Lords Sitting of 25 January 1955

Preamble
Reassembling after the Christmas Recess, the House sat at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

  KENT WATER BILL
  2.37 p.m.
  LORD CORNWALLIS: My Lords, I have been asked by the Kent County Council to move the Second Reading of this Bill in your Lordships' House. As I understand that there is likely to be a short debate on it, I feel that I must go through a little of the history of the Bill and of what it purports to do. It seeks to secure a substantial reorganisation of the water supply areas in that part of Kent which is outside the Metropolitan Water Board's area. It affects one million of the residents in Kent, and it proposes amalgamations which will reduce the number of water undertakings from thirty-five to fourteen. As your Lordships know, the Bill has been passed in another place. The hearing before the Select Committee of that House occupied no less than twenty-three days, the longest period for a private Bill in the last twenty years.
  I was a member of the Kent County Council for many years, and was for four years Vice-Chairman and Chairman of that body. I am no longer a member and have no interest to declare in this matter; but I am still somewhat mixed up in the life of the county, and therefore I know the feeling of concern amongst many responsible people about the future general water supply situation. It cannot be said in this case that the County Council has acted in any spirit of haste; on the contrary, I think it could more properly be said that it ought to have acted sooner. But, as always in matters that affect a variety of conflicting interests, it is proper to deal with the question without undue haste, and that is exactly what the County Council has done.
  This Bill is the outcome of prolonged and exhaustive examination of what is the estimated present and future supply of water in Kent. I think that, without
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  exception, all those who have investigated this particular matter in an objective and constructive manner and on a countywide basis have reached the same conclusion—namely, that unless there is reorganisation of the water supplies in the county there may well be an acute shortage in several districts in the future. That conclusion—and it is a serious conclusion—was reached after a most detailed consideration of the facts contained in such Reports as the Hydro-Geological Survey of Kent which was made in 1948; it was supported by a report to the County Council by independent consulting engineers, and, quite importantly, by the views and proposals of the Advisory Committee on Water Supplies for Kent. The views of that Advisory Committee are of considerable significance, because it is a voluntary body set up in 1935, and when it made these proposals the Committee was representative of all but three of the thirty-five water authorities, company and local authorities, serving the area covered by the Bill—that is, as I have said before, in the county outside the Metropolitan Water Board's area.
  This Bill is to a considerable extent based on the proposals which the Advisory Committee made to the County Council. The County Council has consulted all the water interests concerned at every stage during the five years which have elapsed since it took the first step towards preparing a Bill. There have been numerous conferences, and the water authorities were invited to consult among themselves and to submit alternative proposals. No alternative proposals were made until after the County Council finally decided to promote the Bill. Most of the opponents of the Bill have over and over again asserted to the County Council that nothing was required to be done by way of reorganisation. Yet when in 1953 the County Council took the final decision to go forward with the Bill, several of the authorities were imbued with the need to do two things: one was to put their houses in order, or at least show willingness to make good deficiencies which, up to that point, they had professed did not exist; and the other was to band together to defeat the County Council.
  I would quote just one case. In one of the areas covered by the Bill there are

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  four water undertakers serving a population of 250,000. In that area are large Government installations and several industrial undertakings of considerable national importance. These four water undertakers asserted that no reorganisation by way of amalgamation was necessary; that other means were available, and that a proper supply could be maintained by those other means. In October, 1953, the largest of those four undertakings suddenly decided that something should be done. All that had happened in the meantime was that the County Council had, in the previous July, passed a statutory resolution to deposit the Bill in November.
  Briefly, the County Council's objective is, first of all, to safeguard the future of the limited water supplies for the people of Kent in face of what is, and is likely to be, an increasing demand, not only on the part of an increasing population but also of industry, including the agricultural industry. I would point out that in Kent the agricultural use of water is not confined to the usual farm uses; and the industry makes great demands on the water supplies for the intensive spraying of fruit trees, hop washing and other highly specialised products in the county. The second object is to make sure that the limited sources that are available are developed to the best public advantage, and to secure for a considerable period a cheap and abundant supply of water equitably distributed to all consumers.
  To achieve those objects, it will be necessary, first, to secure an administrative reorganisation so that those water undertakers will have the financial strength and technical resources to undertake the developments that are necessary and be able to employ the necessary highly-skilled technical engineering staff. The point I wish to make quite cleat to your Lordships is that the County Council does not seek to obtain any powers whatever for itself. It is content that the powers to obtain, develop and distribute water shall be in the hands of the water undertakers provided for in the Bill, and that such bodies shall be answerable direct to the Minister.
  It is, I feel, to the point to refer to ministerial statements on the subject of this Kent Water Bill and also on the reorganisation of water supplies gener-
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  ally, because they show that the Council is trying to follow a policy that is not just its own. This is what has been said in one case.
  "The Minister, having considered the proposals made in the Bill, finds himself in substantial agreement with them. As will be seen from comments made later in this Report, he dissents from some particular provisions. As a whole, however, the Bill, by proposing to reduce the total number of undertakings and by strengthening the resources of most of those which will remain, can be expected in the long run to lead to greater overall efficiency in the organisation of water supplies in the part of the county affected and to the provision of improved supplies to consumers."
  That was the Minister's report to Parliament on the Bill. Also, in a statement to the British Waterworks Association, made by the Parliamentary Secretary on behalf of the Minister, he used these words:
  " The Minister wishes to say an especial word of encouragement and thanks to those who have worked and are working for the formation of joint water boards. He would like to see a speeding up in the pace of co- ordination in the water industry. He believes that, before can pride ourselves on having a fully efficient water industry, there must be a substantial re-grouping so as to form undertakings which are large enough to secure the highly-skilled advice and supervision which are now necessary to ensure ample and reliable supplies of water."
  That was a statement of policy made to the conference of the British Waterworks Association at Bournemouth on June 30 last year, twelve months after the Kent County Council had decided to promote its Bill.
  Replying to a Motion with respect to national water supplies on the adjournment of Parliament on December 22, 1954, the Parliamentary Secretary of the Ministry of Housing and Local Government said that the introduction of the Kent Water Bill was the most ambitious move in the category of reorganisations yet attempted, adding that it was well known that the Kent Water Bill did not reach its present stage without a tremendous amount of preparatory work and negotiations. After all that tremendous amount of preparatory work, negotiations and consultations, the Kent County Council asks no more than that its Bill should be sent to a Select Committee of this House where it can produce evidence by witnesses in support of its proposals, and where those who have petitioned against the Bill—and there are

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  seventeen Petitioners, but not all of them opposed to the principle of the Bill—can also produce evidence, it is hoped by witnesses, who up to the present have been noticeable by their absence, and where the whole matter can be gone into in detail and quite impartially. The Kent County Council hopes that the two opposing Bills which have been promoted since the Kent Bill was heard in another place will also be sent to the same Select Committee. It will welcome the prospect of hearing witnesses who were not put forward before. Without encroaching on another Motion which is to come before the House, the County Council hopes that all three Bills will be given a Second Reading and sent to the Select Committee without giving any instructions or orders to that Committee as to how it shall carry out its important task.
  If I may be personal for one minute, may I say that I should not have consented to move the Second Reading of this Bill in your Lordships' House if I had not consulted many of those who have the interests of the whole county at heart, and those leaders in the county who have given years of voluntary service impartially and free from Party politics. They have convinced me that this Bill is a wise measure, not just for five years but for twenty, thirty or more years, and will be of benefit to the county and to those whose lives and work are carried on within its boundaries. I beg to move.
  Moved, That the Bill be now read 2a.—(Lord Cornwallis.)
  2.51 p.m.
  LORD BALFOUR OF INCHRYE: My Lords, it will be in the recollection of your Lordships that some weeks ago there was some mention in your Lordships' House of the Kent Water Bill. It will also be within your recollection that the question we discussed on those two occasions was whether there should be a Joint Select Committee of both Houses or two separate Committees. I feel that the very powerful, though not entirely convincing, speech of the noble Lord who has moved the Second Reading is alone an ample justification for the course which your Lordships took on those two occasions of insisting on the Bill going before a Committee of this House, because it is a most controversial Bill. If I had to make any criticism of the speech of the noble Lord
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  who moved the Second Reading, it would be that it was made on an assumption that all the wisdom lay with the Kent County Council and that all the foolishness lay with those who still oppose by Petition. As there are no fewer than seventeen Petitioners, I cannot believe that your Lordships will accept that all those petitioners are unwise in their actions or unable to be convinced as to what is, or what is not, right for the county of Kent.
  My regret is that there has to be opposition by Petition to provisions in this Bill which are what I would term Second Reading provisions: the elimination of local water undertakings by means of amalgamation. The noble Lord who moved the Second Reading was careful to use the word "amalgamation" and to omit the supplementary adjective "compulsory" which really goes to the heart of the resistance to this Bill. I regret, and I believe noble Lords on all sides of the House will share with me the regret, the passing of a local service well performed by local authorities. On all sides of the House we want to support so far as we can the authority and the functions of local government. I feel that this Bill, which is going to be sent to a Committee and examined carefully by members of your Lordships' House, takes away unnecessarily from local undertakings the functions and duties which they have performed so admirably.
  The noble Lord who moved the Second Reading told us that he was an ex-Chairman of the County Council and that he is no longer on the County Council. I too can claim some sort of "ex" position as my justification in addressing your Lordships for a few moments; I am an ex-M.P. for a particular part of East Kent, in those days the Isle of Thanet Division, including the borough of Sandwich. It is those authorities who have appealed to me to put before your Lordships this afternoon the peculiar position of Thanet and Sandwich, with their fluctuating populations in summer and winter. The local authorities have to satisfy the holiday requirements in summer, while in winter there is a big drop in population, particularly in Sandwich. For 600 years the little, historic, ancient borough of Sandwich has supplied satisfactorily to its inhabitants water at an economic cost, and with every

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  satisfaction as regards health and the quality of the water supplied.
  The question which occurs to me is whether the ministerial responsibility under Section 1 of the Water Act, 1945, which placed upon the Minister the duty to promote a national policy, could not have been achieved in nearly every case, including the case of Sandwich and the Thanet towns, by voluntary amalgamations assisted by a co-ordinating body to advise the Minister. The noble Lord, Lord Teynham, is going to speak on the mid-Kent question, of which he has far greater knowledge than I have, but I understand that 94 per cent. of mid-Kent is company administered. Surely upon that foundation one could build voluntarily in mid-Kent, as one could build voluntarily particularly in the Royal Borough of Sandwich, rather than have regional boards with compulsory amalgamations.
  If I am told that the Members of Parliament for Kent did not object when the Second Reading was taken in another place, I would paint out that it is not for me to question their actions. But let me remind your Lordships of a description given to this Bill by the present Member of Parliament for Thanet, when he said [OFFICIAL REPORT, Commons, Vol. 535 (No. 17). Col. 2840]:
  "…an unnecessary Bill, causing unnecessary friction, has been put forward to create an unnecessary board in order to add unnecessary expense to the ratepayers."
  That in itself—I am not saying whether it is entirely justified or not—is an answer as to whether or not the Kent Members of Parliament are unanimous in their support of this measure. If I am told that the Bill is considered necessary by the Minister, I feel that the procedure followed by the Government Department concerned scarcely fulfills the undertaking given by the Parliamentary Secretary to the Ministry of Health when he said that full regard must be paid to local feelings and to the long traditions of many of the water undertakings. There are seventeen petitions against this Bill.
  I conclude by saying that I—and I believe that many other noble Lords feel the same—view with sadness the calling into question of 600 years of tradition. I do not oppose the Second Reading, because my comfort is that this is one of the issues which will be impartially and fully considered by your Lordships' Com-
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  mittee when they come to examine the Bill. It is for that reason that, though I dislike the Bill's provisions, I would not in any way oppose the Second Reading; but I am glad that the course decided upon some months ago is going to be followed.
  2.59 p.m.
  LORD KILLEARN: My Lords, I rise to support the noble Lord who moved the Second Reading of this Bill. I should imagine that it could hardly be presented to your Lordships under more weighty sponsorship. Not only is the noble Lord, Lord Cornwallis, the Lord Lieutenant of the County at present, but, as he has told us in his speech, he has been Vice-Chairman and Chairman of the Kent County Council. I understand that he has yet another qualification (if that is the right word), in that he has also been Captain of the Kent County Cricket Club—a combination of offices which cannot be common, if it is not indeed unique. In any case, I think my point is a good one, namely, that the Bill comes before your Lordships' House with the weightiest sponsorship. The second point I wish to bring out which has indeed already been made by the noble Lord himself, is that nobody can accuse the County Council of bringing the Bill forward without adequate preparation. I understand it goes back to 1935, when the County Council set up an Advisory Committee which went into the matter very thoroughly and made recommendations, backed by the highest technical experts. I am advised that the provisions of this present Bill are based largely on the recommendations of that Advisory Committee and of those experts. As the noble Lord, Lord Cornwallis, has already told your Lordships, this Bill also has the blessing of the late Minister of Housing, Mr. Macmillan.
  I do not want to be long, but there are one or two facts and figures which may have some interest. In regard to statistics, the population in the area affected by the Bill is just over one million. The area is at present served by thirteen companies and twenty-two local authorities. The companies serve about 65 per cent. of the people—which the Ministry state is possibly three times as great as the proportion for the remainder of England and Wales—and the local authorities serve about 35 per cent. Under the Bill there will be six companies, serving about half the

