Lords Sitting of 12 May 1960

Preamble
The House met at three of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Leicester

BRITISH RAILWAYS AND COASTAL SHIPPING
3.5 p.m.
VISCOUNT SIMON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they have taken steps to ensure that the Advisory Group appointed by the Minister of Transport to examine the structure, finance and working of the organisations controlled by the British Transport Commission in making their recommendations will take into account the need to provide effective arrangements for consultation between British Railways and coastal shipowners in regard to rates on those traffics for which coastal shipping can cater economically.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM): My Lords, the terms of reference of the Advisory Group are wide, and they have already expressed their readiness to receive representations from interested parties. I am sure that they will take account of all relevant factors. I think it is for the Advisory Group themselves to decide upon the form and content of their advice to my right honourable friend.
VISCOUNT SIMON: My Lords, while thanking the noble Lord for his reply, I cannot say that I feel very satisfied with it and I wonder whether I may ask him two questions arising out of it. Am I to understand that Her Majesty's Government are still adhering to the policy which is embodied in the Transport Act, that there should be consultation between the British Transport Commission and coastal shipping, rather than
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cut-throat competition. And if that is still the policy, would it not be right to make this clear to the Advisory Group, so that, in any advice they give, they do not give advice which is contrary to that policy?
LORD CHESHAM: My Lords, in answer to my noble friend's first question, I would say that the present position as to the consultation that has to take place is a statutory one under the Transport Acts of 1947 and 1953, and any departure from that would require legislation. Therefore it is for my right honourable friend to consider, in due course, whether he should do anything about changing the position or not in the light of the advice which is given to him and of other representations which have been, and which no doubt will be, made.
VISCOUNT SIMON: My Lords, I am much obliged to the noble Lord.

THE CORFIELD REPORT ON MAU MAU
VISCOUNT STANSGATE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government when the text of the Corfield Report on Mau Mau will be available in this House; and whether any summarised version will be circulated.]
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH): My Lords, the Report will be published as a Command Paper, which I hope will be available by the end of the month. Copies will be placed in the Printed Paper Office. I understand that Mr. Corfield has summarised his conclusions in the last chapter of the Report.
VISCOUNT STANSGATE: My Lords, I am very grateful to the noble Earl.
LORD OGMORE: My Lords, may I ask whether there is any truth in the rumour that this Report has in some way been censored or bowdlerised by someone dealing with the Report?
THE EARL OF PERTH: My Lords, no; there is no truth in the rumour that it has been censored. What happened

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is that Mr. Corfield himself thought it advisable to do some editing in relation to matters of public interest which are not generally disclosed, such as intelligence work and that sort of thing.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, are we to understand from that reply that the policy has been settled? Would the Government have approved of the statement which appeared in two columns of The Times on Tuesday?
THE EARL OF PERTH: My Lords, I do not think that the statement to which the noble Viscount is referring, which was a statement of the Governor, has anything to do with the Corfield Report. At the same time, I would certainly say that the general lines of what has been said by the Governor are obviously the policy of Her Majesty's Government.

INTELLIGENCE FLIGHTS OVER FOREIGN TERRITORY
VISCOUNT STANSGATE: My Lords, by leave of the House and with the consent of the noble Earl the Leader of the House, I beg to ask the following Question by Private Notice:
"Whether Her Majesty's Government accept the policy set out by President Eisenhower as to intelligence flights over foreign territory; whether this policy would affect our duties under treaties of mutual defence, such as N.A.T.O.; and, further, whether Her Majesty's Government would approve the consideration of President Eisenhower's statement by the Security Council."
THE LORD PRIVY SEAL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM): My Lords, your Lordships' House will remember accepting the First Report from the Select Committee on Procedure, which dealt with Private Notice Questions. The relevant recommendation of that Committee was that the decision as to whether a Question
"is of sufficient urgency to justify an immediate reply should rest in the first place with the Leader of the House and ultimately with the general sense of the House."
I felt that I ought to take what advice I could as to whether this was a Question justifying the Private Notice procedure
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within those words, and I am bound to say that I came to the conclusion that it was not; and if the House would support me, I would ask them to say that, too. On the other hand, in view of the nature of the Question and of the attitude taken by my right honourable friends towards somewhat similar Questions in another place, I felt that perhaps the noble Viscount might have a legitimate sense of grievance if I told him to put the Question down on the Order Paper and then, when he had done so, he got the kind of Answer I expect he would get.
In those circumstances, and without treating this as a proper use of the Private Notice Question Procedure, I thought that perhaps the House would desire me to give the Answer to-day, notwithstanding that it was not a proper Private Notice Question. As I am sure the noble Viscount is well aware, it has long been the accepted practice of successive Governments from both sides of the House that matters relating to intelligence are not discussed in public. Furthermore, I cannot believe that on reflection the noble Viscount would expect me to comment in your Lordships' House on statements made by the Head of the United States Government.
VISCOUNT STANSGATE: My Lords, I pass over the procedural point. I am sure that the House would support the Acting Leader in any action he asked. But my Question is this. Here is a case in which two American planes have been destroyed in what is now really enemy territory. The Government are asked what is their policy in this matter, and they give the reply which has always been given in these matters—namely, that they cannot deal with this private inquiry business at all. That we understand. But there is a vast difference between sending a man to try to collect information in a country and sending an aeroplane, which might be armed, over the other person's country.
VISCOUNT HAILSHAM: My Lords, is the noble Viscount asking a supplementary question or making a statement?
VISCOUNT STANSGATE: I am obliged. But this is an important matter—
VISCOUNT HAILSHAM: All the more important then to keep in order.
VISCOUNT STANSGATE: If the noble Viscount objects he has the remedy in his own hands, and I will ask him to use it. If he thinks I am going too far he has only to ask the House that I be no longer heard and I shall be stopped. But until that happens I intend to make the point—
VISCOUNT HAILSHAM: I would ask the noble Viscount, with respect, whether he intends to ask a question or make a point. If he intends to disregard the Rules of Order of the House and make a point and not ask a question then I shall think of taking the remedy into my hands which he has invited me to do. It is, after all, for Members of the House to observe the Rules of Order of the House. The noble Viscount asked a Question which was out of Order, and I thought I was stretching a point in giving him an Answer. He now, instead of asking a supplementary question, seeks to make a speech to the House, and I shall ask the House not to hear him if he persists.
VISCOUNT STANSGATE: When the noble Viscount sees fit to move that Motion I will accept it. In the meantime—
VISCOUNT HAILSHAM: I beg to move that the noble Viscount be no longer heard.
Moved, That the noble Viscount be no longer heard.—(Viscount Hailsham.)
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I would suggest that perhaps the House would agree with me in saying that as the Leader of my Party is opening a debate on Foreign Affairs to-day in the House of Commons, and the Prime Minister is to engage in that debate, it would be a pity if we got a wrong atmosphere here at the moment until we have heard from more authoritative sources.
VISCOUNT STANSGATE: I am not clear whether my noble Leader is supporting the Motion that I be shut up or not.
VISCOUNT HAILSHAM: My Lords, I can only say that the last thing I would desire to do would be to create any atmosphere of heat, but it is my duty,
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standing in this place, to ask for the Orders of the House to be observed. Of course I am in the hands of the House as to whether it supports me or not. But, as I understood it, the noble Viscount, after having been asked whether he was going to ask a supplementary question, made it quite plain that he was not and was proceeding to make a point. I hope that the House will support me in saying that the Orders of the House in matters of this importance ought not to be lightly disregarded and intentionally flouted.
On Question, Motion agreed to.

BETTING AND GAMING BILL
Brought from the Commons; read 1a, and to be printed.

BUILDING SOCIETIES BILL [H.L.]
3.15 p.m.
Order of the Day for the House to be again in Committee read.
Moved, That the House do now resolve itself into Committee.—(Viscount Hailsham.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 13:
Valuation of security
13.—(1) For the purposes of subsection (1) of section twelve of the Building Societies Act, 1939 (which imposes on every director of a building society the duty of satisfying himself that proper arrangements have been made for valuing security to be taken by the building society) a director or the manager or secretary of the building society shall not be qualified to assess the adequacy of security to be taken by the building society in respect of any advance.
LORD MESTON LORD MESTON moved to add to the clause:
"() Notwithstanding anything in subsection (2) of this section, a director or manager or secretary of a building society shall be qualified to make a valuation and report on a property and to assess the adequacy of security to be taken by the building society in respect of that same property if the said director or manager or secretary is duly authorised to do so by a special resolution passed by the members of the society at an annual general meeting of the society, such authorisation to last for a period

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not exceeding fifteen months, and to be renewable in like manner. Any such authorisation must be reported by the society to the Chief Registrar of Friendly Societies, and reported in the annual report of the society."
The noble Lord said: I rise to move the Amendment standing in my name. I am not attaching any great importance in the actual wording of the Amendment or to the position in which it stands. At the same time, if the Government look with favour upon the Amendment, then I say they will give satisfaction to a large number of people. This is a last ditch attempt on my part to move the stony heart of the noble Viscount the Lord Privy Seal, and if I do not succeed, nothing will be left for me to do than to withdraw and drown my sorrows in the appropriate manner. I have said on two previous occasions, like a gramophone, that I am utterly opposed to surveys or reports for a building society being made by an unqualified or inexperienced person, whether he be a director or otherwise. Furthermore, I am utterly opposed to a report for a building society being made by any director in respect of a property in which he has an interest. But, subject to those qualifications, I think it would be disastrous to shut out any directors who are qualified and experienced men from making reports on property in respect of which their own society make advances of money.
We cannot live in an imaginary world. We live in this world, and we all know that in the past year certain events have happened which have rather shaken the faith in certain building societies. Therefore I am prepared to go as far as this—and I do so with pleasure: that a director of a building society should make a report and valuation for his society only if he
"is duly authorised to do so by a special resolution passed by the members of the society at an annual general meeting of the society, such authorisation to last for a period not exceeding fifteen months, and to be renewable in like manner. Any such authorisation must be reported by the society to the Chief Registrar of Friendly Societies, and reported in the annual report of the society."
I feel that those safeguards are sufficient and will shut out anything in the way of improper practice. On the last occasion the noble Viscount blasted me about coming here with the big battalions. I do not know whether they are here or
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not, or whether there is a phantom army here. I understand that there are Members of your Lordships' House who are directors of building societies and are placed in the same position in which I am placed, and I hope that they will support the Amendment. I beg to move.
Amendment moved—
Page 17, line 14, at end insert the said subsection.—(Lord Meston.)
LORD JESSEL: If Her Majesty's Government do not accept this Amendment—and I think it is highly unlikely that they will—the position will be that a director, manager or secretary of a building society is disqualified from reporting on the value of any freehold or leasehold. If Her Majesty's Government think that is right, I suggest that they ought to go further and disqualify a permament member of the staff, because I can well imagine the situation where a building society has what I may call a "tame" surveyor on their staff and tremendous pressure being put upon him by the manager to give the kind of valuation which was required. If you are going to be consistent and require an independent valuation, I think permanent members of the staff should not be allowed to do it. I should like to hear what Her Majesty's Government think about that point.
LORD LATHAM: Without, I hope, appearing to be a Simon Pure I support the proposals submitted by the Government in the Amendment which was under consideration the day before yesterday. I am sorry that in that respect I may be in disagreement with my noble friend Lord Wise who, as he told us on Tuesday, is a chartered surveyor. I think the situation is misunderstood. When submitting his Amendment the noble Viscount said that the procedure in regard to advances consists of two functions. One is the valuation, and the other is the determination as to the advance that will be made and the adequacy of the security in relation to that advance. Now the first, the valuation, is a matter largely dependent upon ascertainable facts. The second stage is not; it contains quite a number of imponderables. For instance, the board have to consider the financial position and the employment of the borrower, the number of his family and the relation of the property intended to be

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bought to the number of the family. Because nothing can damage a house or flat more rapidly than to overcrowd it; and overcrowding the security would be to reduce the value of it.
All those factors must be taken into account, but the main factor will always remain the value of the property. In that connection and in that respect, the board are entitled to be free of any embarrassment which can so easily issue from the circumstance that the valuation has been done by a member of the board, and his colleagues are perhaps unwilling to criticise him or the valuation which he has submitted. Under Section 161 of the Companies Act it is provided as regards non-exempt companies and public companies that a director or servant cannot be an auditor, nor any partner of any director or servant of the company; and as regards the audit of the accounts of the building societies dealt with in the Bill now before your Lordships' House, those provisions are repeated in Clause 43.
The point is not the competence of valuers who may be directors also of a building society, but the independence of the advice which the board as a whole receive in connection with the value of the property. The noble Lord, Lord Ogmore, suggested yesterday that the provisions as they now stand would shut out the little societies. But the provisions do nothing against societies except to require them to conform to a certain and, as I think, proper administrative régime. The societies themselves will not in any way be damnified. There are plenty of outside valuers who can give the small societies, like the large societies, the valuations which are required. The situation is that to some extent the director who also values will in fact be advising himself; and that is, I think, an undesirable procedure.
As regards the Amendment of the noble Lord, Lord Meston, whose forays at times we all enjoy, it really offers no protection. A special resolution would be put down by the board and, if it is to be successfully opposed and defeated, it means that a member who objects to the proposal that a director shall be entitled to value as well as to assess, will be required to circularise all the other members of the society in order to defeat this resolution. That means that this proposal with regard to a special resolution will need to be included as one of
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the reasons entitling a member of the building society to inspect the register of members and, indeed, to have copies of the names and addresses. It seems to me that it is a little undignified for the director in question, who is also the valuer, to have a resolution down asking the annual general meeting to consent to his acting in a way which otherwise he is not entitled by law to do. It seems to me to be not only undignified as regards the director, but also undignified as regards the society. What is needed is that there should be an absolute independence both in the valuation and in the assessment of adequacy. Not only should there be independence hut, to paraphrase a somewhat hackneyed phrase, that independence prevails should be seen by all. In those circumstances, I hope that the Amendment of the noble Lord, Lord Meston, will be rejected and that the proposals as already approved by the Committee of your Lordships' House will remain.
VISCOUNT RIDLEY: I should like to support what the noble Lord who has just spoken has said. I think this Amendment is a real mistake. In effect, it nullifies the whole purpose of Clause 13. It is true that a number of societies—mainly, I think, small ones—do in practice have valuations done by members of their boards, and of them as individuals I think there is no criticism. Very conscientious and honest people work in these societies, and they do it very well. But the point of this Bill, I think, is to protect the whole of the building societies against the ill-repute from which they might suffer by a few societies' getting into the hands of unscrupulous people, as in fact we know has happened. If that is the purpose of the Bill, it would seem to me to be completely right and proper that there should be no loophole from this provision, which is a provision to protect the good name of societies.
I should like to refer to a point made by Lord Jessel when he said he thought that a surveyor employed whole-time by a society perhaps should not be allowed to make valuations either, because of undue influence from the secretary or manager or whoever it might be in the office of the society. But in practice I think the way the matter works is that, in the case of a society which employs independent professional men to value

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for them, there is constant and daily communication between the staff of the society and the professional men of independence who are doing the valuation, very much in the same way as there would be constant to-and-fro between the senior staff of the society and the whole-time valuer employed by them. Many societies do that. It seems to me, therefore, that it would be totally unjustified to prevent a society from employing a whole-time staff surveyor, which is in fact a very common practice.
I think the noble Lord, Lord Elton, was perfectly right. It is a question of independence that is important here. There is a requirement of building societies, by convention, if not by law, that they may not lend more than the actual amount recommended by the valuation of any particular security offered to them. As I see it, the function of the board of directors is to receive this valuation and to decide, not only on the basis of the valuation but taking into account all the circumstances such as the position and means of the borrower and the security he himself can offer, what is the proper amount to lend. That seems to me such a clear definition of functions that it would seem to me right the clause should stand as it is, and I hope the House will not approve this Amendment.
LORD OGMORE: I think there is a point here, and I think it is very important we in this House should examine it. After all, it was a minority opinion of the Building Societies' Association, as Lord Elton said.
A NOBLE LORD: No.
LORD OGMORE: Lord Elton said it was a minority opinion.
VISCOUNT RIDLEY: I think a very minor one.
LORD OGMORE: He did not describe how minor.
LORD ELTON: I think I said a small minority. I have not any figures.
VISCOUNT RIDLEY: I can quote the figures: 340 were against this Amendment and 40 in favour; that is to say, 340 were in favour of the clause as it stands.
LORD OGMORE: Forty out of 340 is a substantial minority. It is a far greater one than we usually get in this House on this side, and we often think we are in the right.
THE DUKE OF DEVONSHIRE: I should like to interpolate that the Council of the Building Societies' Association were unanimously in favour of the clause as it stands.
LORD OGMORE: I said the Association. On this side we are not so perturbed about that sort of figure as noble Lords on the other side; we ourselves suffer from that. The point is it does affect the small society, and it affects it in this way. When any organisation gets big, whether it is an industrial organisation or a trade union or anything else, although at City dinners and the like it pays great lip service to competition, in fact one of the things it does not want, and will seek to prevent at all costs, is competition. The capitalistic type of society in which we live tends more and more to become a society of the big battalions. I am sorry that the noble and learned Viscount, Lord Hail-sham, who a few years ago used to be a strong supporter against the big battalions, always ready to criticise and, indeed, to vote against his own Government on doctrinaire points, is now supporting the big battalions.
In fact this clause will affect the little societies. It will affect the societies who are starting, who are trying to get into the building society world, who are impinging upon the business of big societies. Those are the ones it will affect; and the reason, of course, is that very often it is through the interests, the influence and the assistance of the surveyors, the valuers and so on, who are associated with the building society, that it develops. So far as I am aware there has been no objection; it has not been proved at all—again as far as I am aware; I have not heard of it—that there has been any misconduct on the part of any of these effectors who are also valuers. In fact the noble Lord opposite said only a moment ago that through the years these directors who were also valuers have performed yeoman service to the societies; and as I mentioned the day before yesterday—not yesterday, as the noble Lord Lord Latham said—left to themselves the big societies become

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more and more, as it were, frozen in their outlook. They were the ones that would not give any mortgages to Poles; it was the little societies that started to give mortgages to Poles. Now, of course, when everyone has realised how good Poles are, how excellent their creditworthiness has been, other people are going to do it.
The big societies have failed to take into account the sort of life which we live in London—the flat, the apartment; and they would not give any mortgages to people who lived in flats. It was a little society that started doing that. Therefore, if you want a society in which free enterprise takes its part, if you want a society in which there is competition—which we on these Benches do—then you should not make it more difficult for the smaller societies to get up and to make a really worthwhile contribution. And that is what is behind this clause.
VISCOUNT RIDLEY: If I may interrupt the noble Lord, could he tell us how the Bill as it stands makes it more difficult for smaller societies?
LORD OGMORE: For this reason: that they will no longer have on the boards of directors valuers and accountants and surveyors, and people like that. It is often through the influence of these people that the small society is able to get a foothold. Noble Lords may like it or not, but that is the fact; that is how a small society comes into existence and grows, through the fact that the board of directors include people who are also valuers and surveyors and can enable them to get business.
Quite apart from that fact, there are certain localities in which it is very important that some of the directors shall have a personal knowledge of the kind of conditions of the particular locality. In some ways I just cannot see the point of this Amendment to Clause 13, because what is it expected the director who is a valuer is going to do? Presumably he wants to give a correct valuation. Presumably he does not want the resources of his society to be imperilled in any way. He is not less likely to give a correct decision because he is a valuer as well as a director. I should have thought he is more likely to give a correct decision
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on values—he has in fact a double realisation of the necessity to give a correct decision. In this matter I feel that we are not looking at the practical effect on the small building society. We are once more looking at the interests of the huge societies, of the big organisations, who more and more in this country are running our show and whose interests we alone in Parliament are, in my opinion, far to much inclined to regard without any proper regard for the young, struggling people whom we ought to be considering and whose interests we ought to be fostering.
THE DUKE OF DEVONSHIRE: Towards the close of the debate on Clause 13 on Tuesday, I asked my noble friend the Lord Privy Seal four questions. I understand that I asked them rather fast, and for that reason, if for no other, I am afraid I was not altogether satisfied with the answers I received. I received an answer to the first question, but I thought that the remaining three questions were not sufficiently answered. My Association would like more guidance by way of answer to those questions. I think they are as relevant to Clause 13 as they are to the Amendment to Clause 13 which has been put forward by the noble Lord, Lord Meston. I therefore intend to ask them again. I received an adequate answer to the first question, but since the other three remain I will ask the first one again. I hope that this time I shall not ask them too quickly.
They are, first, if a director is in partnership as a valuer with other persons who are not directors, are those other partners disqualified from making valuations? Secondly, if the other partners are not so disqualified, should the report be signed by the partner who makes the valuation or in the name of the firm? Thirdly, where a director is in sole practice—that is, without partners—as a valuer, can valuations be made by competent members of his staff? If so, who should sign the report? Lastly, where a director is also a director of a limited company which undertakes valuations, who is disqualified from making a valuation and who should sign a report?
LORD SALTOUN: I think that most of us on this side, and most people in the building societies, are behind the

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Government on this Bill. I quite see that Lord Meston's Amendment will not do, because it would permanently affect the Bill. On the other hand, this is a far-reaching reform, even if it is most timely, and I am told that there are directors of small building societies who for long have practised valuations for their societies. They are not young people, but old people who will find their position and income violently affected by Clause 13 as it stands before us to-day, and will possibly come down in the world very sharply, while there is absolutely no insinuation or suspicion about their integrity.
I think that legislation that proceeds by breaking eggs in such a wholesale fashion is rather a pity, and I wonder whether it is not possible to allow people who have been doing this work for a considerable number of years to continue to do it for a certain time, by licence from the Registrar, or under some such arrangement as that, which will gradually disappear and will inflict no sudden and great hardship on innocent people but will, at the same time, not in any way qualify the great reform that the Lord Privy Seal has in hand at present. The noble Lord, Lord Latham, who spoke most ably on this matter, seemed to me to suggest that there ought to be an impartial person to assess—I have forgotten what he called it—the personal security as well. I always thought that that was a most important function of the directors appointed to the board; and I have always understood that it was far more important really—if things must be measured in terms of importance—than the actual value of the premises. Therefore, if that is correct, it is a subsidiary function that is being taken out of the hands of the board by this clause. I think that if it were possible to continue if for a few years in regard to a man against whom nothing could be urged, it might mitigate the hardship caused by the passage of this Bill and really be for the benefit of everybody.
LORD SILKIN: This is a matter to which I have been giving thought, and I find it rather more difficult than a good many noble Lords who have spoken seem to do. One thing is certain—namely, that this Amendment as it stands will not do, for the reasons, among others, which my noble friend Lord among gave. Apart from that, if you are going to
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retain directors as valuers you must have it quite clear in the Bill itself that they are properly qualified to make these valuations. There is nothing in this Amendment which requires the directors to have any particular qualifications at all. I should have thought that if they were to remain in a position to make these valuations they ought to be valuers duly qualified, and that those qualifications should be contained in the Bill itself. Nor do I regard the discussion as between the large societies and the small ones as particularly relevant to this question.
I think that this is a broad question which is worth considering on its merits. The simple question is: should directors who are properly qualified be in a position to undertake the work of valuations? I myself find that question exceedingly difficult. In the case of most companies—certainly this is so of the larger ones—there are full-time directors who are specialists in particular jobs. There is a sales director, a works director, and so on, whose sole job it is to look after particular aspects of the functions of the company, and there seems to be nothing inconsistent in that as between having directors whose sole job or main job it is to carry out valuations. What one wants to ensure is, as I have said, first of all, that they are duly qualified to carry out these functions, and secondly, that they are independent and will be giving independent advice. If that could be secured I should not feel strongly against permitting directors of a building society to carry out a pure valuation.
Of course, the other functions which my noble friend referred to are, having got the valuation, assessing the security. The valuation is only part of the question of security. The valuation having been obtained, then these questions arise of the possible use of the premises, the creditworthiness of the proposed borrower, the general policy of lending on flats or houses, and so on. These are certainly matters for the board as a whole. As I have said, why this Amendment will not stand up is that it makes no provision for securing that directors who are going to carry out the valuation are properly qualified; nor does it give a proper safeguard merely by requiring the consent of the annual meeting. Those

