Lords Sitting of 2 February 1954

Preamble
The House met at half past two of the clock, The EARL OF DROGHEDA on the Woolsack.
Prayers

BIRMINGHAM CORPORATION BILL [H.L.]
Read 2ª.
CAERNARVON CORPORATION BILL [H.L.]
Read 2ª.
COVENTRY CORPORATION BILL [H.L.]
Read 2ª.

FALMOUTH DOCKS BILL [H.L.]
Read 2ª, and referred to the Examiners.
2.35 p.m.

THE MARKYATE BY-PASS
EARL HOWE: My Lords, I beg to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the line of the Markyate by-pass of the Road A5 between St. Albans and Dunstable has yet been determined, and what progress has been made in the purchase of the land required for the building of the new road.]
THE EARL OF BIRKENHEAD: My Lords, the line of the Markyate By-pass has been determined by an Order made under the Trunk Roads Act, 1936. No progress can be made in the purchase of the land until detailed plans have been prepared; this work is in hand.

THE ASHFORD BY-PASS
EARL HOWE: My Lords, I beg to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government when it is anticipated that the Ashford By-pass will be completed.]
THE EARL OF BIRKENHEAD: My Lords, I hope that this scheme will be completed early in 1956.

QUESTIONING OF M. CASSIN
LORD CHORLEY: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether it is the fact that M. René Cassin, Vice President of the Conseil d'État, and during the war years a member of General de Gaulle's Government in London, who came to this country on 22nd January last on a diplomatic passport, and as a representative of the French Government, was subjected to an hour's questioning at Victoria Station by police officers; and, if so, why he was subjected to this indignity; and, if so, whether Her Majesty's Government will express their profound regret that a man of such distinction and such a well-known friend of this country should have been subjected to this treatment.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE HOME DEPARTMENT (LORD LLOYD): My Lords, so far as I am aware, M. Cassin was not, and did not claim to be, coming as a representative of the French Government on this occasion. He was not questioned for an hour by police officers. He was questioned for a few minutes by immigration officers, but, owing to a misunderstanding, he was delayed about forty-five minutes passing through the control. Her Majesty's Government deeply regret any inconvenience which he may have suffered in consequence and have sent an expression of their regret to the French Embassy.
LORD CHORLEY: My Lords, while thanking the noble Lord for his answer, I should like to ask whether he does not think that it is ironic that a gentleman of this eminence and such a great friend of this country should have been treated in this way. The noble Lord, no doubt,

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remembers that admirable publication La France Libre which used to give us such encouragement during the war. The January number, which I happened to see yesterday, is entitled Les Amitiés Britanniques. I think it is rather ironic that there should be in it an article by M. Cassin entitled Entente Cordiale et gratitude des Français libres. Does not the noble Lord think it is a most unfortunate thing that, at the very moment when this article, so full of affection for this country, comes out, this distinguished Frenchman should have been treated in this way? Will the noble Lord suggest to his Minister that he should impress upon his officials that in future they should take a great deal more care than was evident in this case?
LORD LLOYD: The immigration officers do their best to see that the minimum of inconvenience is caused to travellers coming to this country. When the noble Lord considers the large number of people who come to this country, I am sure he will realise that on the whole the amount of inconvenience and misunderstanding which arises is very small. In this particular case I quite agree with him that it is extremely unfortunate that this misunderstanding should have arisen, but Her Majesty's Government have done what they can by sending an expression of regret. I would add that my right honourable friend the Home Secretary is himself, in addition, sending a personal letter to M. Cassin. I hope in the circumstances that the noble Lord will feel that the Government have done what they could.
VISCOUNT STANSGATE: Does the noble Lord say that the immigration officer was at fault? Surely he must have been acting under instructions? Can he give us an idea what the instructions are that are issued to immigration officers? What is the purpose of their questioning? What are they trying to find out?
LORD LLOYD: I said that it was a misunderstanding. In all the circumstances, since no useful purpose can be served by pursuing this matter and magnifying it, I think that from the point of view of the relationships between the two countries it would be far better if the matter were left as it stands.
VISCOUNT STANSGATE: I am obliged to the noble Lord for his views on matters of taste, but I want to know what instructions are given to the immigration officers. Are they given instructions to cross-examine immigrants who wish to come here? M. Cassin is a distinguished friend of this country. We all applaud the natural courtesy of the Government in offering an apology, but what are the general instructions issued to immigration officers? Are they told that certain people with certain opinions must not be admitted to the country? Is it an unofficial McCarran Act that is being operated?
THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): My Lords, perhaps I may say a word. I am not complaining of what the noble Viscount has said, but surely he is greatly widening the issue raised in the Question. What he is asking now is, indeed, a completely different question. Therefore, if he wishes to ask that question, he must put it down in the ordinary way. It certainly does not arise as a supplementary to this Question.
VISCOUNT STANSGATE: The question I asked was, what were the questions put to M. Cassin? I do not suppose the immigration officer knew who he was. He was operating under general instructions, and I should not have thought that it was widening the Question to ask for some indication what these instructions were. Of course, the responsibility of the Home Secretary is complete—we know that: but what are the general instructions that he gives to his servants?
THE MARQUESS OF SALISBURY: I think that is certainly widening the issue, which is concerned solely with what happened on a particular occasion to an individual. When the noble Viscount asks what are the general instructions given by the Home Secretary to his officials, that is a much wider question, as I am certain he would agree if he were sitting on this side of the House. If he wishes to put down a Question, he should do so in the proper course.
LORD CHORLEY: The noble Marquess must be aware that this is net an isolated incident. If during the last few weeks he has read The Times, he will be aware that there have been several letters published, including one from some French schoolteachers who were held up

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and sent back again. A very distinguished French educationist has also been held up in the same way. Is this all part of a plot to line this country up behind the United States, by having a completely barbarous system in relation to people wishing to enter this country?
THE MARQUESS OF SALISBURY: The noble Lord says that there are other cases of the same kind. I think your Lordships will find that in any country in the world the immigration authorities (who, I must say, have an invidious and difficult task) are bound on occasions to be in error. In regard to such errors, all that the Government concerned can do is to put the matter right. But the immigration authorities are essential people. I have no doubt that as a result of what has been said to-day by noble Lords opposite, be matter will be reviewed to see whether any further action should be taken. But I still think that a wider issue has been raised than is covered by the original Question.
VISCOUNT STANSGATE: I am sure the noble Marquess will forgive the questions which have been put. They were put simply because many people in this country are proud of the fact that we have a reputation for freedom which is not enjoyed elsewhere.
THE MARQUESS OF SALISBURY: But the noble Viscount must not think that our reputation for freedom means that there need be no rules or regulations at all with regard to immigration. I think we are at one on the question of freedom; I would entirely agree with him on that; but there must be these regulations. On occasions I am afraid the regulations are interpreted too rigidly, or whatever it may be. A misunderstanding has, I understand, taken place in this case, and it is quite right and proper that a matter of this kind should be raised in Parliament and looked into by the Government of the day. I am not complaining about that at all. But I am not going to allow the House to think that it is the view of Her Majesty's Government that there should be no rules and regulations with regard to immigration. I should like to feel that no rules or regulations at all were
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necessary; but they are necessary, and that is a fact we must all recognise.
VISCOUNT STANSGATE: The noble Marquess has invited me to put down a Question. If I were to put down a Question asking in general terms about the character of these rules and regulations, will he answer it?
THE MARQUESS OF SALISBURY: The noble Viscount had better put down his Question and I will see what I can do about it.
2.45 p.m.

CURRENCY AND BANK NOTES BILL
Brought from the Commons; read 1ª,and to be printed.
DEVELOPMENT OF INVENTIONS BILL
Brought from the Commons; read 1ª, and to be printed.
RIGHTS OF ENTRY (GAS AND ELECTRICITY BOARDS) BILL
Brought from the Commons; read 1ª, and to be printed.
LICENSING (SEAMEN'S CANTEENS) BILL [H.L.]
Returned from the Commons, agreed to with Amendments: the said Amendments to be printed.

