to allow an unreasonably long period before the matter has to come before Parliament and the Corporation have to give an account of their stewardship.
The next point is that although we had details from the noble Viscount of an additional £100,000,000—that is, additional to the £250,000,000—that £100,000,000 is news to us. Certainly we had no idea that the Federation had put forward figures of that sort additional to their original development plan. I am beginning to wonder whether a certain amount of money, a certain number of millions, has not been added on to this original estimate of £250,000,000 (which was clear to everyone) without any very certain idea as to what would be wanted, simply because it was thought that it would be as well to have a margin, as people might not be confident in the Corporation's ability to carry through all the plans for which they had planned, and at the same time the Corporation would not care to come back to Parliament and say so. I still feel that this is fair and well-founded, but I think that in the absence of further information we must leave it at that. The ball is now on the opposite side of the House. If there is no response, I shall ask my noble friend to withdraw the Amendment.
VISCOUNT ADDISON: In reply to what the noble Viscount has just said may I read to him the passage which deals with the matter upon which he has just touched? This is how it runs:
724
"The British Iron and Steel Federation have already planned to begin the consideration of a new plan of projects to be initiated in the period 1950–1955. With projects under the present plan continuing to be completed at the present speed, it is considered that a very substantial part of the first modernisation plan will be completed by 1953, and therefore some provision must be made for that part of the expenditure under the second plan (consisting of additional capacity in melting and finishing and some 30 per cent. of plant replacement) which will be disbursed by the middle '50's. For this purpose an estimate of £100.000.000 has been taken."
That was what I indicated when I spoke before.
LORD HAWKE: I thank the noble Viscount the Leader of the House for those very interesting figures. Perhaps he will ask me to accompany him to the seaside the next time he goes, and to talk with him there. One thing which the noble Viscount never told us was where he expects to find the money. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved to add to subsection (4):
"but any moneys borrowed for such last mentioned purpose shall be repaid within one year from the date of the borrowing thereof."
The noble Viscount said: This Amendment follows on the last in the sense that there are more or less permanent borrowing powers with which the last Amendment dealt, and temporary borrowing powers with which this Amendment deals. Again I am approaching the matter in a suspicious frame of mind. As the Bill is drawn, it may be possible to stultify the limitation, which stands at £350,000,000, by having a bottomless purse for the temporary borrowing. Supposing the Treasury were in league with the Corporation, it would not be difficult to borrow money, ostensibly for temporary purposes, and then, by failing to have any stipulated repayment of the short-term advances on any due date, arrive at a position where the short-term advances had become in fact long-term advances. This Amendment has been put down in order to examine the matter a little further. If the advances referred to are really short-term, then it would be reasonable to insert our Amendment, which provides that the money should be repaid within a year. Under the Amendment, borrowing for short-term purposes would be limited to what we

