Lords Sitting of 13 December 1966

Preamble
The House met at half past two of the Clock, The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby

ACCESS TO WEST LONDON AIR TERMINAL
2.35 p.m.
LORD FERRIER: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government when it is expected to provide direct access between the West London Air Terminal and Gloucester Road Station.]
THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION): My Lords, as the noble Lord knows, the Transport Co-ordinating Council for London are studying the possibility of more radical improvements to transport facilities between Heathrow Airport and Central London. From work done already it is clear that a full assessment of the need for and form of town centre terminal facilities, and of where they might best be sited, are crucial factors in reaching decisions. My right honourable friend the Minister of Transport thinks it unwise, while this is being done, to contemplate spending large sums on improving existing facilities.
LORD FERRIER: My Lords, in thanking the noble Lord for a rather unsatisfactory reply, may I inquire whether that means that the proposal is shelved meanwhile?
LORD CHAMPION: My Lords, this is a difficult question, as I am sure the noble Lord will understand. The Transport Co-ordinating Council for London are considering, for example, the extension of the Piccadilly line from Hounslow West to London Airport; secondly, the building of a British Rail link between the Airport and Victoria, and various other possibilities, among which are
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better road links or "unconventional"links—for example, monorails. We consider it would be unwise to think of spending perhaps £1 million on the sort of facilities the noble Lord is thinking of if, for example, the Airport-Victoria rail link was set up.
LORD FERRIER: My Lords, in that case may I ask another supplementary? In view of the fact that at present, in addition to the great inconvenience to passengers, some of whom are foreign and many of whom are carrying luggage between the station and the terminal, there is a very real risk of road accidents to pedestrians in this hazardous crossing, particularly in bad light and bad weather, would he ask the authorities concerned—and they are many—whether they would improve the finger posting between the platforms of the Tube station and the second floor concourse in the terminal building?
LORD CHAMPION: My Lords, I should think that is a very practical suggestion, which of coursee I will pass on. We want to do everything possible to make it convenient for people to go from Gloucester Road Station to the Air Terminal, but we do not want in these circumstances to spend the million pounds or so that might be involved.
LORD POPPLEWELL: My Lords, could my noble friend give any indication when these long-term proposals are likely to come to fruition? It is well known what real inconvenience there is for people travelling from Cromwell Road to the airport. Seeing that the Tube runs practically adjacent to or alongside the Air Terminal, it is difficult to understand the figure of £1 million for making a connection from the Tube to the Air Terminal. It would not be necessary to have a completely new Tube station with all the expense involved. A halt, I am sure, would be considerably to the convenience of passengers.
LORD CHAMPION: My Lords, this matter has been very carefully considered, and the point my noble friend put has been thought of—the establishment of something in the form he has suggested, there or thereabouts. Traffic conditions in this place are very complex and very difficult; there are many difficulties involved. My noble friend

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asked when the decision will be made. I cannot say definitely, but certainly not before the middle of next year, and probably rather later.
LORD LINDGREN: My Lords, is my noble friend aware that in 1946–47, when the competition was arranged for the building of London Airport and for its general organisation, a connection between Osterley Park and the Central Terminal was then under consideration? How long is it going to be under consideration, seeing that that was twenty years ago?
LORD CHAMPION: My Lords, my noble friend should not fire nasty ones into my back. I cannot answer the question which my noble friend has asked.
BARONESS BURTON OF COVENTRY: My Lords, I wonder whether the noble Lord could help. I think there is something here which really is a public difficulty. Is he aware that many people, not young, with luggage to carry, find this journey a very real problem? Would it be possible for him to tell the House, or if he cannot, to get the information, what it would cost to make an actual communication purely between Gloucester Road Tube Station and West London Air Terminal, with nothing at all grander in view?
LORD CHAMPION: My Lords, I am aware of the difficulties involved for older people, because I occasionally make this journey myself. I think the point which the noble Baroness has made, of something less grand than the proposal for a travelator, or something of that sort, must be considered, but it would be unwise to spend very much money on something which might be of no use if we have better links between London and the Airport.
LORD BARNBY: My Lords, the noble Lord has dealt generously with the question affecting the West London Terminal and Gloucester Road. Would he urge
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on the Minister of Transport that a Warwick Road flyover from the West would much accelerate the traffic from the Airport to the West London Terminal. It is a matter of vital importance to get over those lights, which can delay traffic so much.
LORD CHAMPION: My Lords, that is rather another question. If the noble Lord would care to put it down, I will try to provide an answer.

TURNHOUSE AIRPORT BUILDINGS AND SECOND RUNWAY
2.43 p.m.
LORD FERRIER: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in the light of the intention to proceed shortly with the reconstruction of the Edinburgh Airport buildings at Turn house, the location and design of the same will be related to the second runway development which is promised at some distant date.]
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES): My Lords, the answer is, Yes. A final decision on the site must await the result of the runway survey which is now being carried out.
LORD FERRIER: My Lords, I thank the noble Lord for his Answer. I assume from that that the final alignment of the runway has not been settled. Is that the case?
LORD RHODES: My Lords, it has not yet been settled. The result of the survey will be published in February of next year.
LORD FERRIER: I thank the noble Lord. Then I await with great interest the Answer to the Question of the noble Earl which is to come later this afternoon.

