ELECTRICITY (COMMISSIONERS AND OTHERS) (COMPENSATION) REGULATIONS, 1950 (Hansard, 13 June 1950)

§ THE PAYMASTER-GENERAL (LORD MACDONALD OF GWAENYSGOR)
My Lords, I beg to move that the Special Order, as reported from the Special Orders Committee on April 27 last, be approved. I think that the terms of the Committee's report will help us to shorten the discussion to-day. They use the usual terms: That in their opinion the Order does not raise important questions of policy or principle; that the Order is founded on precedent; that in the opinion of the Committee the Order can be passed by the House without special attention and that no further inquiry is necessary before the House proceeds to a decision on the Resolution to approve the said Order. At the same time I think it is necessary to make just a few comments by way of explanation of this Order.
Your Lordships are aware that under the Act of Parliament the Minister of Fuel and Power was obliged to bring forward these or some Regulations to deal with those who might suffer in consequence of the taking over of electricity undertakings. Part I of these Regulations relates to the special cases of members of the Central Electricity Board and the three Electricity Commissioners. These gentlemen held office either "during pleasure," as in the case of the two Electricity Commissioners, or for terms of years, normally five years. You will remember that the Chairman of the Central Electricity Board took up his appointment in January, 1947, on the understanding that he would sever his connection with the Board on the vesting date.
In making these Regulations the Minister had in mind that the usual provision for compensation based on length of service would be entirely inadequate and he therefore decided to make Regulations which would give something in the form of a lump sum. Your Lordships will see that in paragraph (2) of Regulation 1, there are set out the factors which the compensating authority have to take into account in assessing compensation—namely, the terms of appointment and the extent to which, but for the dissolution of the body concerned, it might reasonably have been anticipated that a 572 member or a Commissioner would, on the expiry of the term of office for which he was appointed, be reappointed. Certain other factors, such as any pension or further employment of the former member or Commissioner have, as I think your Lordships will agree, quite properly also to be taken into account. The Minister proposes that the amount of the compensation shall not exceed a sum equal to three times the annual emoluments formerly received by the recipient, and he provides, should it be necessary, for an appeal to be made to a referee or board of referees. I think it will be agreed that that provision is fair and reasonable.
Part II of the Regulations makes provision mainly on the lines of the staff regulations which we discussed here some few months ago. It applies to the officers and servants of all undertakings which vested in the Electricity Boards. As I say these general regulations were debated in March, 1949, in your Lordships' House, and I do not think I need say any more than that the Minister of Fuel and Power is unaware of any pending claims from any former officers. I beg to move.

LORD TEYNHAM
My Lords, your Lordships will remember that it was only recently that we debated a set of Regulations governing compensation for those engaged in the coal industry, which we did not consider were entirely satisfactory. Now we have another set of Regulations which equally I suggest are not quite satisfactory but are certainly not quite so difficult to understand. I cannot help feeling that it would have been far better if His Majesty's Government had relied on the Local Government Act of 1933 for terms and conditions of compensation, rather than put forward these numerous regulations for the nationalised industries. In fact I would remind your Lordships that this Local Government Act of 1933 codified the long-standing agreement and arrangements covering compensation matters that had been in force in the public service for many years.
The great advantage of having the substance of compensation regulations in an Act is that they can be amended, whereas 573 under the present procedure they can only be accepted or rejected. These Regulations are dictated by the Minister concerned, and I think it is worth while remembering that another Minister coming along later can alter these Regulations. Another bad point about compensation by regulation is that it has led to many delays. The Electricity Bill was introduced in January, 1947, but it was more than three years before the unfortunate people engaged in the industry knew what their position was going to be. Now we have these Regulations, covering the Commissioners and members of the Central Electricity Board, together, of course, with the officers of the Electricity Commissioners; and here is a further example of delay.
The noble Lord who moved these Regulations has given a reason why there is a difference between the people at the top—namely, the Electricity Commissioners—arid their officers, but I do not think that his explanation is entirely satisfactory. It appears that the people at the top are to be compensated by a lump sum, whereas the officers are to receive only an annuity, on which income tax would be payable. There seems to be nothing to indicate whether the Commissioners will pay income tax or not. Surely, the Commissioners should know definitely whether they are to pay tax on their lump sum payments. If the officers are to pay tax and the Commissioners are to be free from it, it seems to be rather an anomalous position and somewhat contrary to the usual principles of His Majesty's Government. Again, surely it is the duty of Parliament to see that intended compensation is fair and reasonable. How can we determine whether the compensation in the case of the Commissioners is fair and reasonable if we do not know whether or not tax is to be payable on it? I hope the noble Lord in his reply will be able to say something on that point.
His Majesty's Government have frequently drawn our attention to the fact that directors should not be given any compensation unless they 'were whole-time, or, shall we say, practically whole-time directors, and yet here we have men who are serving in a similar position to directors who were by no means whole-time, and who are to receive compensation. I am relieved to 574 hear that His Majesty's Government have at last begun to realise the value of work which can be carried out by a part-time director. There is also another point concerning the qualifying period for compensation. It seems that the officers must have served for eight years, whereas the Commissioners need no qualifying period at all. There is another point which the noble Lord might elucidate. It appears that in determining compensation for working directors and other officers under the Electricity Staff Compensation Regulations, 1949, account was to be taken of income from any alternative employment which might be subsequently obtained. But it appears that these draft Regulations do not propose similar treatment for the Electricity Commissioners and for members of the Central Electricity Board.
For these reasons, we are not at all satisfied with these Regulations, and we feel that they are discriminatory as between officers and members. In fact we go further and say that it appears that an advantage is to be given to directors nationally appointed, as against those appointed by shareholders. I hope that the noble Lord will deal with those points in his reply.