725
might call genuine short-term borrowing—to finance such things as seasonal fluctuations of trade. It would be a safeguard against the limitation in subsection (4) being got round on the plea of temporary borrowing, which turns out to be not so temporary as at first thought. I hope that in the answer we shall have the intention in regard to temporary borrowing clarified a little more than it is in the Bill.
Amendment moved—
Page 41, line 18, at end insert the said words.—(Viscount Bridgeman.)
VISCOUNT ADDISON: I thank the noble Viscount for the way in which he has moved this Amendment and I shall do my best to reply to the inquiry he has made The noble Viscount will notice that the additional borrowing in the Bill is limited by the words:
"Provided that nothing in this subsection shall prevent the Corporation from borrowing in excess of the said sum for the purpose of redeeming any British Iron and Steel Stock which they are required or entitled to redeem or repaying any money temporarily borrowed.…"
The Corporation could not borrow money for any other purpose. I am informed that it may sometimes be necessary to have borrowing for the redeeming of stock, but of course stock would not be repaid every year and the money borrowed would be used for the repayment of issues due for redemption. I should like to quote the assurance I can give the noble Viscount with regard to the disposal of these funds. The intention of the proviso is that the money so borrowed in excess of the limit should immediately be applied in paying off the existing debt, so that the outstanding borrowings of the Corporation would be brought down again to the limit. That is the specific purpose, and it will be applied in that way. I suggest that it could not be borrowed for any other purpose.
VISCOUNT BRIDGEMAN: I agree with everything the noble Viscount says, but if he reads Clause 32 (1) he will see that the clause goes on to say that the Corporation may borrow
"such sums as the Corporation may require for meeting their obligations or discharging their functions under this Act including the temporary lending of money to any publicly-owned company."
726
I think that is wider than the particular obligation which the noble Viscount mentions. These words give rise to the suspicion.
VISCOUNT ADDISON: That would mean the ordinary common business of the company and the use of its ordinary moneys. This proviso limits strictly the borrowing and the purposes, and I can assure the noble Viscount that the Corporation could not use it for any other purpose than that I have described.
VISCOUNT BRIDGEMAN: I am grateful to the noble Viscount for his explanation. However, it does not entirely satisfy me, because I feel there are still a certain number of loopholes. Unless we have a complete assurance that it will not be so used, it would be possible as this clause is drawn, in one way and another to increase the actual outstandings in the way of borrowing. The noble Viscount referred, as I think I did, too, to the financing of seasonal requirements in the way of stock.
VISCOUNT ADDISON: The working capital.
VISCOUNT BRIDGEMAN: The working capital, which is something we all understand. My point is this. If those requirements are seasonal they can be repaid within the year. If they stand out and cannot be repaid within twelve months, they cease to be seasonal and become part of the permanent capital of the company, because they are unable to be repaid. It was for that purpose that we moved this Amendment. What we seek to avoid is the permanent capital of the company exceeding the £350,000,000 which Parliament has authorised, by the making use of Clause 32 (1) in a way that is not intended by any of us.
VISCOUNT ADDISON: I can give the noble Viscount the assurance he asks for, fully and faithfully.
VISCOUNT BRIDGEMAN: In the light of that assurance, for which I thank the noble Viscount, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 32 agreed to.
Clause 33:
British Iron and Steel Stock
(2) The Seventh Schedule of this Act shall, subject to the provisions of this section and of the Fourth Schedule to this Act, apply with respect to the issue, transfer and redemption of British Iron and Steel Stock and otherwise in relation to such stock:
Provided that—
10.3 p.m.
LORD HAWKE LORD HAWKE moved to omit subsection (2). The noble Lord said: By this Amendment we seek an opportunity for some discussion on the principles involved in the redemption of capital which is provided for in the Seventh Schedule, where it is laid down that it shall be redeemed in a prescribed period, the prescribed period being ninety years. Under Clause 37 of the Bill the Corporation have the duty to provide funds for renewals. Clause 35 sets up a general reserve which, amongst other things, is available for capital purposes. The question is: Should the Corporation, in addition to this, redeem their capital debt? If so, is ninety years the right period over which to redeem it? These are the arguments, as I see them, against redemption. But there is provision for replacements and renewals—money with which to replace the plant. There is also provision for new capital to go into the business for the purposes for which it is always required. So that in theory, at all events, at the end of ninety years if there were no redemption of capital the existing plant should have been renewed, and the capital debt should be the present capital plus anything else raised in the interval but less the plant scrapped or written off.
Another argument against redemption, of course, is that it is a burden on current production, and an unnecessary burden when redemption is not required. The arguments for redemption, as I see them, are that something more than renewals and replacements is needed to keep a business going. New capital has to be put in the whole time, and though in theory all new capital is fruitful, in practice it often turns out to be unfruitful. Moreover, a whole industry can become obsolete. Also, of course, if the capital is not redeemed the fixed charges increase by the amount of the interest on the new capital which is issued. Frequently, un-
728
less it is an expanding industry, the production will not have increased, so that the higher fixed charges will be borne by the same production. Those are the pros and the cons as I see them.
Now what happens to-day? By and large, industry per se does not redeem its capital. Except in rare cases, the Inland Revenue do not permit it as a deduction. On the other hand, the local authorities, in housing loans and so on, do redeem. The railways do not redeem, and the result is that their capital over the ages has increased the whole time. It has worked out all right in the past in respect of industry, because the value of money has steadily depreciated. It has been possible to carry the extra fixed burden by the increased value of the same volume of production as time went on, but that does not necessarily make it a good system. I submit that it is right to redeem this stock and, on the whole, ninety years seems a reasonable period over which to do it. A distinguished foreign economist once suggested to me that every investment ought to be amortised in twenty years. That I think is too drastic, and ninety years, I submit, is a reasonable period. I bee to move.
Amendment moved—
Page 41, line 38, leave out subsection (2).—(Lord Hawke.)
LORD PAKENHAM: I am not sure whether the noble Lord, Lord Hawke, is moving this Amendment in order to make a statement himself, to elicit a statement, to do both or because he wants the Amendment carried. I gathered it was not the last, or at any rate he did not throw himself into it with his usual zest. I gather in fact that he is not urging the House to leave out subsection (2). I would like to know before replying.
LORD HAWKE: I should not be urging the House to leave out subsection (2) unless others of their Lordships had stood up and produced strong arguments for not having this stock redeemable.
LORD PAKENHAM: As others are not throwing themselves into the fray very heartily, I assume there is no pressure to leave out subsection (2). I think the noble Lord will agree that that is wise on the part of the Committee, because it is only common form. It appears in the Transport and Electricity Stock Regulations, and I should imagine, therefore, that there