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who know and have had experience of annual meetings will realise that this is not a safeguard—it is a paper safeguard, but not a real one. If something could be devised which would secure the interest of the shareholders and lenders of a building society and which, at the same time, would retain the services of fully qualified and independent directors of a building society, then I myself should feel that that would be worthy of consideration.
3.50 p.m.
LORD WISE: First, I must say that I cannot support the Amendment which the noble Lord, Lord Meston, has moved. I do not think it will meet the case at all. I want to say a word or two on something I mentioned two days ago. I should be glad if Her Majesty's Government would have another look at this particular clause. I believe that before we adjourned this debate on Tuesday last we passed the Amendment moved by the noble and learned Viscount, the Lord Privy Seal, and in that there appear the words "competent and prudent person"; but I feel that some better definition should be laid as to who should carry out valuations. Also, there is nothing in the new subsections to show whether the valuer should make a written or a verbal report and I feel that that matter should be made quite clear.
My main point, however, is that in those new subsections there is invidious discrimination against chartered surveyors and valuers. As has already been mentioned, the board of a building society may consider other matters of a legal, financial, or constructional nature; and on the board there may be lawyers, accountants and architects. These professional directors will be in a position to make a report, either written or verbal, to their fellow directors. They are not prevented from doing so by this clause. If members of other professions are allowed to report to their board on their own particular matters, I see no reason at all why properly qualified chartered surveyors or—
VISCOUNT HAILSHAM: I am sure that the noble Lord does not want to make a false point here, and he is not correct in what he has just said. I
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should not like the Committee to be misled. If the noble Lord will look at column 543 of Hansard of Tuesday last, where the new clause is printed, he will see that he is not correct in his statement.
LORD WISE: These particular directors will have to deal with the adequacy of a security and may be called upon by directors to make reports on particular matters; and as I have pointed out, within this clause they are able to do so. Having made that point, I hope that as there is a difference of opinion on both sides of the Committee Her Majesty's Government will think about this particular matter again and come back at a later stage with something else.
VISCOUNT HAILSHAM: I do not know what would be for the convenience of the Committee, but I was asked some particular questions by my noble friends, the Duke of Devonshire and Lord Jessel, which really have little immediate relevance to the Amendment under discussion. However, I believe both would want to have what answers I can give, and it might be for the convenience of the Committee if I first answered the specific questions and then addressed myself to the arguments on the Amendment.
I must first apologise to my noble friend Lord Jessel. He asked me the same question privately and I misunderstood him, with the result that I gave him a wholly misleading answer. I hope that he will now forget the answer I gave him privately and will attend to the answer (a quite different one) that I am giving publicly. My noble friend suggested that if it was wrong for a director to carry out a valuation, it was equally wrong for a member of the society's staff to do so. I had thought he was asking about an employee—and incidentally, my answer, even on that supposition, was wrong. I would say to my noble friend that this raises two points to which I will refer at greater length when I come to deal with the merits of the Amendment.
First, if a valuation is carried out by a director it is difficult for the board to criticise it and still more difficult for a member of the staff to do so; but the converse is not true. Secondly, the undesirability of valuation by a director

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rests largely on the fact that the director has a share in the responsibility for the final decision on whether or not to make an advance, and for assessing the value of the security. This responsibility lies with the board, even if, in some cases, they may delegate their functions to senior members of the staff. Obviously, if my noble friend desires to pursue this matter it will be considered again; but I would not have said that the argument he presented—that if it was wrong for a director to carry out a valuation it was equally wrong for a member of the staff to do so—was necessarily a good argument. That is not the view I take at the moment. If my noble friend should desire to discuss the matter further I would entertain such discussions with great friendship.
With regard to the questions of my noble friend the Duke of Devonshire, I would say, first, that he is quite unaware of the speed with which he utters his questions, and, secondly, that both I and those advising me were in exactly the same difficulty. If I may say so with great respect, it would be a great help if we could have notice in advance of questions to be put—
THE DUKE OF DEVONSHIRE: I had understood that notice had been given.
VISCOUNT HAILSHAM: Notice in advance had been given of the first two questions but not of the second two, and as it was the first two questions that I had written down I was in great difficulty; so if all four questions could be put to me next time I will try to do my best. As I told the Committee when we last discussed this Bill, the answer to the first question, whether the partner of a director of a building society could give the report for the purposes of paragraph (b), was "Yes"; the partner may do so. The answer to the second question (which, again, I gave last time) is that the report must be signed by the person who has done the valuation; that is to say, by the partner in the firm. It is a personal report.
The third question was: could an employee of a director do a valuation? The answer I have received is "Yes", and again, of course, the report would be signed by the person making it. It is a personal responsibility. The fourth
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question was: if a director is a director of a company making the valuation, who should sign the final report? The answer, again, is that the report should be signed by the person who actually makes the report and not by the legal personage, the company of which he is a director. I hope my noble friend will feel that I have now given satisfactory answers to his questions, and I am sorry that I did not do so the first time.
THE DUKE OF DEVONSHIRE: Yes, I am grateful to the noble and learned Viscount.
VISCOUNT HAILSHAM: May I now address myself to the subject matter of the Amendment? Most of the arguments have been put so lucidly by the noble Lord, Lord Latham, and my noble friend Lord Ridley that I really could do little better than comment on some of the things they have said and perhaps expound them further; because it was perfectly obvious to me that the only thing in the speech of the noble Lord, Lord Ogmore, with which I could agree was his comment: "I just cannot see the point of the Amendment"—because it was quite obvious that he did not do so.
LORD OGMORE: I am sorry if I misled the noble and learned Viscount, but I should explain that the Amendment to which I was referring was the Amendment he made to Clause 13; and had the proceedings not been so unfairly truncated by the noble and learned Viscount we should have been discussing all this together, and what I meant would have been quite clear.
VISCOUNT HAILSHAM: I quite understood that the noble Lord meant that he could not see the purpose of my new clause. I had understood that error of diction. And I still agree that he cannot see the point. I am now going to try to explain the point, for I think the third or fourth time of asking.
LORD OGMORE: I have not asked the noble Viscount to do so, and the noble Viscount really must not lose his temper all the time. We are very few in number on this side. We come here often at great inconvenience. If the noble Viscount and noble Lords opposite do not want us to come here, and if they want this to be a Reichstag, we

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will not come; but while we come we expect to be treated politely. If noble Lords opposite think they are going to intimidate me, they are not. While I am here I am going to say what I think, as a Member of the minority.
VISCOUNT HAILSHAM: I am delighted to see the noble Lord here, and if anybody has lost his temper in this Committee it is certainly not I.
LORD OGMORE: What the noble Viscount said to the noble Viscount, Lord Stansgate, showed an appalling loss of temper.
VISCOUNT HAILSHAM: I do not propose to bandy more words with the noble Lord except to say that I do not think he understands the point. If he will allow me to say so, even if he does not want to hear the point I believe the Committee do, and I hope be will allow me to proceed to explain the matter as I see it.
The new clause to which the noble Lord, Lord Meston, has proposed an Amendment really says that there are two functions which have to be discharged in relation to a security. One is the function which is fundamentally a function of a board; although it can be delegated it is still a function of the management of the society in the shape of the board. It is to ascertain the adequacy of the security. This, of course, depends upon a number of different factors, including the personal value of the promise implied, and a number of other factors which I will not enumerate because some are highly technical. That is a function of management. It is said in the clause that there is a separate duty which has to be performed in order to enable the directors to carry out the first function, and that is the issue of a report, which it is certainly (may I say to the noble Lord, Lord Wise) intended, and I think implied, should be a written report. If I am wrong I shall be corrected. But the second function is the delivery of a report made available by the person who discharges the first function, valuing the property. That is a separate thing, and the policy of the Government in the clause is to ensure that the second function is carried out by an independent person: that is, independent in the sense defined in subsection (2) of the new clause.
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Of course, there is not the smallest truth whatever, as the noble Lord, Lord Silkin, pointed out, in the contention of the noble Lord, Lord Ogmore, that there is a difference between small societies and big societies in this regard. Still less is there the smallest value in his suggestion that if this clause were carried it would no longer be useful for a building society to have a valuer on the board of the society. On the contrary, the view of the Government is precisely the opposite. What the Government would think is wrong, and do think it is wrong, is that the professionally-qualified gentleman who, very properly and rightly, is a member of the board of the society should act in two separate capacities in relation to the one society. This we do think is wrong. But to suggest that there would be no more value in building societies having qualified gentlemen on the board, is, I should have said, the precise opposite of the truth.
I would say this. We are dealing with an important question of professional ethics in relation to this matter. I recognise that a number of perfectly reputable societies and a number of perfectly reputable people have been doing this thing for years past. I do not mean to say that everyone who has been doing it is perfectly reputable, but there is not the slightest criticism to be attached to people just because they have been doing it. It so happens that recent experience has made us believe, and has made the great majority of building societies believe, too, that this thing is intrinsically an abuse; that fundamentally these two functions should be discharged by different people; and this is an important question of professional ethics about which we hold this view. It is also, I would say to my noble friend Lord Saltoun, a question of principle; and I would say, quite frankly, that it is just as important from the point of view of the policy of this Bill that a small society should be run in the only way we consider to be reputable now as that a large society should be run in the only way we consider to be reputable now. The noble Lord, Lord Meston, two days ago described his view as sentimental. I am bound to say I agree with him, and I do not think that on a matter of

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professional ethics, when we have formed a view which happens to coincide with the largest and, I believe, the better opinion inside the profession, we ought to yield to what is admittedly a sentimental argument.
Of course, it is true, as my noble friend Lord Saltoun says, that in some individual cases it will cause hardship. It will not, as the noble Lord, Lord Ogmore, persists in thinking, cause any hardship whatever to the societies—large or small. It will cause hardship, not to the societies, but to the individuals who have been, without moral blame to be attached to them, pursuing this practice and have been paid for it. But if this thing is a question of principle, and if we think it is a practice which ought to stop because it is inherently not a proper practice of professional ethics, then I think we ought not to make exceptions. I would say to my noble friend Lord Saltoun that I think the case for hardship can be overstated and was overstated by the noble Lord, Lord Meston, in his speech last time. Our evidence does not suggest that people will, as he put it, "go out into the night" or be irreparably ruined by this, although they will be, as professional people, deprived of fees which, like other professional people, they were no doubt glad to receive. But I hope I have made this thing plain; and I really do not think there was cause for the noble Lord's suggestion, which was directed personally at myself, that I was in some way guilty of an inconsistency in supporting—as I do, and as all members of my Party do, rightly or wrongly—the principles of competition and private enterprise and supporting this clause, which has no more to do with principles of competition and private enterprise than it has to do with the man in the moon.
LORD SALTOUN: I should like to say one word to the noble Viscount, and that is that I do not altogether follow him on this question of principle. I have always been terrified of the wrongs I do when I am frightfully good; and I will put this case to him. Suppose he lived in a community where every man had two wives and he suddenly found it was a matter of principle that the community should be monogamist. It would be very hard to
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send every second wife "out into the night" just because it was a matter of principle. I think it may be possible to make provision for cases of proved hardship and that the Registrar might give licence for the procedure to go on, provided the building society was agreeable, until people had finished their time.
LORD MESTON: I thank the Lord Privy Seal for his reply, but I remain quite unmoved. I have many opponents to this Amendment, but they appear to be dealing with the matter in a purely academic and not a practical way. I know that I look an idiot, but I am not as big an idiot as I look. For some years I have had in a building society experience of people who are highly qualified and competent surveyors and who have given actually first-class reports upon property and then have placed those reports upon the table; and all the other directors have been free to criticise them exactly as they liked. There is no question of running the building society as a mutual admiration society, or as an "old pals' club": it is run as a business; and I feel myself that there are a great number of societies which are run in the same way. However, most of your Lordships appear to deal with this matter in an academic rather than a practical way. I agree with the noble Lord, Lord Silkin, when he points out that this actual Amendment is not sufficiently well worded, and I think that it is essential to alter the wording so that only a qualified and competent person could make a survey of a property in respect of which he subsequently sat on the board which accepted that property as security for an advance. I quite agree with the noble Lord, Lord Silkin, on that point. But, subject to that, I am in total disagreement with everybody else—except, of course, the noble Lord, Lord Ogmore.
On Question, Amendment negatived.
4.12 p.m.
LORD SILKIN LORD SILKIN moved to leave out Clause 13. The noble Lord said: I put this Amendment down as a result of the unhappy incidents which led up to the termination of the debate on Tuesday last. I felt, and I think a good many noble Lords felt, that it was unfortunate that the Government thought it necessary to push Clause 13 through without what we regarded as adequate consideration, and especially without giving the

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noble Lord, Lord Meston, an opportunity of having his Amendment discussed. I personally have no particular objection to Clause 13, and it is not because I object to Clause 13 in its terms; but I do think that it is unfortunate that we terminated the proceedings as we did, and I should like to remind the Committee of what actually happened.
It had been agreed through the usual channels that we should finish the discussion on this Bill at 4.15, and I hope I am not wrong when I say that that was particularly for the convenience of the noble Viscount, who had another engagement. We all agreed to that, and we were prepared to finish at that time; but we went on until 4.30. Then the noble Viscount decided that we had got to get this clause through, although there were a number of people who wanted to comment on it and to make speeches. In fact, we got it through by a Division of the House. I think it is exceedingly unfortunate. I do not want to make any personal attack on the noble Viscount, for whom I have, as he knows, a very great admiration, but it was a pity that we had to finish up our proceedings in that way. Having said that, I have no particular desire to leave out Clause 13, and, unless—
VISCOUNT HAILSHAM: Perhaps the noble Lord will allow me to say something.
LORD SILKIN: Of course. I beg to move.
Amendment moved—
Leave out Clause 13.—(Lord Silkin.)
VISCOUNT HAILSHAM: I do not want to prolong this business at all, but I think the noble Lord has completely misunderstood both what happened factually and why it happened; and I should Like, if only to remove the sense of grievance under which he evidently genuinely labours, to tell him what at any rate my version of the events certainly is. Of course, it was agreed that the proceedings should terminate at 4.15. As I understand the practice of the Committee, that does not mean that when the bell strikes everybody goes away, or goes on to the next business: it means that we conclude whatever we are doing as soon afterwards as we conveniently can. The noble Lord is quite
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wrong in saying hat we went on until 4.30, as he will see if he looks at Hansard. It was certainly before 4.20 when, nobody else rising to speak, I proceeded to answer the debate, which was on a manuscript Amendment of my noble friend Lord Saltoun. Nobody else rising, I answered the speeches which had been made, including the speech of the noble Lord, Lord Meston, who had spoken rather out of order but still to the point of his Amendment, which he has now moved this afternoon. It was, of course, well within my knowledge—although, from what he has just said, it does not yet appear to have fully been borne upon the noble Lord opposite—that the noble Lord, Lord Meston, was going to move his Amendment to-day, whatever happened on the manuscript Amendment of my noble friend Lord Saltoun; and, therefore, he could not, and should not, be shut out from further discussion of some kind.
When I had sat down—I would not have got up but for the fact that nobody had risen to continue the debate—I naturally concluded (and I am as absolutely certain now as I was then) that the new Clause 13 and my noble friend's manuscript Amendment would be disposed of (and it would have been, without a Division) when the noble Lord, Lord Silkin, got up and suggested that we should proceed to our next business without having come to a conclusion either on the Amendment of my noble friend Lord Saltoun or on my new Clause 13. What was carried to a Division was carried to a Division, not by the Government, but by the noble Lord, Lord Silkin; and what was carried to a Division was not the suggestion that the clause should be passed (which passed thereafter without a Division) but the suggestion that we should go on to our next business without having come to a conclusion on that clause at all.
The last thing I should ever desire your Lordships to do would be to pass over anything without an adequate discussion. I would only say that we have had a very adequate discussion this afternoon on the very same point, and that we should have had one, whichever the way in which the proceedings terminated last time, and in very much better order, if we had not, with respect, spent half an hour of the time of the House

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discussing the Motion of the noble Lord, Lord Silkin, that we should proceed to the next business without concluding the business under discussion—which, in fact, was already concluded.
LORD SILKIN: The noble Viscount has given his version of the matter, and I am very much obliged. I will not take up the time of the House, because it is within the recollection of a good many Lords as to what actually happened. I think a good many of us felt a sense of grievance, that we were being unduly rushed over this matter; and I think that, on reflection, the noble Viscount will realise that it would have been wiser not to have pressed this clause to its conclusion on Tuesday last. However, I have said what I wanted to say, and I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 13, as amended, agreed to.
Clause 14 [Classes of additional security which may be taken into account]:
4.19 p.m.
LORD MILNER OF LEEDS LORD MILNER OF LEEDS moved, after subsection (1) to insert:
"(2) For the removal of doubt it is hereby declared that a guarantee given by a local authority under any Housing Act or any Housing (Scotland) Act—

(a) is, and always has been, authorised additional security for an advance, under section two of, and Part I of the Schedule to, the Building Societies Act, 1939, notwithstanding that the guarantee may not extend to the full amount by which the advance exceeds the assumed normal advance for the purposes of any Scheme of Guarantee agreed between the Minister of Housing and Local Government (or the Secretary of State for Scotland), the local authority (or county council) and the building society, and

(b) may be taken into account by the building society in making the advance as though the guarantee did so extend."

The noble Lord said: On behalf of the noble Duke, the Duke of Devonshire, I beg to move the Amendment which stands in his name, and in that of the noble Lord, Lord Elton. As your Lordships are aware, every advance made by a building society is secured on the property mortgaged to the society; and, in addition, on the personal undertaking of the borrower to repay the loan. The society may, however, make a larger advance than it
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would normally make if the borrower provides one of the eight kinds of additional security which are authorised by the Schedule to the Building Societies Act, 1939. They are composed of four kinds of guarantee and four kinds of charge on money or securities, but the Act does not stipulate that the additional security must be at least equal to the additional advance. That is the practice that is normally required by building societies, I believe, with one important exception, and that is the exception to which this Amendment is addressed.
One of the four forms of guarantee is a guarantee by a local authority, under the Housing (Financial Provisions) Act, which is often offered as additional security. The terms of that Act require the raising of loans to be shared equally by the Government—the Treasury—by the local authority and by the building society, so that the guarantee does not in fact cover the full amount of the additional advance, but only two-thirds, the remaining one-third being left to be borne by the building society. In those circumstances, doubts have arisen as to whether that form of guarantee, and others specifically authorised by Acts of Parliament, do in fact constitute the additional security which is essential. The object of the Amendment is to remove the doubts, which have been strongly expressed by more than one eminent counsel.
I am not sure if I have made myself clear to your Lordships, and I would give a practical illustration. If a property is valued at £4,000, the normal advance on that property might be £3,000. In fact, by reason of the authority given by the Act of 1939, the building society advance is not 75 per cent., but 90 per cent.—that is, an excess advance of 15 per cent. That excess is guaranteed as to one-third by the Treasury and one-third by the local authority; and the remaining one-third is left to be borne by the building society itself. So that in fact the building society has not a guarantee for that remaining one-third: and the loss, if any, and risk have to be borne by the building society. In the circumstances, it seems to me reasonable to remove doubts of this kind and it is for that purpose that I beg to move the Amendment standing in the name of the noble Duke.
Amendment moved—
Page 17, line 25, at end insert the said subsection.—(Lord Milner of Leeds.)
VISCOUNT HAILSHAM: I intervene now because it may be helpful to your Lordships, and not for the purpose of truncating this discussion in any way. The important words in the Amendment are "for the removal of doubt", and at first sight it might seem rather churlish on the part of the Government to say that they resist an Amendment the whole purpose of which is to remove a doubt which many people would say is a legitimate doubt simply because it had come from a responsible quarter. One of the circumstances in which I would say that that was legitimate to accept such an Amendment would be if the explanation did itself remove the doubt and make the matter particularly clear. I am bound to tell the Committee, in all frankness, that this is not a matter which I understand very well myself. I wish there to be no misunderstanding about this. I do not propose to set myself up as an expert on this topic, but I am doing my best and I am told by those who know these things better that the explanation I am going to give is a good one.
The Amendment purports to remove an alleged doubt in the Acts affecting the powers of building societies to advance money where a limited guarantee from a local authority is taken as additional security. Building societies, in practice, lend money on freehold or leasehold security in excess of the amount which they would consider safe to lend on that security alone, and in that case take additional security for the excess. Under Section 2 (2) of the Building Societies Act, 1939, a building society may, in determining the amount of its advance, take into account the value of any additional security of the kind mentioned in the Schedule to that Act. A guarantee of a local authority given under Section 45 of the Housing (Financial Provisions) Act, 1958, or Section 77 of the Housing (Scotland) Act, 1950, is additional security which they can so take into account. A guarantee given under subsection (2) of these sections will, however, guarantee only two-thirds of the excess amount advanced by a society. A doubt has in consequence been expressed by societies as to whether such a limited guarantee is additional security which
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they can take into account when determining the amount of the advance, since the guarantee does not cover the whole of the excess, and therefore whether they have power to make the excess advance on the strength of such a guarantee. As I understand it, the purpose of the Amendment is to remove any doubt there may be on that score.
Under Section 13 of the Building Societies Act, 1874, a building society may lawfully advance an amount equal to the value as security of the freehold or leasehold property to be mortgaged. Under Section 2 (2) of the Act of 1939 a society is expressly authorised to take into account the value of a guarantee by a local authority under Section 45 of the Housing (Financial Provisions) Act, 1958, and under the equivalent provision applying to Scotland which includes a guarantee covering only a part of any excess advance. It is the Government's view that there is therefore no doubt that a local government guarantee which does not fully cover an excess advance—that is, the amount by which an advance exceeds the amount which would have been advanced on the security of the property alone—is none the less an additional security which can be taken into account by a society in making an advance, and that, provided the amount of the excess advance not covered by the guarantee is covered by the value of the property mortgaged, the making of the excess advance is within the powers of a society. It is of the essence of these transactions that they do not involve an advance exceeding the amount of the principal security and there is ample authority for the proposition that building societies can lend up to the value of that security. For this reason it is argued that the Amendment is unnecessary. Having explained to the Committee, in all frankness, that this is not a matter on which I could pretend to have any very strong or decided opinions of my own, I hope that this answer will be considered and that in the circumstances, at any rate at this stage, the noble Lord will not press his Amendment.
LORD MILNER OF LEEDS: I am not altogether happy about the answer but perhaps it might be well to read it and to consider it. As regards the doubt as to whether it is appropriate or proper