LORD HAWKE
My Lords, however unsatisfactory these Regulations may be, it is with great pleasure that I find them so easy to understand. These are the first Regulations that I have seen dealing with staff compensation coming from this Parliament which are intelligible to the meanest intelligence. So I hope that, should His Majesty's Government issue further Regulations of this nature, the same source will produce the fresh ones, though I think the suggestion of my noble friend that there should be some standard regulation for all displaced persons has much to commend it. After all, it is common sense. Of course, to some extent, these Regulations owe their simplicity to a reference to a much more complicated document — namely, the Electricity Staff Regulations of 1949. In re-reading them I came across one paragraph which I shall be grateful if the noble Lord will interpret for me, because I have forgotten its meaning. I refer to paragraph (4) of Regulation No. 9, which apparently adds an extra year for the calculation of compensation to persons who 575 have had a right to a pension. The words that fog me are …assessment of compensation may require the Board.… I cannot recognise that as English grammar, and I do not quite know what it is intended to mean.

§ LORD MACDONALD OF GWAENYSGOR
My Lords, in reply to the last question raised by the noble Lord, Lord Hawke, may I say that I will take advice and will let him know the effect of the advice which I receive. He and I are in the same position with regard to the words to which he has referred. If I get elucidation, I will see that he gets it also. With regard to the question of differentiation, really that lies in the fact that these people hold different posts. Part-time members for some reason or other were referred to in the Act—which rather surprises me—and because they are referred to in the Act the Minister had no option but to make some Regulation regarding the possibility of payment in view of any loss they may have suffered.
The question with regard to income tax put by Lord Teynham was one which I rather anticipated would be mentioned here, for it was raised at great length in another place. I have taken the precaution of netting the best possible advice on this point, and I think that if I pass on this advice to your Lordships as I have it that will be the best course I can pursue. The question whether any sum paid under Part I of the Electricity (Commissioners and Others) (Compensation) Regulations, 1950, to former members of the Central Electricity Board or to the Electricity Commissioners is taxable in any particular case is a matter to be determined by the appropriate body of Income Tax Commissioners, subject to a question of law. Nevertheless, on the basis of advice received from the Inland Revenue, it may be stated that in their opinion as the law stands at present lump sums paid in respect of compensation for loss of office under Part I of these Regulations would not normally attract income tax liability. I am sure that Lord Teynham would not ask me to suggest to him what future Chancellors may do. I can only tell him what applies to-day.

§ LORD CHERWELL
My Lords, does that mean that if someone gets a lump 576 sum for staying, he pays income tax, and if he gets a lump sum for going he does not pay income tax?

§ LORD MACDONALD OF GWAENYSGOR
My Lords, I should prefer not to be drawn into answering any questions of that sort. I have made a statement on advice and I prefer not to add anything to it.

LORD TEYNHAM
Does that cover the new Finance Bill?

§ LORD MACDONALD OF GWAENYSGOR
My Lords, I dare not venture to put on the mantle of a prophet and say what will happen in another place in the future. The fact is, I do not know.