PROCEDURE OF THE HOUSE COMMITTEE
THE EARL OF DROGHEDA: My Lords, I beg to move that the noble Viscount, Lord Alexander of Hillsborough, and the noble Earl, Lord Lucan, be added to the Select Committee on Procedure.
Moved, That the Viscount Alexander of Hillsborough and the Lord Bingham (E. Lucan) be added to the Select Committee.—(The Earl of Drogheda.)
On Question, Motion agreed to.

LOCAL GOVERNMENT (FINANCIAL PROVISIONS) (SCOTLAND) BILL
2.47 p.m.
Order of the Day for the Second Reading read.
THE MINISTER OF STATE, SCOTTISH OFFICE (THE EARL OF HOME): My Lords, I wish I could make this Bill a little less coldly technical than it is, but I am afraid that "equalisation grant" does not lend itself to colour. This Bill will have two main results: first, there will be an increase in the equalisation grants paid by the Exchequer to the local authorities in Scotland: and secondly, there will be a new method of distribution. The proposals contained in the Bill arise out of the findings of a Committee which the Secretary of State appointed to advise him on the application of Part II of the Local Government Act, 1948. I should like to express both my own appreciation and that of the Secretary of State for the friendly co-operation of the local authority representatives who attended that Committee and were helpful all the way through.
I think it may assist your Lordships if I outline how the calculations of the Exchequer equalisation grant are made in present circumstances. Under the present law a grant is payable to each county—including for this purpose the small burghs—and to each large burgh whose financial resources are below a minimum standard measured by reference to rateable value per head of weighted population, that is, population weighted for children under fifteen, and, in some cases, for sparsity of population. The deficiency in rateable value, as compared with the standard, is credited to such counties and large burghs, and the equalisation grant is, broadly equal to the rates which would be payable on the credited rateable value if it were actual rateable value. I hope that that is as clear to your Lordships as it is to me.
My Lords, up to now the standard taken for Scotland has been the average rateable value per head of weighted population in England and Wales, with the addition of 25 per cent. to allow for the general higher level of valuation in Scotland. It has for some time been known and felt by all concerned that this addition was inadequate. But the
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Committee found it impossible to determine what particular percentage should replace the 25 per cent. in order to make it fair in the circumstances, particularly as revaluation is taking place in England. Therefore the Committee came back to the well-tried, hardy Goschen formula of eleven-eightieths of the English grant. It is therefore proposed in Clause 1 that we should adopt eleven-eightieths. This has the unanimous support of the Scottish local authority associations as an interim measure. Clause 1 makes it retrospective to May 16, 1953. The Secretary of State indicated in another place that whereas the grant on the present basis is £6 ·08 million for Scotland it is likely under the new proposals to amount to £8 ·17 million. The latest estimate since the Secretary of State spoke in another place is that the grant may be £8 ·9 million.
As I have already explained, this sum will be distributed to the local authorities by reference to a standard rateable value per head of weighted population, but the Bill proposes certain changes in the grant formula which will affect various individual local authorities in different ways. At present, the equalisation grant is calculated separately for each county, including the small burghs, and for each large burgh. Out of the county grant, what is known as a "capitation" payment is made of so much per head of population to each small burgh and for the benefit of the landward area. The system of these capitation grants takes no account of the actual needs of the small burghs or of the landward areas. Therefore, Clauses 3, 4 and 5 lay down that there may be separate calculations for each large and small burgh and for each landward area on the basis of need. That would seem to be fairer and more consistent with the principle of equalisation grant than the system which we operate now.
Several consequences and consequential adjustments follow on this provision. First, the joint expenditure of local authorities will be allocated, as I have explained, on the basis of actual rateable value plus the rateable value, if any, credited for purposes of the equalisation grant. Similarly, credited rateable value will be taken into account in distributing the payments to local authorities which are made in lieu of rates by the railways and electricity undertakings. That is covered by

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Clauses 10 and 11. The same principle will be used in calculating the rate deduction in the education grant formula. Certain difficulties would arise if all these complicated adjustments were brought into full effect in the one year, because local authorities have already, for instance, fixed their rate poundage. Therefore, Clauses 2 and 7 contain certain transitional arrangements which have been made in order to ease the transition from one system to another.
There are two other changes proposed in Clause 4 which I think I should mention to your Lordships. One concerns houses. In ascertaining the rateable value for grant purposes, it is proposed to use, as the rateable value of local authority houses, the average rental of all houses built by local authorities in Scotland. This will have this advantage that from now on the local authorities will be free to fix their rents according to what they think is right without the fear that their share of the equalisation grant will be affected. I think that that is an important and valuable change. Secondly, in the same clause, the formula for the payment of grant is weighted to take account of abnormal increases in population which put costs and heavy charges on local authorities—for instance the development of new towns or industrial redistribution in a particular district.
Scotland as a whole will clearly gain under this arrangement, though in the application of the formula it is possible that certain individual local authorities may lose. As this is a tentative interim arrangement—as I shall explain in a moment—the Secretary of State thought that, until more experience had been gained, it would be wrong that any particular local authority should suffer a loss. In Clause 6 of the Bill, therefore, provision is made to see that no particular local authority would be worse off on the 1952–53 basis than under the present system. I hope that I have made it clear that I think this is a desirable alteration in the system. But it is an interim arrangement because, as your Lordships will, I think, be aware, a Committee, under the Chairmanship of Lord Sorn, is at present examining the whole rating system in Scotland, and this has, of course, an important bearing on the question we are now discussing. Clause 12 of the Bill, therefore, allows for an
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investigation at any time, and the Secretary of State need no longer wait for the five-year period, as he had to do previously, under the Act of 1948, before he ordered an investigation.
Though not everything in this Bill commends itself to the local authorities, nevertheless, broadly they have accepted it as fair in the circumstances, and I commend it in that way to your Lordships as a fair interim measure. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2ª.—(The Earl of Home.)
2.58 p.m.
LORD MATHERS: My Lords, the first thing I wish to do is to thank most warmly the noble Earl, who has just sat down for the commendable effort which he has made to simplify the terms of this Bill—which I found very difficult indeed. I am not going to attempt anything in the way of an analysis now. It seems to me that in any case that is a Committee matter. May I hasten to say that I use that expression not in any sense as a threat to give the Minister a great deal of trouble when we come to the Committee stage? We shall, however, require to see the Bill more clearly, and to consider what the noble Earl has said, before we are completely satisfied that we can allow the Bill to go through. I am pleased that this measure has come along, because I believe that it marks a step in the right direction. I am glad of the fact that it implements a promise which was made by the author of the original Bill in 1948, that the criticisms which were made of the Bill at that time would, in due course, be examined in the light of experience That experience has been gained over the last few years, and we now have this interim result of the consideration that has been given to the matter. I was glad to hear the noble Earl describe the Bill as an interim measure. Certainly that position has been made clear in the actual text of the Bill, because, contrary to what appeared when it was going through another place, a date is now inserted for the termination of its currency.
I am under several handicaps in dealing with the details of the Bill. Some of them I cannot even understand. I am not a lawyer. If ever the expression that it