729
is no objection to this subsection at all. Indeed, it would surely be very mistaken to leave the power with the Minister instead of using the existing procedure. In reply to the interesting and general observations of the noble Lord, I would mention, in passing, that the Bill does not oblige the Corporation to charge redemption of capital to revenue. The Corporation can provide funds for redemption from money set aside for depreciation or from the cash resources generally. I have made a statement which the noble Lord will find to be accurate, and as I gather he does not wish to press the Amendment I would venture to suggest that perhaps he would see his way to withdraw it.
LORD HAWKE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 33 agreed to.
Clause 34 agreed to.
Clause 35:
General reserve
35.—(1) Without prejudice to the Corporation's power to establish appropriate reserves for replacements or other purposes, the Corporation shall establish and maintain a general reserve.
(2) The Corporation shall contribute to the general reserve such sums at such times as they may determine and the management of the said reserve and the application of the moneys comprised therein shall be as the Corporation may determine:
Provided that—
(b) the power of the Minister to give directions to the Corporation shall extend to the giving to them with the approval of the Treasury of directions as to any matter relating to the establishment or management of the said reserve or the carrying of sums to the credit thereof, or the application thereof, notwithstanding that the directions may be of a specific character, and the Corporation shall give effect to any such directions.
10.11 p.m.
LORD ROCHDALE LORD ROCHDALE moved in subsection (1) to omit all words down to and including "purposes." The noble Lord said: This clause lays down that the Corporation shall establish a general reserve. That is a very right and proper provision, but if your Lordships will look at the first two or three lines of this clause you will see that it says:
730
"Without prejudice to the Corporation's power to establish appropriate reserves for replacements or for other purposes,"
And it is of the purpose and propriety of those two lines of which we are in some doubt. The matter was discussed in another place but no definite information was given on it, though on one matter pertinent to the discussion the Solicitor-General did make this point. He said that the policy debased in this Bill was to follow, so far as can be, the principles and procedure laid down in the Companies Act, 1948. It is on that assumption that I want to say a few words about this Amendment.
The words that we seek to delete seem to us to imply the granting of powers to the Corporation to establish special reserves for replacements and other purposes. The question is: Why are these special reserves for replacements and other purposes necessary? Do not Clause 35 and Clause 37 contain all the powers needed, without having these two lines at all? It may be that these two lines have some other meaning which we have not seen, and perhaps when the noble Lord comes to reply we shall learn something about it. The word that is causing us difficulty is the word "replacements" in a clause where it is placed in context with the word "reserves." It seems that the word "replacements" presumably must mean more than the word "renewal," which is quite a common word in this context. If the word "replacements" were used here simply as "renewal," then I would suggest that it would be quite improper for the sums in question to be met from reserves; they should be, as we shall see shortly in Clause 37, met out of revenue.
That is clearly the position under the Companies Act, and I would like to read one or two short points from that Act. The Companies Act says:
"The expression 'reserve' shall not, subject as aforesaid, include any amount written off or retained by way of providing for depreciation, renewal, or diminution of value"
and so forth. That paragraph also goes on to to say that where the amount written off is greater titan the amount which, in the opinion of the directors of the company, was reasonably necessary for the purpose in hand, then the excess might be met out of reserve. Now in