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  population; five joint boards, composed of elected representatives appointed by sixteen local authorities; and five local authorities who, between them, will serve the remainder of the population. That is the substantial reduction in the number of water undertakings from thirty-five to fourteen.
  The area covered by the Bill is 1,425 square miles, and as I have already said, the population is just over one million. Many places are thickly populated; others are sparsely populated. There is a large variety of industries—paper-makers, two naval dockyards, a large oil refinery, breweries and agriculture. There are well-known and popular seaside resorts. The county is bounded on three sides by the sea and must, therefore, look entirely to its own resources for water. Experts have reported that the number of new sources of water in the area are limited and not evenly distributed. They also report that, if properly and fully developed, the supply will be adequate for the next twenty or thirty years. In 1935, the daily consumption of water was 27 gallons per head; in 1947, 12 years later, it was 40 gallons per head—a rise of 50 per cent. The present average daily consumption of water is about 42 million gallons. The reliable yield of existing sources has now developed to 52 million gallons per day. If those sources were fully developed the yield would be 62 million gallons a day. The estimated future demand is 71 million gallons a day. Surely this shows the need for reorganisation now, the better to be able to organise the sources of supply for the future. Even the Government's successful housing programme adds to the obligations of the water undertakers by increasing demand for water. That is a factor which we should not forget—that an increasing building programme naturally leads to further demands for water.
  I have intervened in this matter only because I happen to reside in Kent and therefore have an indirect interest. I hope that the speech of the noble Lord, Lord Cornwallis, will have convinced your Lordships of the desirability of giving the Bill a Second Reading. In regard to the last passage of his speech, in which he added a rider, if I may so describe it, that he hoped that, if the Bill does secure a Second Reading, all these matters will be considered by one Select Committee,
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  I hope that that Select Committee will not be, if I may say so without offence, hampered by any "instruction," one way or the other. I have some small experience of serving on Select Committees of your Lordships' House—I have served on one or two—and it has always seemed to me that there is no need for such Committees to be given any instruction to deal with a Bill in the fullest and most careful manner which they naturally do. I have no doubt that that is what they will do in regard to this matter. I have much pleasure in supporting the Motion of the noble Lord, Lord Cornwallis.
  On Question, Bill read 2a.
  3.5 p.m.
  LORD TEYNHAM LORD TEYNHAM rose to move that it be an instruction to the Committee to whom the Bill may be referred not to pass Part VII and Clause 68 (b) in Part VIII of the Bill without special attention. The noble Lord said: My Lords, in moving the Motion that appears in my name, I would draw your Lordships' attention to the proposal in this Bill to create in the Medway area a water board, rather than company administration. I think that I should also take this opportunity of declaring that I am personally interested in the Medway area, as I own property there. I would point out that if these clauses were left out of the Bill it would in no way prevent its passage, nor would it affect the object of the promoters, which is to effect amalgamation of a number of small water units into larger water undertakings. I have listened carefully to the noble Lord, Lord Cornwallis, and I cannot help feeling that he has not yet produced any valid reason for the institution of a water board, rather than a company administration, in the Medway area. It is this point with which I wish to deal, and to which I wish to draw your Lordships' attention. Certainly I have no objection at all to the Bill as a whole.
  If your Lordships will examine the evidence given before the Select Committee in another place, I think it will be found to be perfectly clear that the promoters of the Bill did not object to Part VII of the Bill being struck out, provided that an undertaking was given that a company amalgamation would be promoted in the Medway area. At page 37 of the Minutes of Evidence in another

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  place, learned counsel for the promoters of the Bill used these words:
  "If all the Petitioners agree that there should be amalgamation and are content that it should be under a company administration, without doubt as a result of an undertaking to your Committee, the County Council (I repeat, the Kent County Council) would have no objection on that understanding to this part of the Bill being struck out by your Committee. We do not want to take part ourselves in the administration of the resulting amalgamated area."
  We have there a perfectly clear undertaking given by the promoters of the Bill. The undertaking given by the Petitioners against the Bill has already been fully complied with in the promotion of a Bill to amalgamate various water units around the principal company, the Chatham and District Water Company. I cannot help feeling that the proposal to form a water board will very likely lead to increased charges for consumers, whereas the Chatham Bill, which is also before your Lordships' House, proposes not only to take over existing staffs but to maintain the existing charges for water for a definite period of five years.
  I think it is only right that I should draw your Lordships' attention to certain other matters in this Bill. There is the report on the Bill by the late Minister of Housing and Local Government, which has already been referred to this afternoon. This report suggests that the usual procedure for amalgamation of water companies has, in fact, been departed from. In paragraph 10 of the report these words are used:
  "The method adopted by the promoters, except in the Medway area, seems to have been to build the proposed new units round the principal undertaking in each area."
  What is the principal undertaking in the Medway area? It is the Chatham and District Water Company, which alone supplies 60 per cent. of the total population of the Medway area and is 94 per cent. company administered. Yet this Bill proposes to set up an entirely new form of administration by means of a Water Board.
  I understand that the history of this Kent Water Bill which is now before your Lordships is in some ways rather peculiar. In the first place, I believe, it was originally drafted in 1951, but did not then obtain the necessary majority in the Kent County Council to enable it to be
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  promoted in Parliament. It is interesting to note that the original draft, before it came to Parliament, maintained the existing company administration in the Medway area. In 1953, however, the redraft of the Bill which was eventually promoted in Parliament, and which is now before your Lordships, substituted a Water Board administration for company administration. The reason for the proposed change of administration in the Medway area has never been explained, but I know that between the original drafting of the Bill in 1951 and the introduction of the present Bill, the Kent County Council, unknown to the water companies in the Medway area, consulted all the local authorities and obtained their support for taking over the water companies. As soon as the Kent County Council Bill was published, the Chatham company, the largest undertaking in the Medway area, immediately, and I submit quite rightly, took the initiative in bringing about agreements to amalgamate the water companies and to obtain the support of the local authorities. All then changed their views and supported the continued existence of the companies as amalgamated into one company.
  Only recently the then Parliamentary Secretary to the Ministry of Housing and Local Government spoke to the Waterworks Association, and he made a point which has been mentioned by the noble Lord, Lord Balfour of Inchrye, and which I will repeat. The Minister said:
  "You can be sure that in carrying out this work we shall pay full regard to local feeling and to the long tradition of the water undertakings."
  I feel sure that the Select Committee to whom this Bill may be referred will take careful note of these matters, and will bear in mind particularly the feelings of local people and the long traditions of local water undertakings. My Lords, I beg to move the Motion which appears in my name.
  Moved, That it be an instruction to the Committee to whom the Bill may be referred not to pass Part VII and Clause 68 (b) in Part VIII of the Bill without special attention.—(Lord Teynham.)
  3.14 p.m.
  THE CHAIRMAN OF COMMITTEES (THE EARL OF DROGHEDA): My Lords, you may wish me to say a few words as to the practice of your Lordships' House in dealing with instructions to Select

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  Committees appointed to consider Private Bills. There are many precedents for Motions such as that moved by my noble friend, but they have all been in relation to unopposed clauses in Bills. There is, however, every indication that the particular clauses covered by my noble friend's Motion, and indeed all the other clauses of this Kent Water Bill, will be contested in this House as they were in another place. So far as I can ascertain, your Lordships have never given an instruction to a Select Committee in regard to an opposed clause of a Bill. The reason must be that your Lordships' House might find great difficulty in giving instructions to a Committee to do that which they will inevitably have to do, because their attention will be called by counsel engaged before the Committee to every matter covered by these clauses; therefore it seems that an instruction could only give the impression that these particular clauses were either more important than the other clauses of the Bill or more objectionable. It may be that they are; I do not know; but it appears very difficult for the House to come to a decision on that question by a discussion here, when all the matters will be discussed before the Select Committee. I hope, therefore, that my noble friend will not press his Motion.
  3.16 p.m.
  EARL JOWITT: My Lords, I entirely agree with the observations of the noble Earl the Chairman of Committees. In my sojourning in and out of Parliament, I at one time developed—and in this respect I am rather unique in your Lordships' House—a considerable practice before Committees of this House. This House has a right to be proud of the work which its Committees have done, and a right to be very proud of the respect which is felt for them. I have never yet sat as a member of a Committee, but I can say that our Committees manage, notwithstanding political differences, to hear a case fairly and judicially. I have heard all the observations that have been made to-day on both sides, and this Motion seems to be rather like whispering in the ear of a judge before he hears a case. We have agreed that we are to send the Bill to a Select Committee. Why on earth should we discuss it ourselves? Surely the right procedure is to send it to the Select Committee, let them hear and decide upon
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  it, as they always do in our House, and then let the matter come back to us. If the Bill passes Committee, it comes back to us again; and then, on Third Reading, in the full knowledge of everything which will be in the Report of the Committee, we can take exactly what line we may think proper.
  I do not know what line I shall take—I am neither for nor against this Bill—but I most devoutly hope (and I feel I am speaking for many noble Lords in saying this) that we shall not, on these occasions, resort to the practice of making ex parte statements, with necessarily and inevitably imperfect knowledge, in order that we may in some way or other influence the Committee in the conclusion to which they are to come. I consider the Motion of the noble Lord, Lord Teynham, most deplorable. In one sense it is almost insulting to the Committee, in that it instructs the Committee to whom the Bill may be referred not to pass Part VII and Clause 68 (b) of Part VIII without special attention. Of course they will not pass it without special attention. There were twenty-three days spent in Committee in another place and there was an array of the most distinguished counsel at the Parliamentary Bar. The Committee are bound to give it special attention. The only effect, and I suppose intention, of such a Motion is to suggest that Parliament is giving a hint to the Committee as to what it should do. I hope this House, with its very imperfect knowledge of the matter and knowing really nothing one way or another about it, will give no hint to the Committee as to what should be done.
  I am glad to have my recollection confirmed by the noble Earl the Chairman of Committees. Resolutions of this sort have been passed in relation to unopposed Bills, because if one has an unopposed Bill there is a danger of some big national interest being passed over sub silentio without consideration. On such occasions the House gives an instruction to the Committee. I have known an instruction given to a Committee in regard to an opposed Bill where the subject matter was some great national interest and where the two parties, although they were fighting on some small party points, might have disregarded that interest altogether. Where one is dealing with some historic case it is also right that the national point should

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  be brought before the Committee, since it might not be brought before the Committee by either of the contestants. But I maintain that this sort of Motion in a contested Bill is the worst procedure one can imagine. I hope that your Lordships will never adopt it; I certainly hope that you will not adopt it in this case. I do not argue for this Bill; I do not argue against the Bill; I know nothing about the Bill. Let us send it to a Committee whom we have appointed and in whom we have trust; let them elucidate and bring out the facts, and then, if the Bill passes the Committee, at a later stage let us take what course we like. But let us not have this sort of suggestion made in the hope of influencing the Committee before they have got down to dealing with the Bill.
  3.20 p.m.
  THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): My Lords, as we have just been told by the noble and learned Earl and other speakers, this Bill is going to a Select Committee. Certainly the last thing I want to do is to prejudice what will happen when it reaches that Committee. But I feel that, as the Leader of your Lordships' House, I must in a very few sentences—and they will be only two or three—give a little guidance from these Benches. In justice to the noble Lord, Lord Teynham, who has had rather severe treatment from the noble and learned Earl who has just spoken, I think we ought to recognise—at least I understand this to be the position—that it never was the noble Lord's intention either to destroy this Bill or indeed to prejudice further discussions upon it by the Committee. His object was to secure that a particular aspect which he believed to be important—and which is to be incorporated, as I understand, in some later measure which is to come before the Committee—should be in the minds of the Select Committee in discussing this Bill. I really do not think that that was an improper thing for the noble Lord to do. It seems to me we are all members of this House and it is legitimate for any of us to put before the House a view which he believes to be soundly based. I should have thought that the noble Lord was entirely within his rights in tabling this Motion.
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  On the other hand, I entirely agree with the noble and learned Earl in thinking that it would be extremely unfortunate if he pressed it to a Division, because, however far it might be from his intention, we who were asked to express some view upon it might give the impression—and it would be an unfortunate one—that this House, without adequate knowledge (and we cannot have adequate knowledge of these intricate questions), was trying to influence a Bill which is going to a Select Committee. I entirely agree with the noble Earl the Lord Chairman of Committees that that would be most undesirable, for, as the noble and learned Earl, Lord Jowitt, said, the whole essence of the work of a Select Committee is that it should be fair and judicial; and it is remarkable how that tradition has been maintained throughout the years.
  Actually, I think the noble Lord, Lord Teynham, has achieved his object—the object which I understood he had in view—and I have no doubt that the Committee will take account of all that has been said here, just as they will take account of all other aspects which will come before them in the consideration of the Bill. Now he has achieved that, I feel certain that the noble Lord will be ready to withdraw his Motion. I am sure, with the noble and learned Earl, that that would be a counsel of wisdom and in accordance with all the traditions of this House. I do not take quite such a black view of what the noble Lord, Lord Teynham, has done as the noble and learned Earl, Lord Jowitt, appears to take. I think Lord Teynham has done what he intended should be done. No one in the world, I am sure, and he less than anyone, would wish in any way to influence or to give instructions to anyone in a matter such as this.
  EARL JOWITT: May I be allowed to say that I do not suggest that Lord Teynham did anything improper or anything except what he thought he should have done. I suggest that he did something which is unwise and which would set a precedent which should not be followed.
  LORD TEYNHAM: In spite of what the noble and learned Earl has just said, he did in fact say that there were precedents for such a Motion as this on an opposed Private Bill dealing with a very important matter. There has been a precedent for this form of Motion. I

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  consider that my point is a very important one too but in view of what has been said by the Lord Chairman of Committees and by my noble Leader, I beg leave to withdraw my Motion.
  Motion, by leave, withdrawn. Bill committed: the Committee to be proposed by the Committee of Selection.