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would require a Philadelphia lawyer to explain the terms of a measure was justified, it is justified in respect of this Bill. I find that my experience of local government, short as it was, was on the wrong side of the Border to enable me to deal fully with the complications of this Bill. For a year or two I was a member of the council of the first city in England on the way from Scotland by the West Coast, Carlisle. There, of course, as in the rest of England, the Goschen formula is unknown. Indeed, it seems to me that nowadays, if it were not for that formula, Goschen would be unknown. We hardly ever hear the name of one who in his time played a considerable part in Parliament. I know of only one instance of his name cropping up in any prominent way, and that is in the name of a little hamlet in what used to be my Parliamentary constituency of West Lothian. Between Broxburn and Uphall there is a small number of houses named Goschen Place. That is the only instance I know, apart from the famous formula for which he was responsible, where the name of Goschen has been perpetuated.
Another thing that makes this Bill difficult for me to follow is the notional and almost hypothetical terms used in it, such as "weighted population," "adjusted rateable value" and "standard rateable value." I should feel more at home if "actual rateable value" and "actual rate burden" were under consideration because then we should be getting hold of concrete things and should know exactly where we stood. Comparisons with England and Wales are involved, of course, but, more important, comparisons are made between different local authorities in Scotland. The blessed word "equalisation" is freely used, but I am afraid that I am not able to discern that equalisation is realised, though I freely admit that those who laboured to produce this Bill were capable people and tried their best in difficult circumstances. Notwithstanding the fact that some extra money was available, there are eighty-seven local authorities in Scotland who get nothing out of it. However, local authorities are not flesh-and-blood bodies, and before I sit down I want to put a real, human case with regard to the incidence of rates.
The Capital City of Scotland, Edinburgh, is denied any part of the rate
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relief afforded by the Exchequer's subvention of £2 million which the Secretary of State (good luck to him!) has managed to obtain from the Chief Custodian of the British public purse. I want to show how this position appeals to the citizens of Edinburgh, who feel the burden of rates acutely. Edinburgh has long been looked upon as a city where high assessments, high rateable values, prevail. The corollary to that is comparatively low rates, because the high rateable values of houses and other premises make it possible to meet the financial needs of the city out of a lower poundage rate. Therefore, the unthinking onlooker from outside Edinburgh says that it is a very lucky city. But it does not prove to be so. I remember discussing with a colleague the relative merits of Edinburgh and Kirkcaldy. I was standing up for Edinburgh and my colleague was lauding the charms and benefits of Kirkcaldy. When we came to discuss the houses in which we lived, my colleague claimed that he had as good a house as mine, with the same amount of accommodation, although his was a bungalow and mine a terrace villa. But our discussion brought out the fact that his house in Kirkcaldy was assessed at an annual value of £23, while mine in Edinburgh was assessed at £65.
I do not want to make out for a moment that this situation is completely typical and is met with throughout Scotland, but these figures apply to the citizens of Edinburgh. The result is that the last remaining member of a family, usually a woman, living alone in the house that she has known all her life and existing, as many maiden ladies who are left on their own do, on a meagre fixed income, finds herself in dire straits. What is the remedy for her position? Is she to sell the house? That would be a heartbreak to her; and, in any case, where would she go if she sold her house? Had she sold her house two years ago, she would have been able to get a much better price for it than she would get to-day, because of the fall in value of house property. If her poverty were sufficient, she could probably claim relief from rates: but the type of individual I am thinking about would rather die than make a claim of that kind. I believe that I cite a case which is not uncommon. So far as I can see, however, this Bill does not touch individuals in that position.

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All this, I think, points to the need for a complete overhaul and simplification of rating in Scotland. People should know exactly where they stand in respect of rates and what they are paying for. The noble Earl has made reference to the Sorn Committee. I look forward with keen anticipation to the findings of that Committee. I had the opportunity of working with Lord Sorn on another Committee some years ago on the same subject. However, that Committee had greatly restricted terms of reference compared with those of the present one. My experience of working with Lord Sorn, is that we may look forward with confideice to a comprehensive and helpful review of the position in which we find ourselves to-day in regard to Scottish rating, which has been a matter of dissatisfaction over a long period.
I have already made reference to the fact that this Bill is terminable in five years' time. I say most urgently to the Government: "Do not wait for the expiry of that five years. The Bill is valid for that time, but do not use the whale of the period." The matter of Scottish rating is of great urgency, and it is important that it should be on a better basis than we have known it in our time. If I dare make the appeal to the noble Earl, I would use words to him that are not my own, but those of old Omar himself:
"Ah Love! could thou and I with Fate conspire
To grasp this sorry Scheme of Things entire,
Would not we shatter it to bits—and then Re-mould it nearer to the Heart's Desire!"
I am glad that this Bill has come forward. I am sure that we shall examine it with the utmost care in order to get the best out of it that we can, and we look forward to the further steps that are to be taken by the Government, and which, indeed, are promised, to deal with the question of Scottish rating.
3.14 p.m.
THE EARL OF HOME: My Lords, I thank the noble Lord, Lord Mathers, lot the reception that he has given to this rather complicated Bill, and if there is anything that he or any other noble Lord desires to raise in Committee stage we shall be glad to deal with the more detailed points then. I am pleased that Lord Sorn has taken charge of this
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Committee to look into the Scottish rating system An inquiry into this matter has been badly needed for some time, and we have purposely given the Committee wide terms of reference. I should join the noble Lord, Lord Mathers, in hoping that we can remodel the Scottish rating system "nearer to the Heart's Desire"; but am by no means sure that it will be any nearer the pocket's ability to pay.
On Question, Bill read 2ª; and committed to a Committee of the Whole House.

CINEMATOGRAPH FILM PRODUCTION (SPECIAL LOANS) BILL
3.15 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 Mancroft.)
On Question, Motion agreed to.
House in Committee accordingly:
[The EARL Of DROGHEDA in the Chair]
Clause 1 agreed to.
Clause 2:
Power to enter into arrangements with respect to certain loans
2.—(1) If at any time the Corporation are satisfied with respect to any loan made by them which has fallen due for repayment that, except with harmful consequences to the production of films, the amount of the loan cannot be recovered in accordance with the terms thereof or by means of the remedies available, the Corporation may with the approval of the Board of Trade enter into, any financial arrangements with respect to that loan which, in the judgment of the Corporation, are calculated to lead to the eventual recovery without such harmful consequences as aforesaid of the whole or part of the amount of the loan; and any such arrangements may in particular provide for the waiving by the Corporation of payment of interest or for the acceptance by the Corporation of shares or debentures in any company in or towards repayment of the amount of the loan.
LORD LUCAS OF CHILWORTHhad given notice of several Amendments to subsection (1), the first being after "any loan made by them" to insert "or the interest thereon" The noble Lord said The first Amendment I have upon the Marshalled List is purely a drafting Amendment, and the second, fourth and