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to put in an Amendment for the removal of doubt, I would merely say that I think that is quite a frequent expedient and indeed is used in this very Bill, in Clause 12 (4).
VISCOUNT HAILSHAM: My only doubt was whether it was proper for me to resist the Amendment, not whether it was proper for the noble Lord to put it forward.
LORD MILNER OF LEEDS: I am obliged to the noble Viscount. In this very Bill there is a subsection in Clause 12 "for the removal of doubt". It is for that reason that the noble Duke, who is president of the Building Societies' Association, put down this Amendment on behalf of the Association. I am not altogether clear. The noble Viscount seems to rest his answer on his reference to various Acts of Parliament, but eminent counsel, no doubt having all these statutory enactments in consideration, have expressed a different view.
I would ask the noble Viscount, if that be the case, what objection there can possibly be to putting in a clause removing all doubt. It does not affect the Bill in any other respect. Why not accept the Amendment? That seems to be the sensible thing to do. Otherwise we must consider the matter further and possibly put down an Amendment on another stage. As it is merely for the removal of doubts that have arisen, and there is obviously a conflict of opinion between the Government's advisers and the advisers to the Building Societies' Association, why not accept the Amendment for the removal of those doubts, which undoubtedly do exist? I hope that on consideration, the noble Viscount will feel that that is the proper course. Otherwise, as I say, we must consider at our leisure the reasons he has given and possibly put down another Amendment.
LORD ELTON: Before the noble Viscount replies, may I say that, in a sense. I think the noble Viscount has already removed the doubts to a considerable extent. As I understand the position, eminent counsel, as the noble Lord, Lord Milner of Leeds, has reminded us, have repeatedly expressed doubt as to whether in the circumstances we are discussing—that is, where a building society stands to lose one-third
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and has not a security covering the whole of its loan—it is legally proper for the building societies to do this. No doubt obtaining those opinions has cost the building societies considerable sums. As I understand it, the noble Viscount, speaking on behalf of the Government, has now said that there is no real doubt and that it is proper for building societies to act in this way. I should have thought that we had received a free counsel's opinion, or even something rather better than counsel's opinion; and that is perhaps all we need.
LORD MILNER OF LEEDS: But the opinion of the Minister or the Government has no effect in the courts, and the building societies may be left without recourse. The opinion of the noble Viscount, as he will be the first to acknowledge, is of no account in the courts.
VISCOUNT HAILSHAM: I agree that "what the noble Viscount says" is not evidence—like the remarks of the soldier in another case. But I should think that there was a good deal of substance in what my noble friend Lord Elton has said. I think the sensible course here, despite the plausible way in which the noble Lord, Lord Milner of Leeds, has pressed his Amendment, would be to take away my answer and study it. Then if those for whom the noble Lord and my noble friend speak think it necessary to come back again, by all means let them do so. But I would say this as a general observation about legislation: that sometimes clauses which begin with the words, "For the removal of doubt", succeed in creating doubts, and that is not a desirable method of legislating.
LORD MILNER OF LEEDS: I do not think this is one of those clauses. However that may be, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
4.33 p.m.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, after Clause 14 to insert the following new clause:
Additional security: guarantees given in pursuance of continuing arrangements
".—(1) In subsection (4) of section two of the Building Societies Act, 1939 (which provides that where a guarantee given in pursuance of a continuing arrangement is taken

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as additional security for an advance by a building society, the advance as a whole shall not exceed ninety-five per cent. of the amount of the purchase price of the property which is the principal security, and the basic advance shall not exceed seventy-five per cent. of that amount), as it applies in relation to any advance made after the commencement of this Act—

(a) for the words "ninety-five per cent." there shall be substituted the words "one hundred per cent."; and

(b) for the words "seventy-five per cent." there shall be substituted the words "eighty per cent".

(2) Subsection (2) of section six of the said Act (which, as modified by subsection (3) of that section, provides that where a guarantee given in pursuance of a continuing arrangement is taken as additional security for an advance by a building society the period for repayment shall not exceed twenty years or, where the continuing arrangement is a special continuing arrangement, twenty-three years) shall apply in relation to any advance made after the commencement of this Act, and in relation to any agreement made after the commencement of this Act as respects an advance made at any time, as if for the refrence in the said subsection (2) to twenty-three years there were substituted—

(a) where the continuing arrangement in pursuance of which the guarantee was given is not a special continuing arrangement, a reference to twenty-five years, and

(b) where it is a special continuing arrangement, a reference to twenty-eight years,

and the said subsection (3) shall not apply in relation to any such advance or agreement.
(3) Expressions employed in this section to which meanings are assigned by the Building Societies Act, 1939, shall have those meanings in this section."
The noble Viscount said: This is a new clause, and again it is of a highly technical character. Sections 1 and 2 of the Building Societies Act, 1939, permit a society to take into account in determining the amount to advance not only the amount of the principal security but also any additional security that may be given, provided that the additional security is one of the types listed in the First Schedule to that Act; and that is the section we have just been considering. One of the forms of additional security is what is called a "continuing arrangement" under which a third party—for instance, an insurance company or builder—guarantees the "excess amounts" of a series of advances by a building society. In this case the guarantor deposits with the society a sum as security which is usually less than the total amount guaranteed but which
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acts as a "float" to cover all the guarantees. Because the society theoretically has not complete cover for all the excess advances, Section 2 also lays down certain restrictions on the proportion of the valuation that can be advanced, and Section 6 restrictions on the period of the mortgage if additional security has been taken under a continuing arrangement.
These restrictions were in line with good building society practice at the time when the 1939 Act was passed. But since then, with the rising trend of property values, building societies have tended to increase the proportion of valuation which they are in general prepared to advance and also to grant longer periods for repayment. They have not, however, been able to do this in the cases where the guarantee has been under a continuing arrangement. The Building Societies' Association have asked that the restrictions should be eased to come into line with what is now considered normal practice, and the Government consider that this can be done without risk to investors.
Section 2 provided that the basic advances should not exceed 75 per cent. of the value of the principal security—that is, the property—the excess advance 20 per cent. and the total 95 per cent. Societies are now advancing up to 80 per cent. without additional security, and up to 100 per cent. where there is additional security other than a guarantee under a continuing arrangement. Subsection (1) of the new clause will enable societies also to advance up to those limits where the additional security is such a guarantee.
Section 6 of the 1939 Act provided that where a guarantee under a continuing arrangement was taken as additional security the advance should be repayable over not more than 20 years. The limit was raised to 23 years in the case of "special continuing arrangements", defined in Section 5 of the Act as continuing arrangements under which all the advances were in respect of buildings whose constructional standards were certified by a body approved by the Ministry of Health, now the Ministry of Housing; in fact, the only body at present so approved is the National House Builders' Registration Council. Societies now frequently allow repayment over

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a longer period, and subsection (2) of the new clause increases the limits for continuing arrangements by five years. The increase in the permitted period of repayment will apply not only to new advances but also to re-negotiation of the terms of existing advances. With that explanation, I beg to move.
Amendment moved—
After Clause 14 insert the said new clause.—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clauses 15 and 16 agreed to.
LORD MILNER OF LEEDS LORD MILNER OF LEEDS moved, after Clause 16 to insert the following new clause:
Charges on the security of registered land in Northern Ireland
".—(1) For the removal of doubt it is hereby declared that a charge executed in favour of a building society on the security of registered land in Northern Ireland is, and always has been, a mortgage for the purposes of section thirteen of the Building Societies Act, 1874.
(2) In this section the expression 'building society' means a society incorporated under the Building Societies Acts, 1874 to 1940, and any such unincorporated society as is mentioned in section seven of the principal Act and also a building society which is, or for the purposes of the Building Societies Acts, 1874 to 1894, is deemed to be registered in Northern Ireland, or any such unincorporated society as is mentioned in section seven of the principal Act whose chief office or principal place of business is in Northern Ireland."
The noble Lord said: On behalf of the noble Duke the Duke of Devonshire and of the Building Societies' Association I beg to move this Amendment, which is again an Amendment for the removal of doubt. It would appear that recent legal proceedings in Northern Ireland have raised grave doubt as to whether the form of mortgage used in that country in respect of registered land is one which building societies are in strictness entitled to accept under Section 13 of the Building Societies Act, 1874, which prescribes the mortgage which they can accept as security. This Amendment is designed to remove the doubt which has been expressed. The short point, in a few words, as I understand it, is that in Northern Ireland the practice is to have a charge, and the question therefore arises whether a charge on registered land is in fact a mortgage within the meaning of Section 13 of the Building
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Societies Act, 1874. This is a matter of considerable importance, particularly having regard to the development going on in Northern Ireland, and the Building Societies' Association plead earnestly that the Government should accept this Amendment. I hope that the noble Viscount may see his way to accept it. I beg to move.
Amendment moved—
After Clause 16 insert the said new clause.—(Lord Milner of Leeds.)
VISCOUNT HAILSHAM: Again, this being a highly technical matter, it might assist the Committee if I intervened at once. The noble Lord who moved the Amendment is perfectly right that there was at one time a doubt which had been raised in particular quarters with regard to this point. If the doubt had been persisted in, even subjectively, I think it might have been reasonable to introduce a clause for the removal of doubt. But I understand that the original source of the doubt is now persuaded that there is none, and this is also the view of the Government. I propose again to tell the Committee why, and hope that the noble Lord, Lord Milner of Leeds, will again consider the terms of the answer. If those for whom he speaks so well are satisfied with it, I hope that they will accept the answer of the Government that there is no doubt upon this point. If, on the other hand, he feels that the answer is unsatisfactory, of course he must discuss the matter again, either publicly or privately.
The purpose of this Amendment is to remove the supposed doubt as to the power of a society to lend money on the security of a charge on registered land in Northern Ireland. Under Section 13 of the Building Societies Act, 1874, a society can lend only on the security of land, "by way of mortgage". Societies do, and can under that section, lend money on the security of land situate in Northern Ireland. The Land Registry in Northern Ireland will not, however, register a mortgage by demise (which is one method of creating mortgages of land in Northern Ireland) of registered land in Northern Ireland, and, as a result, a society lending money on such land is left with no alternative but to take a charge on the land in accordance with Section 40 (2) of the Local Registration of Title (Ireland) Act, 1891.

769
Such a charge is thought by some building societies not to be a mortgage within the meaning of Section 12 of the Act of 1874, and in their view there is a doubt as to whether they have power to lend any money on the security of such a charge. It is this doubt which the Amendment seeks to remove.
If the doubt were a real one, the Government would be prepared to remove it by accepting the Amendment in principle, for it is not intended that societies registered in England or Scotland should be prevented from making advances on land in Northern Ireland by a technicality of this kind. However, the point, if it is valid at all, also applies to advances on registered land in England, since those also can be secured only by taking a charge. The building societies have never expressed any doubt on this in relation to England, but only in relation to Northern Ireland. In the Government's view no real doubt exists in the matter either in relation to England or Northern Ireland.
An advance made by building societies on security taken by way of a charge on registered land is undoubtedly made on the security of the land. Where such a charge is executed in favour of a building society, the society has all the powers of a mortgagee, including the powers to take posession of, and sell, the land. The Government are firmly of the view that an advance made on the security of such a charge is an advance by way of mortgage within the meaning of Section 12 of the Building Societies Act, 1874, and that, in consequence, it is within the powers of a building society to make advances on the security of such a charge. The Amendment is there-for considered unnecessary, and on the clear understanding that I have tried to give to the noble Lord, I hope he will withdraw his Amendment.
LORD MILNER OF LEEDS: Having regard to the answer of the noble Viscount, I beg leave to withdraw the Amendment. If necessary, we will put it down again after consideration.
Amendment, by leave, withdrawn.
Clause 17:
Notices to be given where security for advance is taken from a third party.
17.—(1) Section seven of the Building Societies Act, 1939 (which requires a building society making an advance to a member to
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give notice to the member if it takes any security for the advance from a third party), shall not apply in relation to an advance made to an individual where the only security taken for the advance from a third party is a guarantee, not being a guarantee secured by a charge on any property.
4.45 p.m.
THE DUKE OF DEVONSHIRE THE DUKE OF DEVONSHIRE moved, in subsection (1), after the first "guarantee" to insert given by an individual". The noble Duke said: I shall endeavour to take the advice of my noble friend the Lord Privy Seal and talk at a rate which is comprehensible to your Lordships. Those of your Lordships who are acquainted with the Building Societies Act, 1939, will know that whenever a society takes any form of additional security for an advance other than the house itself, the society has to send formal notice of this additional security to the borrower. In many thousands of cases this additional security is of a purely technical kind, consisting of a guarantee of a wife by her husband, or of a son by his father, or some such similar arrangement. In such cases, no cash or other security is deposited by the guarantor.
The issuing of these forms every year creates a great deal of work for the society and often causes bewilderment and misunderstanding to the borrower, while in point of fact it gives the borrower no additional protection. In that this clause seeks to save a few of these forms in such cases, the Building Societies' Association warmly welcomes it. But the Association feels that the terms of the clause are cast too wide, so that it also covers guarantees of a different kind—guarantees given by insurance companies and by local authorities. The Association feels that for such guarantees it should continue to notify borrowers that such guarantees have been taken. The first of the two Amendments which stand in my name is designed, therefore, to restrict the dispensation of sending notices to those of individual guarantees, while the second stipulates that when a notice of additional security has to be served, it will be unnecessary to mention in that notice any guarantee by an individual. I beg to move.
Amendment moved—
Page 18, line 19, after ("guarantee") insert ("given by an individual").—(The Duke of Devonshire.)
VISCOUNT HAILSHAM: Perhaps it would be convenient for me to say at once that the Government are very happy to accept this Amendment.
THE DUKE OF DEVONSHIRE: I am extremely grateful.
On Question, Amendment agreed to.
THE DUKE OF DEVONSHIRE: There is nothing I need add to what I have just said. I beg to move.
Amendment moved—
Page 18, line 20, at end insert ("and where a notice is required to be given under the said section seven as respects an advance made to as individual, the notice need not refer to any guarantee given by an individual not being a guarantee secured by a charge on any property").—(The Duke of Devonshire.)
VISCOUNT HAILSHAM: I say at once that the Government are happy to accept this Amendment.
On Question, Amendment agreed to.
Clause 17, as amended, agreed to.
Clauses 18 and 19 agreed to.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, after Clause 19, to insert the following new clause:
Power to admit members who are not shareholders
".—(1) The rules of a building society may allow a person to become a member without holding a share in the building society and such of the rules as concern the making of advances to members need not be expressed in terms which treat a member to whom an advance is made as being, by reason of the making of the advance, the holder of a share in the building society.
(2) The liability of a member to whom an advance is made under rules made in pursuance of the foregoing subsection shall be no greater than it would be if the rules treated the member as being, by reason of the making of the advance, the holder of a share in the building society."
The noble Viscount said: This is an enabling clause. At present, the vast majority of societies' advances are made to members, and under this Bill they would be exclusively made to members. The view has been taken that in order to be a member, a person must hold shares, and this has meant that societies have had to issue shares to most
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borrowers, some by the device of 1s. or 5s. shares described as "qualifying shares", and others by describing the advance as an "advanced share" for the amount of the advance. These are really unnecessary devices and they can cause unnecessary complexities in rules relating to voting rights, and so on. What is essential is that the borrower should be subject to the rules of the society, and this can be perfectly well done by an appropriate provision in the mortgage contract. The effect of this new clause will be to permit those societies who wish to do so to provide in their rules for the membership of borrowers without making them shareholders.
Subsection (2) defines the liability of a member who is not a shareholder as not being greater than if he had, by reason of the advance, been made a shareholder. Under Section 14 of the 1874 Act, this is the amount still due under a mortgage or other security, or under the rules of the society. I beg to move.
Amendment moved—
After Clause 19, insert the said new clause.—(Viscount Hailsham.)
LORD LATHAM: We should all wish to take proper steps to reduce complexity, whether with regard to building societies or other aspects of modern life, but I should like the noble Viscount to explain how the proposed Amendment fits in with the definition clause, Clause 61, where it states that:
"'member', in relation to a building society, includes any person who for the time being holds a share, whether advanced or not, in the building society".
Here we are creating, are we not, members who are not shareholders. I am not saying that that is undesirable but that it is the case, and it would be, I think, helpful, at least to myself, with regard to certain other Amendments, if the noble Viscount could explain how this proposed alteration, this creation of members who are not shareholders, fits in with Clause 24, which is the clause dealing with registers, and Clause 22. If that is not enough, may I add how will it fit in with the noble Viscount's own Amendment, No. 40A, which deals with the qualifications far voting on special resolutions? Perhaps the noble Viscount can help us in that regard.
VISCOUNT HAILSHAM: It looks as though the noble Lord, Lord Latham has got a point and I think there will have to be some consequential Amendments. He has certainly got a point on the definition clause, and I think the effect is that there will have to be consequential Amendments.
LORD LATHAM: Would it not be just as well if this Amendment were stood over until the consequential Amendments were under discussion?
VISCOUNT HAILSHAM: I hardly think so. I think it is the practice of the Committee as a rule to take the substantial Amendment first. I am told now that I was wrong in saying there would have to be consequential Amendments on the definition clause, because the definition clause is of the type of definition which says "includes". That is, of course, the answer to the paint which the noble Lord made in relation to that. I think I have made the case for the Amendment in principle. I am grateful to the noble Lord for pointing out there difficulties, which had not occurred to me, and I will certainly consider any consequential Amendments which may be necessary.
LORD LATHAM: It is intriguing to note that the definition clause is not a definition.
VISCOUNT HAILSHAM: This is always the case, is it not?
LORD LATHAM: I thought perhaps the word "includes" might be regarded as curing the otherwise apparent defect. However, in the circumstances indicated by the noble and learned Viscount, I have no objection to the Amendment as it stands on the Order Paper.
On Question, Amendment agreed to.
Clause 20 [Members or depositors dying intestate]:
LORD MILNER OF LEEDShad given notice of an Amendment in subsection (1), to leave out "one" and insert "two" [hundred pounds]. The noble Lord said: When I put down this Amendment I was under the impression that it was possible to draw £200 from the Post Office savings bank without the necessity of producing probate or letters of administration. I am told I
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was wrong, and that the figure is only £100. In those circumstances I do not move this Amendment.
Clause 20 agreed to.
4.55 p.m.
LORD LATHAM LORD LATHAM moved, after Clause 20 to insert the following new clause:
Investments by trustees
". If a building society—

(a) accepts the deposit of or otherwise borrows any money, or

(b) accepts any payment representing the whole or part of the amount due by way of subscription for an investment share in the building society,