UNITED NATIONS AND RIGHTS OF BALTIC STATES
2.45 p.m.
LORD CONESFORD: 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—

(1) whether they have noted the resolution unanimously passed by the United States Senate on 22nd October and previously passed by the House of Representatives, urging the President

(a) to direct the attention of world opinion to the denial of the rights of self-determination to the peoples of Estonia, Latvia and Lithuania, and

(b) to bring the force of world opinion to bear to restore these rights to the Baltic peoples;

(2) whether they share this desire that these rights shall be restored; and

(3) what action, if any, the United Nations Committee on the ending of colonialism has taken to secure the restoration of these rights.]

THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (LORD WALSTON): My Lords, Her Majesty's Government have noted the resolution. They have not recognised de jure the incorporation of the Baltic States into the Soviet Union. They consider that the peoples of these States should be able to exercise self-determination. No resolution relating to the Baltic States has been passed by any organ of the United Nations.
LORD CONESFORD: My Lords, may I thank the noble Lord for that clear Answer and ask him this: has this United Nations Committee shown any concern whatever for the oppression of subject peoples in any case in which the oppressors are Communists?
LORD WALSTON: My Lords, Her Majesty's Government on various occasions in the United Nations, when it has appeared appropriate and there have been discussions on decolonisation, have drawn attention to such cases as those the noble Lord has in mind.
LORD CONESFORD: My Lords, I am grateful to the noble Lord.
LORD BLYTON: My Lords, is my noble friend aware that, while we agree with the embodiment of these principles internationally, only last week, when we supported these three principles, the Conservative Party voted against us on Rhodesia?
LORD WALSTON: My Lords, I am well aware of the point my noble friend has made.
LORD GRIMSTON OF WESTBURY: My Lords, does not the answer to this question reveal the double standards in operation at the United Nations?

TURNHOUSE AIRPORT: FLIGHT ALTERATIONS AND THE SECOND RUNWAY
2.47 p.m.
THE EARL OF MANSFIELD: 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 will state, for the first half of 1966, and for each of the preceding three years, the number of inward and outward flights from Turn house Airport which have had to be cancelled owing to bad weather and strong winds; whether they are aware that, in addition to the actual number of flights diverted, there are still larger numbers of flights—particularly incoming ones—where the comfort and often the safety of passengers are endangered by the existing runway being unsuitable for the landing or taking off of aircraft, when the wind is blowing from a number of directions; and whether, in view of the rapidly increasing number of passengers using Turn house Airport, they will, in the interests of the safety of these passengers, reconsider their decision not to construct a second runway before the early1970s.]
LORD RHODES: My Lords, I want to apologise for the length of this Answer. I have tried to cut it down, but I have not succeeded. The number of flights at