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sixth are really all the same in purpose. Having consulted the best legal advice that is open to me—which I may say has proved infallible in the past, and I anticipate will prove quite conclusive to the noble Lord, Lord Mancroft, when he comes to accept my Amendment—I understand that the object of this clause will not be fulfilled unless interest is mentioned specifically or as specifically as the loan. I would refer your Lordships to page 2, line 10, of the Bill, where it specifically states that
"the amount of the loan cannot be recovered…"
This refers to loans granted by the National Film Finance Corporation to various film companies for the purpose of producing films.
I have not the slightest doubt that in all the agreements between the National Film Finance Corporation and the companies the ordinary precautions as between lender and borrower have been taken and that all these loans carry interest. I am advised that the interpretation of this clause could be restrictive as only the word "loan" is mentioned. I seek in my Amendment to put in after the word "loan" the words "or the interest thereon." This would give the interest, which may have fallen behind, as much protection as is afforded to the loan by this clause. I am advised that the greater does not include the lesser: in other words, the loan does not include the loan and the interest, unless the interest is specifically mentioned. I imagine that it is the intention of the noble Lord to cover the interest as well as the loan. That is the reason for this first Amendment, and the others which I have mentioned are purely consequential on it. I beg to move.
Amendment moved—
Page 2, line 8, after ("them") insert ("or the interest thereon").—(Lord Lucas of Chilworth.)
LORD MANCROFT: Before I begin to deal with this particular Amendment standing in the name of the noble Lord, Lord Lucas of Chilworth, I wonder whether he will allow me to thank him very much indeed for the trouble he has taken to go through this Bill and to put down on this Order Paper several Amendments with the sole intention of improving the Bill. I am grateful to the
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noble Lord for the trouble he has gone to, and I would tell him straight away that I have examined all these Amendments and sought advice upon them solely in the light of his declared intention of improving the Bill. I should like him to know straight away that it is in that light that I regard these Amendments, and it is in that light that I have attempted to address myself to them.
That being, so to speak, the jam in my opening remarks, I am afraid I must now ask the noble Lord to be so good as to consider the pill. In this particular Amendment I think we are again, as we normally are, at one. I think the noble Lord can have his fears set at rest straight away. He has told us that he has taken legal advice. So have I, and, as is so often the case, the lawyers have Men different answers to what they do not regard as the same question. I am advised that the Amendment which the noble Lord proposes will not add anything effective to the clause, and for this reason. Any agreement in everyday business for a loan—a loan such as this —commonly provides that on a failure to pay any sum of interest on the due date the amount due on the loan becomes payable forthwith, and any unpaid interest is added to the loan. It therefore follows that any new arrangements made under this Bill could cover equally both the loan and the interest. If the noble Lord would care to come out with me to the Library afterwards, I will find him any number of standard commercial precedents which would bear me out on that point.
More important than precedents and lawyers' opinions, however, is this. The National Film Finance Corporation have confirmed that all their loan agreements contain this safeguard, and they are quite satisfied with the situation as it is and that the arrangements which they envisage and which the Bill envisages will not run into any of the trouble which the noble Lord fears. Acting upon their advice, I think we can safely leave the Bill to march with common commercial practice and agree that it provides all the safeguards that are required. I hope the noble Lord will be satisfied with that explanation and will see fit to withdraw his Amendment and the consequential ones which march with it.
LORD SILKEN: In case there is any misunderstanding about the matter, I should like to state at once that I am not the high legal authority to whom my noble friend, Lord Lucas of Chilworth, referred. I think it would be right to say, since we are in Committee and are trying to be helpful to one another, that but for the statement which the noble Lord, Lord Mancroft, has just made—namely, that it is the common practice to insert in agreements a provision that if the interest is not paid the whole loan becomes repayable—the words of the Amendment would have been necessary.
LORD MANCROFT: That is possible, yes.
LORD SILKEN: I think that is a fair statement to make. The noble Lord now assures us that this is a common practice. Does he go so far as to say that it is the invariable practice in all agreements which the Corporation make, to include a provision that where the interest is not paid at the due date the whole amount of the principal becomes immediately payable? If he does, and if he gives such an assurance that that is the present practice and will continue to be the practice, that is a factor which my noble friend will have to take into consideration in deciding whether he will press this Amendment.
LORD MANCROFT: I am grateful to the noble Lord, Lord Silkin. My advice —and I think there is no doubt about it; it is quite categorical—is that the National Film Finance Corporation include this safeguard in all their loan agreements and have every intention of so continuing to do. I thought at first that the noble Lord, Lord Silkin, was going to ask me whether it was the invariable practice in general commerce, to which I would have said "very common," but, as he knows, it is not invariable. To his categorical question I can give a categorical affirmative answer.
LORD LUCAS OF CHILWORTH: May I first of all thank the noble Lord for the kind personal remarks he make in opening his speech. I know that, good as my Amendments are, those words were a prelude to their sudden and violent death. But, after all, one cannot expect to get many Amendments accepted by Her Majesty's Government when they
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know that they need not accept any Amendment except as a gesture of good will.
LORD MANCROFT: I cannot allow the noble Lord to misinterpret me. I cannot let him get away with that. Any Amendment which he puts down and which we genuinely think will improve the Bill, I can categorically assure him will always be accepted. There is no question of making concessions merely to keep the treble Lord in a good humour. His Amendments have been taken strictly on their merits, and I may say that he is misinterpreting me when he suggests that the fate of the future Amendments have been decided before I have heard the arguments which he proposes to address towards them. I wish to assure him, quite firmly—and this is a matter of considerable importance—that his Amendments and the Amendments of any other noble Lord opposite put down on any Bill are considered by noble Lords on this side of the House on their merits and not through any other inferior or ulterior motives whatsoever.
LORD LUCAS OF CHILWORTH: I am sure your Lordships' House will indeed he grateful to the noble Lord, Lord Mancroft, for having laid down categorically what is Government policy. The interesting part is that the noble Lord says that the Government will always accept Amendments brought forward by noble Lords on this side of the House if it is considered that those Amendments improve the Bill. Of course, the present Government want to be judge and jury at the same time. To be strictly accurate, what the noble Lord should have said is "if Her Majesty's Government, in their wisdom, consider those Amendments are helpful." I should imagine that the chance that the Government will form the opinion that an Opposition Amendment to one of their Bills is helpful is very remote. The cases since Her Majesty's Government have been in office have been singularly few, but perhaps the noble Lord, by his pronouncement of Government policy, has started a new and brighter era for Her Majesty's Opposition.
May I take the noble Lord up on one point? My noble friend Lord Silkin elicited the valuable information that, while it may be common practice for the

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greater to include the lesser, it is not invariable practice. Therefore, I understand by that that if the noble Lord, Lord Mancroft, had not received the assurance from the National Film Finance Corporation that they always safeguard the position of the interest when they make a loan, he would have accepted this Amendment. He went on to say that the National Film Finance Corporation are satisfied with this clause. May I point out to him that the National Film Finance Corporation, estimable body though they are, do not yet take the place of your Lordships' House? It is not for the National Film Finance Corporation to be satisfied: it is for noble Lords in this House to be satisfied. As this is a legal question, if noble Lords learned in the law are quite satisfied, I also am satisfied, having drawn attention to the fact; and if in the future there is a case where the National Film Finance Corporation have not done this, I do not think the noble Lord will object to my reminding, him of it. It is a simple legal point. If your Lordships are quite satisfied to leave the matter where it is, I am; and, therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved in subsection (1) to leave out "except with harmful consequences to the production of films." The noble Lord said: This is not quite a drafting Amendment; it is an Amendment of some principle, and, as the noble Lord, Lord Mancroft, quite rightly said before we engaged in this somewhat light-hearted banter, we have really the same object in view. We want to make this a good Bill; we accept the principle of it; but, in my submission, this clause does not fulfil the purpose of the Bill, containing, as it does, this limitation. May I draw your Lordships' attention to the specific words uttered by the President of the Board of Trade in another place when the Bill was being debated on Second Reading? I ask your Lordships to pay particular attention to what he said. I quoted it when the Bill was before your Lordships on Second Reading and I will, with your Lordships' permission, quote it again, because it is the whole of my case. The right honourable gentleman the President of the Board of Trade said (OFFICIAL REPORT, Commons, Vol. 520 (No. 14), col. 2032):
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"The object of Clause 2 is to enable the Corporation to make some prudent arrangements with British Lion which would make it possible, either by reorganisation of the capital or something of that kind, to deal with the matter in a realistic way and to see what measures could best be taken to safeguard that public money in the future."
The emphasis is on the words:
…to safeguard that public money …"—
that public money being the loan of £3 million which was made to British Lion some four years ago. So the criterion which the President of the Board of Trade makes is the safeguarding of public money; and that is my object in seeking to remove these words.
If I may direct your Lordships' attention to the wording in this clause, it says this:
"if at any time the Corporation are satisfied in respect to any loan made by them which has fallen due for repayment that, except with harmful consequences to the production of films, the amount of the loan cannot be recovered yin accordance with the terms thereof or by means of the remedies available, the Corporation may with the approval of the Board of Trade enter into any financial arrangements with respect to that loan which, in the judgment of the Corporation, are calculated to lead to the eventual recovery without such harmful consequences as aforesaid.…"
I trust I may have your Lordships' permission to deal with both the instances in which reference to "harmful consequences" occur, because they hang or fall together. What does it mean? It means that if the Corporation cannot, by the avenues open to them at the present time, secure the repayment of the loan or the interest without harmful consequences to the production of films, they may, with the permission of the President of the Board of Trade, enter into fresh arrangements. Up to that point it is permissive; but then the Bill goes on to say that any such new arrangement they make must, again, not be harmful to the production of films. The National Film Finance Corporation in every case have to go to the President of the Board of Trade for permission. He is the Minister responsible for the fact that the Corporation were set up for the purpose of assisting the film industry. Now, there may come a time when the interests of the taxpayer are in conflict with the interests of the production of films. I say that the President of the Board of Trade, who is answerable to Parliament, should have