731
Clause 35 of this Bill it may be that the word "replacements" is used purposely to allow for such cases of excess over and above what would normally come under the heading of renewals. It may be that, instead of merely renewing the existing machine or plant, it will be decided to put in a new and more modern plant of perhaps greater capacity and better in every way. But if that is the answer, surely it would come under the heading that is mentioned a little further on in the same clause, on page 43, line 13:
"… works the cost of which is properly chargeable to capital,"
The conclusion I come to, therefore, is that without these two lines the provisions of the rest of the clause are quite adequate to deal with all matters that are properly chargeable to capital.
There is one other point, and that is about the three words after "replacements"—"or other purposes". It is clearly laid down that this reserve is to be used only for the purposes of the Corporation, and therefore presumably can be used for any of the purposes that are appropriate—in other words, any of the purposes that are properly chargeable to capital. There again, why are these words necessary? This identical phrase comes in the Transport Act and I have no doubt that the noble Lord may argue that if it is there then it might as well be here—particularly as nothing was said about it in your Lordships' House. But the case of the Transport Act was entirely different; there, there was a monopoly with no competitor. Here you have a completely different case; you have a Corporation carrying out many activities in which there are many competitors operating under conditions of private enterprise. One has only to consider that difference to see that matters improperly charged to revenue that should be charged to capital might react very unfairly on some of the Corporation's competitors. I hope that the noble Lord will be able to throw some light on why these words should remain in this clause. I beg to move.
Amendment moved—
Page 42, line 33, leave out from beginning to ("the") in line 35.—(Lord Rochdale.)
LORD PAKENHAM: The noble Lord, who understands these things very well, has raised some detailed points, but I
732
hope to allay his anxiety. He has pointed out that the same words occur in the Transport Act. He might have added that they are also to be found in the Electricity Act and the Gas Act, and therefore they seem to me to be eminently respectable. I was a little surprised to find the noble Lord so reluctant to see the Corporation setting up reserves of this kind. I would particularly deal, however, with his point about replacements. With the present high costs of capital equipment, normal depreciation and renewal provisions which are usually based on the original cost of the plant may be inadequate, and a reserve for replacements would mean that the Corporation would be setting aside sums to provide, in addition to the proper provision for depreciation made under Clause 37, the money needed to meet the heavy additional cost of new plant. That is really the point—the heavy additional cost of the new plant. That is the thought behind the special reserves for replacements. I hope that with that explanation the noble Lord may see fit to withdraw his Amendment. There is nothing sinister here. It is a common form, and we felt it might help in this particular matter.
LORD ROCHDALE: I am grateful to the noble Lord. I had no intention of implying that there was anything sinister; nor did I say anything against the Corporation's right to have reserves. What I did want to know, about which I am still in a fog, is why those lines were there at all. From what the noble Lord says I gather that he is satisfied that they in no way contravene the idea that the Corporation should act scrupulously under the Companies Act, 1948. If that is so, I beg leave to withdraw the Amendment.
LORD PAKENHAM: I cannot commit myself or the Government to that last statement, because in various ways the Corporation is in a position different from most of the companies affected by the Companies Act. But certainly the Corporation is not out to be unfair to anybody.
LORD ROCHDALE: In relation to this particular point of the Companies Act, I meant.
LORD PAKENHAM: I need further notice of that question. If the noble

733
Lord desires a precise assurance about the bearing of the Companies Act on this particular point, I feel that he will probably be satisfied to have a discussion afterwards. May I suggest that, if he is not satisfied, he puts down his Amendment at a later stage?
LORD ROCHDALE: On that understanding, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
10.21 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, in subsection (2) (b) after "directions" (where that word first occurs) to insert "in pursuance of section four of this Act." The noble Lord said: This is not a difficult Amendment or one which need detain the Committee many moments. The purpose is to make clear that any directions given by the Minister are given by virtue of the powers which the Minister has under Clause 4 (1), and therefore must be given only
"in relation to matters which appear to him to affect the national interest."
Those are the words in subsection (1), but in this subsection the Minister is empowered to give to the Corporation directions even of a specific character in relation to the establishment and management of their reserve. If it is stated that these powers derive from those under Clause 4 (1) doubt must remain as to whether the specific directions authorised in this clause need, in fact, be in relation to matters which appear to the Minister to affect the national interest. I am sure that such specific directions would not be given lightly, but should be circumscribed by this phrase, unsatisfactory though we may consider it.
An almost identical Amendment was put down in another place, and it was guillotined. It was again put down on Report and it was negatived, after the Solicitor-General had used these words:
"The Minister will, of course, only give directions which in the general interest …"
We have had "national interest," "public interest," and now "general interest." What the Solicitor-General meant by those words I am not clear, but what I am clear about is that the purpose of this Amendment is that his powers should be exercised only by virtue of the powers which the Minister
734
possesses under Clause 4 (1). I beg to move.
Amendment moved—
Page 43, line 1, after ("directions") insert ("in pursuance of section four of this Act").—(Lord Balfour of Inchrye.)
LORD PAKENHAM: I am sorry not to be able to give a straightforward and facile assurance to the noble Lord. There was one point where I may or may not have heard the noble Lord correctly. Very naturally he took us back to Clause 4 (1) which says that
"The Minister may, after consultation with the Corporation, give to the Corporation directions …"—
The noble Lord added:
"in relation to matters which appear to him to affect the national interest"
If I heard him correctly, the noble Lord inadvertently left out the words "of a general character."
LORD BALFOUR OF INCHRYE: I am sorry.
LORD PAKENHAM: It is rather a material point because, under Clause 4 (1), as the noble Lord appreciates, the Minister is confined to "directions of a general character." He cannot give a specific direction even where the specific direction is, in his view, in the national, public or general interest, or however you like to phrase it. Therefore, Clause 4 (1) does not do what we need in this case, because there may be a necessity, though seldom arising, for a specific direction. In practice, it is far more likely that the Minister, in consultation with the Corporation, will reach agreement, but we feel it necessary that there should be this reserve power which gives him this specific power to guide investment in the national interest. If the noble Lord will look at the clause which he and I are studying, he will see that there are two conditions or provisos, the first of which says,
"No part of the said reserve shall be applied otherwise than for the purposes of the Corporation or of the publicly-owned companies."
The Minister's power to give the directions would arise mainly where the Minister was intent that the Corporation should relate its investment policy to the financial policy of the country as a whole. I think it is very unlikely that a direction