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Turnhouse cancelled or diverted because of bad weather (other than cross-winds) was 146 in 1963, 188 in 1964, 121 in 1965, and 155 during the first half of 1966. The number cancelled or diverted because of cross-winds was 97 in 1963, 74 in 1964, 64 in 1965, and 17 in the first half of 1966. Pilots are required to operate within limits laid down by their companies for each type of aircraft and there is no question of the safety of passengers being endangered. The provision of a new runway would not affect the number of cancellations and diversions except those caused by crosswinds, and Her Majesty's Government do not consider that the expenditure of £2½ million to £3 million on a new runway could be justified at an early date for the comparatively small number of passengers at present inconvenienced.
THE EARL OF MANSFIELD: My Lords, I thank the noble Lord for his reply. Would Her Majesty's Government be interested to know that only a few months ago when I was meeting a near relative at Turnhouse Airport the plane landed in such a way that even one of the women attendants in the information office there screamed and covered her eyes with her hands, and one of the male officials there cried, "Good God! the plane is down on its wing tip"; and the plane was able to pull up only 20 yards from the end of the runway, smashing most of the crockery on board? Would they be further interested to know that a great many people will not use Turnhouse Airport, although they wish to do so, if there is anything resembling a severe wind? Are they further interested to know that many of the most experienced pilots dislike intensely having to land at Turnhouse in such conditions? And, considering all these extremely important factors, does the noble Lord who replied realise that his Answer was largely inaccurate: that there are many occasions when passengers landing, and indeed taking off at Turnhouse, have their lives put in jeopardy? Accordingly, will Her Majesty's Government reconsider their ridiculous decision not to build a new second runway before the early 1970s?
LORD RHODES: My Lords, I think that if the noble Earl had really considered what he was going to say before
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he got on his feet he would have put a different supplementary question. This sort of talk is most dangerous, and exaggerations of this sort can do no good. The truth is that the percentage of flights which have had to be diverted because of cross-winds has been quite low, 0.7 of 1 per cent. In answer to the first part of his supplementary question, I am interested, but I should also be most interested to know the cause of that particular incident. I think that there is too much exaggeration about this, and I hope that when the noble Earl reads what he said to-day he will take the opportunity to encourage rather than detract.
LORD LINDGREN: My Lords, can my noble friend say whether this still is a joint user airport as between civil aviation and the Royal Air Force, as was the case at one time? Also, as one understands from the Answer that the larger number of diversions is due to causes other than cross-winds, can he say whether or not the ground control approach is in use at Turnhouse?
LORD RHODES: My Lords, I do not know whether it is a joint user airport. I would expect that the control is as he suggests. As to the number of diversions in the early part of the year, I understand that 92 were due to what is known in Edinburgh, I hope I pronounce it correctly, as the "Haar". I am perfectly certain that this matter is being overplayed.
THE EARL OF DUNDEE: My Lords, in view of the affirmative reply which the noble Lord gave to the first Question a few moments ago, does it not follow from that that there is at least the possibility that this improvement may be carried into effect before 1970?
LORD RHODES: No, I do not expect that it will be carried into operation before 1970, but I thank the noble Earl for the constructive element in his question; because there is no doubt about it that, having regard to the speed at which the increase in traffic is taking place, something definite will have to be done. But I cannot guarantee that it will be before 1970.
LORD BALFOUR OF BURLEIGH: My Lords, does the noble Lord realise that his reply has been received with dismay by those of us who have the misfortune to use Turnhouse Airport?
THE EARL OF MANSFIELD: My Lords, arising out of the noble Lord's earlier reply, in which he said he would be interested to know the cause of the incident to which I referred, would he be interested further to know that it was entirely due to a strong cross-wind, and does he realise—and do Her Majesty's Government realise—that there are very many occasions when aircraft have not been diverted but passengers and crews have had their lives put in jeopardy by the landing conditions? Would Her Majesty's Government realise that it is essential that something should be done before the 'seventies if some bad accident is to be avoided?
LORD LINDGREN: My Lords, would my noble friend not agree that in fact a decision to land or divert is entirely in the hands of the captain of the aircraft, who has a regard for his own safety as well as that of the passengers?
LORD RHODES: Yes, quite definitely.
LORD DRUMALBYN: My Lords, may I ask if the noble Lord is satisfied that the figures which he has given for cancellations and diversions reveal the whole story? Is he aware that many may share my experience that, when there is a cross-wind, it is the practice to whittle down the number of passengers; and that although there is no diversion and the plane takes off, it does not take off with its full complement of passengers?
LORD RHODES: That I could not say. All I know is the percentage of the diversions.

FUTURE BUSINESS
LORD SHEPHERD: My Lords, with permission, I should like to make a short Business statement. It may be for the convenience of the House if I inform your Lordships that it is proposed to sit next Wednesday, the 21st, at 11 a.m. and to adjourn at a convenient moment before 5 o'clock that afternoon. I should like to inform the House that we intend to take the Committee stage of the Companies Bill; it is not intended to take the Second Reading of the Education Bill, in view of the number of representations which have been made by Members of the House.

BUSINESS OF THE HOUSE
LORD SHEPHERD: My Lords, on behalf of my noble friend the Leader of the House, I beg to move the Motion which stands in his name on the Order Paper.
Moved, That Standing Orders No. 35 (Arrangement of the Order Paper) and No. 41 (No two stages of a Bill to be taken on one day) be suspended until the House adjourns for the Recess at Christmas.—(Lord Shepherd.)
On Question, Motion agreed to.

ROSS AND CROMARTY (STRATHCARRON-SOUTH STROME ROAD) ORDER CONFIRMATION BILL
Considered on Report (according to Order).