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free and unfettered discretion to use his judgment as to where the major interest lies, and that he should be answerable to Parliament for any such action.
The noble Lord, Lord Mancroft, may reply, of course, that the clause is permissive; that the Corporation need not enter into any such arrangement. Entry into such an arrangement is permissive, but the new arrangements cannot be in any way more onerous in the future than were those of the past. I really think that this is a limitation that is unwise. The President of the Board of Trade should have discretion. I do not think there should be a statutory compulsion in this matter. After all, the Ministers are responsible Ministers. Her Majesty's Government and the President of the Board of Trade, by bringing forward this Bill, have supported the National Film Finance Corporation and the objective which it has. I think that if we took out these words, it would make a clean-cut clause and we should know where we were. At the present time, having read through the clause about twenty-five times, I am still a little fogged about it; and I can only put upon it the interpretation which I have expressed to your Lordships.
I say this without any Party bias at all and I hope the noble Lord, Lord Mancroft, will give me absolution from that. My words come simply from one who has had some experience of commerce and in the borrowing and lending of money—the former, let me say, more often than the latter—in a business career which goes back for some years. I hope, therefore, that the noble Lord will accept this Amendment and the one which follows on it. It does not do any harm; it should do good; it does not tie the hands of the National Film Finance Corporation and it does not tie the hands of the President of the Board of Trade. My argument is that these limiting words in this clause may well be construed so as to apply at some time if the National Film Finance Corporation want to enter into any fresh arrangements either with the British Lion or quite outside the British Lion and its £3 million debt. I do not think I need say any more to advance my arguments and I beg 10 move.
Amendment moved—
Page 2, line 9, after ("that") leave out ("except with harmful consequences to the production of films"),—(Lord Lucas of Chilworth.)
3.39 p.m.
LORD MANCROFT: I am very sorry indeed to hear that the noble Lord has read through this clause twenty-five times and does not now really understand what it means. Admittedly, it is not the most crystal clear of clauses that I have seen, but, if the noble Lord will bear with me while I go through it with him for the twenty-sixth time, I shall be pleased to try to persuade him that there is really nothing which divides us in this matter.
I am afraid that what the noble Lord has been doing is to perform the old household joke of painting or varnishing a floor in such a way that he finishes up in a corner opposite where the door is and therefore cannot get out without walking over the varnish, instead of finishing where the door is, so that he can get out himself. He is in an untenable position. His Amendment, as I hope I can persuade him, would have the effect of completely reversing the intention of the clause as it is at present drafted; and, what is more, I believe, that it would be quite contrary to the intention which the noble Lord had in mind in the remarks with which he moved his Amendment.
Perhaps I can best explain the point by turning to review for a moment the three main classes of case in which loans fall due for repayment. The first, obviously, is in the case of a debtor who is able to repay his loan, albeit, perhaps, reluctantly. That would certainly not have harmful consequences on his ability to produce films. The second and obviously more difficult set of circumstances, from the point of view of the Corporation, as well as, of course, from the point of view of the debtor, is that where a debtor could repay all or part of his loan but only by disposing of all, or most, of his assets and thus ceasing to engage in film production. In such circumstances, any creditor might desire to enter into fresh arrangements with his debtor, rather than put the latter into liquidation. The Corporation, however, have no power to deal with such cases under the terms of the principal

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Act. It is with such cases that we desire to give them power to deal—that is, by subsection (1) of Clause 2 of the present Bill. I submit that the clause as at present drafted does give them just such power.
LORD LUCAS OF CHILWORTH: I do not think I can have heard the noble Lord aright. Did he say that the Corporation have no power under the existing Act to put a debtor into liquidation by foreclosing?
LORD MANCROFT: Oh, no; I said nothing of the sort.
LORD LUCAS OF CHILWORTH: I thought I misunderstood the noble Lord.
LORD MANCROFT: Of course they have that power. What they have not power to do under the existing Act is to enter into the further negotiations which we are now discussing. Of course they have power to put the debtor into liquidation.
Let us now turn to the third sort of case with which the Corporation may have to deal, the case of the debtor who cannot repay his loan even if the Corporation put him into liquidation. The clause as amended by the Amendment of the noble Lord, Lord Lucas of Chilworth, would empower the Corporation to make special arrangements only in such cases—as the noble Lord, Lord Lucas, will see if I read the clause:
"If at any time the Corporation are satisfied with respect to any loan made by them which has fallen due for repayment that …the amount of the loan cannot be recovered in accordance with the terms thereof …"
and so on. Thus, although Lord Lucas's Amendment appears at first sight to be removing a scope of the clause, and may be widening the safeguard, the Amendment in fact completely annuls the intention of the clause as at present drafted. Instead of, as I believe the noble Lord desires, increasing the powers of the Corporation, it deprives them of precisely the power to deal with cases of the second type which I have just described, for which purpose it has been specifically designed. I hope that the noble Lord will follow that argument. If he does, I am sure he will agree with me that his Amendment, although kindly intentioned, will achieve exactly the
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opposite of what he has set out to achieve. I hope that the noble Lord will therefore see his way to think again.
EARL WINTERTON: I should like to ask the noble Lord one question, disclosing, as I have had to do on previous occasions in matters connected with the cinema trade, that I have a personal interest in it. In the course of the noble Lord's observations, with which I may say I am in complete agreement, in reply to the noble Lord opposite, he spoke rather of a suppositious or possible loan. What this Bill and clause are designed to do is to get the Film Finance Corporation out of the awkward position in which it has got itself in regard to British Lion. I understand that since the Corporation was set up it has lent £3 million to British Lion, out of the £5 million which was available, and that that £3 million has not yet been repaid. I merely want to get the position quite clear. It would be inappropriate for me, being, in a sense, connected with business rivals of British Lion, to comment on the strange nature of the financial arrangement entered into. I think we ought to be clear that really what we are dealing with is the case of British Lion.
3.46 p.m.
LORD SILKIN: Perhaps I may say a word in support of the Amendment. I do not think that the observations of the noble Earl, Lord Winterton, in any way affect the point of view which I am trying to put forward. I cannot agree with the noble Lord, Lord Mancroft, that the deletion of the words proposed would completely alter the intention of this subsection The subsection (we are now on a point of construction, rather than on policy) contemplates this state of affairs: that a sum of money is owing to the Corporation and that the amount of the loan cannot be recovered in accordance with the terms of the agreement. That is the only case with which we are dealing in this subsection. That is, I think, the third of the cases which the noble Lord, Lord Mancroft, mentioned. We are not dealing with the other two, so let us confine ourselves to a case where either the loan or the interest, or both, is owing and the film company is unable to pay. As the clause stands, the film company has a let-out. It is under no obligation to agree to any arrangement made—or, rather,