735
would ever eventuate in those circumstances, but we feel the power is necessary and it does not exist in this form under Clause 4 (1). After that explanation, I hope the noble Lord will withdraw his Amendment.
LORD BALFOUR OF INCHRYE: I thank the noble Lord for his explanation, and I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, in subsection (2) (b) to omit "or the application thereof." The noble Lord said: This Amendment deals with a different point. Its purpose is to delete the provision giving the Minister power to give directions to the Corporation as to the application of their reserve. I do not think one can take any exception to the Minister giving directions as to the establishment or the management of the reserve, but we feel it is undesirable that he should be empowered to direct the specific uses to which that reserve might be put. For example—although I am sure it has never happened—an unscrupulous Minister might direct the Corporation to subsidise some extraneous activity, such as the manufacture of umbrella frames or tennis racquets, about which we have heard, until the private enterprise makers were forced out of existence. That is a possibility. We also feel that if the Minister has this power there is an objection that the Corporation are deprived of their financial autonomy, which we feel they should possess.
This subject was dealt with in another place when the Solicitor-General said this:
"We feel that the Minister must reserve to himself the power, in case of need or in case he thinks it necessary so to do, to give this sort of direction with regard to this very large pool of available reserve, which will be there to be used for national purposes in case it is required so to do."
Coming from the Solicitor-General, it sounded to us rather ominous that the Minister could direct that the reserve should be used for purposes which he felt were in the national interest. As I have already said, the Minister might use his powers unwisely, and a less responsible successor to the present Minister might consider it in the national interest to direct that the reserve should be applied to keeping a plant in operation
736
in a period of low demand in order to maintain full employment. We do not object to the Minister having the power to give directions as to the establishment or the management; it is to the specific use that we take exception, and which we question in this Amendment. I beg to move.
Amendment moved—
Page 43, line 6, leave out ("or the application thereof")—(Lord Balfour of Inchrye.)
LORD LLOYD: I would like briefly to support my noble friend, and I want to put one specific question to the noble Lord, because he mentioned on the last Amendment that the Minister could give directions to the Corporation for investment in the national interest. In addition to the points raised by my noble friend, I would like to ask whether that means that the Minister can give directions which would have the effect of putting the whole of this reserve into gilt-edged securities or out of gilt-edged securities, with all that that has meant in the past.
LORD PAKENHAM: It would certainly be within the power of the Minister to influence the Corporation in that way, but it is most unlikely that he would proceed by way of direction. As I pointed out in dealing with the last Amendment, there is a clear proviso in the clause stating that the reserve may not be applied otherwise than for the purposes of the Corporation. I do not know whether the noble Lord wishes to pursue this at length, after what I said on the last Amendment, but I would content myself by reminding your Lordships that the powers here are pretty complete in the way of exercising financial control of the Corporation. This really is in line with the general financial relations of the Minister and the Corporation.
LORD BALFOUR OF INCHRYE: We do not like it, for it seems to rely so much on there always being a good Minister. We do not like having to depend on that. We have a good Minister now, and I wish we could be sure that in the years to come it will always be so. Nevertheless, in view of the explanation which the noble Lord has given, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 35 agreed to.
Clause 36 agreed to.
Clause 37 [Sums which are to be chargeable to revenue account]:
10.33 p.m.
LORD ROCHDALE LORD ROCHDALE had an Amendment on the Marshalled List to insert after "depreciation" the words "or diminution in value." The noble Lord said: The next Amendment on the List is closely connected with one which I moved to Clause 35 a few moments ago. In view of the statement of Lord Pakenham, my noble friends and I would like to have an opportunity of giving further consideration to the Amendment before it is discussed in this Chamber. Therefore, I do not propose to move it now but I retain the right to move it at the Report stage.
LORD PAKENHAM: May I just say that while we do not feel that the noble Lord's Amendment adds anything to the Bill, we would not in fact resist him violently if he decided to press it very hard.
VISCOUNT SWINTON: Why not accept it now?
LORD PAKENHAM: I am always against accepting an Amendment which we feel will do neither good nor harm, so I suggest that we leave it until the Report stage.
Clause 37 agreed to.
Clause 38:
Accounts and audit and statistics
(3) So soon as the accounts of the Corporation have been audited, the Corporation shall send to the Minister—
(b) copies of the accounts of each of the publicly-owned companies prepared in accordance with the Companies Act, 1948, but so that where group accounts within the meaning of that Act are prepared by any company it shall not be necessary for a copy of the accounts of any subsidiary dealt with in those group accounts to be sent to the Minister;
and copies of every statement, account and report required to be sent to the Minister under this subsection shall be made available to the public at a reasonable price.
VISCOUNT SWINTON VISCOUNT SWINTON moved, in subsection (3) (b) to omit all words after "1948." The noble Viscount said: We now come to an Amendment to which we attach great importance. I can deal with it briefly, in view of the debate
738