TRIBUNALS AND INQUIRIES BILL [H.L.]
2.54 p.m.
Order of the Day read for the Consideration of Commons Amendments.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that the Commons Amendments be now considered. These four Amendments are all, in substance, drafting Amendments, and if it is convenient to the House I propose to take them together. If, of course, any noble Lord wishes any individual Amendment to be considered separately, I will certainly do so. I beg to move.
Moved, That the Commons Amendments be now considered.—(The Lord Chancellor.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
[The references are to Bill [57] as first printed for the House of Commons]
Nos. 1–4
Clause 1, page 2, line 6, at end insert—
("(5) The said section 7A shall (notwithstanding the provisions as to extent of the Town and Country Planning Act 1959 and the Town and Country Planning (Scotland) Act 1959) extend to Northern Ireland in like manner as other provisions of the Tribunals and Inquiries Act 1958.")
After Clause 2, insert the following new clause—
Procedural rules for certain Tribunals
(".In section 8 of the Tribunals and Inquiries Act 1958, at the end of subsection (3), there shall be added the words "and the reference to a Minister includes a reference to the Commissioners of Inland Revenue".")
Clause 4, page 2, line 27, leave out subsection (3).
In the Title, line 6, after ("Scotland;") insert ("to apply section 8 of that Act to procedural rules made by the Commissioners of Inland Revenue;".)
THE LORD CHANCELLOR: In the case of this Bill there only four Amendments, and, as I have said, in substance they are drafting Amendments. They fall into two pairs, Nos. 1 and 3, and Nos. 2 and 4. Clause 4(3) of the Bill, in the form in which it left your Lordships' House, extends the whole of the Bill to Northern Ireland, together with Section 7A of the Act of 1958 as it is to be amended by the Bill. While, strictly speaking, there is nothing wrong with Clause 4(3), it is not ideally drafted, and the Amendment accordingly consists of the third Amendment, which deletes Clause 4(3), and Amendment No. 1, which inserts in Clause 1 what is thought to be a better piece of drafting.
Although it is the normal practice in framing legislation to state expressly whether a Statute applies to Northern Ireland or not, this is not invariable. In the case of the Tribunals and Inquiries Act 1958 the way in which the Act was framed would have made it inconvenient to spell out those provisions which extended to Northern Ireland and those which did not. For this reason the Act was, in general, silent about the extension to Northern Ireland. I ought to add by way of confirmation that the whole of the Act of 1958 extends to Northern Ireland, subject to certain modifications. In case your Lordships wish to see which are the most important of these modifications they will be found in Section 1(9) and Section 10(7).
As the Act of 1958 is not expressed in terms to apply to Northern Ireland, we felt that it would be a mistake now to say that the whole of the current Bill should so apply. When this Bill becomes law, it and the Act of 1958 will, in a sense, constitute a code, and it would
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be a mistake if part of that code were expressed to apply to Northern Ireland and part were not. The only provision where an express extension is needed is in the case of Section 7A of the Act of 1958. Your Lordships may remember that that section was not in the Act of 1958 as originally enacted but was added by the Town and Country Planning Act 1959, and by the equivalent provision for Scotland. For some reason, which is not now clear, Section 7A was not extended to Northern Ireland, and this Bill will now put that matter right.
Amendments Nos. 2 and 4 deal with the position of the Commissioners of Inland Revenue. When a Minister—or, in Scotland, the Lord President of the Court of Session—wishes to make or approve procedural rules for any of the tribunals listed in the First Schedule to the Act of 1958, he is put under a duty by Section 8 of that Act to consult the Council on Tribunals before doing so. It has been discovered that the Board of Inland Revenue are not under such a duty. The reason for this is that "Minister" is defined in Section 14(1) as "including any Board presided over by a Minister", and, of course, no Minister presides over the Board of Inland Revenue.
It may be that at the time the 1958 Act was being drafted it did not occur to anyone that the Inland Revenue would have to make any such procedural rules as are contemplated by Section 8. But in fact they do, and whatever may have been the reason there does not seem to be any justification for the Inland Revenue being in a different position from other Government Departments. Accordingly, Amendments Nos. 2 and 4 will bring them into line—that is, on the footing that your Lordships will agree that, if other Departments have to consult the Council on Tribunals when preparing rules, there is no reason why the Inland Revenue should be in a different position. I beg to move that this House doth agree with the Commons in their Amendments Nos. 1 to 4.
Moved, That this House doth agree with the Commons in their Amendments Nos. 1 to 4.—(The Lord Chancellor.)
On Question, Motion agreed to.

NEW TOWNS BILL
3.1 p.m.
Order of the Day for the Third Reading read.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Kennet.)
LORD HASTINGS: I want to say only a very brief word. Of course, we are glad to give this Bill a Third Reading. We had a good debate on the Second Reading, but there is one point which the noble Lord, Lord Kennet, kindly said he would clarify, and I think it would be useful to have the information so that everybody in your Lordships' House should know it.
It concerns Clause 2, where it is laid down that any development value arising from the designation of an extension of a New Town should be ignored. I wish to ask the noble Lord how this clause will operate. One assumes that the value of agricultural land outside a New Town—I am talking more about the North, which I know—would be about £200 per acre. One assumes, also, that as a result of the proximity of the New Town, if the land were sold for building the owner might normally expect to receive about £1,200 an acre. As a result of the extension of designation of a New Town, would the value then be expected to be more? Obviously, if it were, that extra value would be ignored and no development charge would be payable upon it. But will the value be the agricultural value of £200, in which case there will be no development charge, or will the market value be considered to be the value with building permission, irrespective of the designation of an extended New Town, and will development charge therefore be payable on that part of it? I should be glad if the noble Lord could give us an illustration of how the clause will operate?
LORD KENNET: My Lords, in brief what this clause does is to make the basis of compensation for land acquisition the same in extensions to New Towns as it
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has been for some time in New Towns themselves. May I go into a little more detail? In general, a public authority acquires land on the basis of "market value"; that is, the amount which the land might be expected to realise if sold in the open market by a willing seller. The market value takes into account existing use, existing or hoped-for planning permission, use shown on a development plan or proposed by the acquiring authority, and alternative use certified by the planning authority. If the land is included in an area designated as a New Town there could enter into the value an increase (or possibly a diminution) on account of the development or prospect of development of other land in the area in the course of the area's development as a New Town. It is this, and only this, increase or diminution which is excluded by Section 6 and Schedule 1 of the Land Compensation Act 1961 from assessment of compensation payable. All the other elements I have enumerated are taken fully into account.
That is the situation as it has been since 1959 in relation to initially designated areas of New Towns and those extended areas of New Towns as they were at October 29, 1958, when the 1959 Act was introduced. Similar provisions apply, incidentally, to an area of a single compulsory purchase order, an area of comprehensive development as defined in a development plan, or an area of town development under the Town Development Act 1952. So that is well established. But the provision excluding the increase or diminution which I have been talking about does not apply, and has never applied, to an extension of a New Town area since October, 1958. Whilst such extensions were small, this did not matter a great deal, but we have had in the last five years three extensions of over 1,400 acres, and more large extensions of about that size may well be made in the future.
So Clause 2 of this Bill seeks to apply to any future extension of a New Town the same provision in relation to that extension as the existing provision in relation to initially designated areas of New Towns. The existing provision and the proposed new provision under the Bill will be, so to speak, mutually exclusive; that is to say, first, in relation to land in the original area,