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the Corporation, if it presses the company and seeks to enter into some arrangement such as is set out in this subsection, has to take into account the possible "harmful consequences to the production of films." If the consequences are likely to be harmful, then the Corporation is expected not to enter into some such arrangement.
If I am right in that construction, what is the Corporation to do in a case where the money is owing, but cannot be paid, and the consequences of demanding repayment may be harmful to the production of films? Is the Corporation then to sit back and say, "Well, that's that. We have no means of recovering our money. We cannot recover it in the normal way; we are not allowed to"? I know that the Corporation has a discretion, but the terms of the subsection are, at any rate, a clear direction as to what it should do. The Corporation is not to enter into any other arrangement, and so the money is simply lost. It is not even expected to take into consideration, as my noble friend says, the question of which is the greater evil: the possible harm to the production of films or the possible loss of a large sum of money to the taxpayer. If the effect is that there will be harmful consequences to the production of films, then the Corporation is not to enter into such an arrangement. Then what is it to do? Therefore, I say that the deletion of those words will enable the Corporation to consider whether or not it is in the public interest to make such an arrangement with the borrower. The omission of these words would not deprive the Corporation of the opportunity of making an arrangement—I think that is right—but it could take into consideration the question of which is the greater evil. In addition, my objection to those words is that they are vague. What is the meaning of "harmful consequences to the production of films"? Do they mean, harmful to the production of films by the borrower, the particular company concerned, or to the production of films generally? What tire "harmful consequences"? I can understand the extreme case, where a company could pay only by selling off some of their equipment. That is the extreme case, and it is of course perfectly clear. But what are the "harmful consequences" visualised in this provision?
This is a complicated matter, and I agree with the noble Lord, Lord Mancroft that we are not on opposite
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sides in this. We are trying to make clearer a provision which, as he admits, is not very clear. I agree that this is not the most complicated provision I have ever read, but neither is it the clearest. We are trying to make it clear, and we are trying to hold a balance between the interests of film production and the interests of the taxpayer, who has also to be considered. I suggest that this is a matter to which the noble Lord might agree to give further consideration. May I add just one thing (my noble friend has commented on it, but I think it is worth emphasising) namely, that, in any event, all these arrangements are subject to the approval of the Board of Trade. The Board of Trade know what is the intention to be exercised. If, by any chance, the Corporation sought to be unduly harsh and to injure the production of films, either generally or by this particular concern. I think the President of the Board of Trade is perfectly capable of taking the point that this would be harmful; and I think that it is unduly narrowing the functions and discretion of the Corporation to have these words in. I think the Amendment is worthy of much more serious consideration than the noble Lord appears to have given to it.
LORD MANCROFT: I am sorry to hear the noble Lord, Lord Silkin make that last observation. I have given very careful consideration indeed to this matter, and I sought the best advice I could. We are really down to a matter of construction. We are all at one as to what we seek to achieve. As I say, I have taken the best advice open to me, and we are all trying to achieve the same result. The noble Lord, Lord Silkin, has asked me to look at this again. I car give no further promise than to say that I will take advice in the light of what noble Lords have said, though I must honestly confess that I have not been shaken in the slightest bit. May I, in turn, ask that noble Lords opposite should look carefully at what I have said, to see whether, perchance, on a more mature reflection of my words, and leaving aside my jumbled oratory, they may be convinced that I have really got a better answer than they have?
LORD SILKIN: Speaking for myself, the noble Lord certainly has not shaken me.
LORD MANCROFT: I must confess that I did not see the noble Lord looking very shaken. If I may answer one or two small points before I revert to the major one, the noble Earl, Lord Winter-ton, of course speaks from a rather particular position, but he is perfectly right in saying that at the back of this clause there is British Lion. No Act of Parliament can contain a clause specifically directed against one organisation, and naturally this clause is drafted to cover all similar cases. But it would be idle to deny that British Lion was at the back of the Government's mind when they decided upon the policy of this Bill, and in the mind of the draftsman when he put pen to paper. Of course, as the noble Lord, Lord Silkin suggests, there may be a conflict of interest between the film industry and the taxpayer. This Bill is drafted sufficiently widely to enable the best decision to be reached from the point of view of the country, weighing up the admittedly difficult conflicting interests of the two people—the film producer, or the film viewer if needs be, and the taxpayer. It is in that light that the clause has been drafted. Quite frankly, I think that noble Lords opposite are making rather heavy weather of this, and I would, with great respect, ask them whether they will consider it again. Of course, I will consider it from my point of view, but I cannot possibly accept the noble Lord's Amendment, because he has said nothing to convince me that the deletion of these words would do anything except upset the whole meaning of the clause and achieve a result which neither he nor I have the slightest desire to see achieved.
EARL WINTERTON: I am sorry to trouble the Committee again but I think it is right to make plain, as perhaps I did not in my original speech, that the difficulty (to call it by no other stronger phrase) that has arisen with regard to British Lion did not arise in the lifetime of the present Government—it is a legacy from the late Government. It is also only fair to make plain, as my noble friend Lord Reith has privately reminded me, that the National Film Finance Corporation had pressure placed upon it by the Treasury to make the particular arrangement which it did make—in fact, it had no option in the matter. It is only fair to the Government to say that.
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Personally, I hope the noble Lord opposite will not persist in this Amendment, because this Government are doing the best they can to get out of a situation which is not a very easy one.
LORD LUCAS OF CHILWORTE: Whether or not the Committee will be appreciative of the noble Earl's attempt to bring this discussion down to the gutter of Party politics must, of course, be for the Committee to decide. We have not mentioned Party politics or responsibility, and if the noble Earl who has just spoken had been present upon the Second Reading of this Bill it would not have been necessary for him to speak at all to-day, because all that he has said was said on that occasion. However, to return to the clause and to the noble Lord, Lord Man-croft, who is speaking on behalf of the Government, I assure the noble Lord that I have sincerely tried to put upon this clause the construction that he wants me to; but I have failed. And when he says that my Amendment would completely reverse the meaning of this clause, I just cannot agree.
The noble Lord has rather startled me by saying that under the principal Act the National Film Finance Corporation have not the power to enter into any fresh financial arrangements with a debtor if, in their opinion, the present arrangements bear too harshly upon the debtor in present circumstances. In my view, this Bill does not alter that situation; it merely clarifies it in a way which, to my mind, the noble Lord does not really intend. Subsection (1) quite plainly says, with the deletion of the words which I propose to admit:
"If…the Corporation are satisfied with respect to any loan made by them which has fallen due for repayment that …the amount of the loan cannot be recovered in accordance with the terms thereof or by means of the remedies available, the Corporation may with the approval of the Board of Trade enter into any financial arrangements with respect to that loan which, in the judgment of the Corporation, are calculated to lead to the eventual recovery …of the whole or part of the amount of the loan."
There is no circumscription about that; there is no string or tag to it. The Corporation can say, "By our existing arrangements we cannot recover the whole or part of that loan; we can now enter into a fresh financial arrangement which we consider to be in the best in-

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terests of the taxpayer as well as the film industry." That is what my Amendment, in effect, provides. How can the noble Lord say that it reverses the entire thing? Really, that is not the case. However, I will meet him, and we will try to look at this matter differently.
The noble Lord, Lord Silkin, says that nothing which Lord Mancroft has said has shaken him. Certainly nothing Lord Mancroft has said has shaken me. It has only confirmed me in my view that this is a limiting factor. As I interpret it, any fresh financial arrangement which the National Film Finance Corporation may undertake under this clause must not be detrimental to the production of films, irrespective of whether or not it is detrimental to the taxpayer. That is my interpretation of it, and it is also the interpretation of my noble friend Lord Silkin. What I will do, if the Committee will give me permission, is to withdraw this Amendment—and I will not move the next one—on the understanding that the noble Lord and I can have further discussions about the matter to see whether one or other of us can convince the other. But I reserve the right to bring this matter up again. Unless the noble Lord is going to accept one of my other Amendments—and in view of his very flowery opening and his really adroit compliments to me I have grave doubts —there will not be a Report stage, and the only course, therefore, that will be open to me will be to put down on Third Reading any Amendment we may wish to move. That course I shall adopt if the conversations between the noble Lord and myself do not result in my altering my opinion. I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.3 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH had an Amendment on the Marshalled List to leave out the words "in or towards repayment of the amount of the loan" at the end of subsection (1), and insert:
"and the appointment of directors to the boards of those companies."
The noble Lord said: Perhaps I can convince the noble Lord, Lord Mancroft, that the words which I propose to omit are not necessary. I have put down here one Amendment, but really it is two Amendments, and if the Committee will agree perhaps I may be allowed to move
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the first part as a separate Amendment and the second part as another Amendment. The first part of the Amendment reads:
"Page 2, line al, leave out ('in or towards repayment of the amount of the loan')."
This is what this clause slays:
"…the Corporation may with the approval of the Board of Trade enter into any financial arrangements with respect to that loan which, in the judgment of the Corporation, are calculated to lead to the eventual recovery without such harmful consequences as aforesaid of the whole or part of the amount of the loan;".
It must be their objective to recover the whole or part of the loan. Further down it says:
"any such arrangements may in particular provide for the waiving by the Corporation of payment of interest or for the acceptance by the Corporation of shares or debentures in any company in or towards repayment of the amount of the loan,"
I should have thought that the words in the fifteenth and sixteenth lines would have covered those final words in the twentieth line. That is that part of my argument on this Amendment. Should I now go on with the second part of the Amendment, or may I have the Committee's permission to deal with it separately?
LORD MANCROFT: As the noble Lord has said, these are really two Amendments, and I think it would be preferable to deal with the first part as one Amendment now, for the two do not quite march together. It would be tidier, I feel, to deal with this Amendment now if the noble Lord so pleases.
LORD LUCAS OF CHILWORTH: Then if I have the permission of the Lord Chairman and of the Committee, I now move the first part of my Amendment as a separate Amendment.
Amendment moved—
Page 2, line 20, leave out ("in or towards repayment of the amount of the loan").—(Lord Lucas of Chilworth.)
LORD MANCROFT: I see what is troubling the noble Lord. Really, in this case it is no more than a drafting problem which has arisen. I follow the noble Lord's objection to the words mentioned in his Amendment and his desire to have them left out, but it would not add much to the clause if we accepted the Amendment. The noble Lord has argued, as I understand, that