which we have already had on Clause 31, and in view, particularly, of the observations made by the noble Viscount the Leader of the House in rejecting all our proposals on Clause 31 for the reason which he gave—that we should get under Clause 38 such detailed and meticulous information about these companies. It will be convenient, if I may have the leave of the Committee to do so, to say a few words now about the first two Amendments to this clause. They raise slightly separate issues and yet they hang very much together. In the first of the Amendments, I ask the Committee to leave out certain words. Your Lordships will see that on page 44, line 26, it is stated that:
"copies of the accounts of each of the publicly-owned companies prepared in accordance with the Companies Act, 1948, but so that where group accounts within the meaning of that Act are prepared by any company it shall not be necessary for a copy of the accounts of any subsidiary dealt with in those group accounts to be sent to the Minister."
I suggest that we should leave out from "1948" to the last word of that paragraph.
Why should not these accounts be sent to the Minister? There is no question about collecting a large number of accountants who are not there. Of course the accountants are there, and the accounts are there. It is only a question of what should be done with those accounts. Why should they not be sent to the Minister? I suppose I shall he told that if they are sent in, they will ultimately be published to Parliament. That is exactly what we want—to have adequate knowledge. If the accounts are not submitted to Parliament, we shall not know what is happening in these companies. It will be possible in the Corporation accounts, without any breach of the Companies Act, to cover up losses and to cover up concealed subsidies. I am not going to repeat the whole argument I addressed to the House earlier, with which your Lordships were good enough to agree. This is vital, because it would be perfectly possible for this great nationalised complex to sell steel dearly and something else very cheaply and at the same time show an overall profit. Adopting the admirable precedent of the noble Lord, Lord De L'Isle and Dudley, I pray in aid the words of that major prophet of the Labour Party, Lady Passfield.
LORD PAKENHAM: Mrs. Sidney Webb.
VISCOUNT SWINTON: Mrs. Webb, as we all knew her. I hope I shall not be met with the argument that an ordinary company can present its accounts in this way. I am sure the noble Lord, Lord Pakenham, will not meet me with that argument, because in the penultimate Amendment he said we must not treat these companies as if they were ordinary companies. I agree with him. Now that we are to have a vast monopoly it is important that we should know what it is doing. Our money is invested in it, and we have an interest in it. It has a great many competitors and we want them to have fair treatment, as we want to have fair knowledge. Certainly there can be no argument about the public interest, national interest, or general interest, whatever you like to call it, because all these interests alike require that there should be a full and proper disclosure. Therefore, I submit to your Lordships that these words certainly ought to go out. The words we propose to leave out are:
"but so that where group accounts within the meaning of that Act are prepared by any company it shall not be necessary for a copy of the accounts of any subsidiary dealt with in those group accounts to be sent to the Minister."
I should have thought that disclosure of the results of separate activities would have been in the Bill. I thought it was common form in nationalisation measures. We had it in transport, in coal and in gas. The Government readily agreed to it in the Transport Act. We are to have separate statements on railways, buses, hotels and so on. If that was desirable in transport, it is infinitely more important here, where it is essential that the public, the owners, the taxpayers, who have to subsidise the Corporation if there is a loss, should know how the different main activities are going. If we do not know, we do not know whether subsidised competition is going on. I am sure I need not press this any more, because I am certain that the Government will accept this part of the Amendment. If they have already given it to us in nationalised industries where there is no competition, and only benefit or otherwise to the unfortunate consumer, a fortiori they ought to give it to, us in this industry where there is the keenest
740
competition. With the greatest confidence, I beg to move this Amendment.
Amendment moved—
Page 44, line 26, leave out from ("1948") to end of line 30.—(Viscount Swinton.)
LORD PAKENHAM: I followed the noble Viscount's argument very closely. As regards the first Amendment, may I venture to suggest that the noble Viscount, who so often uncovers hidden truths, has here discovered a mare's nest? There is a strong technical or administrative argument for the Bill as it is now drafted, and there is no argument of substance against it, as I think the noble Viscount will realise in a moment—I am dealing now with the noble Viscount's first Amendment. The grounds can be briefly summarised, as I know the Committee are anxious to make progress. Under the Companies Act, which we were asked to observe a few moments ago, group accounts only of the kind we are suggesting need be placed before the shareholders of a holding company. So here we are in line with the Companies Act. Then I come to the question of bulk. It would be troublesome to have even eighty accounts to publish—which we shall have—and it would really be an infernal nuisance, if I may use that expression, if we had 225, or it may be more, to publish. This is the real point which I would commend to the noble Viscount, and which I think has escaped him. The accounts of each of the publicly-owned companies will be filed with the Registrar of Companies. That is an important point, if I may say so. Therefore, there is no question of there being any mystery about these accounts; they will be available to anybody who chooses to go to the Registrar. May I suggest, therefore, that if we could form an opinion on this first Amendment, the noble Viscount, in the light of that indication of the facts, may agree to withdraw it?
VISCOUNT SWINTON: I do not want to be unreasonable, but I cannot withdraw this Amendment. I think we must make the most meticulous examination of how this will work. The noble Lord said what a difficult thing it would be to have to produce 225 accounts. I do not think it is. After all, there are tens of thousands of companies in this country to-day, all producing their accounts to