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only an increase or diminution due to development or prospect of development of other land in the original area will be excluded; an increase or diminution due to development or prospect of development of land in the extension area will not be excluded. Secondly, in relation to land in the extension area, only an increase or diminution due to development or prospect of development of other land in the extension area will be excluded, while an increase or diminution due to development or prospect of development of land in the original area will not be excluded. Moreover, Clause 2 will not have retrospective effect on New Town areas already extended.
I hope this makes the situation quite clear. It is a little prolix, but it is impossible to put it clearly in any shorter way. What we are proposing is simply to treat future extensions of New Towns for compensation purposes as if they were original New Towns: after all, they are communities comparable in size.
On Question, Bill read 3a, and passed.

LEGAL AID (SCOTLAND) BILL [H.L.]
Read 2a (according to Order) and referred to the Joint Committee on Consolidation Bills.

LOCAL GOVERNMENT (SCOTLAND) BILL
3.7 p.m.
Report of Amendments received (according to Order).
Clause 24 [Liability to be rated in respect of certain unoccupied property]:
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords with permission, I would speak to Amendments Nos. 1, 4 and 5 which are identical in character. These Amendments restore the period of grace on empty property to what it was before Amendments were carried against the Government during the Committee stage on November 29. The period of grace before empty property can be rated would become three months as in the Bill when first introduced. The House of Commons has already disagreed with the Lords Amend-
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ments on the English Bill providing for a six months' period of grace, and your Lordships yesterday agreed not to insist on these Amendments to the English Bill. In these circumstances it is hoped that the present Government Amendments will be accepted by the House in order to avoid unnecessary delay in the Scottish Bill's becoming law. I beg to move.
Amendment moved—
Page 16, line 38, leave out ("six") and insert ("three").—(Lord Hughes.)
THE EARL OF DUNDEE: My Lords, one of the strongest reasons we had for carrying this Amendment in Committee was that a similar Amendment had been carried into the English Bill, and it would have been unfortunate if Scotland had been placed at a disadvantage. As the noble Lord had said, another place has now disagreed with your Lordships' Amendments to the English Bill, and it may be that the argument which we had for giving Scotland equality with England in this respect is therefore less compulsive than it was. I still think it would have been an improvement to the Bill, but it is not an issue on which we think it right to press the matter further. We will not, therefore, oppose the Amendment.
On Question, Amendment agreed to.
LORD HUGHES LORD HUGHES moved, in subsection (2), after "Act", where that word occurs first, to insert:
"the amount of any rates payable by an owner in respect of a dwelling-house by virtue of this section shall be three-quarters of the amount which would be payable if he were in occupation of the dwelling-house, and".
The noble Lord said: My Lords, with permission, I would speak to Amendments Nos. 2 and 3, which are connected. These Amendments restore the rates payable by the owners of empty houses to three-quarters of the normal rates. One-half was inserted by an Opposition Amendment at the Committee stage, and this was carried against the Government, on a Division. The Government's arguments in favour of three-quarters rating for owners of empty houses, as distinct from other property, were given fully during the Committee stage, and if the House were not prepared to accept the present Amendment the Government would feel bound to ask the Commons to disagree with the Lords Amendment