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these words are redundant. I hope that I can convince him that his objection is not very well founded. The words are necessary to indicate that any shares or debentures taken by the Corporation as a result of new arrangements made under this clause are taken in whole or part satisfaction of the loan, and the amount of the loan is reduced by the value of the securities. Without these words, there is nothing to indicate that shares or debentures taken in any new arrangement are not merely additional security and that the loan remains at its previous level.
Let me try, if I can, to give an example. Suppose the National Film Finance Corporation have lent, say,£100,000 to a company, and new arrangements are to be made in regard to that loan. Under this clause, the Corporation will be able to take shares to the value of £75,000 and pay for them by relieving the company of liabilities of £75,000. Their debt under the loan liability for the remaining£25,000 remains as a debt due to the Corporation. Under the principal Act, there was considerable doubt whether the Corporation were entitled to take shares in satisfaction of the whole or part of any of their loans, and it was thought desirable to clear up that matter in this Bill. That is the reason why the words, which I hope Lord Lucas of Chilworth now agrees are not really redundant at all, were included in the Bill.
LORD LUCAS OF CHILWORTH: I can see the point of the noble Lord's argument. I do not agree with him 100 per cent., but I think I do so about 85 per cent. As the balance is in the noble Lord's favour, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.8 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved to add at the end of subsection (1):
"and the appointment of directors to the boards of those companies."
The noble Lord said: I feel sure that Lord Mancroft is going to accept this Amendment—I do not think he can refuse, because he has told the Committee that the present powers of the National Film Finance Corporation under the existing Act are open to doubt. He does not know whether they have the
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power to enter into special arrangements if their existing arrangements are not wholly capable of getting the amount of their debt back again. Here the clause specifically states—I suppose to clear up any further misapprehension—that the Corporation may accept debentures. I do not know why that word is put in. The National Film Finance Corporation already have a debenture on the floating assets of the British Lion organisation. They may take shares. It may well be, as I suggested to the noble Lord. Lord Mancroft, in my Second Reading speech —to which, I hope, he is going to give far more favourable consideration than he has given to my Amendments —that the real way to clear up the position of British Lion, and to give the British Lion people a fair chance of contributing a major part to the future production of films, is for the National Film Finance Corporation to take equity; to take either a substantial block of shares or the whole of the share capital and/or a debenture. We should let them have that necessary elbow room which the waiving of the interest would give.
I told your Lordships that if you carefully examined the accounts of British Lion you would find that that company are, as it were, living on a knife edge of financial disaster. Their profits up to date are just about sufficient to pay interest on the Corporation's loan. They cannot make any headway. They have this noose round their necks. I suggest that they should have this freedom, which would do them far more good than any mumbo-jumbo in this, to me, uninterpretable clause. I say definitely that in any arrangement the Corporation make where they take some risk capital, they should have directors upon the board to see that the policy of the company is carried towards the end of the eventual recovery of the loan.
If the noble Lord will give me an assurance that it is not necessary to write this into the Bill, I will accept it, but I want him to give the House an undertaking that if at any time the National Film Finance Corporation become substantial shareholders in any film company they will appoint directors to the board so that the taxpayer may be properly represented. I cannot believe that this idea is at all offensive to the Government. I think it is a natural precaution. I do not say

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that the directors of the National Film Finance Corporation should go on the board of a company: that is not my point; but they should be able to appoint directors to the boards of companies, with the consent of the President of the Board of Trade, who, I should have thought, would play a substantial part in the choosing of such directors. I hope the noble Lord, Lord Mancroft, is not going to say that the Government are not going to do it is. If the noble Lord is going to put on that primrose-decorated bonnet about which I sometimes chide him, and say that he cannot go in and control British Lion, I would point out that this clause gives the National Film Finance Corporation the power to control British Lion by taking shares. It does not say how many: they can take the whole of the £3 million in shares, with the consent of the President of the Board of Trade. If they take any substantial amount of shares in a company, I consider it obligatory upon them to see that their interests are represented on the board like those of any other ordinary shareholder. I beg to move.
Amendment moved—
Page 2, line 20, at end insert ("and the appointment of directors to the hoards of these companies.")—(Lord Lucas of Chilworth.)
LORD MANCROFT: I am puzzled to find out how the noble Lord, Lord Lucas of Chilworth, has managed to drag the Primrose League into the Cinematograph Film Production (Special Loans) Bill. I have been puzzled this afternoon to know how the noble Lord has reached many of the odd conclusions that he has reached, from the excellent arguments and suggestions he has put forward. He asks me the categorical question (I want to make certain that I have got it right): will I give him an assurance that the Corporation will appoint directors in die circumstances his envisages? No: I cannot give him that assurance. The assurance I can give him is that the Bill gives power to the Corporation to appoint directors in the circumstances which the noble Lord, Lord Lucas of Chilworth, quite rightly envisages, in which it may be necessary, desirable or inevitable that they should appoint directors. Let me explain, if I can, why I differentiate between the two.
The intention is that the Corporation should have the rights which flow from
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the holding of any shares which they acquire in a company or any other rights which they acquire as part of any new financial arrangements. In negotiating these arrangements, the Corporation can always stipulate that they shall have representation on the board of the company, even though their stake in the company does not give them majority voting power. There is nothing to prevent the Corporation from obtaining, by negotiation or otherwise, representation on the boards of companies; but to put the proposed words in this clause would give the impression that the Corporation had some right to representation; and that, I think, would be undesirable. Therefore, I cannot give the noble Lord the categorical assurance for which he has asked. I think the real assurance he wants is that the Corporation should have power to appoint directors in the sensible circumstances he has put forward, and I think he will see that such power is already given by the Bill. I think that is as far as we want to go, and it gives the noble Lord all the safeguards he understandably wants.
LORD SILKIN: I think I understand the noble Lord correctly. He is dealing with a case where the equity interest of the Corporation will be a majority one. In such a case, I agree that unless there is something in the Articles of Association preventing it, the Corporation would have control and could appoint directors, and that in such a case it might not be necessary to stipulate that they can do so as part of the arrangements, subject always to the point that there may be there already life directors who cannot be removed. I imagine that in such a case it would be possible, without any arrangement at all, or without putting words into the Bill, for the Corporation to appoint directors.
LORD MANCROFT: That is so.
LORD SILKEN: But they may not have a majority interest. They may have a minority interest, and in such a case would not be in a position to force matters. It is even doubtful whether, under the terms of this subsection, they would have power to appoint directors.
LORD MANCROFT: The whole point is that no new arrangement is necessary. Assuming that the Corporation wanted to have directors on the company, which