  CHATHAM AND DISTRICT WATER BILL [H.L.]
  Read 2a, and referred to the Examiners.
  SEVENOAKS AND TONBRIDGE WATER BILL [H.L.]
  Read 2a, and referred to the Examiners.
  CHINESE ENGINEERING AND MINING COMPANY BILL [H.L.]
  Read 2a, and referred to the Examiners.
  CHATHAM AND DISTRICT TRACTION BILL [H.L.]
  Read 2a, and referred to the Examiners.

  MONO-SODIUM GLUTAMATE IN FOOD
  3.27 p.m.
  LORD DOUGLAS OF BARLOCH: 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 for what purposes mono-sodium glutamate is added to foodstuffs; to what foodstuffs it is added; and what research has been conducted relating to the effects on health of the ingestion of this chemical in small quantities for prolonged periods.]
  THE CHANCELLOR OF THE DUCHY OF LANCASTER (VISCOUNT WOOLTON): My Lords, the purpose of the addition of mono-sodium glutamate to certain kinds of food is to enhance their flavour. In fact it functions as a condiment. It is used at present principally in canned soups and dry soup mixes. Glutamic acid, of which this substance is a salt, is a normal constituent of food proteins and has not been found to have any adverse effect on health; I am advised that there is no reason to believe that
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  the continued use of mono-sodium glutamate will have any such effect.
  LORD DOUGLAS OF BARLOCH: Do I understand from the noble Viscount's answer that in fact no research has been conducted on this matter?
  VISCOUNT WOOLTON: I do not know what the noble Lord understands from it. I made no observations on the subject at all.
  LORD DOUGLAS OF BARLOCH: Then may I ask the noble Viscount whether it is a fact that he has no information about that part of my question?
  VISCOUNT WOOLTON: That is true.

  WEST INDIAN IMMIGRANTS
  3.29 p.m.
  LORD KERSHAW: My Lords, on behalf of my noble friend Lord Calverley, who I am sorry to say is indisposed, I beg to ask the Question which stands in his name on the Order Paper.
  [The Question was as follows:
  To ask Her Majesty's Government whether the immigrants who recently arrived from the West Indies in Italian ships had been medically examined before the ships sailed and whether they were provided with proper clothing and sufficient money; and to ask Her Majesty's Government whether they can give the name of the organisation responsible.]
  THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE COLONIES(LORD LLOYD): My Lords, the parties of West Indian immigrants who recently arrived from the West Indies in Italian ships were not medically examined before embarkation. There is no requirement that private fare-paying passengers joining ships in the West Indies should submit themselves for medical examination. The immigrants do not undertake their journey under official auspices, and there is no question of an obligation on the authorities in the West Indies to provide them with money or clothing. The ships in question are owned by well-known shipowners with agents in London, and arrangements for passages are made in the ordinary course of business by travel agencies in the West Indies.
  LORD KERSHAW: I beg to thank the noble Lord for his Answer.

  CHILDREN AND YOUNG PERSONS (AMENDMENT) BILL [H.L.]
  LORD TEYNHAM: My Lords, I beg leave to introduce a Bill to remove, subject to certain safeguards, the restrictions on children taking part in riding or athletic events or in games or sports, and for that purpose to amend Section 22 of the Children and Young Persons Act, 1933. I move that this Bill be read a first time.
  Moved, That the Bill be now read 1a.—(Lord Teynham.)
  On Question, Bill read 1a, and to be printed.

  SHARES OF NO PAR VALUE
  3.30 p.m.
  THE EARL OF CROMER THE EARL OF CROMER rose to ask Her Majesty's Government what action they propose to take on the recommendations of the Gedge Report on Shares of No Par Value (Cmd. 9112); and to move for Papers. The noble Earl said: My Lords, I think it may be accepted as a fact that no country in the world is more dependent on its manufacturing industries and its merchants for its mere survival, let alone its prosperity, than the United Kingdom. Owing to the vast aggregations of capital required to-day to provide the machinery for production and the working capital for merchanting, the joint stock company has almost entirely supplanted the individual capitalist. Although the joint stock companies have made their mark on our history for many centuries, it was probably the great railway building boom of the last century which really put them on the map as a means of providing finance for large-scale industrial enterprise. As this is relevant to the situation which has continued to the present day, I should like to remind your Lordships that in those days it was common practice in many cases for shares to be issued in a partly paid form. There were various reasons for this, not the least of which was the fact that creditors in those days, when companies were still looked upon as a hazardous experiment, used to look on the uncalled liability oil shares as their enforceable security in the event of the failure of the company. It was customary, therefore, to describe a share as, for instance, "a £10 share, £3 paid." But to-day, of course, a partly-
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  paid share is a rarity except immediately after a new issue.
  In view of our dependence on the successful operation of joint stock companies, it is essential that the relationship between the three main constituents—labour, management and capital—should be harmonious. Probably this can best be achieved by each party being kept as closely and as fully as possible informed of the activities and difficulties of the other parties, as it is only by mutual confidence that the three constituents can work effectively as one. Communication is one of the problems to be solved, and in particular the avoidance of the use of words which are ambiguous in their meaning. From the layman's point of view, there are many such words in company law and practice. The 1948 Companies Act was a great improvement on its predecessors from many points of view, not the least of which was the fact that it called for the publication of considerably more information. Some progressive companies have even gone further than the Act requires and I should like to see other companies following suit. However, the 1948 Companies Act still contains the words found in its predecessors, the heritage of the Railway Age, to the effect that the memorandum of a company with shares must state the amount of share capital and the division thereof into shares of a fixed amount.
  In 1952 there was a debate in another place on a Private Member's Bill to introduce no par value shares. The aftermath of that debate was that a Committee under the chairmanship of Mr. Montagu Gedge was set up by the President of the Board of Trade to investigate the desirability of no par value shares. The Committee reported in January last year, having heard evidence from a large number of authoritative bodies and individuals, and the Majority Report of the Committee was strongly in favour of permissive legislation to allow the issue and use of no par value shares. There was one dissentient on the Committee—the representative of the T.U.C. The T.U.C. was the only responsible body which was definitely against the use of such shares.
  Although I do not think the House would wish me on this occasion to go in detail into the technicalities of no par value shares, I should like to attempt to explain in very general terms the implications

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  of the recommendations of the Gedge Committee. First of all, the nominal capital of a company—that is, the capital that appears in the company's balance sheet—may or may not represent the amount subscribed by the shareholders in cash in the first place or subsequently, together with such undistributed profits as have been formally transferred to capital account. What is perfectly certain is that at no time, except in the most unusual circumstances, does the nominal capital have any bearing on the capital employed in a business. In fact, the more forbearing shareholders are in not withdrawing the earnings to which they are entitled, the more unrealistic becomes the nominal capital.
  As to all intents and purposes this nominal capital figure is meaningless, it must follow that any division of this figure into shares of a fixed amount is equally meaningless. An equity share bestows no specific right to any specified number of pounds, but merely bestows a potential right to a proportionate amount of the assets and earnings of a company after all debts have been met and after all prior-ranking securities have received their entitlement. The no par value system at least removes the main cause of misunderstanding of the nature of an equity share, the notional monetary label attached to a par value share which is quite unreal. The other principal criticism of par value shares is the method of declaring dividends as a percentage of nominal capital. Any figure expressed as a percentage of another figure which is meaningless must be meaningless itself. It would make just as much sense for the dividend to be declared as a percentage of the number of employees.
  Another important criticism of par value shares is the misunderstanding which arises very generally when what otherwise would, in theory at any rate, be distributable profits are permanently frozen into the capital of a company by what is usually but misleadingly called a "bonus issue." Such issues are necessary from time to time under the present system in an attempt to bring the nominal capital more into line with the capital employed in the business, but unfortunately there seems to be a fairly widespread belief that in the circumstances the shareholders are getting some-
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  thing for nothing free of tax and in perhaps a somewhat nefarious manner, whereas in fact the individual shareholder has exactly the same proportionate interest in the same assets and the same earnings as before.
  What are the chief advantages claimed for no par value shares? First, the removal of the monetary label attached to a share would lead to simpler and more comprehensible balance sheets. As bonus issues will not be required, the inherent misconceptions which such issues evoke will not arise. The issue of further equity capital would be possible in circumstances which at present usually necessitate borrowing owing to the limitation on the issue of par value shares at a discount. The declaration of dividends as a percentage of nominal capital would be replaced by dividends of so many shillings and pence per share—and these would be real shillings and pounds and not notional ones.
  It is true that various criticisms exist of the recommendation of the Gedge Committee, and in the debate in another place various objections were made to the issue of no par value shares. I contend, however, that these criticisms and objections are based on facts which do not happen to be true. The principal objection put forward by the Trades Union Congress at the hearings before the Committee was that the main purpose of the issue of such shares was to conceal what is happening inside a public company and, in particular, to camouflage the payment of excessive dividends. Of course, this is far from the truth. No doubt there are better ways in which this particular purpose could be achieved. But in the evidence of the T.U.C. before the Committee, one representative of the T.U.C. is reported as having said that if a dividend, for instance, of 2s. 6d. a share is declared on a no par value share, he could not explain what it was on. I take it to mean that if this dividend were declared on a share with a nominal value of £1 it would represent 12½ per cent., or if it were declared on a share with a nominal value of 10s., it would represent 25 per cent. To follow up the argument put forward by the T.U.C., this is apparently easy to explain; but I should not like to try to do it, because it does not mean anything.
  The same point kept on coming up in the debate in another place, where there was stated to be a preference for a picture even though it was admitted that the picture might not be an accurate one. I believe this to be fallacious reasoning, because if one takes one of the leading companies in this country—which I have chosen not because it is an exaggerated case, but because the company is sufficiently far-sighted to publish its turnover figures—one finds that in 1953 they earned 46 per cent. on their nominal capital, and they paid a dividend of 18 per cent. on their nominal capital. If one takes the capital employed in a business from the balance sheet, and works out the earnings and dividends on this basis, one finds they come to 14½ per cent. and 5½ per cent.; and even these figures are probably still exaggeratedly high, because the balance sheet will almost certainly understate the value of the assets, owing to depreciation. As a matter of interest, if one works out the earnings on the gross turnover of this same company, one finds it is about 6½d. in every £1 of sales, which is a verb modest profit. If we read that a company has made 46 per cent, it may to some people sound high—that apparently is what some people would like to hear—but as a picture of what is actually happening in the company it is a travesty of the truth.
  The T.U.C. stated to the Committee that excessive dividends were those which would strike an average trade unionist as excessive in relation to the wages he was receiving and in relation to general remuneration of all kinds. For 1952 one particular company reported earnings of 437 per cent. on the nominal capital, and paid a dividend of 250 per cent. on the nominal capital. Again, if you work out the capital employed in the business from the balance sheet—which I have already pointed out is an inaccurate yardstick, because it still exaggerates the profits—you find that the figure of 437 per cent. comes down to 20·7 per cent., and the dividend of 250 per cent. comes down to 11·8 per cent. That the T.U.C. can say it is easy to explain this to workpeople surprises me greatly. I do not think that credence can be given to the argument that the task of the T.U.C. would be made more difficult by the removal of this most obnoxious red herring from the table of wage negotiations. My contention is
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  borne out by a number of those who gave evidence before the Committee. What really matters to shareholders and workers alike is the amount of profits made by a company in pounds, shillings and pence, and it is only against this comparison that dividends or profits can be adjudged to be too high or too low.
  The T.U.C. make a point with which I heartily agree, in complaining that some companies do not disclose enough information to allow for objective discussion. In particular, it is most helpful when companies publish their turnover figures. Discussion would be more objective if the main points at issue were not so often obscured by the present misleading connotation of the word "profits." On the question of bonus issues, the debate in another place and the Minority Report of the Committee both show such a misapprehension of the purpose served by such issues that it is highly desirable that the need for them be removed.
  The Committee under the chairmanship of Mr. Montagu Gedge received more than adequate evidence that there is a desire for no par value shares. They were satisfied that there was substance in this desire, and also that the same protection as at present should be granted to the investing public against manipulation and other malpractices. They were also satisfied that such shares are a logical development of company law and practice, and that the objections put to them were either ill-founded or met by the recommendations of the Committee. I hope that Her Majesty's Government will be able to see their way to introduce permissive legislation to allow the use of no par value shares and thereby remove this most troublesome source of misunderstanding between capital and labour. I beg to move for Papers.
  3.46 p.m.
  LORD PETHICK-LAWRENCE: My Lords, I rise with considerable diffidence to take part in this debate because I am aware that on the Benches of your Lordships' House there are many men who have far more expert knowledge of this question than I should for a moment claim for myself. At the same time, I have a certain amount of knowledge derived from my own personal experience, which is a family tradition, because my forbears were actively engaged in the City of London. Moreover, as a multi-trustee