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providing for 50 per cent. rating. This would inevitably delay the passage of the Bill, and would jeopardise the chances of a rate support grant order being promoted under the Bill in January in order to give local authorities the earliest possible notice of the nature of the new grants system. I beg to move.
Amendment moved—
Page 16, line 46, after ("Act") insert the said words.—(Lord Hughes.)
THE EARL OF DUNDEE: My Lords, I still think it is not really justifiable to increase the rating on this unoccupied property from 50 to 75 per cent., and that it would have greatly improved the Bill if the Amendment which your Lordships passed in Committee had been allowed to remain. But it is not, I think, an issue on which we would be right to pursue the disagreement. Our object was to give both the Government and another place the opportunity of reconsidering what we thought was a blemish in the Bill, and of accepting the Amendment. The noble Lord, Lord Hughes, has, I think, done his best to meet us on various points which are not disconnected in principle with this, particularly in one Amendment, No. 10, which he has now put down on Report, and in a further Amendment to the Schedules. In these circumstances, I do not think it would be right for us, in view of the very definite feeling which the Government have and the very definite advice which they would give to another place, to press the point any further now.
LORD AMULREE: My Lords, the noble Lord has referred to the question of grant, and I think this may be the appropriate occasion for me to ask him one short question concerning the provision of school milk and school meals. I take it that the fact that this is again going to be done by the local authorities will not mean that great attention will not be paid to this important service. I refer particularly to the school milk service, because I understand that once more cases of rickets are appearing on Clyde side, where they have not been seen for a very long time. I therefore trust that when grant is being given these points will be considered, and that local authorities and the Government will
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encourage these services to be kept up as much as they can.
LORD HUGHES: My Lords, I am grateful for what the noble Earl has said. I am also happy that, as he has indicated, I have been able to come some way in the direction of noble Lords opposite in subsequent Amendments. With regard to the point raised by the noble Lord, Lord Amulree, strictly speaking, this Amendment does not deal with grants, but as I used the word "grants" in my opening remarks on this Amendment it seems quite an appropriate occasion on which to raise this point. I can certainly assure the noble Lord that adequate control over the school milk and meal service will continue to be maintained.
Under Section 53 of the Education (Scotland) Act 1962 an education authority have a duty to provide milk and a mid-day meal, and the Meals Service (Scotland) Regulations, supplemented by Departmental circulars and memoranda, lay down standards for the service, and give the Secretary of State power to determine the charges to be made for school mid-day meals. Building standards are governed by the School Premises (Standards and General Requirements) (Scotland) Regulations. All these controls will still be exercised by the Scottish Education Department, and there is no intention of allowing standards to fall. Full allowance will be made for school meals expenditure in calculating rate support grant and in the weighting for each education authority in the distribution formula, and it is intended that authorities should be as well off under the new arrangements as they are at present.
On Question, Amendment agreed to.
LORD HUGHES: My Lords, I beg to move Amendment No. 3.
Amendment moved—
Page 16, line 47, leave out ("the relevant") and insert ("other").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords I beg to move.
Amendment moved—
Page 17, line 25, leave out ("six") and insert ("three").—(Lord Hughes.)
On Question, Amendment agreed to.
Clause 25 [Provisions supplementary to Section 24]:
LORD HUGHES: My Lords I beg to move.
Amendment moved—
>Page 17, line 37, leave out ("six") and insert ("three").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords, this Amendment restores the period of grace on empty new dwelling-houses to six months, as in the Bill as first printed for your Lordships' House, thus reversing the Amendment which was made at the Committee stage. This Amendment is a corollary of the Amendment to page 16, line 38, preserving the position that new dwelling-houses should have twice as long a period of grace as other empty properties. The Commons have already disagreed with the Lords Amendment on the English Bill to introduce a period of grace of twelve months, and your Lordships yesterday decided not to insist upon that Amendment. I hope your Lordships will agree to accept this Amendment today. I beg to move.
Amendment moved—
Page 17, line 39, leave out ("twelve") and insert ("six").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES LORD HUGHES moved to add to subsection (3):
"In paragraph (a) of this subsection the reference to a legal prohibition does not include a prohibition which arises from the failure of the owner to apply for a certificate under section 9 of the Building (Scotland) Act 1959".
The noble Lord said: My Lords, this Amendment is designed to prevent an owner from escaping the empty property rate by refraining from applying for a building certificate. Under Clause 25(3)(a) the empty property rate may not be levied at any time when the owner is prohibited by law from occupying it. This was intended to apply to cases of bankruptcy or statutory incapacity to manage his own affairs. But under the Building (Scotland) Act 1959 the occupation of new property is prohibited until a building certificate has been obtained, and as the Bill stands now an owner of new property awaiting a tenant could escape the empty property rate by deliberately refraining from applying for a building certificate
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until a tenant was in view. Under the building legislation this is quite acceptable, but it was not intended that an owner should be able to escape rating by this means.
The Amendment therefore provides that failure to apply for a building certificate does not constitute, for rating purposes, a statutory prohibition on occupying the building. If, of course, an owner applied for a certificate but was refused one, he would be protected from being rated. I beg to move.
Amendment moved—
Page 18, line 18, at end insert the said words.—(Lord Hughes.)
On Question, Amendment agreed to.
Clause 27 [Notification of unoccupied dwelling-houses]:
LORD HUGHES: My Lords, this Amendment restores the notification period for empty houses to two months, as it was before the Committee stage. It is consequential on the earlier Government Amendments to restore the provisions of the Bill in regard to empty property as first introduced. I beg to move.
Amendment moved—
Page 19, line 29, leave out ("five") and insert ("two").—(Lord Hughes.)
On Question, Amendment agreed to.
3.21 p.m.
LORD HUGHES LORD HUGHES moved, in subsection (2), after the first "shall" to insert: ", subject to the next following subsection,". The noble Lord said: My Lords, with permission, I should like to speak to Amendments Nos. 9 and 10 together. These Amendments give effect to an undertaking that I gave in Committee to ensure that liability for 100 per cent. rating of empty houses could be removed when it was reasonable to do so. The rating authority will have power to make the reduction when it seems to them fair and reasonable to do so. In addition, a rating authority retain at all times their discretion, under Clause 24, not to levy the empty property rate at all. There will thus be several courses available to them, according to the nature of the circumstances. The rating authority could insist on maintaining 100 per cent. rates in cases where there had been a wilful attempt to conceal that a house was