741
their shareholders. It is not as if the Government were economising in paper. We have a number of Government publications. If the Government feel they wish to make a slight economy in paper, there is the Government propaganda department which is costing a good many millions and issuing a good deal of paper. Perhaps we could do a little exchange by saving a little on that and publishing accounts which people in this country will want to see. I know the argument about group accounts, and I made it in advance, as the noble Lord admits.
LORD PAKENHAM: Not the point I have just mentioned.
VISCOUNT SWINTON: Yes, I did. I said that an ordinary company could present its group accounts in this way.
LORD PAKENHAM: I see that point. I am sorry.
VISCOUNT SWINTON: I said it in opening. I am going to be perfectly frank. I think we should have the fullest possible information about the Corporation—the ninety-four main Companies and the subsidiaries—and I think it is a very small thing to ask the Government to give us those accounts with full information in this hazardous venture on which we are asked to embark. I am sorry, but we must have the fullest information.
LORD PAKENHAM: May I just say before the Committee go to a Division—

Resolved in the negative, and Amendment agreed to accordingly.

if that is intended—that it is clear to me that the noble Viscount was under a complete misapprehension in his opening remarks, because I do not think—I shall be corrected if I am wrong—he was aware that the accounts of each of the publicly-owned companies would be filed with the Registrar of Companies.
VISCOUNT SWINTON: Of course I was aware of that, and I know what filing with the Registrar of Companies means. But are people really to be required to pay half a crown and search the Register? I do not think that is in the least an answer to this problem. When the Government want to publicise things, they do not say: "Go and pay half a crown and go to the Registrar of Companies"—they take millions of the taxpayers' money to get their own publicity.
LORD PAKENHAM: I think the noble Viscount's remarks will look very strange when we return to his opening in Hansard, because it is obvious that he was accusing us of trying to hide something. But it is clear that we are hiding nothing. For my part, and for the Government, we shall be pleased to meet the noble Viscount in Division or anywhere else.
On Question, Whether the said words shall stand part of the Bill?
Their Lordships divided: Contents, 18; Not-Contents, 46.