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  in many concerns, I have naturally had to deal in detail with investment in companies; and, in addition, I sat for many years in another place when the company laws were being amended.
  It seems to me that those who are advocating a change have to establish three facts. The first is that the change they propose is intrinsically and substantially beneficial; the second is that there is a demand among those qualified to express it in favour of the proposed reform; and the third is that there are no disadvantages attaching to the change which are great enough to outweigh the advantages claimed. I venture to submit that this proposal fails on all those three grounds. Prior to my speech we had an admirable speech by the noble Earl, Lord Cromer, in introducing the Motion. I listened with the greatest care to see whether he put forward any substantial claim of advantage which would be effected by this change, and if your Lordships read his speech tomorrow I think you will find that I am not exaggerating when I say that he did not put forward a single argument of power in favour of the scheme. He put forward a number of answers to alleged objections, but he did not make any real case of what was greatly going to be gained by the proposal.
  With regard to that, I should like to point out to your Lordships that the view put forward by the Incorporated Accountants, so far as I can understand it from the evidence which they gave, is that in order to make the scheme devoid of danger it would be necessary to safeguard it by a number of provisions. If those provisions were made, then the alleged advantages of the scheme would almost entirely disappear. That is the substance, as I read it, of the evidence tendered by the Society of Incorporated Accountants. I have come back, therefore, to try to discover what the advantages of this scheme really are supposed to be.
  So far as I can make out, they amount to this: that as the actual discrepancy between the subscribed capital and the capital in the business, as represented by its balance sheet, is so great, it will be a great advantage to sweep away the conception altogether. That is, however, a rather hypothetical advantage. I entirely agree that a great many things in
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  a company balance sheet tend to become notional: it is certainly true to a large extent in the case of subscribed capital—I do not think anybody would attempt to deny that. But whether there would be advantage in introducing in its place another notion, that of a share of no par value, I am exceedingly doubtful. In my view, it is an innovation which would not make a great deal of difference, and it would certainly tend to confuse a large number of ordinary people.
  Now let me turn to the second point: is there any substantial demand for this charge? I noticed that in their memorandum the Institute of Chartered Accountants of England and Wales said that, in their opinion, no par value shares should be introduced only if the Gedge Committee received evidence of a general demand for it, and that the Council of the Chartered Accountants is not itself aware of a general demand of that nature. It is true that certain demands were put forward by the evidence of other bodies laid before the Gedge Committee, but I remain doubtful whether that demand is of such an extensive character as in any way to justify this considerable innovation.
  Now I come to the third point of my criteria: whether there are disadvantages, and what they are. The noble Earl, Lord Cromer, quite good-temperedly, rather made fun of the T.U.C. and their objections to the scheme. I venture to suggest that we ought to pay considerable attention to the views of the T.U.C. in this matter, because they have a grave responsibility to perform. Your Lordships are aware, of course, as every ordinary citizen who thinks for himself must be—and your Lordships have a special knowledge of these things—that the whole social stability of this country depends upon the acceptance on all sides of the great British tradition of "fair do's." If you once threaten the acceptance of "fair do's" in any section of society you are in for trouble, because it is perfectly clear today that anything like a withholding of its services by any influential section of the population, or, on the other hand, any such reduction of incentives that those who have capital at their disposal are unwilling to invest in the enterprises of our own country, would produce a disequilibrium that would cause grave menace to the prosperity of this country in the days to come.

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  The T.U.C. take the view that it is their business to promote demands for reasonable accretions in wages. As your Lordships will be aware, in dealing not only with trade unionists and workers in industry but with large numbers of people, their ideas of what is reasonable are often far in excess of the views taken by other people. The Trades Union Congress today, with great difficulty, have to expound the position to many of their workers who want to press for claims which in the opinion of the T.U.C., as a whole are unreasonable. Let us take two illustrations. In the first case, suppose that a dividend is announced of 20, 30 or 40 per cent. The person who is not accustomed to understand company affairs says "Just fancy; this shareholder in this company has spent £1 and he is getting 5s. or 10s. on every pound he has put in." Of course, your Lordships know perfectly well that that is often far different from the fact. The shares, instead of being £1 at the time the investor bought them, might have been £7.
  That is not easily understood by the ordinary man in the street, and not always understood by investors themselves. The T.U.C. have learned the technique of explaining these facts to the workers, and, I think your Lordships will admit, with a reasonable amount of success. Now it is proposed to take the chess board, turn the pieces off and start an entirely new method of estimating the dividends compared with the investment that is made. It means starting all over again with a new technique which large numbers of workpeople will regard as fictitious—because there is a fictitious element about these shares of no par value, as I think noble Lords on all sides must agree.
  Take another example. The noble Earl quite rightly said that when bonus shares are issued, theoretically the equity shareholder owns no more than he did before. If there were 1,000 shares of £1 for every share he had, it means that there are now 2,000 shares. As the holders of these 2,000 shares own between them the whole business, and they cannot own any more, theoretically the shareholder gains nothing by the bonus distribution. But no noble Lord who has had experience of bones shares can be deluded into imagining that in all practical cases, or nearly all (I think there was one in the opposite direction
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  the other day), when there is a distribution of bonus shares the net result to an individual shareholder is other than that he finds himself with assets that have risen considerably. The Gedge Committee, in one paragraph of their Report, gave a perfectly valid reason for that, but the fact remains; so the workman is not so very misguided when he thinks that, by the distribution of bonus shares, the shareholders are becoming considerably more wealthy. It is quite commonly held to-day that a large number of people who get a tax-free bonus have more money to spend than another person who methodically has earned a wage of a certain amount. I quite recognise the reason for that, and it remains theoretically true that the shareholder does not have any more after the transaction than he did before. I quote that as another thing that has to be explained to the ordinary person. Until it is explained, he does not understand it at all, and when it has been explained to him he probably thinks there is a catch in it somewhere.
  The long and short of all this is that the Trades Union Congress fear, and I think with some justification, that if you make an entirely new arrangement and create shares of no par value it will place in their way the fresh difficulty of getting the ordinary trade unionist to understand that in this considerable change you are not taking some means to hide the facts from the workmen in the business. What it really comes down to is this—and here I agree wholeheartedly with the noble Earl who put forward this proposal: the great thing is to insist that more information is given than has been given in the days gone by. That is one of the results of the last Companies Act, and, in so far as that was so, I think it was thoroughly good.
  If I felt—and I should like not to be misunderstood in this matter—that the introduction of this change, the permission to create shares of no par value, was intrinsically of great benefit to the country (and, incidentally, to the companies themselves), I should not think that the difficulty put forward by the T.U.C. ought to override that consideration. If there were a very large demand on a general scale for the introduction of this proposal, even though the intrinsic good that it would do might not be

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  very great, I should not think that what the T.U.C. said ought necessarily to prevail. But as in my view, and in the view of the London Chamber of Commerce, the advantages of this new scheme are largely theoretical, I do not feel that there is sufficient ground for making the change, having regard to the Trades Union Congress objections to it.
  Perhaps I may quote to your Lordships what the London Chamber of Commerce representatives said in their evidence. One said this:
  "I think that in certain sets of circumstances the results might become gravely misleading in the course of time."
  In another place they said:
  "Individual members"—
  that is, of their body—
  "have shown no interest at all"
  in these proposals. I have already quoted to your Lordships the views of the Institute of Chartered Accountants of England and Wales and of the Society of Incorporated Accountants—bodies, I submit to your Lordships, of very considerable importance in this matter: the two leading bodies of accountants—and the London Chamber of Commerce, by no means an unimportant body in the City of London.
  Therefore, I suggest that we should not necessarily be motivated by the decision of the Gedge Committee, which, your Lordships will not forget, reverses the views and the decisions taken by two important Committees not so very long ago—the Committee of Lord Greene, formerly Master of the Rolls, published on May 8, 1926 (that is almost thirty years ago), and the Committee under the Chairmanship of Mr. Justice Cohen (now Lord Cohen), which reported on June 11, 1945–that is only ten years ago. Moreover, although the Gedge Committee have reported in favour of this change, the evidence of intrinsic advantage to be gained from it has not been very strong, and there is no adequate public demand for it. I venture to say, therefore, that we should not rush into this innovation and I hope that the Government will say that they are not prepared to do so.
  4.5 p.m.
  LORD POLWARTH: My Lords, we have had a somewhat varied menu before us this afternoon. We spent the first hour
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  arguing, as it were, about who was to provide the drinks, albeit non-alcoholic. I think that most of your Lordships will probably regard this debate as a somewhat indigestible hors d' œuvre to precede the succulent and substantial dish which the noble Viscount, Lord Samuel, has in store for us shortly; but I would assure your Lordships that to those of us whose work is among financial matters it is real caviare. May I congratulate the noble Earl, Lord Cromer, for rescuing this valuable Report from the pigeonhole in which it appears to have been lying since its publication some months ago? No less do I congratulate the Committee on the clarity with which they set out the arguments on a very complicated subject.
  The mover of the Motion has explained the nature of the subject in great detail and very clearly. I do not propose to enlarge upon the arguments in favour of the introduction of shares of no par value. I should like to try to counter some of these objections which have been raised to the proposal, and in particular to deal with the points raised by the noble Lord, Lord Pethick-Lawrence. First of all, he said that we must be convinced that there is a good reason for this change in the existing law. He himself is not convinced that there is a good reason. Surely, anything that clears away the mystery and uncertainty that surrounds any institution must be welcome. Surely, it is desirable that these things should be brought out into the open and that as many people as possible should understand them. On that ground alone there is every reason to permit the introduction of this type of share.
  From my own experience, though it is only a fraction of the length of that of the noble Lord opposite, I am convinced that it would be good from every point of view. For the private investor it would sweep away a great deal of uncertainty and misunderstanding about the nature of investments. For his advisers, and for those institutions whose job is mainly to invest the small man's savings for him, it would save a great deal of unnecessary and unproductive work. For those of us who are concerned with the production and audit of company accounts I believe that it would ensure that the true and fair view of the companies' affairs which we have to certify was, in fact, made also clear and obvious.