from a person whom it has reason to believe is a trustee, the building society shall not be required to ascertain whether that person is empowered by the instrument creating the trust to make such an investment or is not prohibited by such instrument from making the investment."
The noble Lord said: On behalf of the noble Duke, the Duke of Devonshire, I beg to move this Amendment. Apparently some doubt has been created as to the power of building societies to lend money to trustees—though, happily, the words "for the removal of doubt" are not included in the Amendment. The building societies have been informed that there is some doubt as to whether a society can lend money to trustees without making itself liable for any wrongful investment by trustees who are not authorised to make it. This clause is designed to remove doubt which is felt in legal circles, as I have said, on this point. There is an analogy, which is perhaps not too close a one, with Section 117 of the Companies Act, which the noble and learned Viscount will know provides that no notice of any trust, expressed, implied or constructive, shall be entered on the register or be receivable by the Registrar in the case of companies registered in England. This applies, of course, only to shares, and not to debentures, loans, advances or deposits. Under Section 117 the effect of that is to free the company from acknowledging any trust. The purpose of the Amendment which I am moving is somewhat different. It is to give a kind of "blanket" legality to societies to receive deposits or other investments from trustees, and it seems to me that in a Bill of this kind this doubt which it is thought exists should be removed. For those reasons, I beg to move.
Amendment moved—
After Clause 20, insert the said new clause.—(Lord Latham.)
VISCOUNT HAILSHAM: I am again advised that this is not a necessary Amendment. From what the noble Lord said, it assumes that where a building society knows, or even where a building society has reason to believe, that an investor is a trustee, it is the duty of the building society, apart from the new clause, to inquire whether the trustee has the requisite investment power to invest money in a building society; and this clause would release the building society from this duty. But I am advised that there is no reason to think that building societies, or indeed any other class of person with whom trustees invest money, are under any such duty. And it would seem that if there were any point to be made like that in the Amendment it is not a particular point limited to building societies but a general point which would not concern building societies alone, and which, if dealt with by an Act of Parliament, ought certainly to be dealt with more generally and not merely for building societies.
The noble Lord quite fairly said that Section 117 of the Companies Act, 1948, does not provide a very close analogy. The purpose of that section is to relieve a company from taking notice of equitable interest in shares, and precluding persons claiming under equitable titles from converting companies into trustees for them. In other words, the purpose of Section 117 of the Companies Act is to prevent a company from having to ascertain whether a disposition by the legal holders of a share is in accordance with the trust to which that holder may be subject. The section, moreover, prevents persons whose titles to shares have not been completed by registration from compelling the society to look to them, rather than to the legal holder of the shares, for directions as to the disposition of the shares. As the noble Lord quite fairly indicated, it appears from this that neither of these objects has anything in common with the question of whether a trustee has power to invest in a building society—and it is this to which the Amendment on the Paper is addressed. For these reasons I hope that the noble
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Lord will not press his Amendment. Having said that, however, I must add that I am conscious, as I have been in previous cases, that these are highly technical matters about which a second opinion or second thoughts may be necessary. I would therefore ask him not to press the matter now, but to study the reply which has been given and, if it should be found that this is a satisfactory reply, it will conclude the matter. If not we can consider it again.
LORD LATHAM: I am much obliged to the noble Viscount for his explanation and undertaking. He did say that if the point were a valid one then it would have a general application, and that, if that be the case, the appropriate method was for general and not special legislation to deal with that. I gather that sooner or later—it may be sooner—the Government propose to introduce a Bill extending the power of investment of trustees generally. If that be the case, it seems to me that might be a useful vehicle for dealing with this matter. Perhaps the noble Viscount would bear that in mind.
VISCOUNT HAILSHAM: I am much obliged.
LORD LATHAM: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 21 agreed to.
Clause 22 [New investors to be given copies of accounts]:
5.2 p.m.
THE DUKE OF DEVONSHIRE THE DUKE OF DEVONSHIRE moved, after subsection (1) to insert:
"() For the purposes of this section any subscription for shares to a value of less than one pound made in order that the subscriber shall qualify as a person to whom the building society may make advances shall be disregarded."
The noble Duke said: Following on the new clause which was brought in under Amendment 31A, I am not quite certain whether this Amendment is not now redundant. I do not know whether my noble friend the Lord Privy Seal can give me any guidance on this point. It has to do with those who are not really investors but have a share in the society so that they can borrow. I am more than happy to move the Amendment as it stands, but it may be affected by Amendment 31A.
VISCOUNT HAILSHAM: It may help my noble friend if I were to say that, if he does move it, I shall accept it.
THE DUKE OF DEVONSHIRE: On that consideration I shall move it. I think the Amendment is self-explanatory. Under the clause as at present drafted, many societies will be required to provide to all new borrowers a copy of their accounts. In the case of a large society this will mean a great deal of work and expense. If carried, the effect of the Amendment would be to confine this requirement to actual investors in a society as opposed to those who are borrowers, holding a token share in the society in order to permit them to borrow. The great majority of companies insist that a borrower from a company must be a member of it, and therefore he has what amounts to a token share, one of a few shillings or not more than a pound. My Association feel that there should be no requirement that these people, who are but technical investors in the society, should have a copy of the accounts sent to them every year. I beg to move.
Amendment moved—
Page 9, line 41 at end insert the new subsection.—(The Duke of Devonshire.)
VISCOUNT HAILSHAM: As I indicated, I am going to accept the Amendment. If anyone else wants to endorse it or criticise it, he may do so; but I am authorised to accept it, and I do.
LORD LATHAM: I rise merely to make the suggestion that it might be convenient for the Committee, and will expedite the business, if Amendment No. 67, which deals with the same point, were dealt with at the same time
VISCOUNT HAILSHAM: I do not know that it really would, because we have to deal with it where it comes in the Bill. But I will accept it when it is moved.
On Question, Amendment agreed to.
Clause 22, as amended, agreed to.
Clause 23 agreed to.
Clause 24 [Duty to keep register]:
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved in subsection (1) to leave out "keep at its chief office" and insert "maintain". The noble Viscount said: This Amendment and Amendments Nos. 36 and 38 deal with the same subject. Clause 24
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requires a building society to keep a register of names and addresses of its members, and this register is to be available in certain circumstances to inspection by members of the society. The object of this provision is that certain rights which members are given under other statutory provisions—for instance, the right to requisition a meeting—may be frustrated unless a member wishing to take action can find out who his fellow members are and where they live. Most building societies already keep a central register at their head office, and no doubt they will continue to do so. But attention has been drawn to two practices which we think are not inherently unreasonable and ought to be covered by the Bill, and this Amendment is designed to cover them.
Some societies may find it preferable to keep a register not at the head office but at some other office, for example where all their accounting work is done. In most cases there could be no objection to this. Of course, a society which was trying to evade the law might seek to evade the purpose of this clause by keeping its register in the Outer Hebrides or some other inaccessible place in order to make access to it difficult. For this reason it is proposed in the new subsection (2) to ensure that arrangements of this sort, which are not likely to arise in many cases, should be subject to the Registrar's consent.
Secondly, one or two of the largest societies may find it administratively burdensome to be obliged to keep a central register with the names and addresses of literally millions of members. It may be more convenient to keep separate parts of the register at branch offices, and such an arrangement might be more convenient to members, who would be able to obtain the names and addresses of other members in their own locality with less difficulty. Again, it is necessary to ensure, by requiring the Registrar's consent, that the scope for splitting up the register is not abused, since he might easily find it necessary to require that no part of the register contained fewer than, say, 1,000 names and addresses. The Amendment to line 25 is designed to ensure that in cases where the register is kept in whole or in part in some other place than the head office, members shall be told where it is kept. I beg to move.
Amendment moved—
Page 20, line 17, leave out ("keep at its chief office") and insert ("maintain").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move this Amendment.
Amendment moved—
Page 20, line 19, at end insert—
("() The said register shall be kept at the office of the building society except that the building society may, with the consent in writing of the registrar, keep the register, or parts of the register, at one or some of its other offices.").—(Viscount Hailsham.)
On Question, Amendment agreed to.
LORD ELTON LORD ELTON had given Notice of his intention to move, in subsection (2), to omit all words from "writing" down to and including "application", and to insert:
"in conformity with subsection (3) of this section".
The noble Lord said: I am not going to move this Amendment, which runs in together with Amendment No. 39. The Council of the Building Societies' Association view this clause with some concern, but further consideration has led them to the view that this Amendment, as at present drafted, would not do, and that at some later stage another Amendment will be put down. But I do not move Amendment No. 37, nor, when we come to it, Amendment No. 39.
VISCOUNT HAILSHAM: I beg to move this Amendment, which I have already explained.
Amendment moved—
Page 20, line 25, after ("given") insert "all necessary information as to the place or places where the register or a part of the register is kept and").—(Viscount Hailsham.)
On Question, Amendment agreed to.
On Question, Whether Clause 24, as amended, shall stand part of the Bill?
LORD ELTON: If it is in order for me to ask two factual questions, may I point out that the object of this clause is to require building societies to keep registers? They already do so, of course, and some have addressing machines; and the small technical point involved is this: apparently these machines are constructed to record the initials of members but not their Christian names. Similarly, when there is more than one holder of
780
a security, the machine will record the name of the first holder and after that will say "and another", or "and others". It would be very helpful if we may be told whether in subsection (1) of this clause the word "names" necessarily means the full Christian name and surname, or whether the requirements of the clause will be met by the existing machinery of the societies, which is constructed to record only the initials. We should also like to know whether, when accounts are held jointly in the names of more than one person it will be sufficient to record the name and address of the first holder, with an indication that there are other joint holders.
VISCOUNT HAILSHAM: Questions as to names are always difficult, but on the first point which my noble friend has raised I would say that the intention is that the list should be simply a list of names and addresses which will enable members to be identified and contacted. It is not specified in the clause that full names should be inserted and I am told, with authority, that we are satisfied that the courts would not interpret it in such an unduly onerous sense. I do not think it would be possible to lay down a hard and fast rule as to what particulars of names or addresses should be included, but it is not intended that full names should be given in order to meet the requirement.
Secondly, my noble friend asked whether, when an account is held jointly in the names of two or more members, it would be sufficient for the register to contain the name and address of the first holder only, with an indication that the account is held also in other names. It is perfectly fair to say that my noble friend gave me notice of this question and I am therefore not taken unawares by it; but here my advice is not so clear. I am told that there are complications which I should like further time to consider. Similar points may arise on other clauses relating to members in regard to, for example, the circulation of accounts. I will undertake to examine this point to see whether an Amendment is required at a later stage. I am afraid that that is the best I can do at the moment.
LORD ELTON: I am grateful to the noble and learned Viscount.
Clause 24, as amended, agreed to.
Clause 25 agreed to.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, after Clause 25, to insert the following new clause:
Special resolutions
".—(1) For the purposes of this Act a resolution passed at a meeting of a building society shall be a special resolution if passed by not less than three-fourths of the number of the members of the building society qualified to vote on a special resolution and voting in person or by proxy on a poll on the resolution.
The members qualified to vote on a special resolution shall be all the members of the building society except that, if the rules of the building society so provide, members who, at the end of the last financial year before the date of the meeting, did not hold shares in the building society to a value of one pound or more shall net be qualified to vote.
(2) In section thirty-three of the principal Act (under which two or more building societies may unite) for the words from 'upon such terms' to the words 'for the purpose' there shall be substituted the words—

'(a) if the terms of the union are approved by a special resolution (as defined in the Building Societies Act. 1960) of each of the societies passed at meetings respectively convened for the purpose, and

(b) if the union obtains the concurrence in writing of the holders of not less than two thirds of the whole number of shares in each society, whether they are present at the meeting or not',

and section nineteen of the Building Societies Act. 1894 (which amends the said section thirty-three), shall cease to have effect.
(3) In section twenty-two and paragraph 4 of section thirty-two of the principal Act (which relate respectively to a change of name and to a winding up) for the references to a resolution of three-fourths of the members of a building society there shall be substituted a reference to a special resolution, and in section five of the Building Societies Act, 1940 (which relates to a transfer of engagements), for the references to a special resolution as defined by that subsection there shall be substituted references to a special resolution as defined in this section.
(4) In any rules made by a building society after the commencement of this Act the expression 'special resolution' shall, unless the context otherwise requires, means a special resolution as defined in this section."
The noble and learned Viscount said: This is a new clause and needs a little explanation. In general, the existing Building Societies Act leaves it to the rules of the societies as to what should be the voting rights of individual members of societies, and, in general, that is also the policy of this Bill. However, these Acts and this Bill, in Clause 26 which we are about to consider after this
782
Amendment, have selected certain issues, such as the winding up of a society, the transfer of its engagements to or its union with another society, or change of its rules or its name, as being of such fundamental importance that the voting procedure should be laid down by Statute. In general, it is stipulated that there shall be a majority of three-quarters of the members voting at the meeting. There have, however, been minor differences, and this clause replaces these requirements by a uniform requirement for a "special resolution" as defined in this clause. The additional requirement in certain cases of written consents—which sometimes exists—is not altered.
Subsection (1) sets out the requirements for special resolutions. They will need a majority of three-quarters of the number of members, and proxies will be allowed. All members will be entitled to vote, with the exception that a society's rules may exclude borrowers. This may deal with one of the points put to me by the noble Lord, Lord Latham, on an earlier Amendment. The indirect method of describing borrowers as members who do not hold shares to a value of £1 or more is necessary to get over the difficulty of qualifying shares, and also occurs in Amendment No. 34 with which we have dealt. The provision for proxies was first introduced in this Bill as presented, whilst the power to disenfranchise borrowers was first included in the 1940 Act.
Subsection (2) applies this special resolution procedure to the provisions on union of societies in Section 33 of the 1874 Act, as amended by Section 19 of the 1894 Act. Subsection (3) applies the procedure to the provisions on change of name, referred to in Section 22 of the 1874 Act, winding-up (Section 32 (4) of the 1874 Act) and transfers of engagement, under Section 5 of the Societies (Miscellaneous Provisions) Act, 1940. There are a series of consequential Amendments, notably to Clause 26, dealing with change of rules, and the Third Schedule, dealing with model rules, to which we shall come in due course. I beg to move.
Amendment moved—
After Clause 25, insert the said new clause.—(Viscount Hailsham.)
LORD MILNER OF LEEDS: This is a new clause which I believe has been

783
put down since we met on Tuesday last, and I am not altogether clear upon it. Could the noble and learned Viscount tell us for what purpose a special resolution is required? One knows that special and extraordinary resolutions are required for certain purposes in Company Law, but I am not clear why that should be required in a Building Societies Bill. Assuming we have an answer to that, am I right in believing that what is required on a special resolution is that it be passed by not less than three-quarters of the members qualified to vote and actually voting; that it is not a question of three-quarters of the whole of the membership of the society but three-quarters of those actually voting on the particular question, either personally or by proxy if a poll is held? I assume that that is the correct interpretation.
VISCOUNT HAILSHAM: I believe that the cases where special resolution is required are those enumerated in my speech and which are referred to in the new clause. On the second point, the noble Lord is perfectly correct.
LORD LATHAM: I want to ask the noble and learned Viscount one question on his Amendment, from which I do not dissent. Does the noble Viscount realise that it is the case that the limitation to a value of £1 or more will apply as regards voting on a special resolution, but will not apply as regards the right to inspect the register and to ask for a list of members' names and addresses? Is he aware of that distinction and does he know what the reason for the distinction is? The principal purpose of inspecting the register may well be in order to get the members of the society to consider a special resolution. Different persons can do different things. A person with a ls. share can inspect the register and also demand a list of members' names and addresses. But when it comes to giving effect to the purpose for which he asks for that information, namely, the passing of a special resolution, he may be cut out unless he has an investment shareholding of £1 or more.
VISCOUNT HAILSHAM: As I indicated, the purpose of the exception to the general rule that all members could vote is to allow a society, if its rules so provide, to disfranchise borrowers, who have to be defined by the indirect
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method I have described to get round the anomaly I mentioned on an earlier Amendment of a qualifying share of 1s. or 5s. It is simply a device, therefore, which is required by draftsmanship. The object is to permit societies to disfranchise, for this purpose, borrowers. The noble Lord, I think, is quite right. He is pressing me hard on ground on which he is very familiar and on which I am less familiar, but I think he is perfectly right in saying that, where the society's rules so permit, it would effectively exclude borrowers from taking part in special resolutions, and therefore one of the purposes for which they might otherwise wish to inspect the register would be of no value to them. But I do not think it is the only purpose, and I would say, therefore, that there would be other reasons why they should be entitled to inspect the register on proper occasions.
On Question, Amendment agreed to.
Clause 26 [Alteration of rules by special resolution]:
VISCOUNT HAILSHAM: This Amendment and Amendments 40C and 40D are consequential on the last Amendment. I beg to move.
Amendment moved—
Page 21, line 15, after second ("a") insert ("special").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 21, line 16, leave out from beginning to ("at") in line 17.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 21, line 22, after ("by") insert ("special").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 26, as amended, agreed to.
5.25 p.m.
LORD MILNER OF LEEDS LORD MILNER OF LEEDS moved, after Clause 26 to insert the following new clause:
Rules to be approved by Chief Registrar
".—(1) Any new rule, and any alteration to an existing rule, made by a building society shall be of no effect until it has been approved by the Chief Registrar.
(2) Upon a requisition to that effect signed by ten investing members of a building society, any rule or part of a rule of that society shall be submitted to the Chief Registrar for his approval, and if within a period of two months from the date of the requisition the Chief Registrar has not signified his approval to the society, such rule or part of a rule shall cease to have effect:
Provided that, in any case where, in the opinion of the Chief Registrar, the operation of this subsection would, apart from this proviso, prevent the society from carrying on its business satisfactorily, he may extend the said period by two months only."
The noble Lord said: This new clause is intended to ensure that the rules of the building society already registered with the Chief Registrar may be reviewed in certain circumstances, and that future rules submitted to the Registrar shall have effect only when they have been approved by him. The present position is a little anomalous. Under it, any building society can pass a rule, send it with an appropriate certificate from an official—or, perhaps, of directors or members—to the effect that it complies with the Building Societies Acts, and automatically the Chief Registrar registers that rule. However, during the emergency, as it was called—that is to say, from 1940 onwards—as some members of the Committee will remember, the Societies (Miscellaneous Provisions) Act was passed which authorised boards of building societies, friendly societies and other bodies to make rules without the necessity of calling meetings of their members. Quite a number of societies, I believe, took advantage of that facility—a perfectly proper one, perhaps, in the circumstances. Of course, it was intended only to deal with matters which were urgent in circumstances of emergency. But a number of the rights of members were affected during that period without their having any opportunity of meeting or voting "Aye" or "Nay".
There is a further practical point. In building society rules, as in the rules of many other bodies, in some cases the remuneration of boards of management or directors is fixed at a certain sum. Sometimes in present circumstances the sum is far too low. Sometimes that remuneration is a percentage, 1s. per £100 of assets, or 6d. per £100 of assets, as the case may be. Of course, in the case of some societies, the assets have grown enormously, by the circumstances of the time: they have doubled or trebled or perhaps have quadrupled since the
786
remuneration was fixed. I know of one society whose assets approach £200 million and whose rules fix the remuneration at 6d. per cent. on the assets. I think, if I am not mistaken, that that would amount, for some eight or nine people, to £50,000 a year in all. That amount is not in fact actually drawn in the case I am quoting but it is permissible to draw it. Some are remunerated by sums which are far too small, and they should be increased or the basis altered. For all these reasons it would seem to me proper that, on appropriate steps being taken by a requisition—and I suggest that it should be a requisition signed by ten investing members—any rule or part of a rule should be submitted to the Chief Registrar, who should approve it or otherwise; and if within a period of two months he has not signified his approval the rule should cease to have effect. The Amendment gives power to delay or to extend the period during which the Chief Registrar is required to act for a further two months. I am not bound by the words—they can probably be improved; but I hope I have made clear the sense of the Amendment. I beg to move.
Amendment moved—
After Clause 26, insert the said new clause.—(Lord Milner of Leeds.)
VISCOUNT HAILSHAM: Our view is that this Amendment puts too much on the Registrar. In the first place, it requires every new rule or amendment of an existing rule made after the coming into operation of this Bill to be approved by the Chief Registrar as a condition of is validity; that is the provision of subsection (1) of the new clause. In the second place, it enables any ten investing members of a society to submit any existing rule for the time being in operation to the Chief Registrar for his approval. If he did not approve it, the rule would become invalid.
The position at present is that the society must submit its rules to the Registrar when it is first registered, and it must thereafter submit for registration any new rules or amendments of existing rules. But these are submitted for registration, and not, in general, for approval. The Registrar's duty is to see that the rules contain all the provisions required to be contained by the Acts, and that the rules are in conformity with the Acts. If the rules or amendments are in accordance with the Acts in these respects,

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the Registrar has no alternative but to register the rules. Approval is therefore not one of his functions: surveillance to ensure compliance with the Acts as a condition of registration is one of his functions. Indeed, the form of certificate of incorporation which is provided for by the Third Schedule to the Act of 1894, expressly states that incorporation of a building society does not imply any approval by the Registrar of its rules. The Amendment therefore constitutes a change of existing policy as embodied in the Acts.
The difficulty about accepting this Amendment lies mainly in two factors. The power which it confers on the Chief Registrar would presumably require him to scrutinise a rule to determine whether, in the particular circumstances of the case and of the society concerned, the rule was, among other things, equitable and would work fairly and justly. Our view is that this would be a difficult—it might be impossible—position in which to put the Registrar. In many cases he might need to consider conflicting interests in a society, and he might have to come down in favour of one interest rather than another. It might also require the Registrar to consider the relative advantages or disadvantages of a particular course of action, and so accept responsibility for one policy rather than another. Also, we think, at any rate, that approval tends to give a false impression, and perhaps even a false sense of security, to members and to potential investors—which is, perhaps, I should have thought, one of the strongest arguments against providing for it in the Bill.
I think that none of us should forget that, in spite of their great size and complexity, building societies are in the last resort still societies; and, that being so it is for their members to determine the rules. And, subject to their conforming with the general Acts which deal with questions of public policy, we do not think that the functions and responsibilities of members should be inhibited. We think that the responsibility should rest on their shoulders. As a matter of fact, the clause which we have just discussed, Clause 26, does make it more difficult in some cases, at any rate, to alter the rules of societies by including the provisions for special resolutions which we
788
have been discussing, so that anything underhand can be avoided. It is also fair to say that the Chief Registrar has plenty of power in other parts of the Bill to take appropriate action against a society which is acting against the interests of its investors. Indeed, I have heard some criticism in the course of these discussions that the powers might even be considered excessive; and I should think that such powers might well cover a society whose rules were in fact oppressive. At any rate, in our view there is already in the Bill all the power needed to deal adequately with societies which have become a danger to their members; and, on balance, we think that this Amendment would probably do more harm than good, although in many ways I appreciate both the way in which the noble Lord has moved it and the reasons which he has advanced.
LORD MILNER OF LEEDS: I appreciate all the noble Viscount has said, but he has not, of course, dealt with my point about those rules which were passed during the emergency, and which were not put before a meeting of members. I fully agree with him that the members should have control of the society. It is my complaint that in some respects that is not the case. For example, some societies hitherto, prior to this Bill, have given notice of their meetings only by advertisement, and the result has been that only a handful have attended. Most of that handful, in some circumstances, are employees of the society, and it may be not a majority of the ordinary members of the society.
This Bill provides (and I am very happy to see it) that written notice of meetings has to be sent to members, and I hope that that will result in a better attendance. But during the war, when most of us were engaged on endeavouring to win the war, provision was made, quite properly, permitting boards of directors and committees of management to pass rules which did not have to come before a meeting. In those instances, therefore, they were not in fact passed by members, but were passed with the authority, perhaps, or under the direction, of the Chief Registrar by the boards of management or the directors themselves. However, the matter having been ventilated, perhaps the noble Viscount will be good enough to look at it again;

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and, if he will so so, as I have no desire to press it unduly, I ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 27 agreed to.
Clause 28 [Annual general meeting]:
5.37 p.m.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, in subsection (2), to omit "on the application of any member of the building society". The noble Viscount said: Clause 28 (2) provides that if a building society fails to hold its annual general meeting within the first four months of the financial year, as the clause requires, the Chief Registrar may direct it to call such a meeting, and may issue such other directions as may be necessary. As the clause is drafted at present, the Chief Registrar cannot take the initiative in issuing such directions, but can do so only on the application of a member of the society. We think that there is no need to require such an application. In practice, the Chief Registrar will doubtless be unlikely to act unless a member of the society communicates with him, since he will probably otherwise be unaware of the default. But in principle, if the society is in default, we think that the Chief Registrar ought to be free to act on his own initiative. I beg to move.
Amendment moved—
Page 22, line 21, leave out from ("may,") to ("call") in line 22.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This is, I think, little more than a drafting Amendment, as is No. 44, which follows it. As the Bill is drafted, there is some ambiguity whether the references in lines 37 and 41 to an annual meeting held by the building society "for" a year (say, 1960) meant the meeting held in 1960 relating to the business transacted in 1959 or the meeting held in 1961 to discuss the society's business transacted in 1960. In fact it is the former that is meant, and the purpose of this Amendment is to make it clear. I beg to move.
Amendment moved—
Page 22, line 37, leave out ("for that year,") and insert ("so as to require the holding of an annual general meeting in that financial year and in subsequent financial years,").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 22, leave out lines 41 and 42 and insert ("so as to require the holding of an annual general meeting in the financial year beginning in the year nineteen hundred and sixty-one and in subsequent financial years".—(Viscount Hailsham.
On Question, Amendment agreed to.
Clause 28, as amended, agreed to.
Clauses 29 to 32 agreed to.
Clause 33 [Keeping of books of account and office management]:
VISCOUNT HAILSHAM: This is a purely drafting Amendment. I beg to move.
Amendment moved—
Page 24, line 28, leave out ("that") and insert ("this").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This Amendment goes with the following Amendment, No. 47. Subsection (2) of Clause 33 requires societies to establish a system of supervising their cash holdings, and subsection (3) requires them to establish a system to ensure the safe custody of mortgage deeds. It has been pointed out to the Government that there is no corresponding requirement of a system of control over other assets, principally investments of surplus funds. These Amendments remedy this deficiency by including all documents of title belonging to the society—stock certificates to bearer and share certificates—in the system for control of mortgage deeds required by subsection (3). I beg to move.
Amendment moved—
Page 24, line 36, after ("of") insert ("all documents of title belonging to the building society and of").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move the next Amendment.
Amendment moved—
Page 24, line 40, after ("such") insert ("document of title or").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 33, as amended, agreed to.
Clauses 34 and 35 agreed to.
Clause 36 [Signing of balance sheet]:
LORD LATHAM LORD LATHAM moved, in subsection (1), to leave out "the chairman" and insert "two of the directors". The noble Lord said: On behalf of the noble Duke, the Duke of Devonshire, I rise to move Amendment No. 48, and it may be convenient to take No. 49 with it. As the Bill is drafted, it requires the balance sheet to be signed by the chairman. The usual practice of a company is that the balance sheet should be signed by two directors. It may be that the chairman is not available or is not accessible, and in these circumstances difficulties might arise. Amendment No. 48 substitutes two directors for the chairman.
Amendment No. 49 deals with the question of manager. Many building societies adopt the title "manager" rather than secretary, and therefore it is suggested that, "manager or" should be included in the clause. Section 155 of the Companies Act prescribes that the accounts and balance sheet shall be signed by two directors, and if there is only one, that it should be signed by him. There is nothing about the secretary or manager. But I have found that with regard to banking, companies registered after 1879 the balance sheet must be signed by the secretary or manager, if any, and where there are more than three directors, it must be signed by at least three, and if there are not more than three directors then by all. I apprehend that the noble Viscount will be willing to accept both these Amendments and I beg to move.
Amendment moved—
Page 26, line 39, leave out ("the chairman") and insert ("two of the directors").—(Lord Latham.)
VISCOUNT HAILSHAM: As the noble Lord has indicated, I am very happy to accept this Amendment.
On Question, Amendment agreed to.
LORD LATHAM: I beg to move the next Amendment.
Amendment moved—
Page 26, line 40, after the first ("the") insert ("manager or").—(Lord Latham.)
On Question, Amendment agreed to.
Clause 36, as amended, agreed to.
Clauses 37 to 39 agreed to.
Clause 40 [Auditors' report]:
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved to leave out subsection (3) and insert—
"(3) The report shall state whether the balance sheet and revenue and appropriation account are properly drawn up in accordance with the requirements of this Act and the regulations made thereunder and whether, in the opinion of the auditors, they give a true and fair view—

(a) in the case of the balance sheet, of the state of the building society's affairs as at the end of its financial year; and

(b) in the case of the revenue and appropriation account, of the income and expenditure of the building society for its financial year.

