§ 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 603 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 MANCROFTBefore 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 604 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 SILKENIn 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 MANCROFTThat is possible, yes.
LORD SILKENI 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 MANCROFTI 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 CHILWORTHMay 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 606 know that they need not accept any Amendment except as a gesture of good will.
§ LORD MANCROFTI 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 CHILWORTHI 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 607 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 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.
610§ 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 MANCROFTI 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 611 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 CHILWORTHI 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 MANCROFTOh, no; I said nothing of the sort.
§ LORD LUCAS OF CHILWORTHI thought I misunderstood the noble Lord.
§ LORD MANCROFTOf 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 612 opposite of what he has set out to achieve. I hope that the noble Lord will therefore see his way to think again.
§ EARL WINTERTONI 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 SILKINPerhaps 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, 613 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 614 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 MANCROFTI 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 SILKINSpeaking for myself, the noble Lord certainly has not shaken me.
§ LORD MANCROFTI 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 WINTERTONI 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. 616 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 CHILWORTEWhether 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- 617 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 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 MANCROFTAs 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 CHILWORTHThen 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 MANCROFTI 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 619 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 CHILWORTHI 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 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 620 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 621 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 MANCROFTI 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 622 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 SILKINI 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 MANCROFTThat is so.
LORD SILKENBut 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 MANCROFTThe whole point is that no new arrangement is necessary. Assuming that the Corporation wanted to have directors on the company, which 623 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 SILKINIf 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 MANCROFTSurely that goes without saying.
§ LORD SILKINI 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 MANCROFTThe 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 SILKINWith 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 MANCROFTThey already have them.
§ LORD SILKINNo. 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 WINTERTONOn 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 625 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 626 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 MANCROFTI 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 CHILWORTHWhat 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 MANCROFTTo protect the taxpayers' money.
§ LORD LUCAS OF CHILWORTHTo 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 628 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.