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their voting powers did not give them, they could make the appointment of X or Y as directors an essential term of a new agreement.
LORD SILKIN: If that is so, what is the objection to saying that they may, as part of the agreement, do a variety of things, including appoint directors to the board?
LORD MANCROFT: Surely that goes without saying.
LORD SILKIN: I do not think it does where there is a minority interest. One could contend that it has exactly the reverse effect, because of the doctrine of eiusdem generic, with which the noble Lord will be familiar. If we specify particular things which the Corporation can do as part of the arrangements, but omit the appointment of directors to the board, then it could be argued that this subsection does not provide for the appointment of directors in such a case—and I am sure that Lord Mancroft is not seeking to provide possibilities for argument in the courts. The noble Lord shakes his head. I can shake my head also, but that does not get us anywhere. We both belong to the same profession and we disagree. But what is the objection to making the matter quite clear?
LORD MANCROFT: The objection is this. The noble Lord is pleading the eiusdem generic rule, but if he looks at the clause he will see that the arrangements stated are part of the financial arrangements, and I do not think we can count the appointment of directors to the board of a company as a financial arrangement. It is a different sort of arrangement. We can specify any sort of arrangement we like—we can nominate the office cat, if we like—but that will not be a financial arrangement which must be mentioned in this clause. That is why I say that this particular insertion, although it meets just what we all have in mind, is unnecessary. It is already implied, and, in any case, it is a different class of arrangement entirely from the financial ones which are already mentioned. If the noble Lord looks again at the clause, he will see that in all the circumstances he envisages it is quite possible, under the clause as now drafted, for the directors to be appointed in just the manner he wants.
LORD SILKIN: With great respect, I cannot agree. The noble Lord is trying to have it both ways. He is saying, on the one hand, that as part of the financial arrangements the Corporation can provide that directors should be on the board, and that therefore the Amendment is unnecessary. He then goes on to say that this is not part of a financial arrangement at all, and, therefore, it is unnecessary to put in the words. He cannot have it both ways. If he wants to say that the right to appoint directors to a board is not appropriate as part of a financial arrangement, then it may be that other words than those of the Amendment will be necessary: if one wants to be meticulous, it may be that the words of the Amendment are not appropriate. But some words ought to go in which will give the Corporation the legal right to have directors on the board.
LORD MANCROFT: They already have them.
LORD SILKIN: No. They can enforce it, when they have a majority holding, in certain circumstances. I have mentioned one particular case where it might not be possible to enforce it. Where they have a minority interest, it is not at all clear that they can make it one of the conditions under which they will enter into such an arrangement. The noble Lord and I can stand here arguing until Domesday. But is this not a point that is worth looking into again? It is not that one is seeking to score a point; we are all trying to make the Bill a good Bill, and it would be a great pity if it were found hereafter that, in the circumstances I am visualising, the Corporation wanted to put somebody on the Board and then found that the Bill, when it became an Act, did not enable them to do so. In spite of the noble Lord's certainty on the matter, I would ask that, here again, he will seek further advice, in the light of the discussion we have had, to see whether it is not possible even to make assurance doubly sure by putting in some appropriate words.
EARL WINTERTON: On a previous Amendment the noble Lord, Lord Lucas of Chilworth, accused me, I thought without any justification, of having reduced the debate to the level of the Party political gutter, when I merely gave a factual and historical account of

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how this matter had arisen. I have seldom in a long career been more mild than I was on that occasion. I hope that I shall not be the target of the noble Lord's not very formidable invective if I say a word or two on what he and the noble Lord, Lord Silkin, have just said. I do not dissent very much from some of what they have said, although I entirely support the Government on this particular Amendment. However, I think it would be a great pity if it went out from your Lordships' House, or to those of your Lordships who are not acquainted with this particular question, or if it were read in the Press or by those who study Hansard, that we were concerned in this matter with one particular public company. The noble Lord, Lord Lucas of Chilworth, seemed to refer to the difficulty into which the Film Finance Corporation and British Lion have got over the money lent to British Lion. It might be thought from that that there was no other company making films in this country, and that British Lion were the only company who needed sustenance in order that British films might be produced. Those of your Lordships who are familiar with the matter know that that is absolute nonsense, and that other companies are producing films without having a penny from this particular body—although it is only fair to say that they are receiving help from the Eady Fund.
I feel that it is necessary that that should be stated, and I hope your Lordships will not feel I am being unduly frank when I say that this Bill might be described as coming into being to salvage a situation that has arisen owing to the immense financial connection of the Film Finance Corporation and British Lion. Those of us who are connected with the interests of the cinematograph industry, and, I think, all those on this side of the House, would feel strongly against any proposal in the future that this Corporation, which, after all, is financed by the Treasury and paid for by the taxpayers, should be concerned solely with the affairs of British Lion; and if there were to be directors placed upon the board of that company by the Government, it might look as if that was to be the one means of producing films in this country to be sustained by such money in the future. I should like to support
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the noble Lord on the Government Front Bench and say once again to noble Lords opposite—and I hope that I shall not be attacked by them for it—that this difficulty arose from what was done by the late Government. I believe that this Bill is getting out of that difficulty very well, and I do not chink any of the Amendments on the Marshalled List are necessary.
4.25 p.m.
LORD MANCROFT: I should like to say a word or two before the noble Lord, Lord Lucas of Chilworth, takes what line he sees fit as to this Amendment. The noble Lord, Lord Silkin, has made a conciliatory offer to me, and I should be discourteous if I did not answer it. Of course I will look into this matter again in the light of what noble Lords have said. Nothing really separates us at the moment other than a drafting point, and I should be loth indeed to take a stand on a drafting point without seeking advice to see whether it is possible that the noble Lord, Lord Silkin, is right and I am wrong. I do not think I am wrong, but: nevertheless I will accede to his request to look at it again, and if I find I am wrong I will take the necessary steps.
LORD LUCAS OF CHILWORTH: What the noble Lord has just said will shorten what I have to say. I think I can permit myself this observation. My noble friend Lord Skin is quite right in sayng that the noble Lord, Lord Mancroft, wants it both ways. At one time in his argument on other clauses he said that it was necessary to have this, that and the other in the Bill to clear up any misapprehension, But when he comes to a serious misapprehension, as to whether or not the exclusion of this will be taken as exclusion of the Bill, he says: "No." When he says that they can make any financial arrangements, why does the Bill specifically mention three things—namely, shares, debentures and the waiving of interest? They are all in the omnibus of financial arrangements. Why specifically mention them? I cannot see that there is anything in the drafting argument that the appointment of directors is not a financial arrangement. You do not appoint directors to a board to sing them a song; you appoint them to the board to watch the financial interests—
LORD MANCROFT: To protect the taxpayers' money.
LORD LUCAS OF CHILWORTH: To safeguard the taxpayers' money. This Bill provides for the giving away of the taxpayers' money in the term that it may waive the interest. If the noble Lord wants to get over his drafting point, that the appointment of directors is not a financial arrangement, then he has only to put a semi-colon in the line, and that ends his difficulty. I will leave for another occasion any further observations I have upon Government policy and the appointment as custodians for the taxpayers' interest of directors in a company of which the taxpayers hold the shares. As
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the noble Lord is going to look at this matter again, I will withdraw the Amendment, at the same time reserving the right to put it down again on Third Reading should the discussion between us prove to be abortive. With those words, I beg leave to withdraw the Amendment.
Amendment, by leave withdrawn.
Clause 2 agreed to.
Remaining clause agreed to.
House resumed.
Bill reported without amendment.
House adjourned at half past four o'clock.