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  One of the arguments brought up in favour of the proposal before the Committee was the widespread use of this device in the United States and Canada. To that argument two objections were raised. The first was that recently in the United States there has been a trend away from shares of no par value. That is indeed the case, and I have taken the trouble to inquire into the reason. It appears that it is solely due to a quite arbitrary rate of tax on share transfers which weighs more heavily on shares of no par value than on certain others. I do not think there is any evidence that that taxation is for any reason designed to discourage the use of these shares, although it has had that effect.
  The second objection raised is that conditions across the Atlantic are different from those here and that we should not blindly follow in their steps. Of course I agree that we should not blindly follow in their steps, but I think there is no doubt that they have developed a system of public company finance more widely and to a more advanced stage than we have here. Then there is this point. Recently there has been a great increase in mutual investment between the two countries—that is, in British investors putting their money into American concerns, and, I am glad to say, in American investors putting their money into companies over here. I believe that that is wholly desirable, and I believe that practical ties of that sort are worth any amount of talk about mutual good will between the two countries. Surely, anything that is going to enable us to understand each other's systems of shares and investment is all to the good. There is no doubt that Americans have been greatly puzzled by some of the perhaps rather archaic terms and practices surrounding our company practice.
  To come to the question of the demand for this reform, the noble Lord, Lord Pethick-Lawrence, said that he did not think the demand was very impressive; and he quoted in aid the evidence of certain august bodies—among them what he described as the two leading organisations of accountants in the country. With great respect, I would point out, with regard to the Institute of Chartered Accountants in England and Wales, that that august body's elder brother, the Institute of Chartered Accountants in Scotland, of
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  which I have the honour to be a member, reported wholeheartedly in favour of the proposal; and, if the noble Lord wishes I shall be glad to show him their evidence. I hardly think that your Lordships will be likely to consider the attitude of that body less cautious in regard to financial conduct and safeguards than its neighbour South of the Border.
  I do not set much store by this argument that there is not much demand. For one thing, the City is by nature a conservative institution, and it is, of course, largely due to that fact that it earns the respect that it does. But surely no reform will come about unless the facilities for it are provided. Provide the facilities, and I believe that the demand will come. There will be a first flight of progressive companies which will take advantage of this proposal, and I believe that once it has been put into action, it will be widely followed.
  As to the noble Lord's objection regarding the attitude of the worker and the general public, with great respect I do not think my noble friend Lord Cromer poured scorn on, or laughed at, the report of the T.U.C. I personally do not consider it a laughing matter; I think it is deadly serious, and a matter for considerable concern. Frankly, what their objection boils down to is that, because the workers (by which presumably they mean their members) cannot understand the present system of share capital with percentage dividends, they would be suspicious of any change. Surely that is merely saying that it is better to mislead the public than to remove the cause that is misleading them. Incidentally, that is in rather striking contrast to the attitude of the representatives of the T.U.C. when giving evidence before the Cohen Committee on Company Reform. It was quite clear at that time that those representatives themselves understood the nature of share capital and dividends, and they showed themselves anxious that their members should understand it, but they complained that they were unable to do so. Surely that is rather a strange argument. The deplorable part about it is that it shows a readiness to continue to perpetuate this rift in understanding between labour and capital, when of course they should regard themselves as partners in the enterprise, as indeed they are.

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  I apologise for again mentioning the United States, but I think it is a fact that over there the trade unions appreciate that what is good for the shareholders of a company is also good for them; they realise that a prosperous company which is making profits means higher earnings, as well as more security, for themselves. I only wish that that attitude could become more widespread over here. Indeed, I cannot believe that our own workers are all that much behind the workers in America in their intelligence. Of course, there are mysteries about this matter of company finance. For those who are not expert it is not easy to follow; and for this, as my noble friend said, managements must bear a good deal of the responsibility—they must make greater efforts to explain these things to their employees. But I must say that the trade unions also bear some responsibility for this situation. If they cannot explain to their workers the present system, surely it is much better to introduce a system which they can explain to them.
  As I have said, however, I do not think that the employees of this country are so ignorant. Some of your Lordships may have seen last week headlines about the success of an issue of shares to the public of a steel company which was formerly nationalised. Your Lordships may not have noticed that among the applicants for shares were 1,200 present employees of the company, who between them applied for an average of about £100 worth of shares. I do not think that those men entered into that undertaking without some sense of responsibility or some understanding of what they were doing; nor do I think that they would object if the company were to pay them a higher dividend than the one which is forecast. No doubt I should be ruled out of order if I were to attempt to draw from that any conclusion with regard to the employees' views on the nationalised ownership of industry.
  In conclusion, I hope that I have done something to show that there is a demand for these shares, that they can be hedged about by safeguards, and that the objections are not of sufficient weight to justify the Government's maintaining a barrier to prevent those companies who wish to do so from issuing shares of no par value. I realise that the subject is largely a tech-
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  nical one, and I agree with my colleagues who gave evidence for the Scottish Institute of Chartered Accountants—that it is not one that should be given a high degree of priority in Parliamentary time. At the same time, I feel that the Government should declare that they are not opposed to the principle of the introduction of such shares, and that if a further Private Member's Bill were introduced they would be willing to give it their support.
  4.18 p.m.
  LORD BALFOUR OF BURLEIGH: My Lords, after the informative speeches from both sides of the House to which your Lordships have listened, I am sure you do not want any more information about the nature of shares of no par value. I should like to sum up my point of view by saying that it seems to me an extremely logical form in which company capital should be arranged. If we cast our minds back to the days before companies became so common, and if we see what great complications of company finance there are, and the extraordinary disparities in the value of ordinary shares, I cannot help feeling that if anyone had been clever enough to think of no par shares in the early days it would have made things much easier, and would have been a much better arrangement.
  I listened with great interest to the speech of the noble Lord, Lord Pethick-Lawrence. I understood him to bring three points against this proposal. What the noble Lord said was that those who favoured this proposal must show three things: first, that the effects of the change will be intrinsically beneficial; secondly, that there is a demand from qualified people; and thirdly, that there are in the present system disadvantages which outweigh the advantages to be had from that which is proposed.
  LORD PETHICK-LAWRENCE: The noble Lord has put it very well, but the last one is not quite correct. It is that the disadvantages in the change would not outweigh any alleged advantages. That is the third one.
  LORD BALFOUR OF BURLEIGH: I do not think there is much between us: it comes to nearly, but not quite, the same thing—that the disadvantages in the change would not outweigh the advantages of the change. On the first point,

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  that the effect would not be intrinsically beneficial, the noble Lord opposite said that my noble friend who introduced the Motion had made no substantial claim for any advantage at all. That is not quite correct, for I understood my noble friend to claim the great advantage that it would make company accounts very much easier to understand. That is a very important point.
  Then the noble Lord quoted an accountant society on some technical points, and summed up that part of his argument by saying that he did not consider it would be advantageous to introduce another notion, the notion of shares of no par value. My answer to that objection is that it would be introducing not a notion but reality, because that is what these shares are. They have no fixed value, and it would be advantageous to get rid of what might be considered notional things and to introduce reality. The extent of the demand from qualified opinion is largely a matter of opinion. I feel that there is a strong demand among those persons best qualified. The noble Lord opposite is entitled to his opinion, but I believe that City opinion and accountancy and commercial opinion generally is in favour. The two Committees to which the noble Lord referred were Lord Greene's Committee which took evidence thirty years ago, and to which we cannot nowadays attach much importance, and the Committee presided over by Mr. Justice Cohen (as he then was) which took evidence in 1943 and 1944, when many very important witnesses were not available. I believe that if the noble and learned Lord, Lord Cohen, were to take evidence to-day he would ,get evidence to different effect; but that is a matter for speculation.
  Coming to the most important of the noble Lord's objections, he said the disadvantages would not outweigh the advantages; and in putting forward that view he rightly attaches great importance to the views of the T.U.C. The noble Lord said that the T.U.C. had grave responsibility in this matter, which is true. He also said that our social stability depends on the acceptance of "fair do's"—and I could not agree more. The noble Lord also said something which I am delighted to hear from that side of the House, that anything which discouraged the investor would cause
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  grave disability. I am not quite sure whether I heard the noble Lord rightly, but if so that is a very important admission, coming from that side of the House, because it is a view not commonly held among members of the Socialist Party.
  The noble Lord also said that it is the duty of the T.U.C. to demand reasonable accretion of wages. Once again I agree with the noble Lord, and I quite understand that the T.U.C. may have difficulty in explaining company finance to their members. It is not only the T.U.C. who have difficulty in explaining company finance to those whom they seek to enlighten. Where I differ so strongly from the noble Lord opposite is when he complains that there is a fictitious element in shares of no par value. I believe the precise contrary to be true: that if there is a fictitious element at all it is in a 10s. share nominal which is worth £4 on the Stock Exchange, or a £1 share which is worth nothing because the company is bankrupt. That is much more fictitious than a share of no par value, the price of which on the market will correspond exactly to what it is worth in money yield.
  The noble Lord makes the point that this innovation would create fresh difficulties for the T.U.C.—or that that is what they say. I am sorry if the T.U.C. think so, for if they really tackled this question they would find the converse to be true. Reluctantly I must touch on a rather unworthy argument in the T.U.C. evidence, that one of the purposes of the issue of shares of no par value is to conceal what is happening inside public companies and, in particular, to camouflage the payment of excessive dividends. I acquit the noble Lord of saying anything of the sort. I hope that I know him well enough to know that he would say no such thing. I am glad that the Majority Report did not make the obvious rejoinder, which would be fair. That would be to say that one of the objects of those who oppose shares of no par value is to permit large dividends to be misrepresented as excessive profits. I am not going to bandy arguments of that sort, but as it is there to be read in the Report we must be conscious of the other side. The noble Lord said that more information should be given. I agree, and that appears in

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  the Majority and Minority Reports. The noble Lord said he felt it would help, or that if there were a large demand he would favour it. I welcome his open-mindedness and hope that when he reads his speech and my own tomorrow he will find more in favour of the proposal than at first he thought.
  I will venture now to stray a little outside what would be the Rules of Order in another place and to refer to perhaps the most important thing which emerges from the T.U.C. evidence and the Minority Report—that is, that I believe both reflect regrettable ignorance. I am in no way impugning the sincerity of anybody concerned. I am perfectly certain that the signatory of the Minority Report only signed what he believed to be true and correct. Nevertheless sincerity, unfortunately, is very compatible with ignorance. One of Her Majesty's Judges once said: "Nothing is more conducive to false judgments than ignorance of the facts"; and, indeed, in arguing I have often found that to be the case.
  The Minority Report disregards a fact which I consider to be fundamental: that the interests of workers and shareholders are fundamentally identical. For support I appeal to the opening sentence of the informative speech of my noble friend behind me: that no country in the world is mote dependent on industry and commerce for its survival than ours. The fundamental identity of interest between the workers and shareholders is, in that respect, complete. There may be a difference of opinion about the division of such profit as may emerge, but it is the expectation of a profit that makes the wheels of industry turn, and I deplore the way in which noble Lords opposite, or their Party, so often represent profits as being something which is really immoral.
  If it is not too far outside the Motion I should like to stress the importance of the equity shareholder's function. He has to provide capital for new industry and capital to make industry expand and prosper. In doing so he runs risks. Just the other day Mr. Herbert Morrison said in another place:
  "As regards the bulk of the recipients of dividends, they have done little or nothing to earn them."
  It is a pity that opinions of that sort should be expressed by important people
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  on the other side of either House. To give an example of the risk which an equity shareholder runs I have turned up the Industrial Share Index in the Financial Times. There was a period of a few months in 1951–52 when they showed a global loss of 23 per cent. Textiles, in particular, showed a capital loss on the overall list of 40 per cent., and tea shares at one time of 41 per cent. Tea shares have all gone up again, but that fact does not help the man who had to sell them when they were down. It represents a loss of his capital. At the risk of labouring the point, may I stress that this conflict of interests between workers and shareholders is a mistaken idea? That industry should make profits is equally important to both. The whole Welfare State is dependent upon the profits of a healthy industry.
  At the risk of boring your Lordships, I will give just two more figures. In the five years from 1949 to 1953, companies paid more than £4,000 million in taxation. Including tax on their distributed dividends and interest, they provided £6,000 million. I cannot give the comparative figure for dividends, but that it is very much smaller is proved by the fact that a figure of £2,000 million represents over the same period not only dividends on ordinary shares but dividends on preference shares, interest on debentures and interest of all kinds including building society interest, both to shareholders and depositors, all, of course, net of tax. The whole structure of the Welfare State is dependent on the profits which derive from taxation. And the workers' interest in profits is even more direct. I understand that the Miners' Welfare Fund is a very large holder of equities. Then there are the great insurance companies, with millions of policy holders. The workers' interest is inextricably involved in their welfare.
  One word more. It may be argued that Socialist policy is hostile not to profits but to dividends—I think some Socialists realise that they are wiser to attack dividends. Though I do not think they are wise to attack either, they do attack dividends rather than profits. The point is, of course, that dividends are essential to secure the flow of risk capital for industry. Savings will not be attracted to industry unless there are proper dividends. Large profits, I maintain, are equally in the interest of the worker and of the