(4) It shall be the duty of the auditors of a building society in preparing their report under this section to carry out such investigations as will enable them to form an opinion—

(a) as to whether the building society has kept proper books of account and proper records of the matters referred to in subsection (3) of section thirteen of this Act, and

(b) as to whether the building society has maintained a satisfactory system of control over its transactions and records, and, in particular, whether the requirements of subsections (2) and (3) of section thirty-three of this Act have been complied with, and

(c) as to whether the balance sheet and revenue and appropriation account are in agreement with the books of account and records of the building society,

and if the auditors are of opinion that the building society has failed to keep proper books of account or proper records of the matters referred to in subsection (3) of section thirteen of this Act, or to maintain a satisfactory system of control over its transactions and records, or if the balance sheet and revenue and appropriation account are not in agreement with the books of account and records of the building society, the auditors shall state that fact in their report."
The noble Viscount said: Amendments Nos. 50 and 52 go together. They are intended to replace the provisions in subsection (3) of Clause 40 about the form of the auditors' certificate on the annual accounts. They have been prepared as the result of further discussions with the Institute of Chartered Accountants since the publication of the Bill, and on behalf of the Government I must record our thanks for their assistance in this matter. The main effect of the Amendment is considerably to reduce the length of the certificate which will be required in most cases. Under the clause as drafted, the auditors are required to report on seven points, mentioning, all seven irrespective of whether everything was in order or not. They will now only be required

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to report in all circumstances whether the accounts are properly drawn up and show a true and fair view of the society's affairs. They will be put under a duty to consider the other points and to report on them if anything is wrong.
There are arguments in favour of both forms. The principal argument in favour of the short report is that any adverse report immediately stands out as being longer than normal, and the members' attention is immediately attracted to it. If, however, the report were as long irrespective of whether it was favourable or adverse, it can be argued that members would be deterred from reading what appeared to be a formal repetition of almost unintelligible phrases and might well miss an adverse comment included in the middle of it. An argument for the long report is that it brings to the auditor's attention before he signs it the points which he is under a duty to consider. The Institute of Chartered Accountants, however, have assured us that the shorter certificate will in no way lower the standards of auditing.
The Building Societies Act, 1894, followed the short form of report, and the Companies Act, 1948, followed the long form. Clause 40 as originally drafted was modelled on the Companies Act. However, the Government feel that some different factors apply in the cases of building societies and companies, notably the larger number of people to whom the accounts have to be circulated and in general their smaller experience of financial matters, and on reconsideration have decided that the balance of advantage lies, in the case of building societies, with the short report. Because of the different factors involved, it must be understood that this decision in no way prejudices any consideration which the Jenkins Committee may give to this point in relation to companies. These Amendments also provide for certain minor improvements of detail, which have been incorporated as the result of suggestions by the Institute of Chartered Accountants. I beg to move.
Amendment moved—
Page 28, line 29, leave out subsection (3) and insert the said new subsections.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I think I can describe this Amendment as drafting; it is certainly vary minor. I beg to move.
Amendment moved—
Page 29, line 24, leave out from ("accounts") to ("and") in line 25 and insert ("records and vouchers of the building society and to all other documents relating to the affairs of the building society (including the deeds relating to property mortgaged to the building society,)").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This Amendment is consequential. I beg to move.
Amendment moved—
Page 29, line 28, at end insert ("; and if the auditors fail to obtain all the information and explanations which to the best of their knowledge and belief are necessary for the purposes of their audit, they shall state that fact in their report.")—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 40, as amended, agreed to.
Clauses 41 to 43 agreed to.
Clause 44 [Commencement of provisions relating to accounts, annual summary of business, directors' report and audit.]
5.50 p.m.
VISCOUNT HAILSHAM: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 32, line 41, leave out ("appropriation and revenue") and insert ("revenue and appropriation").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This, too, is a drafting Amendment. I beg to move.
Amendment moved—
Page 32, line 41, leave out ("annual summary of business").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 44, as amended, agreed to.
Clause 45 [Making of annual return].
LORD LATHAM: On behalf of the noble Duke, the Duke of Devonshire, I beg to move this Amendment. It deals with a question already decided upon by your Lordships.
Amendment moved—
Page 33, line 14, leave out ("the chairman") and insert ("two of the directors").— (Lord Latham.)
On Question, Amendment agreed to
LORD LATHAM: I beg to move this Amendment.
Amendment moved—
Page 33, line 15, after the first ("the") insert ("manager or").—(Lord Latham.)
On Question, Amendment agreed to.
Clause 45, as amended, agreed to.
Clauses 46 to 49 agreed to.
Clause 50 [Information to be given on unions and transfers of engagements]:
VISCOUNT HAILSHAM: This Amendment and Nos. 57B and 57c are consequential. I beg to move.
Amendment moved—
Page 36, line 31, leave out ("In a case").— (Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 36, line 31, leave out from first ("of") to first ("the") in line 33.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 36, line 33, leave out from ("thirty-three") to second ("the") in line 35.—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 50, as amended, agreed to.
Clauses 51 and 52 agreed to.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, after Clause 52 to insert the following new clause:
Failure to sell property after foreclosure etc.
".—(1) If a building society contravenes the proviso to section thirteen of the principal Act (which directs that land mortgaged to a building society shall, if the building society becomes absolutely entitled to the land, be sold or converted into money) the building society shall be liable on conviction on indictment or on summary conviction to a fine which, on summary conviction, shall not exceed two hundred pounds and every officer of the building society who is in default shall be liable—

(a) on conviction on indictment to a fine or to imprisonment for a term not exceeding two years, or to both, and

(b) on summary conviction to a tine not exceeding two hundred pounds or to imprisonment for a term not exceeding three months, or to both.

(2) This section shall not apply to an offence committed before the commencement of this Act."
The noble Viscount said: This new clause remedies an oversight in the Bill as presented. Under Section 13 of the Building Societies Act, 1874, a society is required to sell any property to which it becomes absolutely entitled, for example by foreclosure, "as soon as may be conveniently practicable." Failure to do so was an offence under the general offences section, Section 21 of the Building Societies Act, 1894. This latter section is being repealed, as specific provision has been made in this Bill for the other offences covered by it. However, no provision was made in the Bill as presented for failure to carry out this particular duty.
The new clause therefore provides that failure to sell the property in these cases will continue to be an offence, and since this could be used as a device to evade Clauses 1 and 10, the penalty is the same as in those clauses. I beg to move.
Amendment moved—
After Clause 52, insert the said new clause.—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 53 [Increase of certain other penalties]:
VISCOUNT HAILSHAM: This Amendment is consequential on the Amendments to Clause 13, which provide for the repeal of Section 12 of the Building Societies Act, 1939. I beg to move.
Amendment moved—
Page 38, line 30, leave out paragraph (e).—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This, too, is a consequential Amendment. I beg to move.
Amendment moved—
Page 38, line 38, leave out ("section twelve and").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 53, as amended, agreed to.
Clauses 54 and 55 agreed to.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, after Clause 55 to insert the following new clause:
Time limit for commencement of summary proceedings
".—(1) Notwithstanding any limitation on the time for the taking of proceedings contained in any Act, summary proceedings for any offence under this Act or for any offence under the Building Societies Acts, 1874 to

797
1940, committed after the commencement of this Act may, subject to the provisions of the next folic wing subsection, be commenced by the Chief Registrar at any time within the period of one year beginning with the date on which evidence, sufficient in the opinion of the Chief Registrar to justify a prosecution for the offence, comes to his knowledge; and for the purposes of this subsection a certificate, purporting to be signed by or on behalf of the Chief Registrar, as to the date on which such evidence came to his knowledge shall be conclusive evidence thereof.
(2) Nothing in the foregoing subsection shall authorise the commencement of proceedings for any offence at a time more than three years after the date on which the offence was committed.
(3) This section shall have effect in its application to Scotland as if, in subsection (1), the words 'by the Chief Registrar' were omitted."
The noble Viscount said: Section 104 of the Magistrates' Courts Act, 1952, imposes a limit of six months within which a prosecution for a summary offence must be brought unless another Act expressly provides otherwise. This is not entirely appropriate to the case of building societies. In their case the Registrar has usually to rely on the statutory annual returns and on information from the public to discover an offence. Since the annual return does not have to be submitted to the Registrar earlier than three months after the end of the financial year to which it relates and since further inquiries are usually required before proceedings can be instituted, the six months' limit has proved an obstacle to prosecutions. This difficulty has been overcome in several other, perhaps analogous, Acts administered by the Chief Registrar by providing that prosecutions may be brought within one year of discovery, subject to a limit of three years. The new clause follows these precedents, one of which is the closely analogous case of the Industrial and Provident Societies' Amendment Act, 1954 Subsection (1) provides that the date of discovery of the evidence on which the prosecution is based shall be certified by or on behalf of the Chief Registrar, and imposes a limit of one year from the certified date of discovery as the period during which proceedings may be commenced. Subsection (2) imposes a maximum limit on the commencement of proceedings of three years from the date of the offence; subsection (3) retains the requirement of the Chief Registrar's certificate in the case of proceedings instituted in Scotland, but
798
provides for the fact that such proceedings will not technically be commenced by the Chief Registrar. I beg to move.
Amendment moved—
After Clause 55, insert the said new clause.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM VISCOUNT HAILSHAM moved, before Clause 56, to insert the following new clause:
Form of registers, etc.
".—(1) Any register, record or book of account to be kept by a building society may be kept either by making entries in bound books or by recording the matters in question in any other manner.
(2) Where any such register, record or book of account is not kept by making entries in a bound book but by some other means, adequate precautions shall be taken for guarding against falsification and facilitating its discovery, and where default is made in complying with this subsection, the building society and every officer of the building society who is in default shall be guilty of an offence under this Act."
The noble Viscount said: This new clause has been tabled at the suggestion of the Institute of Chartered Accountants. It follows the lines of Section 436 of the Companies Act, 1948. Subsection (1) makes it clear that any register, record or books of accounts, which is required by Statute, may be kept in the form of a bound book or in any other form, for instance, a register of members could consist of the racks of addressograph plates and the accounts could be in loose leaf form. Subsection (2) requires adequate precautions to be taken against falsification and makes default an offence under this Act. I beg to move.
Amendment moved—
Before Clause 56, insert the said new clause.—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 56 agreed to.
Clause 57 [Proceedings on a petition by Chief Registrar for winding up a building society]:
VISCOUNT HAILSHAM: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 39, line 41, leave out ("who were").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 57, as amended, agreed to.
Clause 58 agreed to.
Clause 59 [Provisions as to regulations and orders]:
VISCOUNT HAILSHAM: This Amendment is consequential to the amendment of Clause 1. I beg to move.
Amendment moved—
Page 40, line 17, after ("Act") insert ("other than a statutory instrument containing an order under section one of this Act").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Clause 59, as amended, agreed to.
Clause 60 agreed to.
Clause 61 [Interpretation]:
VISCOUNT HAILSHAM: This is a drafting Amendment. I beg to move.
Amendment moved—
Page 41, line 12 leave out ("named") and insert ("name").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This Amendment is consequential on No. 40A. I beg to move.
Amendment moved—
Page 41, line 23, at end insert ("'special resolution' has the meaning assigned to it by section (Special resolutions) of this Act").— (Viscount Hailsham.)
On Question, Amendment agreed to.
THE DUKE OF DEVONSHIRE: This and the following Amendment are designed for the same reason as the Amendment advanced and accepted to Clause 22—namely, that borrowers from building societies are also members of the society, and for this reason are generally required to have a nominal holding. There is one variation from that. In some cases, some societies' borrowers are treated as having a freeholding equivalent to the amount of their advance. These two Amendments provide that the word "shares" means shares held by investors, and any shares issued to borrowers as such shall be disregarded. I beg to move the first Amendment.
Amendment moved—
Page 41, line 37, leave out ("and").—(The Duke of Devonshire.)
VISCOUNT HAILSHAM: I am happy to say that I accept this Amendment.
On Question, Amendment agreed to.
THE DUKE OF DEVONSHIRE: I beg to move this Amendment.
Amendment moved—
Page 41, line 38, at end insert ("and any share held by a person to whom the building society has, as the holder of the share, made an advance shall be disregarded.")—(The Duke of Devonshire.)
VISCOUNT HAILSHAM: I accept this Amendment.
On Question, Amendment agreed to.
Clause 61, as amended, agreed to.
Clauses 62 and 63 agreed to.
6.3 p.m.
LORD MILNER OF LEEDS LORD MILNER OF LEEDS moved, after Clause 63, to insert the following new clause:
Extension of powers of building societies to certain overseas territories
".—(1) If it appears to Her Majesty that there exist in Canada, Australia, New Zealand, the Union of South Africa, India, Pakistan, Ceylon, the Federation of Rhodesia and Nyasaland, Ghana or the Federation of Malaya, or in any other sovereign state, laws for regulating building societies substantially similar to the Building Societies Acts, 1874 to 1960, then She may by Order in Council make provision—

(a) for enabling building societies as defined in this Act to carry on business and make advances in any of those territories on the security of land in such territory, subject to any such law as aforesaid and to any conditions which may be specified in the Order;

(b) for enabling, subject as aforesaid, such building societies to create, or assist in the creation of, building societies in any of those territories; and

(c) for ancillary purposes.

Any such Order in Council may also provide that a building society whose seat is in any such territory may exercise similar powers in the United Kingdom, subject to such provisions of the Building Societies Acts, 1874 to 1960, as the Order may specify.
(2) Her Majesty may also by Order in Council direct that, for the purpose of enabling building societies as defined in this Act to carry on business and make advances in any colony, protectorate or United Kingdom trust territory upon the security of land in such colony, protectorate or territory, the provisions of the Building Societies Acts, 1874 to 1960, shall extend, with such exceptions, modifications and adaptations, if any, as may be specified in the Order, to such colony, protectorate or territory.
(3) Any Order in Council made under this section may be varied or revoked by a subsequent Order in Council so made, but no recommendation shall be made to Her Majesty in Council to make an Order under this section unless a draft thereof has been laid before, and approved by resolution of, each House of Parliament."
The noble Lord said: This new clause is, in my submission, a most important one, and one which, if approved in principle, can have the greatest possible advantages to the Commonwealth in particular, and also to this country. The short object is to extend or permit the extension of the beneficent operations of buildings societies, their knowledge and their financial stability, to overseas territories, some of which I have mentioned in the Amendment, and especially, of course, to the Commonwealth. Your, Lordships are aware that building societies originated in this country, and there are quite a number of countries which have no building societies at all, or anything analogous thereto. There are countries which have a few small struggling building societies, usually requiring "know-how" and finance. Of course, there are one or two countries in the Commonwealth which have building societies of some substance.
It appears to me, and will, I hope, appear to others of your Lordships, that if we could give building societies help to carry on their operations in other countries of the Commonwealth, as in subsection (1) (a) of my new clause, to carry on business themselves and make advances to any of those territories on the security of land in those territories, or, secondly, to enable building societies to create, or assist in the creation of, building societies in any of those territories, it would be a good thing. My proposal, therefore, is that power should be given to building societies, under such conditions as may be laid down, to lend monies on the security of land or property and, in addition, to permit building societies in this country to help by the provision of finance, "know how" or the actual setting-up of building societies in overseas territories.
Obviously, either of those procedures would be a great advantage to the territories concerned. They would get to know our "know how", and would have the opportunity of investing in building societies set up in those territories, thereby encouraging thrift, which is one of the main assets, I think, of the building society movement in this country. They would also have the opportunity, under laws similar to those of this country, to make advances to persons, either white, black or any other colour, who fulfil the conditions laid down on which advances
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can be made. Any such procedure would obviously result in funds going out from this country with interest coming back. For example, in the case of Canada, I believe I am right in saying that there are no building societies as such. There is the National Mortgage Corporation, but, as I understand it, it does not fulfil the precise functions fulfilled by building societies so satisfactorily for the most part in this country. British Guiana has already made representations to Her Majesty's Government asking for assistance in the setting up of building societies. One knows something about housing conditions in the Caribbean, and there again I believe that there is a demand for help and, maybe, finance from this country.
Of course it is not only a question of finance, which indeed might have to be provided only in the first instance. I believe that if building societies were set up under the auspices of our British building societies in some of these overseas territories, with a certain amount of preliminary finance the confidence so engendered would result in the local residents investing their money, little by little, in the building society and in turn borrowing that money for the purpose of purchasing or building their own houses. In my submission, this can be a most potent form of propaganda on behalf of the United Kingdom. It would do something to extend knowledge of our British way of life. It is not merely a matter of money. In fact, the general secretary and representatives or members of the Building Societies Association have been out to some of these territories and have given advice and help. But, so far, owing to the operation of the Building Societies Acts, no building society in this country has had power either to initiate or assist in creating, or to itself operate in, any of these overseas territories.
I do not think I need delay your Lordships further. If it is said that there are plenty of houses to be built in this country, and that the funds of building societies are well occupied, that may well be the case. But I cannot believe that for such an object as this it is not possible for one or two of the larger building societies, or a consortium of building societies, or the Building Societies Association, in some form to get together and take steps to extend

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these magnificent activities to other parts of the Commonwealth. Looking to the future, I feel that the passing of this new clause, or some other clause which may be drafted giving these powers, would render very great service. I therefore venture to commend it most sincerely to your Lordships. I beg to move.
Amendment moved—
After Clause 63, insert the said new clause.— (Lord Milner of Leeds.)
LORD BARNBY: I wish to record strong support for this Amendment. It is a peculiar thing that hitherto these facilities have not been statutorily permissible in the Dominions. All Parties politically in this country have always been very proud of the great achievements this movement has made possible in giving assistance in housing. The noble Lord has given in a few words very convincing reasoning in favour of this Amendment. Surely it is a peculiar gap that hitherto this type of "know-how" and finance has not been made available to the Dominions. We know that there are building societies in the Dominions. We know that there are many other financial fields, prototypes in the Dominions such as were piloted here by long experience in this country, and so one would feel that there can be little reason against it.
On the question of finance there have been arguments that we cannot afford and should not permit any kind of money to go out of this country to build houses in the Dominions when there is such a need for houses in this country. That seems a very poor argument, and I deal with it only in anticipation that it might be mentioned now. Curiously enough, a not similar but analogous form of assistance to finance for those who are less affluent in the Dominions is in hire purchase of all kinds. We have recently seen a tremendous development in all the Dominions and many of the Colonies of the projection of the British experience and "know-how" into these fields in order to assist those who habitually are unable to finance themselves and therefore employ organisations like building societies. It is interesting (perhaps I may have the indulgence of the Committee to mention this) that according to Sir Eric Harrison in the Daily Telegraph:
"The Dutch Government obtained a loan of £3 million from the United States Development
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Loan Fund. This loan has been met pound for pound by Australian banks and the total sum is being fed into the Co-operative Building Societies but comprised solely of immigrants from Holland. The societies arrange individual loans to members and take mortgages on houses under construction."
It is reported from other sources that the Italian Government also, with the support of Italian banks, are financing to the extent of £2½ million the building of 1,000 homes for Italian immigrants into Australia. It surely is a most peculiar thing that hitherto this privilege and advantage has been denied to all those of adventurous spirit who wish to go out to the Dominions. It seems to me such a large gap that we ought to feel indebted to my noble friend for suggesting that this be included in the Bill, and I naturally hope that the noble Viscount may find his way to accept the Amendment. I strongly support it.
LORD HASTINGS: I intervene with some diffidence because I am not at all knowledgeable about building societies, but I noted that this Amendment concerned Commonwealth countries and Colonies and, of course, that aroused my interest. It seems to me that there is no intention in this Amendment that building societies should indulge in any speculative business in the Commonwealth or Colonies but that they should remain subject to the stringent regulations laid down in this Bill or similar regulations which would be enacted in the countries concerned. It is no doubt well known to your Lordships that the Colonial Development Corporation, part of whose business is of course equities, did in fact start a building society in the Federation of Malaya, and also, if I am not wrong, another in the Federation of Nigeria. The results prove that those societies were very greatly needed; and, incidentally, they have not only fulfilled a crying need but proved extremely profitable business. That is especially so in the Federation of Malaya. I think there is little doubt that in many of these countries named in the Amendment home ownership schemes are going in the future to be increasingly needed and of tremendous importance, both economically and, of course, politically, and that in those countries there now arise, and will continue to arise, difficulties of finding local finance for these building societies. I will not support the noble Lord who

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moved the Amendment quite to the extent of saying that it is not a matter of money. There are all sorts of other benefits accruing, but I would put it to the noble Viscount that it is a matter of money and exceedingly good business. Therefore I hope he will consider this Amendment very favourably.
VISCOUNT HAILSHAM: Of course, what has been said has a great deal of attraction in it. I suppose that every one of us would be inclined to agree that there is considerable scope for the extension of loans for house purchase overseas. I am not sure that I quite understand the phrase "know-how" in this connection. It has many meanings, and it seems to me that this connection is perhaps not the most appropriate context in which to use it. But I think we can all agree that British societies can give, to countries which want to start building societies of their own, advice and technical assistance. But as to the first point, that there is room for extension of loans for house purchase overseas, it does not by any means follow from that premise, as I think all three noble Lords who have spoken seem to assume, that the right technique of providing it is that the building societies here, who represent a particular class of investor, should necessarily invest their money by the extension of loans for house purchase overseas. On the contrary, other methods—a State-aided mortgage bank or a mortgage corporation relying on investment of foreign risk capital—have all been tried, and I think with a measure of success. I think it has to be proved that it is a proper use of British-based building societies to engage in this class of business.
Secondly, I would also agree, of course, as I said, that our building societies here can in truth and in fact offer very great help to countries overseas to start building societies over there. But that, I am afraid, seems to me almost the opposite of what is proposed in this Amendment. What is proposed is not that they should help countries in the Commonwealth to start building societies of their own, but that, if Her Majesty is satisfied that they already have building societies of their own, instead of helping them to start building societies of their own, or helping these building societies to indulge in other business—
LORD MILNER OF LEEDS: Would the noble Viscount permit me? He is quite in error here. What I have said in my Amendment is that:
"If it appears to Her Majesty that there exist … laws for regulating building societies substantially similar …".
Then I mention the territories concerned and go on in paragraph (a) to provide that our societies should be enabled to make advances, and that they should be able to help in the creation of building societies in any of those territories. That is what I intend: that building societies here should be enabled, for example, to put up preliminary capital and to make the first advances when I believe that capital would come in from the territories themselves. I suggest that they should be able to send out, possibly a manager or an official, or a number of officials and staff, to create building societies in these territories. Although I said earlier that it was not a question of money, in the first instance it probably is; but I hope that that may not be necessary for too long. But the technique is also necessary in order to make them a success. I think the noble Viscount was in error in stating that my proposal was not to help Commonwealth countries to set up societies of their own.
VISCOUNT HAILSHAM: I do not believe that either of us is really in error about this; it is that we take a different view about the same subject. What I was saying was that of course one can concede that it may be a most useful thing—I think it is—for a building society here to give technical advice and assistance for the creation of a building society in the Commonwealth. Perhaps I was going too far in saying that that was the opposite of what is proposed; but it is not the same thing, because the essence of this proposal is that building societies here should invest in house property, not in building societies in the Commonwealth. That is not the same thing at all. I may have overstated the case, but I think I have now stated it correctly. I do not think that the conclusion follows from the premise at all.
The purposes of a building society are defined in the Principal Act as
"making advances to members … upon the security of freehold, leasehold or copyhold estate by way of mortgage."