CONTENTS

Jowitt, V. (L. Chancellor.)

Stansgate, V.

Marley, L.

Macdonald of Gwaenysgor, L.

Addison, V. (L. Privy Seal.)

Amnion, L. [Teller.]

Morrison, L. [Teller.]

Crook, L.

Nathan, L.

Huntingdon, E.

Hare, L.(E. Listowel.)

Pakenham, L.

Holden, L.

Pethick-Lawrence, L.

Hall, V.

Kershaw, L.

Strabolgi, L.

Williams, L.

NOT-CONTENTS

Cholmondeley, M.

Swinton, V.

Layton, L.

Exeter, M.

Llewellin, L.

Reading, M.

Amherst of Hackney, L.

Lloyd, L.

Willingdon, M. [Teller.]

Ashton of Hyde, L.

Mancroft, L.

Balfour of Inchrye, L.

Middleton, L.

Albemarle, E.

Balinhard, L. (E. Southesk.)

Moynihan, L.

Buckinghamshire, E.

Barnby, L.

O'Hagan, L.

De La Warr, E.

Carrington, L.

Raglan, L.

Dudley, E.

Cherwell, L.

Rea, L.

Dundonald, E.

Clanwilliam, L. (E. Clanwilliam.)

Remnant, L.

Fortescue, E. [Teller.]

Ritchie of Dundee, L.

Iddesleigh, E.

Clydesmuir, L.

Rochdale, L.

De L'Isle and Dudley, L.

Sandhurst, L.

Bridgeman, V.

Fairfax of Cameron, L.

Teynham, L.

Falmouth, V.

Gifford, L.

Tweedsmuir, L.

Portman, V.

Hawke, L.

Waleran, L

Ridley, V.

Hindlip, L.

VISCOUNT SWINTON: I beg to move.
Amendment moved—
Page 44, line 39, at end insert—
"( ) The accounts of each publicly-owned company shall give or be accompanied by a statement giving separate information as respects each of the principal activities of the company and as far as may be the financial and operating results of each such activity."—(Viscount Swinton.)
LORD PAKENHAM: The noble Viscount has already spoken to this Amendment briefly but vigorously, and the issues very close to it were discussed earlier in the evening. Therefore, if the House agrees I will make only a few observations about it—and indeed they will be few. I would point out that the request for separate information in respect of each of the principal activities of the company is likely to be met under other clauses—under subsection (5) of Clause 38, and under Clause 35—but I agree that there is a request here for financial and operative results of activities which are not promised as the Bill now stands. I would have liked to reply at greater length to the noble Viscount's perfectly true suggestion that provisions on the lines of the Amendment are to be found in other Acts, but I would say briefly that here we have a task which would be much more complex than any other comparable task. At any rate we take the view that the task would be a great deal more complex.
I would, however, like to lay main stress on a point mentioned earlier by the noble Viscount. There is undoubtedly a real difficulty if we try to give results of this character. It may be that these results would be of assistance to foreign competitors. Civil Aviation is an instance. We have examined the possibility of publishing results of this kind, and I have felt hitherto that it would be easy enough; but there is an artificial element when we attempt to allocate at Headquarters the expenses, for instance, of the Welsh services. I feel it would be impossible, artificial, and not in the national interest to do this in the case of our overseas activities. A good deal of attention should be paid to the international aspect. The impossibility of doing this was set out earlier by my noble friend the Leader of the House. Therefore, with that strong and. I hope, friendly protest, I say we shall not divide, since the House
744
revealed its attitude a few minutes ago, and the process of conversion would be rather miraculous if noble Lords were to vote differently at this moment. Therefore I say that we shall fight this Amendment to the end in all constitutional ways, but we will not divide against it to-night.
On Question, Amendment agreed to.

REPRESENTATION OF THE PEOPLE BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills, with Amendments, and re-committed to a Committee of the Whole House.
CIVIL AVIATION BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills, with an Amendment, and re-committed to a Committee of the Whole House.
RHODESIA RAILWAYS LIMITED (PENSION SCHEMES AND CONTRACTS) BILL [H.L.]
Reported, with Amendments.