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  shareholder. They are equally important whether ploughed back into industry or distributed as dividends. It is an utterly false conception that the worker is the man who only works, while the shareholder is a man who only draws profits.
  I have already detained your Lordships too long and I will not deal with the question of what are excessive profits. But I suppose the extreme Socialist view is that anything that is left over after payment of wages, overheads and cost of material, if regarded as profit, is excessive. I should prefer, if I were asked to define excessive profits, to say that they are profits which result from the exploitation of the consumer, whether by pressure of monopoly or whatever it might be. I wish we could devise better means of making more obvious what I consider the obvious identity of interest of worker and shareholder. The best way to do that is to make the worker himself a shareholder. And that is happening.
  Lord Polwarth quoted the case of the recent steel issue. That is very valuable in the case of established companies. I have spoken about the risk attaching to equities, and therefore equities in single companies are not altogether so suitable, in my opinion, for the worker, because that means that his interest in the success of an industry is doubly engaged. If an industry fails he may lose his job, and, if he is a shareholder, he loses his capital as well. I would rather see an extension of small savings invested in, say, investment trust companies. I think that trust companies afford a very good example. I should like to see something in the nature of hire purchase shares in trust companies—always assuming, that such a scheme had the blessing of the Chancellor of the Exchequer, for, of course, hire purchase has risks. In this connection, something is being done in the United States, and I will conclude by saying that I hope more will be done in this country. I am sure the banks would be receptive to the idea—some of them at all events—and would be willing to help.
  I would emphasise the importance of more information being given by management to their men. I think they should keep the men fully informed on these matters. I could not be more enthusiastic about that—indeed, I am as enthusiastic about it as the noble Lord opposite. But I think, too, that if only the leaders of the Party opposite will try to remove
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  some of these misconceptions about profits they can do a great deal of good. It is they who have to do it. It is no use my making speeches about it. Not only am I a Member of your Lordships' House, on the wrong side, but I have been connected with the City. Altogether, my record is far too black in the eyes of the Party opposite for anything I say to carry any weight. If noble Lords opposite think there is anything in what I say, I beg them to try, to spread the truth about these matters, instead of allowing false impressions to be disseminated and supported by colleagues of theirs in high places.
  4.36 p.m.
  LORD SALTOUN: My Lords, every man who reads a balance sheet with a view to ascertaining the value of a business does, in fact, disregard the nominal value of share capital and, whether he works it out with pencil and paper or by mental arithmetic, estimates the value of that business as if in shares of no par value. That is true of myself and of the noble Lord, Lord Pethick-Lawrence. Therefore, if accounts are to show at any given time the true nature and state of a business this proposal which is now before your Lordships' House ought to receive universal assent.
  4.37 p.m.
  THE EARL OF PERTH: My Lords, this subject, as we have heard, is a very technical one, and the issue should, I believe, be decided on its technical merits. Unfortunately it has become, in a sense, what I would call a matter of Party dispute. When I read the conclusions of the Minority Report, I note that a demand for a change exists among "some professional investors and speculators"; and there is an equally strong, or even stronger, opposition from the trade union movement. It is a little unfortunate that there should be that characterisation of "some professional investors and speculators" as being those who want the change.
  If your Lordships look at the list of those who have, in fact, shown themselves in favour of the change, as set out in Clause 22 of the Report, you will find a very impressive and responsible number of bodies, including such organisations as the Federation of British Industries, the Association of British Chambers of Commerce, the National Union of Manufacturers, the Issuing

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  Houses Association, the Association of Investment Trusts, and the British Insurance Association. It is true, as we have heard, that one or two are less certain about it. But it is just that sort of characterisation as is made in the Minority Report, or that sort of point, which I think is unfortunate. However, I do not wish to make a Party speech or a debating speech; nor do I want to go over technical points which have been so admirably developed and expressed by other speakers. Rather should I like to explore why the demand for no par value shares has developed, particularly over the last few years, and, if Her Majesty's Government decide not to introduce permissive legislation at the present time, what can be done under the present system to make things better.
  First, why has this demand for no par value shares arisen in the last few years, quite apart from any technical merits which may be inherent in these shares? As we all know, there are two main reasons. One is the rise in prices that has occurred since the beginning of the war. The second one is related to this: that when these rises took place, and when company directors and managements wanted to give effect to the change in the value of their companies, there was imposed, most unfortunately, a ban on so-called bonus share issues. What was the result? The result, very often, was that we found that apparently excessive dividends were being paid on shares because companies were not in a position to give the true value of the shares—the bonus ban forbade it. That naturally led to misunderstanding and suspicion on the part of the workers, and so was a bad thing. Then what happened? The ban on bonuses was, broadly, removed. The result was that many company directors properly performed their duty and issued these free shares; and many of them did it all at once. Again a flood of so-called bonus issues caused suspicion and created bad feeling among some of the workers in the trade union movement. If there had been no control, the whole process would have been a much more orderly one and would not have led to this apprehension and agitation against such happenings. So much for why the demand arose.
  If the Government decide not to introduce at this time legislation permitting no
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  par value shares—and when I hear the noble Lord, Lord Pethick-Lawrence, speaking about the attitude of the trade union movement and when I read the Minority Report of the Committee I am confirmed in thinking that they will not do so—none the less I think that there are some things which can be done which will remove some of the difficulties which we are facing at the present time. There are three main steps which can be taken. One is to find another name instead of "bonus" share, although this is a minor point. A bonus, as Webster says, is "something given beyond what is usual or strictly due." I think we all know that in this case the giving of a bonus share is, properly, giving nothing at all. We ought to try to find a different name, because the name it has to-day perpetuates the misconception which surely we want to avoid.
  Secondly—and this is more important—I ask the Government whether they will remove the need for companies to get the permission of the Capital Issues Committee before they make a free bonus share issue. I think that requirement is really an anachronism and a nonsense. If I may give an analogy, although I know analogies are often imperfect, I would point out that there may be a number of citizens who own valuable pictures which are covered with dirt, and which are badly framed and badly lit. Imagine the position if they had to get the permission of a committee appointed by the Government before they could remove the dirt from those pictures and place them in a proper light, so that their value might be appreciated by the public. That is not a very far-fetched analogy with the position of those who have to get permission from the Capital Issues Committee before they can make a bonus share issue. While on this point, I would appeal to noble Lords opposite, when, or if, they next come into power, not to reintroduce this ban on bonuses or to make it a penal matter to issue bonuses. It is a misconception and something which leads to misunderstanding, and it should not be.
  This brings me to my last point, which is much the most important and which has been touched on by everybody in the debate to-day—namely, that company directors and managements must go to much greater pains to try to explain to the workers the whys and wherefores of capital changes. They may say that they

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  have tried to do this very often, but when one reads the Report it is clear that they have failed. I only hope that what we have heard to-day will be studied by all concerned and interested, and that a determined attempt will be made to put this particular point right. If these three steps are taken, and above all if the unfounded suspicions about capital changes which to-day affect the workers can be removed, then I think the work of the Committee which did the study on no par value shares will not have been in vain.
  4.45 p.m.
  LORD COLERAINE: My Lords, of all those who have risen to address your Lordships this afternoon, I am the least qualified to do so. Neither by education nor by training nor by experience am I able to instruct your Lordships on these high matters. Any misgiving I have had has only been emphasised by the opening comments of the noble Earl, Lord Perth, who said that this was a technical matter to be decided only by technicians. I do not agree with the noble Earl on that point. Though clearly it is a highly technical and complicated matter, it is one which is of the greatest concern to everybody in the community, and I think it might be fitting that I should give what I consider to be a layman's view of this question. The noble Lord, Lord Pethick-Lawrence, made an extremely fair speech, as he always does. He said that this issue must be submitted to three tests: whether there were great advantages to be derived from the change, whether there was a demand for it, and whether there were any disadvantages which could be invoked which would outweigh such advantages as there might be. I do not think it is necessary to concern ourselves with one of these tests. So far as the existence or not of the demand is concerned, I should be prepared to accept the evidence of the Committee's Report. The other two tests seem to me much more important and I should like to address myself to them for a few moments.
  There is one overwhelming advantage in the substitution of no par value shares, not only from the point of view of the shareholder but also from the point of view of British industry as a whole. On either side of the House we have differing views about the effectiveness of a profit-making economy, but we are agreed on one thing, namely, that over by far the greater part of the field—some would
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  say 60 per cent., others 80 per cent., I myself should prefer it to be 100 per cent.—we have to rely on a profit-making economy. I do not think there is anybody who disputes that—not the Conservative Party nor the Liberal Party, nor the Socialist Party. It is of the essence of a profit-making economy that it should be enabled to earn profits freely. We are often told by noble Lords opposite of the far greater efficiency of the American industrial machine. We are told that it has three, four and five times as much horse-power per industrial worker as the industrial machine in this country. Surely one of the reasons for that, as the noble Lord, Lord Balfour of Burleigh, pointed out earlier, is that in the United States it is respectable to make profits. In this country over a wide field it is regarded as disreputable to make profits.
  EARL JOWITT: No.
  LORD COLERAINE: I am not suggesting that the noble and learned Earl, Lord Jowitt, shares that view, but I am saying that over a wide field that view is held, and that is one of the reasons why the industrial machine works more effectively and provides a higher standard of living in the United States than it does here.
  There is no doubt whatever that the existing system of calculating dividends does mislead the man in the street. I do not think there is any Member of your Lordships' House who would be prepared seriously to deny that. It tends to make the man in the street, and particularly the worker, resist profits even when they are doing him good as well as the shareholder, the management and the consumer. Therefore, anything that can convey to him the real truth of the picture must surely be to the good, not only of the shareholder, but of British industry as a whole.
  That brings me to the other test of the noble Lord, Lord Pethick-Lawrence: that of the disadvantage. He told your Lordships that the evidence of the T.U.C. before the Committee established the fact that there was the overwhelming disadvantage that the introduction of no par value shares would tend to confuse and befog the ordinary member of a trade union, and, in consequence, the T.U.C. would have far more difficulty in restraining unreasonable wage demands—I think that, broadly speaking, was the argument

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  of the noble Lord. If that argument could be sustained, I would certainly support the noble Lord; but I do not believe that it can be sustained. Indeed, more than one of your Lordships who has already addressed the House has made it clear that all the confusion and the deception arises from the existing system of calculating dividend rates. I think there can be no doubt that if there is a case such as the noble Earl, Lord Cromer, cited, of a firm apparently making profits of over 400 per cent. and paying a dividend of 250 per cent., two things must happen: one is that the worker in that industry will feel that he is being treated unfairly; and the other is that I, and no doubt others of your Lordships, will feel that this is a field of industry in which we ought to be getting busy. But when those profits are really 20 per cent., and the dividend is really 10 per cent., surely that is something that can be easily explained to the trade union member.
  The noble Lord, Lord Pethick-Lawrence, said that one of the essential characteristics of the British people, as a whole, is their insistence on "fair do's." Surely, a working man who sees a dividend of 250 per cent. being paid cannot think it is fair. But a working man who is fair-minded—and, as the noble Lord said, by far the greater part of the British people are fair-minded—when he sees that it is not 250 per cent., but 10 per cent., will say: "After all, that is not so unfair. I have a good job and I am well paid. The business is doing well. Let us make it do better." I cannot speak for the T.U.C., but I have had some experience in dealing with the working man, both in industry and as a Member for a working-class constituency, and I should have thought that the apprehensions expressed by the T.U.C. were groundless and that we ought not to pay too much attention to them.
  4.55 p.m.
  THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE HOME DEPARTMENT (LORD MANCROFT): My Lords, when I was at school we used to be given a holiday task, which would usually take the form of a book to read during the school holidays. As a result, it was invariably read in the train going back from Waterloo to school at the end of the holidays. As an equally invariable fact, one desired never to read
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  a work by that author again, who became one's private literary "Enemy number one." My noble friend, Lord Cromer, set us a stiff holiday task to read when he gave us the Gedge Report on Shares of No Par Value as the first item on the Order Paper when we returned from the holidays. But I must say, in justice to my former colleague at the Chancery Bar, Mr. Montagu Gedge, that I have read his work, and I think your Lordships have, too, with much pleasure and profit; and I think we owe to him and his Committee our warm thanks for the skill, care and impartiality with which they tackled their task. We are grateful to them for a valuable, useful and authoritative Report.
  I am sure that we are also grateful to my noble friend Lord Cromer for having raised this matter, and particularly for having done it in such a lucid and fair speech. The debate which has followed has really been most remarkable—and I do not mean remarkable only by the fact that it has produced the astonishing co-incidence of four Scottish Representative Peers speaking one after the other, but of what has arisen out of the subject. The debate has extended far beyond the superficial issue of shares of no par value. We have discussed this afternoon some of the fundamental political issues that divide now but may one day, I hope, unite the two Parties on either side of the House. We have discussed them calmly and fairly in a debate which would have produced uproar at any public political meeting.
  I turn now to the Report—or, put more exactly, the two Reports, because there are two completely conflicting but equally lucid Reports. I think that comparing the two Reports one must admit straight away that the majority have had the better of the argument; and the debate today has supported strongly the majority view. I hope that the noble Lord, Lord Pethick-Lawrence, who as usual made a calm, fair and good-tempered speech, will not mind if I say that most of his points have already been answered by noble Lords who sit behind me. I should like first to echo the remarks of the noble Earl, Lord Perth, when he pointed out that this Report was supported by a striking consensus of professional and commercial advice, including, I believe, that of most of the bodies who really matter in our commercial and industrial