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This has a meaning peculiar to English law. Exact parallels do not exist in all overseas territories. Consequently, the provision in subsection (1) that would enable societies to operate in countries where
"laws for regulating building societies substantially similar to the Building Societies Acts"
are in operation, would have to be enlarged to restrict operations to those countries where something approaching English or Scots mortgage and property law applied. Without this provision the building society investor might lose some of the safeguards which English mortgage law offers him.
The main purpose of the Building Societies Acts is to protect the investor from the application of his funds with insufficient security. That is the purpose, and it is precisely because investors in building societies are, and have been proved to be, persons who may be vulnerable in one way or another that this and other Acts have been passed. The Registrar exists in order to see that building societies registered in this country operate in a manner which will ensure a reasonable degree of security; the Bill extends his powers for this purpose. But I must say, frankly, that the operations of British building societies overseas could not be policed in this way so easily. The proposed new clause attempts to avoid this objection by limiting overseas operations to countries where a code similar to our own might exist. This would presumably involve a sort of "Interpol" of Building Society Registrars, exchanging information and returns. I would say that the practical difficulties would be considerable, and the drafting of a suitable Order in Council would be made more complex than the drafting of this enabling provision has been.
It is said that British savings should be used to encourage house purchase in Britain. That may or may not be so, but I certainly see no shortage of outlets for such savings in the foreseeable future. I do not think that there is any widespread demand for such a provision, although obviously the noble Lord would not have moved his Amendment if he had not felt that he could gain a certain amount of support—and he has had able and eloquent support in this
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discussion. But only the largest societies have sufficient management resources safely to take on overseas business. One can foresee that some societies might be tempted to indulge in it unsuitably, and I must say that I see a certain amount of disadvantage from that point of view.
It is, of course, the policy of the Government to assist economic and social development in under-developed countries in the Commonwealth, but I do not think that this would be the particular chosen instrument to do it. But even if it were, our view is that it is likely that in practice any overseas mortgage business would be channelled into relatively developed countries which are quite capable of providing their own building society movement. Canada has been mentioned in the Amendment. There again, one would think that there were disadvantages as well as advantages in our building society movement investing in this way, and there are certainly investments which would bring more immediate benefit in our balance of payments position than that. I do not wish to appear unsympathetic to the underlying enthusiasm behind this Amendment, but I would question whether this is the way in which building societies over here would be wise to proceed; and the advice I have received is, that it is not considered likely that this is the best way of doing things. For that reason, I would ask the Committee not to accept this Amendment.
LORD SHEPHERD: I speak with a certain amount of trepidation because the hour is late, and, like my noble friend Lord Hastings, I certainly do not understand the legal phrases of this Bill. But, again like the noble Lord, Lord Hastings, I am conscious of the need for assistance in providing houses for people in many parts of the British Commonwealth. I think the noble Viscount will be aware of the feeling of this House generally towards this Amendment. I am quite certain, too, that my noble friend Lord Milner of Leeds would not pretend that the words of his Amendment as they now stand should be written into the Bill. I wonder whether the noble Viscount could make a point for us by taking some thought, and by seeing whether it is possible, with his friends, to devise an Amendment to

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the Bill which would meet what I think is the feeling of the Committee, and would make it possible for building societies, if they wish—I stress the phrase "if they wish"—to operate in certain parts of the British Commonwealth. The noble Viscount made the point, which I think we all accept, that the Registrar would be in some difficulties in regard to investments which are made overseas. But surely insurance companies are in a rather similar position, yet they are operating profitably throughout the world. If the insurance companies can carry on their business efficiently and profitably, I can see no reason why we should deny that opportunity to British building societies.
VISCOUNT RIDLEY: While it would seem that there may be no objection to having this clause in the Bill, I can hardly imagine that in the foreseeable future any building society would be likely to want to use it. The type of operation implied here is so utterly foreign to the ideas of directors of building societies on the use of their funds that I should have thought it was really a waste of time. I do not know what may be the attitude of the Building Societies' Association on this question, but the investment of funds in building societies by the public is a continuing operation. It is an investment by a very large number of people of very small sums of money, and loans through building societies are being continually made and continually repaid. The rates of interest involved in those operations are adjusted to the rates prevailing at the time, enabling societies to raise the money they need so as to keep turning it round in that way; and I should have thought it impossible, for example, to keep adjusting the rates on a mortgage in, say, South Africa to suit the conditions of the money market in England, where the movements might be quite different.
It may well be that building societies here could advise and help societies in other countries, but I cannot envisage funds being exported by societies from Great Britain to other countries for that purpose. I believe it is the view of all building societies that their funds are for the provision of homes in this country, to be lent to individuals on the security of a house or a flat; and it would seem odd to export a large sum of money in one piece to some other country to be
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used through some other agency. I feel it is very unlikely that any building society in this country would ever consider doing such a thing, although the noble Lord, Lord Milner of Leeds, says that some may wish to do so.
LORD BOOTHBY: While I can conceive many desirable forms of investment in the Commonwealth and many things which ought to be done in the way of investment in the Commonwealth, I cannot think of anything less desirable than investment there by building societies in this country—societies which were created for an entirely different purpose—in a corresponding scheme in the Commonwealth. I simply do not think it would work. "Know-how", yes—but investment of funds of our building societies could never work.
LORD BARNBY: In another place my noble friend Lord Boothby, with whom I have been associated there, would quickly have got at cross purposes with me in a Committee stage on this matter; but the noble and learned Viscount in charge of the Bill has gone to great trouble to give reasons why, in his judgment, this was not a practicable suggestion under this Bill. As usual, he has supported his view with a generous volume of explanation, and as a result it would seem that there is a danger of a conflict of understanding about this subject.
In his remarks (and it would be difficult to define those without a reading of Hansard) the noble and learned Viscount seemed to make the position complicated, in that on the one hand he referred to actual loans by building societies to householders at the distant point where they would function, as against the possibility of building societies here acting either by the establishment of subsidiaries under statutory provision or by other means which my noble friend Lord Boothby so strongly deplored—though I do not doubt that there are many other kinds of investment in the Commonwealth which he deplores with equal intensity.
The noble and learned Viscount left us in no doubt that he feels disinclined to accept my noble friend's Amendment, but the noble Lord, Lord Shepherd, sagaciously put forward the suggestion that, should the noble and learned Viscount remain immovable at this stage,

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the question might perhaps be reviewed at a later stage; because it would be a great pity if the facilities on which the noble and learned Viscount laid stress were not available. He dislikes "know-how" but accepts the word "guidance". Those are grammatical distinctions on which I will not attempt to cross swords with him; but he will not deny that there is evidence that there is an accumulation of great experience in this, as in other things. Surely the thought that this would take money out of this country into other parts of the Commonwealth is not something of which we should be afraid.
The noble and learned Viscount laid stress on the possibility of "insufficient security" and suggested that there would have to be a great limitation of operations under that heading. There is a distinction in relation to the carrying out of the noble Lord's Amendment—either starting building societies, or working through existing societies. The noble Lord, Lord Ogmore, has explained that there are several building societies in non-white countries of the Commonwealth. We cannot brush aside the fact that this is something for which there is great need, and I believe that if the noble and learned Viscount were to review this question he would find a possible area in which the proposals of the noble Lord, Lord Shepherd, might assist him.
Before I sit down I would say to the noble Viscount, Lord Ridley, that I am given to understand that until recently the building societies of this country have accepted the statutory position that they were barred from this type of operation, but that recently there has been a marked change of attitude and that they are now in a different frame of mind about it. Although that does not necessarily mean that they will plunge in and pour money over there in a large volume, I feel that this is an important Amendment and one which could greatly affect the Commonwealth; and it would be a pity to deny the privilege of this valuable knowledge we have as a channel of assistance not only to people already in these Commonwealth countries but to adventurous and spirited migrants from this country. The Italian and Dutch Governments have already given such assistance. I pray
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God that such migrants may continue to go out from this country, for had it not been for them we should never have had a Commonwealth. It is because of the implications of this that I hope that if the noble and learned Viscount finds he is unable to accept this Amendment he will give the Committee some encouragement by suggesting that possibly something may be hoped for at a later stage.
VISCOUNT HASTINGS: In view of the opposition of some noble Lords I should like to make clear that I approach this question from a strictly business point of view. I realise that this Bill deals principally with the safeguarding of small investments of the public in this country, and therefore I suggest that perhaps the noble and learned Viscount could pay more attention to subsection 1 (b) of the clause than to any other part; because I feel that the essence of the matter lies in that subsection, which is really concerned to assist in the creation of these building societies. I visualise that with their technical knowledge and preliminary funds, obviously it might be possible for building societies here to assist in the creation of such societies elsewhere. But after that preliminary movement, naturally, the funds upon which a building society would operate in the Commonwealth countries and in Colonial territories would come from the inhabitants of those places; and even the original loan would be repaid to the parent company. In that respect, there might be some procedure which the noble Viscount could look at and consider, and perhaps produce at the next stage.
6.40 p.m.
VISCOUNT HAILSHAM: I think that the noble Lord, Lord Boothby, is right about it, and so was my noble friend Lord Ridley. Noble Lords have really assumed too readily that this would be a popular move in the recipient countries. I do not think that that is so. I must tell noble Lords that this was considered; it is not the first time this has been considered. It was discussed by United Kingdom and Commonwealth officials prior to the Commonwealth Economic Conference in 1958, and, as a result, United Kingdom Ministers agreed not to support any extension of building society activities to overseas territories. I do not think that noble Lords should assume, without further evidence, that it would

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be an acceptable move at all to other people.
The business of building societies is to provide credit, to lend money. They can lend it to another society, but that is only another way of saying in the end "lending money on mortgage to people who own their own houses". I can conceive very great political difficulties arising if corporations in this country, with millions of pounds of capital which might be at their disposal at some future date—although it is not, so far as I know, available for this purpose at present—invest in owner-occupier houses in another country and foreclose on mortgages, widespread, in the interests of small investors here. And now it is solemnly said that this is imaginative, forward-looking Commonwealth stuff. I do not personally agree. I will report the course that this debate has taken, for and against, to my right honourable friend, and we will see whether the Government view can in any way be modified. But I am not convinced of this and I should be doing an injustice to the noble Lord by saying I was.
LORD BARNBY: May I ask the indulgence of the Committee to ask two points?
SEVERAL NOBLE LORDS: Oh!
LORD BARNBY: This is the Committee stage. Can he give us enlightenment on the change in the situation since 1958? I am informed that there has been a change in attitude on the part of building societies recently. Secondly, would he say something as to the dangers of a subsidiary company of a building society operating in the Dominions with a Dominion façade? What would their position be?
VISCOUNT RIDLEY: How can a building society form a subsidiary company? It is not conceivable.
LORD BARNBY: They cannot do it at the moment. We are urging that this should be changed in law. That is the object of this debate.
LORD MILNER OF LEEDS: I am greatly obliged to all those noble Lords who have taken part in the debate, and particularly to those who expressed what, in my opinion, is a very forward-looking view in regard to this matter. In
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the first place, the power proposed is purely permissive. I hope that the noble Lord, Lord Boothby, will not go, in case he is inclined to when one is in process of replying to him.
LORD BOOTHBY: I did not know the noble Lord was replying to me.
LORD MILNER OF LEEDS: This power is purely permissive. I am not bound in any way by the wording of the Amendment, but my view of the matter is that two or three of the larger societies in this country might well get together for this purpose, as there is capital of £1,000 million or thereabouts invested here in building societies. Suppose that they put up, if you like with the authority of their members in general meeting—a lot has been said about the views of members in general meeting—£1 million for a particular Commonwealth country. That would give a building society or two or three building societies a magnificent start. They could lend money on many houses and it would enable the inhabitants or the residents themselves to contribute. It is not a question of putting up a very large sum in comparison with the sums the building societies have at their disposal here. I would not favour foolish speculation, but I would favour, with due authority from the members, the lending or putting up of money by one or more building societies in this country to enable building societies to be created in Commonwealth countries.
LORD BOOTHBY: May I ask the noble Lord one question?—because this is important. How does he propose that they should do it: by direct investment in the Commonwealth countries concerned—in other words, by giving loans on mortgage for houses, and possibly foreclosing—or by forming subsidiary companies in the Dominions? And, if the latter, how does he suggest that that should be done?
LORD MILNER OF LEEDS: I have known the noble Lord for many years and I do not propose to be involved in the detail for which he asks. It would be perfectly simple. £1 million could be put up in some Commonwealth country to form a building society there, the money being loaned by a building society or building societies in this country to the newly created

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society or societies there. Provision is made in this Bill for money to be lent for building societies in this country when it is needed. The latest instance of that being done was in the country of the noble Lord, Lord Boothby, in Scotland, where unfortunately a building society became very heavily involved and another building society had to go to its help. My view is that a similar procedure could be adopted in regard to creating building societies in other parts of the Commonwealth.
In reply to the noble Viscount, Lord Ridley, I would say that there are building societies which are anxious and willing to make these investments or to enable building societies to be set up in the Commonwealth and to assist them in their setting up. The noble Viscount is quite wrong in imagining that that is not the case. I should have thought that the society with which he is connected would, possibly, be very willing, with the approval of their members, to make a contribution to the setting up of a building society in some other part of the Commonwealth.
In reply to the noble Viscount who is speaking for the Government, I would say that it is not true that all countries have adequate building societies or organisations of that kind now. Canada, for one, has not; and we could make investments in Canada, as indeed many other organisations and companies have, which would in due course bring a very satisfactory dollar return to this country and, as the noble Lord, Lord Hastings, said, enable the monies advanced to be returned to this country with probably considerable interest as well. At any rate, in all these Commonwealth countries we should do something to encourage thrift, to encourage better housing; and in all these countries better housing is required. There is ample scope and there are ample funds in this country, at any rate to give the movement a start; and that is all, in my judgment, that might be required.
I thought that the noble Viscount's reply, if he will forgive me for saying so, was rather a collection of pettifogging reasons for not doing anything at all in a matter in which I should have thought his side of the House would have been very forthcoming: developing the
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Empire and Commonwealth and so forth. I should have thought that the Government would have said, "Perhaps this is not the correct way of doing it, but we will try to devise words that will give the necessary authority, with appropriate safeguards, to help in creating these homemaking institutions". As to the attitude of the Building Societies Association, I have no authority to speak for them on this matter, but I think I am entitled to say that there is certainly no active opposition to the idea. Indeed, numbers of the executives and chairmen, and so forth, of British building societies attended a Congress in Africa last year on this very subject of building societies. It was a conference which was attended by a number of Commonwealth and other countries' representatives; and I think I am entitled to say that they certainly do not oppose it. My own personal view, though I hesitate in the presence of the noble Duke to express an opinion, is that they probably favour it.
THE DUKE OF DEVONSHIRE: I think it would be true to say, on behalf of the Association, that they are entirely uncommitted on this question. They had not seen the Amendment of the noble Lord, Lord Milner of Leeds, until very recently. It has not gone before the Council, or before members of the Association, and I should not like to commit the Association or its Council in any way to this new clause. I feel certain that in due course they will give it due consideration, but to date they have not considered it.
LORD MILNER OF LEEDS: I am much obliged to the noble Duke. I fully accept that that is the position. I am anxious not to delay the House a moment longer than necessary. I do not know whether the noble Viscount can give me any assurance about reconsidering the matter. I understand he is going to report it to his right honourable friend. I do not know which right honourable friend he refers to. Would it he the Secretary of State for the Colonies?
VISCOUNT HAILSHAM: The Department which is responsible for this Bill is the Treasury; and, of course, I meant my right honourable friend the Chancellor of the Exchequer.
LORD MILNER OF LEEDS: Would the noble Viscount be good enough to consult also, perhaps, the Commonwealth Relations Office and the Colonial Office? I should have thought that they would have been the appropriate Departments. If he consults the Treasury, will he ask the Treasury whether they have not had representations from British Guiana that this sort of thing should be done? Perhaps he would be good enough to put that to them. What I propose to do, having regard to the time, is to ask leave to withdraw my Amendment, while at the same time reserving all my rights with a view to putting it down again at a later stage if necessary. However, at the moment I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Remaining clauses agreed to.
First Schedule [Special terms applying to certain shares]:
VISCOUNT HAILSHAM: Before I move the next Amendment, may I take the opportunity of asking noble Lords what would be their wish in this matter? Personally, my desire would be to go on and to finish, but I do not wish to incommode the Committee in this matter at all.
LORD SILKIN: I think we should all prefer to see this Committee stage through, although we have great sympathy with the noble Lord, Lord Teviot. We had hoped to finish half an hour ago; but, speaking for my friends, I can assure the noble Viscount that we shall not in any way hold up the business.
VISCOUNT HAILSHAM: I am much obliged to the noble Lord. I think we can manage this fairly quickly. Amendment No. 69 is simply drafting, and I beg to move.
Amendment moved—
Page 44, Lave out lines 19 to 34.—(Viscount Hailsham.)
On Question, Amendment agreed to.
First Schedule, as amended, agreed to.
Second Schedule agreed to.
Third Schedule [Standard rules for meetings of building societies]:
VISCOUNT HAILSHAM: Both this and Amendment No. 69B are consequential on my Amendment No. 40A, which has already been passed. I beg to move
Amendment moved—
Page 48, line 35, at end insert—
("(7) If a resolution put to the vote of the meeting is a resolution which, under the enactments relating to building societies, will not be effective unless it is passed as a special resolution, a poll shall be deemed to have been demanded by the chairman.")—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 49, line 3, leave out from ("vote") to second ("a") and insert—
("(2) On a poll on a resolution which, under the enactments relating to building societies, will not be effective unless it is passed as a special resolution, every member shall have one vote.
(3) On a poll on any other resolution").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This is drafting. I beg to move.
Amendment moved—
Page 49, line 10, leave out ("More than £25") and insert ("£25 or more").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Third Schedule, as amended, agreed to.
Fourth Schedule [Minor and consequential amendments]:
VISCOUNT HAILSHAM: I am told that this is a drafting Amendment. I beg to move.
Amendment moved—
Page 51, line 9, leave out ("(5)") and insert ("(6)").(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This Amendment and Amendments Nos. 71B, 71C, 71D and 72A are all consequential on Amendment No. 40A, which has been passed. I beg to move.
Amendment moved—
Page 51, line 13, leave out from first ("the") to end of line 14 and insert ("words from resolution' to 'present' substitute 'special resolution (as defined in the Building Societies Act, 1960) passed'").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 51, line 18, leave out from ("the") to end of line 19 and insert ("words three-fourths of the members present' substitute the

819
words 'special resolution (as defined in the Building Societies Act, 1960) passed '").(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 51, leave out lines 20 and 21.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 51, leave out lines 33 to 35.—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: Amendment No. 72 repeals Section 12 of the 1939 Act, and is therefore consequential on Amendment No. 25. I beg to move.
Amendment moved—
Page 51, line 38, leave out ("Section four") and insert ("Sections four and twelve").(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 51, line 45, leave out from ("words") to end of line 47 and insert ("from 'means' to the end of the subsection substitute 'has the same meaning as in the Building Societies Act, 1960").—(Viscount Hailsham.)
On Question, Amendment agreed to.
Fourth Schedule, as amended, agreed to.
Fifth Schedule [Repeals]:
VISCOUNT HAILSHAM: This Amendment and No. 74A, are both consequential on No. 40A. I beg to move.
Amendment moved—
Page 52, line 28, third column, at end insert—
("Section nineteen").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: This Amendment and Amendment No. 74 are minor Amendments to the Repeals Schedule, and, I am told, need no special explanation. I beg to move.
Amendment moved—
Page 52, line 32, at end insert—
("Subsection (3) of section six as respects advances or agreements made after the commencement of this Act.").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move.
Amendment moved—
Page 52, line 33, column 3, leave out ("Subsection (2) of").—(Viscount Hailsham.)
On Question, Amendment agreed to.
VISCOUNT HAILSHAM: I beg to move the last Amendment.
Amendment moved—
Page 52, line 42, at end insert—

("3 & 4 Geo. 6. c.19.

The Societies (Miscellaneous Provisions) Act, 1940.

In section five, in subsection (2), the words 'or by section nineteen of the Building Societies Act, 1894'.")

—(Viscount Hailsham.)

On Question, Amendment agreed to.
Fifth Schedule, as amended, agreed to.
House resumed.