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empty; they could reduce the rates to 75 per cent. as soon as the owner explained why he had failed to notify, or at some time afterwards, when the owner had, as it were, expiated his failure to notify; or they could remit rates entirely if the owner convinced them that it was genuinely impossible to find a tenant.
In Committee the noble Earl, Lord Dundee, suggested that 100 per cent. rating should extend only until notification was given. This, in fact, has proved not to be possible because it would mean that as soon as a local authority informed an owner that they intended to enforce 100 per cent. rating the owner would obviously notify. The attitude the Government take in this matter is that they do not wish or expect local authorities to exact an unreasonable financial penalty for failing to notify, but, at the same time, they do not want rating authorities to be, as it were, stymied by the owner. I beg to move.
Amendment moved—
Page 19, line 36, after ("shall") insert (",subject to the next following subsection,").—(Lord Hughes.)
LORD DRUMALBYN: My Lords, I would thank the noble Lord for having gone some way to meet us in this matter. But I should like to ask him to confirm that the question of rating rests entirely in the hands of the local authority; that it is entirely for them to say what is fair and reasonable in any particular circumstances. Would he indicate whether there will be any means of challenging the local authorities if, in fact, they did not act in a way that was fair and reasonable? Secondly, may I ask him to confirm what he indicated were his views on the last occasion: that there can be no question of double rating in cases like this?
LORD HUGHES: My Lords, I would confirm that the purpose of the Government in these matters it to give local authorities the fullest possible measure of discretion. The discretion given to local authorities in the Scottish Bill is wider than that given in the English Bill; but this is reasonable, because there are such great variations in circumstances in Scotland. What would be a reasonable rate in one authority area might be unnecessarily severe in another; or, alternatively, what would be reasonable in one might be regarded as absolute neglect in another.
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The only way in which justice can be done throughout the country is to give the local authorities the widest possible measure of discretion in what may be done. That can vary, in the circumstances described, from 100 per cent., to 75 per cent. rating, or to no rating at all. On the subject of double rating, I confirm that there is no possibility of rating being exacted twice at the same time for the same property.
On Question, Amendment agreed to.
LORD HUGHES: My Lords, I beg to move Amendment No. 10 formally.
Amendment moved—
Page 19, line 40, at end insert—
("( ) A rating authority may, if in all the circumstances it seems to them fair and reasonable so to do, reduce the amount of rates payable in respect of any dwelling-house for any period by virtue of subsection (2) above to the amount payable by virtue of section 24(2) above.").—(Lord Hughes.)
On Question, Amendment agreed to.
Clause 32:
Transfer of road lighting systems
(2) There shall not be transferred to a highway authority by virtue of this section any right or liability of a lighting authority in respect of work done, services rendered, goods (including gas and electricity) supplied or money due for payment before the said date, and there shall not be transferred to the Secretary of State by virtue of this section any liability of a lighting authority in respect of loans or loan charges.
LORD HUGHES: My Lords, with permission I should like to speak to Amendments Nos. 11 and 13 together. These are drafting Amendments only, taking account of the fact that the phrase "road lighting system" occurs in both Clauses 32 and 33. I beg to move.
Amendment moved—
Page 23, line 11, leave out from ("system") to ("was") in line 12.—(Lord Hughes.)
On Question, Amendment agreed to.
LORD DRUMALBYN LORD DRUMALBYN moved, in subsection (2), to delete all words after "date". The noble Lord said: My Lords, the purpose of this Amendment is to enable the liabilities for service of loan, and so forth, connected with a lighting system to be transferred to the Secretary of State when the lighting