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  life. For the minority view, Mr. Beard of the T.U.C. gives a vigorous counter to this; but I submit that his arguments really fly in the face of the evidence. May I quote in support of this the Economist of April 3 of last year, which said:
  "The reason is with the majority but the vehemence is with the minority."
  I should like to add this. The majority Report had a most favourable reception in the national, the professional and the technical press. The almost universal comment in the press, so far as I have been able to follow it, was that the majority had amply proved their case and that the minority arguments did not really bear serious examination. The obvious dissentient minority was the Daily Herald, and their argument seemed to be based principally upon a fallacious point of view which has been disposed of by my noble friend Lord Polwarth in his excellent speech. It is the point concerning the incidence of Federal issue and stock transfer tax in America and is not relevant to the argument really at issue. I should like to add, in mentioning the American point of view, that it is interesting to note that, on the subject of shares of no par value in America, the American trade unions so far have expressed no opposition.
  It seems to me that the present position is this. From the standpoint of logic and common sense Her Majesty's Government are satisfied that a strong case has been made out for the alteration of our company law so as to allow companies to issue ordinary shares of no par value if they wish to do so. The present nominal value system seems to the Government to be fundamentally illogical and that, I think, is the gravamen of the point made by my noble friend, Lord Cromer, in his opening speech. Nominal value, I think the House must by now be convinced, is not a true indication of the value of the share. Even if the nominal capital did originally correspond with the real worth of the undertaking—and this, of course, is not always so—it quickly ceases to do so. This is because the value of the assets have changed, because profits have been ploughed back, and because of the revolutionary changes in the value of money. This leads inevitably to misconceptions about dividends.
  If I have correctly followed this debate, and if my elementary economics are right, profits are earned on the capital
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  employed in the company; but under the present system dividends are related to nominal value, which is usually quite out of date. The expression of the dividend as a percentage of this out-of-date capital is misleading as an indication of the shareholder's return on the money he has invested, and still more misleading as describing the proportion of the company's receipts which goes to shareholders. That, I think, was the point made by my noble friend Lord Balfour of Burleigh. It the directors are to pursue a policy of dividend restraint over a long period, ploughing back a large proportion of the profits so that the capital employed in the company considerably exceeds the nominal capital, a dividend of, say, 40 or 50 per cent. may be quite moderate. That, as the debate has shown, is difficult for the man in the street to understand, and he often forgets, I think, that it is not only the millionaires or the speculators who are interested in these matters. It is the little man who invests his money in small sums, which, added together amount to a great deal of money, who is just as interested in this matter; and, of course, the Trades Union Congress themselves must be big investors.
  There is one point, however, where the minority and the majority are strongly in agreement—where Mr. Beard and the Majority Report are at one. That is the point which has been raised by every speaker this afternoon. That is not going to stop me from raising it, because it is a point upon which I am personally interested and have previously wearied your Lordships in many a speech. It is this question of industrial consultation—of management explaining to workers what is really going on. I had this point strongly borne home to me in the four or five years in which I had the honour to be the independent chairman of the joint advisory council of one of our bigger craft industries. I became more and more convinced of the importance of management explaining to their workers, in language which they could understand, what was really happening. The difficulty is that to understand what is really happening in a company you have to look at the balance sheet and be able to read it. I spent a year in a chartered accountant's office before I was called to the Bar, but I certainly would not guarantee to

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  make head or tail of nine-tenths of the balance sheets that I see in the newspapers.
  Mr. Beard emphasised the difficulty of educating the working people, and he is absolutely right. On the day I started to prepare the notes for the speech with which I am now wearying your Lordships, I happened to look at The Times, and in that edition there were the annual reports of nine different companies. Of those nine, four gave no indication whatever of the goods which they manufactured or the services they had to offer to the public. It was impossible to tell whether those four companies made ships, shoes or sealing wax. That cannot be right. I am certain that that gives rise to the doubts and misconceptions to which Mr. Beard draws attention.
  I am also certain that it is necessary that explanations should be in plain language. I think it was our late friend, the noble Lord, Lord Lyle of Westbourne, who first popularised the idea of putting forward his annual statement of affairs in very simple, almost childishly simple, pictorial form. One or two companies have followed suit by using diagrams representing wages, taxation, dividends, reserves, profits and so on, all in the form of a cake with segments. Until you do it in that way, you cannot expect work-people to understand who gets what share of the cake. I sometimes think that it would be simpler to explain such things if words like "rent," "dividends," "profits" and "landlords" were not so festooned around with the rags and tatters of Party politics. We should then be able to understand these things a great deal more clearly.
  Therefore, I hope very much that the plea which has been put forward by every noble Lord speaking to-day for a plainer exposition of the affairs of our industrial and commercial concerns to those who earn their daily bread therein will not fall on deaf ears. I hope that I shall not be considered unkind if I suggest that a little further commercial education, or education of the elementary ABC of economics, is possibly needed by Mr. Beard and those who share some of the views which he put forward in the Minority Report. His principal line of argument against no par value is that its main purpose is to camouflage the payment of excessive dividends. He did
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  not produce any evidence for that. I would submit, on the contrary, that the no par value system, by abolishing misleading percentages, must surely help to remove misunderstanding and misrepresentation.
  I call in aid the Manchester Guardian of the day on which the Report was published, March 31. This is what that newspaper said:
  "Clearly the business of explaining how capitalism works is going to be a long job. No wonder the President of the Board of Trade says the Report calls for careful study and that it will be some time before he can make a statement on it."
  The reason for its being a long job is hinted at by another newspaper on the same day, the Glasgow Herald, which said:
  "A patient reading of the statement of the dissentient member, Mr. W. B. Beard, General Secretary of the United Pattern Makers' Association and member of the T.U.C. Economic Committee, which occupies one-third of the Report, suggests that his real objection to the Majority Report is that, while it overstates the advantages to be expected from the introduction of N.P.V. shares, it takes insufficient account of the fact that objections to the change by such bodies as the T.U.C. would have effects so harmful to the public interest that the change ought not to be made. If this a fair reading of the objection it amounts to no more than a surrender to ignorance."
  That, I think, is putting that point of view very plainly indeed.
  The brand of ignorance to which the Glasgow Herald is suggesting that a surrender is contemplated is, I think, shown most clearly of all in the News Chronicle of the same day. I am glad to see the noble Lord, Lord Layton, in his place—he is not unconnected with that newspaper. Whether he was personally responsible for this or whether it was Sir Oscar Hobson I do not know, but I should like your Lordships to listen to this point of view:
  "Essentially, there is no difference between nominal value and N.P.V. shares. Both represent 'a fraction or an aliquot part of the equity' of a business, but the nominal value share has a 'label of value' attached to it and confers 'a suggestion of value which is untrue and unreal.' In logic this argument is incontrovertible, but the T.U.C. representatives who gave evidence were not concerned with logic but with the suspicion that N.P.V. is a plot 'to conceal what is happening inside public companies and in particular to camouflage the payment of excessive dividends.'
  "'Excessive dividends' is, of course in the eyes of the T.U.C. the rub, though its representatives could only define an 'excessive'

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  dividend as one 'which would strike the average trade unionist as being excessive in relation to the wage he is receiving' 'Excessive' in this submission is what the average untutored worker thinks to be excessive and any step, however desirable otherwise, which made him less inclined to think dividends too high might take the edge off his hatred of capitalism—and that would never do."
  That is the view of the newspaper with which the noble Lord, Lord Layton, is associated, and I would ask your Lordships to bear that last remark in mind. Nobody has yet explained to us, of course, what this excessive dividend is, and I can only think of Humpty Dumpty, who said. "When I use a word it means just what I choose it to mean—neither more nor less."
  On this vexed question of excessive dividends, whilst agreeing entirely with the argument put forward that excessive dividends, if they are really excessive, may have the unfortunate results that certain noble Lords have suggested. I should like to add this. Comparing 1953 with 1938–I have taken two years far apart because a year-to-year basis is not fair for this purpose—dividends have risen by only 50 per cent. while prices have risen by 100 per cent. and wages by 200 per cent. I believe that the editor of the Economist is right when he says:
  "So far from attempting to conceal the truth, the reform would in our opinion enable companies to appear before the public in their true guise with a true expression of what they are in fact doing. I think the Trades Union Congress have got the argument upside down."
  That really is what divides us, if anything divides us, this afternoon. We neither of us want to deceive, on either side of the House. We all, I hope, want to make the situation perfectly clear, and particularly to those who earn their daily bread in industry and who are entitled to have that industry's fortunes made clear to them. We who support the majority finding of this Report think that what is proposed will make for more clarity and helpfulness. We think the weight of opinion and evidence is predominantly on our side, and I must confess that I have heard nothing this afternoon to shake my own opinion on this.
  This is my last point. The procedure for putting these recommendations into law is going to be much more complicated than I first realised when I looked at the Report, and I even expect a bit more complicated than Mr. Gedge and his colleagues themselves thought. The
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  introduction of a no par value system would necessitate adaptations of our taxation law. The coming into force of the necessary Companies Amendment Act would have to be postponed to an appointed day to allow the taxation adaptations to be enacted in the Finance Bill. The companies capital duty, which is now charged on nominal capital, would probably have to be replaced (both for par value companies and for no par value companies) by a charge on the total issued price or consideration for shares, and on increases of capital.
  I ought in duty bound to draw your Lordships' attention to this point. Under the Acts dealing with income tax, surtax, profits tax and estate duties, various questions, none of which I myself understand, turn on the proportion of a company's share capital which is owned or could be acquired by particular individuals or other companies. These Acts would need to be amended to bring them into line with a no par value system. Your Lordships will see from this admittedly vague and unprofessional reference which I have made to the complications involved that it is not going to be quite so plain sailing as some people think. My noble friend, Lord Cromer, will no doubt have heard the note of regret that has crept into my voice, and I think the next remark I have to make will not surprise him. It is this. The Government are, in principle, favourably disposed to legislation on the lines recommended in the Majority Report of the Gedge Committee. However, as I have, I think, now indicated, the legislation would involve not only amendments of the Companies Act, some of which may have some degree of complexity, but also substantial and complicated amendments of existing taxation provisions in a subsequent Finance Bill, the discussion of which would inevitably take up a considerable amount of Parliamentary time—and we are not very flush with Parliamentary time at the moment.
  For these reasons, I am sorry to say that the Government cannot hold out any hope of legislation during the present Session. If I have not given the noble Earl, Lord Cromer, the satisfaction he wanted in that respect, I hope at least I have given him the satisfaction of a clear indication of what Her Majesty's Government's views are on this important and technical subject.
  THE EARL OF CROMER: My Lords, I rise to give thanks to the noble Lord, Lord Mancroft, and at this stage in the debate all I wish to say is that I hope that his evident enthusiasm for no par value shares will act as a spur to overcome the many difficulties which apparently lie ahead. By leave of the House, I beg to withdraw the Motion.
  Motion for Papers, by leave, withdrawn.