B.B.C. AND PUBLIC POLICY
6.58 p.m.
LORD TEVIOT LORD TEVIOT rose to ask Her Majesty's Government whether they will appoint a permanent authority, or panel, to consider the advisability or otherwise of permitting members of the staff of the B.B.C., especially on Panorama, who have no authority or responsibility, investigating and discussing matters which are the concern and responsibility of the Government and Ministers of the Crown, apparently in order to influence public opinion; and to move for Papers. The noble Lord said: My Lords, I am very grateful to those noble Lords who are going to take part in this debate for remaining here so long. This Motion has been down on the Paper for a very considerable time. I tried to get it on before Easter, but I could not manage that; and since then I have done my best to get it debated. I shall be as short as I can, but I am afraid that when you begin to go into the subject of my Motion you find it is impossible to deal with it in a limited and short way. I will cut out as much as I can, but I must get certain points over now, having put my hand to the plough, so to speak.
First let me say, my Lords, what this Motion does not do. I am making no personal attack. The B.B.C. is a model of courtesy in personal dealings. What the Motion does is to call into question

821
the policy of the B.B.C. in their handling of political questions by persons without political responsibility, whatever their other merits may be. I do not suggest that that policy is due to any ambition in the B.B.C. or to a wish to give the appearance of being the "Portland Place Parliament". The airing of different views on matters that interest the public is, in general and in principle, quite right, though not, I imagine, unconditionally desirable. But when it comes to matters which it is the duty and the prerogative of Parliament to handle, the general rule does not always hold. It can be a political embarrassment to have a huge organisation like the B.B.C., with its enormously wide access to the public, maintaining a sort of standing forum. Such a forum, as we all know, can be made very seductive and attractive. It is an agreeable mixture of entertainment and education. It draws into itself, but only by switching interest from something else. The "something else" is Parliament, Westminster, which suffers a sort of diminution.
It may be that in some ways the B.B.C. advertise Parliament, but in my opinion this indirect advertisement, if it exists, falls very short of balancing the diminution of Parliament. I am well aware of a sort of co-operation that is going on between the Houses of Parliament and the B.B.C. Some legislators have a foot in both camps—and no doubt this is of advantage to them but this sort of pluralism seems to me of doubtful value to the State. Perhaps it is a prejudice, but my feeling is that things have come to this: that one should be either a Parliament man of Westminster or a man of the Portland Place Parliament, but should not mix them. That is not only my view, but also the view of many other people. The intervention of the standing forum at Portland Place disturbs the political peace by provoking a sort of malaise in the population, so far as it listens in.
The chosen experts and propagandists on the B.B.C., being irresponsible in the strict sense, talk to masses of people who, like themselves, have no direct or immediate political responsibility. The audiences listen in a mixture of interest, of amusement, of doubt, of frustration. This is the background to the inquiries and the decisions that the responsible leaders in office must make. Background
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has its uses, but it can be something of a trial for Members of Parliament, and especially for those who hold office. They are probably not the least tough of Britishers, but the question I bear in mind, and many other people are thinking about is: Are they tough enough? I hear that a noise abatement society has been started—a very necessary body. Like many of your Lordships I have suffered severely from noise. There are noises of different sorts. This new society might well set itself to secure more peace, more freedom from all the political background that is going on, for the men who have the conduct of the nation's affairs. That ends the first part of my remarks. I have not been long yet and I am not going to be any longer than I can help.
I am not interested in B.B.C. politics, but I am interested in the result of the General Election, the composition of the House of Commons, from which, together with the House of Lords, the Cabinet and the Government are selected to accept authority and responsibility of office as Ministers of the Crown. The great bulk of our people are also interested in this. I am aware of the up-to-date Royal Charter of the B.B.C. I do not believe that the B.B.C. were intended to operate as they are now doing. I find that great numbers of our people are getting the strong opinion that the B.B.C. are arrogating to themselves the functions of Government and instructing their employees to air opinions and views which should be given publicity to our people only through the Westminster Parliament, which embraces the Cabinet, the Government and those elected by our people, and not through the Portland Place Parliament. In fact, only those who are in these responsible positions can know, through information to which only they have access, what the real situation is in regard to our home affairs and our connections with our Foreign Embassies, Allies and foreign countries.
LORD BOOTHBY: My Lords, may I ask the noble Lord, is nobody else to be allowed to address the public except those who are in authority over us and who therefore know?
LORD TEVIOT: My Lords, there is no indication here that that is so. I think that I shall come to that in a minute. I did not mention the noble Lord's name, but I know that he is implicated in some

823
of the things I have said. What the public generally are disturbed about is the type of the persons who are interviewed, who in many cases are definitely anti-British and in opposition to those trying to help the country in these difficult days. I feel confident that Ministers must be bothered and worried by these B.B.C. activities. In reply to what the noble Lord, Lord Boothby, just said in his interruption, I would say that there is no question here of endeavouring to interfere with the expression of opinion by any citizen of this country in a private capacity. But you cannot say that the B.B.C. is in a private capacity; it is in a public capacity and has all the advantages that publicity can possibly give.
Many of your Lordships will remember that at the time of the Nyasaland trouble one representative, in particular, came over here and was permitted by the B.B.C. television to accuse the then Secretary of State, Mr. Lennox-Boyd, of being a liar. I was viewing television and I saw him do it. Is that a proper thing for any organisation such as the B.B.C. to permit? With regard to censorship of all theatres and public entertainments, mentioned by my noble friend Lord Chesham on February 9. I can see no reason why something of this nature should not apply to the B.B.C.'s activities. There is any amount of information about which we all want to hear which is perfectly proper subject for the B.B.C. I could mention them at great length—sport, entertainments generally, ceremonial, theatres, music, athletics, cricket, football, polo and many others. We want to limit, as far as possible, the publicity given to murders, to brutality and to crime generally.
My Lords, the Malayan Prime Minister was on television last Monday, and he was interrogated. He was asked many, as I thought (and one of the chief members of the Opposition was there, and he objected very much indeed) embarrassing questions, but, being a perfect gentleman, he practically told his interrogator that every question he had been asked he could not possibly answer. I was glad that he took that line, and it enhanced my opinion of him.
I ask your Lordships whether, in view of the general activities of the B.B.C.,
824
you are satisfied with the management. It is the Government at Westminster and Parliament who are responsible for determining the broad outlines of policy. The Press can criticise; but, of course, they can be answered. Finally, my Lords, I refer to my noble friend who is going to reply to the debate, and I wonder whether he is still of the opinion he expressed in his final reply to my question on February 9. [OFFICIAL REPORT, Vol. 220 (No. 35), col. 1024.] I shall no doubt have an opportunity after the debate of referring to certain questions that will arise. I beg to move for Papers.
7.15 p.m.
LORD STONHAM: My Lords, I hope that I may lay claim to being a "man of Parliament", although certainly I cannot lay claim to being a "man of Portland Place", because I have never had the opportunity. Therefore I hope that the noble Lord, Lord Teviot, will accept what I say in that matter as being said with complete impartiality. The noble Lord always endears himself to us when he speaks, and he always speaks engagingly; though sometimes, in fact very often, he expresses a somewhat novel and unusual point of view. But I am sure he would agree with me that I should be extremely discourteous if I did not take everything that he said quite seriously.
I want to deal, as briefly as possible, both with what he has said and with the terms of his Motion, to which he did not adhere very strictly. The noble Lord said that he objected to the B.B.C. providing what he called a standard forum which might be regarded as seductive, and said that it provided entertainment by switching interest from Westminster. I think that is absolutely wrong. In my view, the discussion programmes on television and on broadcasting do not switch interest from Westminster but to Westminster, and greatly add to the knowledge in the public mind of the things we do. It would be regrettable in the extreme, in my view, if anything happened to end those programmes. The noble Lord said that the B.B.C. was arrogating to itself the functions of Government and was trying to impose its opinions on the public mind. But in my experience of listening to broadcast programmes and television programmes I have never on any single occasion heard the B.B.C. express an

825
opinion. As such, the B.B.C. has no opinion, and ever since it began it has been sedulously, carefully and strictly avoiding expressing anything like an opinion.
I wonder if the noble Lord saw the leader in The Times to-day, regretting, in a sense, as I take it, the decision that the Nine o'clock News is soon to be no more. Referring to the Nine o'clock News it said:
"It was of even more powerful influence in Europe. Men and women in occupied countries, whose peoples refused to be enslaved, risked their lives—and on occasions lost them—surreptitiously to listen to the nine o'clock news."
Then comes the important part:
"They came to trust all the B.B.C.'s news services, but in a curious, psychological way they felt the news which the British people themselves were hearing had a final authority."
You cannot possibly get a reputation of that kind unless you act with continuing integrity, and resolutely oppose any attempt by any member of the staff to express anything like a personal opinion.
Looking at the Motion, I feel that it is deplorable that to-day, only three months after the Soviet Government ceased to jam B.B.C. broadcasts to the Russian people, the British Parliament should be discussing a proposal to jam B.B.C. broadcasts to the British people. What an advertisement it would be for democracy if Her Majesty's Government were to accept the noble Lord's suggestion! Just think of the questions that Mr. Khrushchev could ask Mr. Macmillan at the Summit Conference—"Why have you closed your Window on the World?" "Is Panorama too revealing?" "Are you afraid of the consequences of putting the facts before the people and letting them form their own judgment?" It will be a sorry day when we cannot give a firm and decisive "No" to all those questions.
Only a few months ago we all welcomed the decision to increase foreign-language broadcasts and to increase the Government money spent on providing cheap books for sale abroad in order that we could tell a more complete story of British democracy and our way of life. We all deplore the sound curtain which has been so firmly clamped down round the Soviet satellites, so that the B.B.C. transmissions in Czech, Slovak, Hungarian, Bulgarian, Roumanian and German are still being jammed. We all
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believe that it would be a step towards peace if the B.B.C. could talk without interference to the peoples of those countries in their own tongues. What chance shall we have of ever persuading them to lift the sound curtain if we make it so painfully clear that we are afraid to let the B.B.C. talk to our own people?
For all the noble Lord's careful explanations, and for all his assurances that he meant no personal attack on any member of the B.B.C.—which, of course, we expect: we know that anything else would be impossible from him—what I have said is precisely what his Motion would mean. As he said, he asks for a permanent panel to decide whether the B.B.C. should be allowed to discuss matters which are the concern and responsibility of the Government. But surely any matter which concerns the Government concerns the people. They have a right to be told the facts. I am not talking of censorship on grounds of security, but of questions which are public property, and which are the only questions that Panorama ever discusses. Imagine the outcry the newspapers would make if they had to go to a standing panel to ask for permission to discuss any topic of the day! That does not bear thinking about.
The noble Lord's proposal in his Motion is, in fact, a far greater restriction than the old Fourteen-day Rule of unhappy memory, with its absurdities and humiliations. All of us who took part in such programmes as Any Questions will know that matters of current or pending discussion in Parliament were precisely the things about which the questioners wanted to ask the panel. Fortunately, of course, the questions were not known in advance, and all the answers had to be "off the cuff". I personally cannot remember a single programme in which I took part, or to which I listened, in which the Fourteen-Day Rule was not well and truly violated. Of course, we could do that, taking part in this programme.
The B.B.C., however, were not nearly so fortunate. In order to avoid public irritation and frustration they had to move with the greatest caution, if last-minute cancellations of planned and published programmes were to be avoided. That meant planning always with one

827
eye on the possibility that a debate might be arranged in Parliament. They had to plan their programmes well ahead of transmission, and they were published only a few days before the Parliamentary business was known. Consequently, they had often to shelve important subjects because of the possibility that there might be a debate on them, and they could not deal with them until after Parliament had either debated them or decided not to have a debate. Despite that care, sometimes they had, under the Fourteen-Day Rule, to cancel programmes. The contributors were sent home and the listeners were treated to chamber music. If anyone thinks no harm was done by that I disagree, because every cancellation of that kind was, in my view, harmful and humiliating to Parliament. You do not preserve the reputation of Parliament in that way.
Eventually the Government recognised this, and they abolished the rule. In its place, they accepted an undertaking from the B.B.C.
"to act in a way which does not detract from the primacy of Parliament as a forum for debating the affairs of the nation."
This undertaking, in my view, has been faithfully carried out, and unquestionably Parliament and democracy have been the gainers. The noble Lord, Lord Teviot, spoke of the Prime Minister of Malaya being questioned on television the other evening. I did not personally see the programme but I heard several accounts of it, all of which tallied with the noble Lord's. I would submit that the remedy for that does not lie in suppressing the B.B.C.—it lies in making protests of the kind that he has made. Then perhaps the interviewer will get more sense or better manners. Or the B.B.C. might get other interviewers who would not ask such foolish questions and embarrass important visitors to the country by asking questions which they well know in advance cannot be answered. I agree with the noble Lord that that kind of cheap journalism, which is unworthy of a good journalist, and which in fact good journalists never practise, is always a blot. But it does not mean that we must have censorship of B.B.C. programmes simply because one or two interviewers do not know their job and manners.
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A select Committee on Broadcasting (Anticipation of Debates) has recognised:
"The development of radio and television in Britain and the broadcast discussion of public affairs which has followed it, have done much to encourage an intelligent interest in the work of Parliament."
That is the direct opposite to what the noble Lord thinks. I am quite sure the Select Committee were right. Surely an intelligent interest in what we do is precisely what we want. We should be thankful when the facts are given objectively on the air and in the Press, and criticise only when the facts are suppressed or distorted. If the facts are unpalatable or discreditable, the fault does not lie with the B.B.C. or with the reporters, but with ourselves.
I hope your Lordships will agree that there are only two factors which should determine the choice of a subject to be televised or broadcast. First, is it a matter of concern to the public? And, secondly, are the people justified in looking to the B.B.C. for information about it? Certainly the Panorama programmes that I have seen fully satisfied those criteria. Certainly they influence public opinion—of course they do—but only in one way. They influence public opinion towards enlightenment, and so far as humanly possible they put the pros and cons of every case before the viewers and leave them to make up their own minds. Inevitably, each of us individually regards the presentation as just or partial according to his preconceived notions, or according to his way of looking at things. Inevitably, there are charges of bias. But every public inquiry following these allegations has exonerated the B.B.C. from any intention of bias. Of course we all know that complete impartiality or an exact balance is not always possible. But there can be no doubt that their constant aim is to inform the public.
It is not enough just to give information of world events through the medium of news bulletins. A responsible democracy needs to hear various opinions about the facts, and television makes it possible to see those who hold different opinions and to watch them stating their views and answering questions about them. I think The Times leader again made that perfectly clear to-day, when

829
the writer insisted that it was an important requirement to keep news and comment absolutely distinct. I think that is right. But it emphasises the point that, in addition to straight news, there must be comment and discussion. We all know that television in general, and Panorama in particular, presents opposing views to a mass audience which is not presently possible in any other medium in quite the same way. There is no doubt that since the war public opinion has increasingly endorsed and welcomed the greater freedom which broadcasting has exercised in these matters.
Some years ago, when I saw one of the first Panorama programmes (it was in company with the present Director of Television for the B.B.C.), I felt that from the viewpoint of democracy it was the most exciting and important event in television. I still hold that view. It is a view which I am glad to know the public increasingly share. During the first three months of this year, on an average day some 17,300,000 people watched at least one B.B.C. television programme. That is two million more than a year ago. Panorama has an average viewing audience of 7 million. That compares with viewing audiences for similar programmes of 3 million for Who Goes Home?, 3½ million for Press Conference, and an average of 7½ million for the Tonight programme. These figures emphasise that there is an important audience for these programmes and, of course, for some similar programmes produced by I.T.V., to which, if I may say so, the Motion, astonishingly, makes no reference. I am quite sure the noble Lord is aware that we have commercial television, but perhaps he thinks that their programmes are sufficiently cleaned up by the detergent advertisements which precede and follow each programme. But commercial television does in fact carry a number of political discussion programmes—Free Speech, for example, of which the noble Lord, Lord Boothby, was a prominent exponent.
LORD TEVIOT: Dr. Banda—
LORD STONHAM: I did not quite hear what the noble Lord said, though I heard him say Dr. Banda. But during his speech he made reference to Mr. Lennox-Boyd, and something about
830
Nasser. I should have thought it was Mr. Selwyn Lloyd, the Foreign Secretary who was to do with the Suez Canal.
LORD TEVIOT: I never mentioned the Suez Canal. The particular gentleman who made this remark on the television (I heard it myself) was referring to Nyasaland, which is under the Colonial Office.
LORD STONHAM: That may well be so, but the particular gentleman to whom the noble Lord was referring was not a member of the staff of the B.B.C.
LORD TEVIOT: I am sorry, but I never said he was. But what I want to see is that people such as that man should not be allowed to perform among the activities of the B.B.C.
LORD BOOTHBY: Why?
LORD TEVIOT: I do not believe they want it, but some further investigation should be made at the time.
LORD BOOTHBY: Cannot you call a man a liar?
LORD STONHAM: The noble Lord's Motion which we are discussing is:
"… to consider the advisability or otherwise of permitting members of the staff of the B.B.C. … who have no authority or responsibility, investigating and discussing matters which are the concern and responsibility of the Government …"
If a politician, Commonwealth or foreign or Dominion politician, comes over here as a visitor, and is invited to take part in a television programme and refers to one of Her Majesty's Ministers as a liar, I think that is very bad taste, something he should not do, whatever he feels. But what is absolutely certain is that you cannot hold the B.B.C. responsible; and therefore it is no part of this Motion.
We have these "free-speech" programmes, these democratic programmes, on all television channels, and I think we should welcome that fact. My own opinion, quite firmly and clearly, is that if a politician, Minister or Back-Bencher, is not prepared to take part in a programme where he has the chance of answering questions put to him, providing that his replies go out uncut, he should retire from politics. Indeed, I think these discussion programmes of this kind are much fairer than interviews for newsreels, because such interviews

831
are often pre-recorded and cut afterwards; and the cutting, being at the discretion of the editor, often gives, as it does in newspapers, a false impression of what has been said. I expect we have all suffered from that kind of thing. My Party always has suffered, and probably always will, from the fact that the Press is mainly Tory-owned. Most political news, therefore, either by suppression or distortion, is slanted against us. That is why our prospects usually improve during an Election campaign, when wireless and television programmes are more sought after and evenly balanced.
We on this side of your Lordships' House have a vested interest in truth and in any media of public information which attempts to tell the truth, but in the long run it is in the interests of us all that the facts should be known, and I believe that is the constant aim of the B.B.C. and of Panorama. For that reason I trust that we shall completely reject the Motion now before the House and in so doing give a clear directive to the B.B.C. to go on telling the truth to the people.
7.36 p.m.
LORD RITCHIE OF DUNDEE: My Lords, I will not keep your Lordships very long. Reference has been made, both in the noble Lord's Motion and by the noble Lord, Lord Stonham, to the Panorama programme, and I should like to say a word or two about a particular Panorama programme shown last January, simply on the ground that I think it would be wrong for me to let the occasion of the debate go by default by saying nothing about a matter which, to us in the City, was a quite notable incident. The noble Lord, Lord Teviot, I think knows that I am not prepared, as it were, to go the whole way with him. Part of the reason for that is that I was received shortly after the programme by the Chairman of the B.B.C. with the greatest possible courtesy and friendliness, and for that reason among others I should not wish to take any arguments too far. Further, I must admit to being fundamentally opposed to any form of censorship. I am very much against any kind of control or interference, but I do feel that it is a good thing that this subject should be aired in your Lordships' House and I have great sympathy with what I believe
832
are the thoughts which lie behind the idea of this Motion.
What in fact occurred? On January 18, a Monday, there was a programme which was broadcast about the stock markets. Admittedly three days later, on the Thursday, the bank rate was raised, but on the Tuesday, the day immediately following this broadcast, there was quite clear evidence of fairly heavy selling of stocks and shares, almost entirely by small investors. It could quite clearly be attributed to the influence of the programme the night before. This was an episode which caused us considerable concern. I am particularly anxious not to be misunderstood or misinterpreted about the point that I am coming to. I want to make it abundantly clear that it is not for one moment the duty, the function or any part of the job of those of us who administer the Stock Exchange to complain or make a fuss when prices go up or go down. The Stock Exchange is a market place which reflects the activities of investors. The rise or fall of prices in that market is nothing to do with the Stock Exchange governing body. But this particular instance caused us considerable concern.
I am not saying for a moment that suitable warnings to investors, both large and small, are undesirable. Far from it. But the effect of a programme of this kind was clearly to stimulate sales, even to frighten the less well informed members of the public into foolish action. The use of the powerful media of radio and television could very well bring about a considerable scare. I hope that I shall not be thought to be carrying the argument too far if I suggest that it could create a scare in just the same sort of way as it could create a scare on a matter of health.
LORD STONHAM: My Lords, would the noble Lord allow me to interrupt him? Would he at the same time deal with the position if an exactly similar state of affairs is brought about by popular newspapers, who give a tip to buy certain shares or even a hint to sell certain other shares? I do not want to name the newspapers. The noble Lord must be aware that they are in the same position, and that it happens virtually every week.
LORD RITCHIE OF DUNDEE: I quite agree with the noble Lord, but I think he has given us a figure of 17 million who look at Panorama.
LORD STONHAM: There are 17,300,000 people looking at some B.B.C. television programmes every day; 7 million look at Panorama.
LORD RITCHIE OF DUNDEE: I do not think any daily paper has a circulation of 7 million.
LORD STONHAM: Many of them claim a readership of more than 7 million.
LORD RITCHIE OF DUNDEE: I still think that the effect of the visual programme is much stronger than reading something in the paper. Furthermore, of those 7 million who may read the paper, I wonder how small a proportion of them ever look at the financial page. I was saying that I think the programmes could be used—I do not suggest that they would be, but they could be—to bring about a scare on a matter connected with health. I am sure we all agree that it would be highly undesirable and would never be done, that such a programme on a matter of health would take place without experts being invited to take part and to give their considered views. But here comes my point. On the programme to which I refer such experts were not invited to take part.
May I make one further point on that, and an even more serious one? We on the Council of the Stock Exchange take every possible step against the manipulation of prices. For example, before we grant a quotation to a company for their shares, we insist that they shall agree to issue early information on their affairs and how they are doing. We in the Stock Exchange are conscious perhaps of a lack of information between ourselves and the public, but quite a lot has been done lately—we have now a public gallery, and we have a film which indeed has been shown on the B.B.C. But there remains one great danger—I am not suggesting for one moment that it occurred on this occasion—that a programme of that kind could be deliberately used to raise or to depress the markets. I would go so far as to say that I believe that if the effect of that programme could have been anticipated beforehand, I greatly doubt whether the script would
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have been allowed to stand. We welcome programmes on the Stock Exchange, but we think that they should be carefully prepared. Given any kind of reasonable notice, we are always prepared to assist and co-operate whenever we can.
I have deliberately tried to speak with some moderation, but I should like to say that the impact of that particular programme was probably much more violent than had been anticipated. Further, I think that anyone reading the script of that programme now would be surprised at the effect it had. The last thing I want to do is to make any personal criticism of anybody who took part in it or of the organisers of it. The Stock Exchange is in some debt to Mr. Dimbleby. I think we all are after last Friday. Before I sit down I want just to reiterate how courteously and graciously I was received at the B.B.C.. and I think that the outcome of that interview will be that such programmes, on the subject of the Stock Exchange, at any rate, will in future probably be more carefully vetted and considered before being shown.
7.45 p.m.
LORD BOOTHBY: My Lords, at this late hour I do not intend to detain your Lordships for more than a few moments, but I should like to say that I, too, do not think that the charm with which my noble friend Lord Teviot moved his Motion should be allowed to conceal the extreme danger of its wording. I should like, first of all, to correct him on two small points. He talked about the "Portland Place Parliament". Actually, it is in Shepherds Bush, some distance away. He should in future describe it as the "Lime Grove Parliament". Shortly, it will be at the White City. But it has nothing to do with Portland Place so far as Panorama is concerned.
LORD TEVIOT: My Lords, I should like to ask the noble Lord why it was that when I went to see the Director-General of the B.B.C. some time ago on a most important matter with regard to the people of this country, I was told to go to Portland Place, and was shown into a sumptuous room wherein I was received most kindly by the Director-General? I took that to be the Head Office.
LORD BOOTHBY: The Director-General does, in fact, inhabit Portland Place in considerable comfort, but he has little to do with television. He exercises only a general, distant, supervising authority.
That brings me to my next point, that we should not attempt to interfere with the detail of the programmes. The second point I should like to make is this. The noble Lord, Lord Teviot, refers in his Motion to members of the staff of the B.B.C., as taking part in the Panorama programme. Technically, that is not correct. Those who take part in Panorama—the interviewers and the interviewees—are not members of the staff of the B.B.C., nor are they in any circumstances directed by anybody as to what they are to say or do in these particular programmes. If a general line is thought to be undesirable, they are, of course, under the supervision of the controllers of the television programmes, as is a free-lance correspondent under the ultimate supervision of the editor of a newspaper. But there is no more to it than that. To suggest, as did the noble Lord, that the B.B.C. in those matters has a policy—a kind of rather nefarious policy, a doubtful, dubious policy, a sinister policy, which they direct their minions on the Panorama programme and other similar programmes to carry out—is, I suggest to your Lordships, a travesty of the truth.
As the noble Lord admitted, I have taken part in a number of television programmes both on Independent Television and on B.B.C. television, and I can give an assurance to the noble Lord that never at any time have I received any direction as to what I am going to say, even if I would have accepted it, nor have I ever known a case in which anybody has ever received an instruction as to what he should or should not say.
Now I come to the actual terms of the Motion itself, which complains of those
"who have no authority or responsibility, investigating and discussing matters which are the concern and the responsibility of the Government and Ministers of the Crown, apparently in order to influence public opinion,"
With all due respect to the noble Lord—I claim his friendship if he does not claim mine, and I admire him greatly—those are the most dangerous words I have ever seen on an Order Paper of either House of Parliament, because,
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summed up, they amount to what I regard as the negation of democracy. Ultimate power is vested, quite properly, in another place, in the sense that the House of Commons can sustain or dismiss any Government. But to deny to any free citizen of this free country the right to attempt to influence public opinion and, by implication, to reserve that right to those who are Ministers of the Crown, seems to me to be an absolutely monstrous suggestion.
The noble Lord on another occasion suggested that it was an insult to important figures arriving from abroad into this country, or to important Ministers of the Crown arriving at London Airport, to be interviewed on television. My answer to that is that they trip over each other in their hurry to get in front of the cameras. There is absolutely no reason for them to be interviewed if they do not want to be interviewed: and when they are interviewed, there is no reason for them to say anything that they do not want to say. I gather that the other day the Prime Minister of Malaya was careful to say, "No" quite often. But there is no obligation upon those people to be interviewed, and I have found, by and large, that people—even high and responsible Ministers of the Crown—are very anxious to get in front of the cameras if they can possibly do so, in order to air their opinions. They like airing their opinions, especially to a very large audence. I am not blaming them, merely suggesting that they should not be pitied for this. Because, to tell the truth to the noble Lord, Lord Teviot, they rather enjoy it.
I now turn to the point raised by the noble Lord, Lord Ritchie of Dundee. I see it. I believe that that particular programme was a great pity—especially as I had bought a very few shares only the day before, and it caused me the usual small but unpayable loss that I always sustain whenever I buy any shares. I believe that the whole thing was unnecessary and I feel that it was perhaps a pity they did not have more expert financiers. I happened to hear the programme, and I thought it was great nonsense from start to finish. But I do suggest to the noble Lord that there is not much distinction to be drawn here between the B.B.C. or Independent Television and the Press. I also suggest to him that there are a very large

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number of followers of the financial journalists, particularly those who write for some of our more popular Sunday newspapers, who are influenced to a far greater extent than anyone could be by a second-rate, generalised programme on the B.B.C. Because those writers actually tip the specific shares that ought to be bought or sold. The B.B.C. gave just a general moan, or should I say groan, about the prospects for the market and for the future of this country?
Without saying anything to embarrass the noble Lord who is to reply to this debate I would suggest that even in this respect the right honourable gentleman the Chancellor of the Exchequer is a far greater offender than the B.B.C. ever was, because what he said in the Budget debate—
LORD RITCHIE OF DUNDEE: My Lords, if the noble Lord will forgive me, the Chancellor of the Exchequer is the proper person to give such warnings.
LORD BOOTHBY: My Lords, he may be the proper person, but his warnings were just as foolish as those of the B.B.C. And it was those vague threats he made in his Budget—the noble Lord cannot deny it—which hung over the Stock Exchange, over which the noble Lord so ably presides, for a month and made the Stock Exchange talk themselves into a totally unnecessary bear market. That is a fact no one can deny. As I said only yesterday, it was because he went droning on about the dangers of inflation without saying exactly what he was going to do, saying only, "If this goes on we shall take you upstairs and wallop you"—which is something that the business community cannot understand. I told Sir Simon Marks yesterday that he, almost single-handed, by the results he had produced a day or two ago, had stopped the Chancellor of the Exchequer from talking this country into a depression. If we are to compare the B.B.C. with the Chancellor of the Exchequer, when it comes to being a Jonah I believe it is the Chancellor of the Exchequer who wins every time; and I have good reason to hope that, after all the things that have been said about him in the last few days, he will now stop.
I have only one thing to say, in conclusion. There is, of course, a declining
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interest in this country in purely Party politics. I am not going into causes, for I do not want to offend my noble friends on those Benches; but that is so. I suggest that there is not a declining interest in Parliament, and for that, I believe, television and sound radio are largely responsible, because they have stimulated public interest in the kind of questions we discuss. I do not say that the public hang breathlessly upon our every word. I do not think they will read with avidity the debate we have had this afternoon about building societies. I frankly confess that I had moments of boredom myself, and I believe that the public may have moments of boredom on that particular issue. But they are interested to an increasing extent in what I would call the broad questions of the day and the hour. That is as it should be in a democracy, and I believe that television and broadcasting generally have done more than any other single thing to stimulate that interest which is the essence of democracy.
We are sometimes apt to deride the democracy of the United States of America, and to laugh at it. But it is very genuine and very real. The United States is a democracy, and a democracy conducted very largely through the instrument of the Press conference—the Presidential Press Conference for one—and television, and the endless discussions they have. No one can say that the influence of Mr. Edward Murrow in the United States has been anything but beneficial. That is a democracy conducted to a very large extent by the Press, by columnists of the highest distinction and by television and radio; and that is part and parcel of modern democracy.
I do not think it detracts from the interest in the proceedings of the Congress of the United States, any more than the development of such a democracy here will detract from the interest in politics. Do not let us become mealy-mouthed. It surprised me that the noble Lord, Lord Teviot, spoke in terms of hushed horror about the fact that somebody had called Mr. Alan Lennox-Boyd a liar. Why not, if he thought he was a liar? Our Victorian ancestors never stopped calling each other liars: and when the Irish were in the House of Commons the term "liar" was about the nicest and kindest expression they

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ever used. We are becoming terribly polite and well mannered in this country. A little more robustness, a little more rough language, is going to stimulate interest in democracy still further.
Before I sit down may I say how much I agree with the noble Lord, Lord Ritchie of Dundee, that censorship of any kind is murder to a democracy. That is really what the whole argument of the modern world is about. Once we start even touching censorship—and this is what the noble Lord's Motion really does: it imposes a kind of censorship—we tar and soil our hands. We are fighting this great public battle against Communism over that single issue. It cuts right down to the deepest issues, the issues of freedom or of slavery. And one of the conditions of freedom is freedom of expression, freedom of thought and freedom to say to your neighbour what you believe. That is what I think television is encouraging, and that is what I feel it should be encouraged to do.
7.58 p.m.
LORD SHACKLETON: My Lords, the noble Lord, Lord Boothby has given us on this occasion the stirring opinions that we expected from him, and I think we ought not to allow ourselves to be deceived by the charm of the noble Lord, Lord Teviot, into thinking that he does not have the most violent views on this subject. I do not want to quote what he said in an earlier debate, but he did except the noble Lord, Lord Boothby, from those who were "tinpot persons". My only regret is that Panorama has not yet invited the noble Lord, Lord Teviot, to express his opinions. These things are valuable, stimulating and exciting, and they add to the enjoyment of life.
I am feeling a certain difficulty because the noble Lord, Lord Teviot, has objected to Parliamentarians who appear on television. I suspect that recently I have been dropped from The Brains Trust, so I can speak with a clearer conscience; and I would ask the noble Lord to realise that we fully sympathise with his views. Irresponsibility, whether or not it is of the kind to which the noble Lord, Lord Ritchie of Dundee referred—anything which is harmful—is something to be deplored.
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It is a question of the price we pay for preventing it. In this issue of freedom to which the noble Lord, Lord Boothby, referred we have also to face the very great danger of democracy, which is the danger of triviality; and television is more prone to that danger than practically any other form of public entertainment, activity, or source of information.
I should like to take up the noble Lord, Lord Boothby on his point about the influence of Mr. Edward Murrow. American television is extremely trivial and the tragedy is that Mr. Murrow is being continually pushed away and his programme may very soon go off the air entirely.
LORD BOOTHBY: I am glad to say that he is back. He called the chairman of his company inept and after that was immediately reinstated.
LORD SHACKLETON: My Lords I am delighted to hear it. But I only hope that this battle will not be fought in this country and that there will be no question of Lord Boothby or Lord Teviot not being freely able to appear, to inform us and to entertain us. I am sure that Lord Boothby agrees that triviality is a danger. I do not want to go into the question of I.T.V. but there is the particular triviality of some of their programmes; and some of those on the B.B.C. The great credit to the B.B.C. in putting on Panorama is due to the fact that they have had the courage to put it on at a peak listening time, in competition with Wagon Train. They have only one channel to play with, thanks to disastrous action taken by the Government at an earlier date, but they have still gone on and got their 7 million or 8 million listeners. The listeners are not just "eggheads", as I think they are called, or intellectuals like the noble Lord, Lord Boothby. They are ordinary people who are interested and who are stimulated and turn away from the ever-firing guns of Wagon Train. This is something on which the B.B.C. really ought to be congratulated.
Of course there is a danger in unscripted stuff; there is danger in skilful presentation and showmanship. But this programme would not be playing its valuable part, like other programmes of

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information of this kind, at peak periods if the B.B.C. were not given a free hand to get people for it, whether they are the Dimblebys or the Kennedys or Kees, or any of them; and if they did not give them a reasonably free hand to show their skills and ability and to draw out of people ideas and interest. Now and again they make a terrible hash of it, and we get the sort of disaster to which the noble Lord, Lord Ritchie of Dundee, referred, although not everyone accepts his version that this was responsible for the slide in share prices. However, we do not want to start arguing now. It has been suggested that it is a little of a post hoc, propter hoc argument. None the less, there is general agreement that it was not a very good or wise programme. But this is a small price to pay. The alternative is that we have to accept the rule of mandarins in this field; and if we want to live under mandarins then probably we ought to go to live in South Korea or South Africa, or wherever it is. But I am sure that the noble Lord, Lord Teviot, does not want to do it.
I believe it would be a national disaster if we were to attempt to limit in any way the excellent job that is done in trying to produce an educated democracy. Since we have universal suffrage (and I am sure that the noble Lord, Lord Teviot, does not regret it, even if he is unable to vote) the great majority of people are able to vote; and the more information we can give them, and the more integrity that is brought to bear by independent commentators being given a free hand, not only by the B.B.C.—or "Auntie B.B.C.", as this bold, forward-looking, courageous organisation has been called—the stronger will our Western civilisation grow. It is an important challenge. If we do believe in its value then we have to take some risks and chances. I am sure that on this issue there is no difference between us on any side of this House. We are quite convinced that the maximum freedom should be given. And, so far from supporting this appalling proposal for censorship—it is really appalling—we should, with the determination of all the good democrats that we have in the House of Lords, turn it down, with ignominy, if the noble Lord, Lord Teviot, is thinking of taking it to a vote.
8.5 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM): My Lords, as for the second time in two weeks I look round the Benches of your Lordships' House at about this time of the evening, I have a future vision of a shambling figure mumbling its way along the pavement and of people saying, "There goes poor old Chesham, talking to himself again." Your Lordships will know where I learnt the habit. I should like, first of all, in replying, to say how glad we are this time that ill health did not prevent the noble Lord, Lord Teviot, from discussing this subject; and, whether or not we agree with him—and I, for one, do not—we certainly cannot fail to recognise his personal sincerity and persistence in the matter. So far, everyone in this debate, with the exception of my noble friend Lord Teviot, has said the same thing. Therefore, like the noble Lord, Lord Meston, I must plead guilty to being a form of gramophone, but I shall make no apology for referring to what I have said more than once in your Lordships' House on the question of the attitude of the Government towards programmes and towards broadcasting organisations.
First the B.B.C. The 1952 White Paper—this is the extract I find the quickest; there are longer ones—says this:
"The Government accept the broadcasting committe's recommendation … that the Corporation's current independence in making programmes and in general administration should be continued."
This only endorsed the policy which had been that of successive Governments for a long period of years; and I want to make clear that it is still the policy of Her Majesty's Government. I hope it will continue to be, and in that I am very glad to have support from the Benches opposite that was expressed by the noble Lord, Lord Stonham. The position, of course, is similar so far as the I.T.A. are concerned. Although it does not enter into my noble friend's Motion, I rather share the surprise of the noble Lord, Lord Stonham, that it did not do so.
My noble friend Lord Teviot was chiefly concerned with the handling of matters of a controversial nature and has suggested that there was some desire on

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the part of the B.B.C. to influence public opinion. Apart from the fact that, I suppose, rather as the noble Lord, Lord Ritchie of Dundee, explained to us, there may be on occasion unwittingly an effect which was not anticipated or intended, it is extremely unlikely that the B.B.C., or any other broadcasting organisation, should aspire to influence public opinion, because both broadcasting organisations have specific obligations put upon them by Parliament to be impartial in dealing with such matters and it certainly is not in their interests to try to perpetrate their own views on the public. There are, in fact, safeguards to prevent them from doing so.
So far as the B.B.C. is concerned the prescribing letter to the Corporation says:
"… the Postmaster General relies upon the Corporation to carry on its existing policy of treating controversial subjects with complete impartiality."
I think I might continue to mention the I.T.A. The Act puts a duty on them to ensure that—it is in these words—
"Due impartiality is preserved on the part of the persons providing the programmes as respects matters of political or industrial controversy or relating to current public policy."
There is also a requirement in the Act that news must be presented with due accuracy and impartiality; and on the B.B.C. side again its principle as regards news is:
"A fair selection of items impartially presented."
I think that deals with that point.
The noble Lord, Lord Teviot, indicated the type of programmes, and he picked on Panorama in particular, which he dislikes. He told us that he thought that in some ways documentary and current affairs programmes, and even certain news reporting, interfere with the activities of and embarrass Government Ministers and indeed Parliament as a whole. But, my Lords, surely the objective and, indeed, the legitimate function of the broadcasting organisations is to present to their audiences the background to topics of the day as well as the current facts about them. The B.B.C. themselves describe these programmes as being complementary to the news, and they aim at giving a comprehensive picture of affairs and trying to help towards an understanding of them.
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No one, I feel, could seriously question this objective and the concept that it is the function of the broadcasting organisations that they should inform and should educate, as well as entertain. In doing this, they include many personalities of the day—and quite rightly so, in my opinion—however objectionable or however sympathetic or statesmanlike the activities of those personalities may be. For the first time in history, it is possible for the ordinary citizens of this country to get some inkling of what the world figures are like as they come and go; and whether they say something stupid or something intelligent does not much matter—it helps to inform the public. And, as the noble Lord, Lord Boothby, said, whether or not they do anything about it is entirely optional. I was interested to hear that so many people enjoyed it so greatly—and, of course, he would know.
The noble Lord, Lord Ritchie of Dundee, gave us some very interesting views, and I do not attempt in any way to deny the gravity of this matter, as he put it; but the thing that I was particularly glad he said was that he went to see the B.B.C. about it and was received seriously, and also courteously. That, of course, is the right thing to do. It is the right thing to do in this case: it is the right thing to do in any other case when any of your Lordships—or, indeed, anybody else—thinks there is something wrong with the programme. It is a matter for the B.B.C., and I think we are very right to keep it that way. That is the way to do it; and I am perfectly sure that what the noble Lord said to them will have been very carefully considered. It helps to build up the feeling that they will be more and more responsible and more and more careful, and that such things are perhaps not likely to happen again. It is perfectly true, as several noble Lords have said, that these programmes are popular in the homes of this country and are listened to by many people. The figure of 8 million for Panorama is, I think, right; and the I.T.A. say that their programme called This Week, which is rather the same sort of thing, probably attracts about 10 million when shown from all their stations.
LORD SHACKLETON: May I interrupt the noble Lord? This Week gets only about 2 million, according to the T.A.M. rating.
LORD CHESHAM: I am not going to argue about that, my Lords.
LORD STONHAM: If the noble Lord will allow me to say so, I think nobody knows, because my information is that the figure is 4 million.
LORD CHESHAM: That is even more reason for not arguing about it. I can never understand how they manage to assess it at all; but there is no doubt that a great many people listen to these programmes, however many the actual number of the millions may be, and there is no doubt that there is a public desire to see these programmes and an appreciation of them, even if my noble friend Lord Teviot does not share that appreciation.
I should like to quote from something that the Daily Mail said in February when talking about this type of programme. They said:
"All these programmes in their different degrees seek to provoke answers to questions of the day. You are not expected to accept what anybody says on them, but at least they leave you with a tingle of disturbance—even of conscience—at having a challenging idea thrown at you".
I think that most of your Lordships will agree that there is a great deal in that which is basically sound. We hear a great deal these days about tele-morons and tele-maniacs, and of the dangers of television stifling initiative, particularly mental initiative and thought; and, without necessarily accepting and agreeing with that view, if there is anything in it surely this type of programme must be an antidote to that sort of effect.
My Lords, is it really true—can it be true—that the independence of the broadcasting organisations to put on these programmes in any way impedes or embarrasses the Government or Ministers? Is it really possible to contemplate that the vital issues that are raised in everyday life are for the concern only of the Government, and not of the man in the street? With the noble Lord, Lord Boothby, I should hesitate to predict what might be the future of what we think of as our democratic way of life if we accepted that view. I should hate to have the job of examining our claim to a really democratic Parliamentary Government. I am glad to know that the noble Lord, Lord Stonham, claims a vested interest in truth, but he must realise that, though
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his interest may be vested, it certainly is no monopoly. As far as Parliament is concerned, we have got that assurance that the noble Lord, Lord Stonham, spoke of—the one that was given at the time the Fourteen-day Rule was suspended. The words, I would remind your Lordships, are that they, the broadcasting organisations, would continue to act in a way which did not derogate from the primacy of Parliament as the forum for debating the affairs of the nation. I do not think that anyone can seriously argue that they have not tackled that in a most responsible way.
Now a word about the restrictions which I understand the noble Lord would like to impose. If I have got it right, he thinks that important issues should be handled only by those in authority or by experts; that there should be a permanent body of officials who would act as a board of censors to these programmes; and that news interviews with controversial personalities should in fact be banned. My Lords, this, in my view—and I think in the view of most of your Lordships—would be a repellent suggestion, and quite unacceptable. Not only that, but it would in certain circumstances, which are not very hard to imagine, open a very easily-opened door to a political censorship, which would be a far greater risk than anything else—and in this country that would be quite unthinkable. I think the noble Lord is trying to turn the clock back. It is 32 years since March, 1928, when the Government of the day decided that the ban on broadcasts of controversial matter should be entirely withdrawn. Now the noble Lord wants it back on again. He wants to control, not only programme content but the type of person who shall speak on the air. I agree with other noble Lords: why should he stop there? Why does he not carry it to its logical conclusion and apply the same muzzle to the Press? His arguments would apply, as I see it, in just the same way—and, indeed, they would apply also to sound radio. But, in point of fact, so far as I cart see, he wishes to apply this particular brake only to the B.B.C.; and not even, as I have said, to the I.T.A.
What we have to consider is whether actual experience, other than the noble Lord's personal distaste, offers any justification for drastic restrictions of the

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sort the noble Lord has proposed. My Lords, the Government do not think that it does. I think it is recognised that the development of radio and television in this country, and the broadcast discussion of public affairs which has followed it, have done a great deal to encourage an intelligent interest in the work of Parliament—and I mean the Parliament at Westminster, and not any other form of Parliament in Portland Place. Lime Grove, or anywhere dawn the suburban line. These programmes stimulate interest—there is no doubt about it. They do not take it away.
The question was raised of the desirability of allowing certain people with known views or who hypothetically may have been pressed to take a B.B.C. line, to take part in these programmes. The noble Lord, Lord Boothby, explained it clearly and concisely. But the real test is whether they would carry their own or any other imposed political slant into programmes in which they are concerned. The Corporation is there to watch that, and I am sure that they do. I would suggest to your Lordships that anyone knowing that what he has to say on a controversial issue is going to be watched with suspicious eyes, will, in fact, lean over backward to be as impartial as he can.
LORD STONHAM: It may be inadvertently but the noble Lord appeared to say, "if somebody takes a B.B.C. line". Is it not the case that there is no such thing as a B.B.C. line?
LORD CHESHAM: I was dealing with the hypothetical suggestion that the B.B.C. thought to influence public opinion. I do not believe for a moment that it does so, but if it did, the temptation would be to try to conceal it and not make it blatant.
I think we ought to be happy that we live in a country in which expression of opinion is given a free rein and responsible expression of opinion is carefully cultivated. Broadcasting, so long as it is intelligently and impartially handled, and that is how the organisations seek to do it—indeed, they have a duty to do it—plays a good part in informing and educating public opinion. We want informed and educated public opinion. The more there is, the better our work can be done. May I leave one final point
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with my noble friend Lord Teviot? The essence of what he has urged is that there should be a body of responsible men appointed to vet B.B.C. programmes when they deal with controversial topics. I would suggest that the noble Lord has overlooked the fact that this has already been done ages ago. The Government appoint Governors of the B.B.C. who have the responsibility of watching over these programmes. I think that we can safely leave the broadcasting authorities to carry out their trust with full regard to the important responsibilities which that trust lays upon them.
8.26 p.m.
LORD TEVIOT: My Lords, I am not going to detain your Lordships for more than a moment. I want to correct the noble Lord, Lord Stonharn. I never mentioned anything about books or about the news. Of course they can say what they like about books, provided they are the proper sort of books, and broadcasting the news is a very proper function of the B.B.C. But there are these questions which have come before Panorama. I am all in favour of Panorama, but I want to see that some of the things that Panorama have done, one of two which I have mentioned, should not recur. My noble friend Lord Ritchie of Dundee has shown the sort of thing that might happen.
The noble Lord said something about millions of people. That takes me back to a remark made by my noble friend Lord Brabazon of Tara in regard to some of the programmes put on by the B.B.C. He said, "If only we could know how many people immediately switch off their instruments when this or that comes on!" Of course we cannot tell. There is one thing about which I am extremely distressed. It appears that there is going to be no supervision. This is the same answer. I did not mention the word "censorship". It seems to have got into the minds of some people that censorship is a terrible thing, but we have it with regard to the theatre. Perhaps something like the Lord Chamberlain's office might supervise certain programmes which, in my view, should not be put on the television at all, or even mentioned by the B.B.C.
With regard to my noble friend Lord Boothby, no doubt he had in his mind something I said about Members who

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had feet in both camps. Of course, we are bound to get that. However, that, is his business and not mine. I am hoping that something I was told yesterday is going to happen, and then we shall see what your Lordships do not seem to appreciate: that there is a tremendous body of people in this country who want something done with regard to these programmes. Every day I have letters and everybody I have asked about this, except for one or two noble Lords, say how delighted they are that I am doing this. One old professor said to me, "If we do not look out we are going to be ruled by Dimbleby and the B.B.C." That is what is going to happen, and I warn your Lordships that if what I call irresponsible management goes on in this sphere of our lives, it will be a great danger. I hope that what I was talking about yesterday is going to come off and then we shall see what happens. I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

CORNWALL COUNTY COUNCIL BILL SAINT PETER UPPER THAMES STREET CHURCHYARD BILL
Reported, without Amendment.