  HOUSE OF LORDS REFORM
  5.16 p.m.
  VISCOUNT SAMUEL VISCOUNT SAMUEL rose to ask Her Majesty's Government if they will state whether they propose to take any action on the question of the reform of the House of Lords. The noble Viscount said: My Lords, at the last General Election in 1951, at which the present Parliament was elected, the Leader of the Conservative Party, Mr. Winston Churchill, included a paragraph in his Election Address in which he said that a Conservative Government, if returned, would summon an all-Party conference to consider the question of the House of Lords. That conference has never been summoned, largely owing, no doubt, to the attitude taken by the Labour Party. At the opening of the Christmas Session last December, in my speech on the Address I raised this question afresh, and drew attention to the results that had been reached by the all-Party conference that was held in 1948 which, while not coming to any agreement on the question of the powers of Second Chamber, did arrive at a remarkable unanimity on a number of important points dealing with composition.
  I hope I shall not be thought unduly persistent if to-day I ask Her Majesty's Government what course, if any, they propose to take on the question of the reform of the House of Lords. It may be found that the matter of powers is not now regarded with the same strong feelings that used to prevail. Neither in the country nor in Parliament is there any powerful body of opinion which exercises itself over any change in the present powers of the House of Lords, and it may well be that we shall all be content to let that matter rest where it is under the law as it now stands, and perhaps try by some fresh effort to arrive
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  at a general agreement on the question of composition. For I am sure that all your Lordships will be of the opinion that great constitutional changes, such as we are concerned with here in this matter, can best be arrived at, not after bitter Party controversies and a struggle on purely Party lines, but that they will be most effective and most beneficial and conduce best to the stability of our institutions if they can be reached by a large measure of agreement and after deliberate and painstaking discussion. For that reason, I have to-day put down an Unstarred Question, not a Motion, because I do not hope, desire or attempt to evoke the general opinion of the House on this great matter, and still less to express my own views which I have done to your Lordships on many occasions. This is only an exploratory Question, but I am inclined to think, subject to anything that may be said by the noble Marquess the Leader of the House or by the noble and learned Earl the Leader of the Opposition, that it may be found desirable before long to arrange for a full discussion in your Lordships' House in which the whole of the situation may be carefully reviewed. Meantime, I beg to ask Her Majesty's Government if they will state whether they propose to take any action on the question of the reform of the House of Lords.
  5.20 p.m.
  EARL JOWITT: My Lords, before the noble Marquess replies to that Question, may I say a brief word or two? No one, I think, can complain that the noble Viscount should raise this matter again; yet, for my own part, I venture to think—because we have had a good many discussions about this subject, and we have been going rather round and round about it—we have reached the point now where, if anything is to be done, the best way to do it is for the Government to promulgate or put forward some suggestions which could form the subject of discussion before the House, in order that the sense and temper of the House may be obtained. I believe that would be a better way of getting the opinion of the House than just a discussion completely in vacuo, as we have been having for some time past.
  I feel sure that the noble Marquess who leads this House would, in a matter of this sort, concerning something which is of such importance to us, desire to get

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  the largest possible measure of agreement, or at any rate to reduce the area of disagreement so far as he possibly can. I believe he would rather have a plan which commended itself to wide sections than a more perfect plan which did not so commend itself. I have no intention of making a speech about this matter now, but I think it must be made plain that there is no question or intention of increasing the powers of the House of Lords; that we leave the position where it stands under the Act of 1948, and accept that as the basis on which we are to proceed. Secondly, it must be made plain that there is no suggestion of creating a House of Lords which is in any sense a co-ordinating authority with the other place, as it would be, for instance, if it were an elected Chamber, whatever form of election you have. I do not think that would do at all. If the noble Mar-guess, if he comes to formulate some proposals, would bear those two facts in mind, I believe he would go some way, at any rate, to avoid hostility, which I am quite certain would arise were those proposals at all in question. I do not believe—and the noble Viscount, Lord Samuel seems to agree with me—that those matters are in issue at the present time in the proposals. That is something which we should very much like to see.
  All I can say is this—I cannot speak for my Party more than in this way—that if those principles are observed and proposals are brought forward in this House, we shall devote ourselves to them and try to bring to bear on them useful, not merely destructive but constructive, criticism as well, and examine them and make what contribution we can by way of debate. I am not authorised to say any more than that. Subject to those two points of principle which I have mentioned, I can at least say that we will take our part in the debate on the Floor of this House.
  5.24 p.m.
  THE MARQUESS OF SALISBURY: My Lords, we have had an extremely short but I think valuable exchange of views on the Question which has been asked by the noble Viscount, Lord Samuel. I must confess that when I first read on the Order Paper the noble Viscount's Question I was a little bewildered. I wondered why he had chosen that particular form of words for the purpose of raising this question of the reform of your Lordships'
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  House, and I expect that some bewilderment may have been felt by some other noble Lords. One might naturally have expected him to ask when Her Majesty's Government proposed to take action, or what action they proposed to take on a subject in which, as we all know, the noble Viscount is keenly interested. But he studiously avoided doing that, even in his Question. He confined himself to the single bleak, bald proposition:
  "To ask Her Majesty's Government if they will state whether they propose to take any action on the question of the reform of the House of Lords."
  Why did he do that? As we all know, the noble Viscount is an extremely wise and experienced Parliamentarian. He never does anything without a very good reason, and he must have considered the wording of that Question on a matter of this importance with the greatest care. Why did he put it in that way? I am going to try to answer him.
  VISCOUNT SAMUEL: Simply as a result of past experience.
  THE MARQUESS OF SALISBURY: I think that the noble Viscount himself gave the answer in the few remarks he made to your Lordships. He said that it was an "exploratory" Question—that was the epithet he used. In fact, as I understand it, this is only the first preliminary move; it is not the "succulent dish" to which the noble Lord, Lord Polwarth, referred in an earlier debate this afternoon: it is just another hors d' æuvre to a later discussion. That is the first thing one must conclude. The second is that the noble Viscount wishes to retain the initiative for the second move; and it is only when he gets to the second stage that we shall learn fully what is in his mind. In the meantime, I imagine that the noble Viscount is not particularly anxious that the Government, or anyone else, should come out with fully-fledged proposals. That, I think, would embarrass him rather than please him today. As I say, he would hike to retain the initiative for the next move.
  I do not complain at all of the line which he has adopted with such careful thought. This gradually phased approach to the subject may indeed have special advantages for all of us. It enables us to get some information as to the attitude of Parties which I think may be of very real value in our further explorations of

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  this subject, which, as the noble Viscount has said, is of great importance to us all. Indeed, we have already got a certain amount of information from the speech of the noble Viscount himself, brief though it was. We know, first, that he—and also, presumably, the Liberal Party for whom he speaks—is convinced of the necessity for some reform of the composition of this House. My Lords, that is at any rate satisfactory to most of us. In passing, I would say that, as I understand it, the noble Viscount did not today concern himself with powers. The subject on which he threw the greatest emphasis was the question of composition, and I hope he will understand that it is to the question of composition alone that I shall direct any remarks that I have to make this afternoon.
  I do not know whether the noble Viscount has changed his views or modified them since he was younger, but at any rate his view now is that this country must have an effective Second Chamber—again I refer only to the composition of that Chamber. He suggests, too, as I understand it, that if nothing is done to bring any new life to this House it will gradually die, as an effective element in the Constitution. With that I personally, and I expect most of us, would agree. There are many reasons to account for the present position in this House. There is the further reduction in the importance of the House as a result of the Act of 1948, which has I think, to some extent, at any rate, led to a further reduction in the interest of some of its Members in its doings. Many of us pointed out at the time that that was likely to happen, and I think it has happened. I do not want to overstress it, but I think that is one of the reasons for a certain lack of life which perhaps exists in the House today, as compared with ten years ago.
  Then, if I may be bold enough to mention such a thing, there is the economic reason. A popular belief appears to persist in this country that all Peers are rich men: but noble Lords know that in these difficult days that is no longer true—if, indeed, it ever was, to the extent suggested by that popular belief. The vast majority of noble Lords in this House can no longer afford to give their whole time to a job for which they receive no remuneration, not even payment of the many expenses incidental to the job itself.
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  At the present time by far the greater part of the cost of attending to our constitutional duties has to be paid by noble Lords themselves, and that imposes an increasingly severe burden upon them. I am not complaining of the position; I am merely stating it as a fact. This is true of Peers of all Parties, and it imposes, I believe, special difficulties for the Party of noble Lords opposite. That is a problem which must, in my view, be faced at the earliest practicable date. It is just one of those respects in which some reform is becoming ever more necessary, although personally I do not feel that it is by those means alone that the House will regain the full life which it has unhappily to some extent lost.
  I do not propose to-day to enter into details of the complete scheme which I hope in due course to be able to recommend to your Lordships, for of course the answer to the noble Lord's Question is "Yes." In his Question the noble Viscount has studiously avoided asking for that, and I agree with him that it would be premature. I did intend going into a certain amount of detail but I now think that even that is unnecessary; in fact, much of the speech I had intended to make would be perhaps going too far ahead at this stage, in view of the very great restraint shown by the two noble Lords opposite. But I can say that any scheme that may finally be adopted must, of course, conform to certain broad principles, with which doubtless the noble Viscount and most of us would be in agreement.
  And now I should like to say a word on the attitude adopted by the Labour Party, as instanced by remarks of the noble and learned Earl, Lord Jowitt, this afternoon. On the whole, it is rather better than I expected. It is not so entirely hostile as some of us might have feared. I understand the position taken up by the Party of the noble Lords opposite to be that there must be no change in the balance of the Constitution as between one House and another in any respect, and that there must in particular be no increase of powers. Short of that, the noble and learned Earl has indicated (perhaps he would say hinted), or at any rate given some indication, that the attitude of his Party to some measure of reform in the Constitution might not be entirely negative. I hope that I have

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  not overstated the noble Earl's case. We are not concerned to-day with powers, and I do not propose to go any further into that aspect; but as a result of the Question which the noble Viscount was good enough to put down, we do know now that there are circumstances in which the Labour Party might be willing, without prejudice, to enter into talks. That is something more than we have had
  EARL JOWITT: To enter into talks on the Floor of the House.
  THE MARQUESS OF SALISBURY: On the Floor of the House. I was very glad to hear that view because, frankly, unless noble Lords opposite believe in Single-Chamber Government—and I do not think most of them do—it is surely better to make the Second Chamber as efficient in its composition as it possibly can be made. I believe that no one in this House would dispute that—indeed it is really common sense.
  I was glad the noble Earl did not put forward the view that no other Parties could go ahead without his Party's co-operation. That would be a very strange doctrine in the mouth of a Party which brought in a Parliament Bill less than ten years ago without any agreement at all. But clearly it would be very much better, if there is to be a reform of this House, that it should be by agreement. We should all agree that any great constitutional change, or modified constitutional change, is better done with inter-Party agreement than without, and I still hope that that may prove possible. In the meantime, I can say to-night that we shall continue to labour at perfecting the details of a scheme of reform; and we shall, in that work, welcome the co-operation of the Liberal Party if they feel able to give it, and indeed if, after further consideration, the Labour Party, too, find it possible to co-operate with us when the time comes, that co-operation also will be welcomed. I recognise that the noble Earl has not offered that, but I repeat, if they find it possible, we shall be very happy that they should join in discussions. If not, then we shall have no hesitation in due course, when the time comes, in going ahead without them on a task on which, in our belief, the future safety and welfare of our country may well depend in the difficult years that lie ahead.
  VISCOUNT SAMUEL: My Lords, by leave of the House, may I ask the noble Marquess a question which will be in the mind of everyone after his useful speech—When?
  THE MARQUESS OF SALISBURY: I seem to remember a great Liberal dictum: "Wait and see,"
  VISCOUNT SAMUEL: When that was said by Mr. Asquith in my hearing, and repeated three or four times, it was said in a menacing and combative tone, telling the Opposition who were then angry with him that if they would only wait a little while they would very soon see—and they did.
  THE MARQUESS OF SALISBURY: I hope the Liberal Party also will see in due course.
  VISCOUNT SAMUEL: This is a very important and serious point. When the noble Marquess says "in due course," how long is that course to be? Is there any prospect that this matter will be fully discussed in your Lordships' House during the present Parliament?
  THE MARQUESS Of SALISBURY: My Lords, we have all far exceeded the proper rules of order with regard to Unstarred Questions in the Rules of Order which we have ourselves lately revised. If the noble Viscount wishes for more information, I suggest that he should put a Question or a Resolution, as he is inclined, on the Paper of the House.
  VISCOUNT SAMUEL: On that note I would thank the noble Marquess most cordially for his helpful speech.
  5.39 p.m.
  LORD ELTON: My Lords, would it be in order for a Back-Bench independent Member to ask a Question of the noble Marquess, the Leader of the House? I know nothing of the inner councils of the Conservative Party, but I hope he will remember that there are independent Peers; and there is, I am sure, a large current of feeling in the country which entertains profound misgivings at seeing this ancient House embarking on paper-constitution making. Many of us believe that this is one of those ancient British institutions of which, thanks to its very ancientry and to the success with which over the centuries it has continually adapted itself to changing circumstances,

  719
  it can be said that while it is totally indefensible in theory, it works excellently in practice. We have heard a lot about the illogical features of the House, but that is the House of Lords of theory. Here around you you see the House of Lords in practice, a small body of impoverished and public-spirited individuals representing in the aggregate an immense accumulation of experience of administration, legislation, and practical affairs. I should like to ask the noble Marquess the Leader of the House whether the next stage in this lamentable progress—for so many of us, inside and outside the House, regard it—is that we are to be presented with an official, ready-made, paper reform, on the model of the French Revolution, of this ancient House, or whether we are yet to have a discussion as to whether any such reform is necessary. It was not at all clear, from what the noble Marquess
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  said, what the next stage of the proceedings is to be. I hope I may be forgiven for inquiring.
  THE MARQUESS OF SALISBURY: My Lords, I think the proper answer to the noble Lord is that it is open to him, or to any other noble Lord, at any moment, to put down a Motion on the Order Paper for discussion. I am sure that, if he wishes, he will be able to do so before the Government complete this immensely complicated inquiry in which they are now involved. I suggest that that is the proper course for the noble Lord to follow. It may be that if the noble Viscount, Lord Samuel, is himself proposing to take the matter further at a later date it would be well for the noble Lord, Lord Elton, to see him and to discuss the matter with him.
  House adjourned at eighteen minutes before six o'clock.