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system itself is transferred. The principle here seems to be a sound one: when the assets are transferred the liabilities that go with them should be transferred as well. It has been argued in another place that where the assets have been provided by a local authority for local use it is right that the service charges should remain to be paid by that local authority. But the same people will be enjoying this lighting system whoever has installed it, and it will not matter whether the Secretary of State adds to that lighting system at a later time or whether the highway authority adds to that system; for in that case it will be the highway authority who will own the assets and be liable for the charges. Since, for systems that are already installed, the assets are to be transferred, the lighting system itself is to be transferred, it seems only reasonable that the liability for the payment of outstanding loan and the service on the loan should also be transferred at the same time.
I understand that in this case also a comparable Amendment which was carried in this House to another Bill was rejected in another place. But it would have been a good argument for the noble Lord to put this forward in this case had he not made the difference as between the 75 per cent. and the 50 per cent. that applies to England. If Scotland is to have a higher burden in regard to the percentage of the rent that is to be paid in respect of a vacant house, then there is something to be said for making in this case also a difference as between the Scottish and the English Bills. I beg to move.
Amendment moved—
Page 23 line 28, leave out from ("date") to end of line 30.—(Lord Drumalbyn.)
LORD HUGHES: My Lords, I must ask the House not to accept this Amendment because the Government would be bound to ask another place to reject it. There is no difference at all in the principle in this Bill and the one in the corresponding English Bill. As the noble Lord stated, the Commons disagreed to your Lordships' Amendment to the English Bill, and your Lordships yesterday agreed not to press the Amendment. I must say that, when I realised that the noble Lord was to speak to this Amendment, I won-
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dered what he could possibly find to say which would be different; and I must congratulate him on the ingenuity, at least, of the argument he produced. If I may be tempted to be ingenious also, but without in any way affecting the merits of the proposal, I would say that it could be argued that the owner who has property which he leaves empty is in fact deriving greater advantage from the lighting system because he does not have an occupant to look after it, and it is therefore all the more necessary that his property should be well-lit. That could be advanced as an argument, but I think that it is just as irrelevant as what the noble Lord said. I am merely working on the principle of the give-and-take we are having on this Bill: one irrelevancy deserves another. I hope that your Lordships will feel able not to press this Amendment, for the very sound reason that the other place will find it impossible to accept it.
LORD DRUMALBYN: My Lords, there is force in the noble Lord's argument. The only additional argument I can adduce is that Scotland, with the exception of Edinburgh, is a development area and therefore entitled to different treatment from that given to the rest of the country. However, I do not suppose that that argument would weigh with the Government either, and I therefore beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD HUGHES: My Lords, I beg to move this Amendment.
Amendment moved—
Page 24, line 9, at end insert—
("( ) In this Part of this Act 'road lighting system' means a lighting system which is not a footway lighting system.").—(Lord Hughes.)
On Question, Amendment agreed to.
Schedule 3 [Rating of unoccupied property]:
LORD HUGHES: My Lords, this Amendment improves the position of owners of empty new property by ensuring that when a completion notice is served on them by the rating authority—that is, a notice saying that the building is deemed to be ready for occupation from a certain date—a statement of the rights of appeal to the sheriff is included with the notice. I beg to move.
Amendment moved—
Page 40, line 11, at end insert ("; and the authority shall along with the completion notice send to the owner a notice of his right of appeal by virtue of sub-paragraph (4) below").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords, with permission, I would speak to Amendments Nos. 15, 16 and 17 together. They are all drafting Amendments. As a result of changes made at earlier stages, there is no longer any reference in Schedule 3 to "dwelling-house". I beg to move.
Amendment moved—
Page 41, line 36, leave out ("or dwelling-house").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords, I beg to move the next Amendment.
Amendment moved—
Page 41, line 37, leave out ("or dwelling-house").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords, I beg to move Amendment No. 17.
Amendment moved—
Page 41, line 41, leave out ("or dwelling-house").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords, this Amendment gives effect to a suggestion made by the noble Lord, Lord Drumalbyn, during the Committee stage, that buildings undergoing improvement should be exempted from the empty property rate, but that the rating authority should be allowed to serve a completion notice. Buildings undergoing improvement (which includes alterations) will, by virtue of this Amendment, be exempted from empty property rating in the same way as new buildings until the rating authority serve a completion notice stating that the building is deemed to be ready for occupation as from a given date. This will allow necessary improvements to be carried out without the owner becoming liable to rates and at the same time ensure that an unscrupulous owner cannot avoid rates by protracting improvement work indefinitely. I beg to move.
Amendment moved—
Page 41, line 43, at end insert—
(". The provisions of this Schedule relating to newly erected buildings shall apply to
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buildings which are being improved by the owner and are thereby rendered temporarily unsuitable for occupation, and references to erection of a building shall be construed as references to improvements; and those provisions shall so apply with any other necessary modifications.
In this paragraph 'improvements' includes alterations other than such alterations as are described in paragraph 5 above, and 'improved' shall be construed accordingly.").—(Lord Hughes.)
LORD DRUMALBYN: My Lords, I thank the noble Lord for this Amendment. If I may say so, I think it is a very sensible way of meeting the point that was made by my noble friend Lord Saltoun and by myself in the Amendment that I put down.
On Question, Amendment agreed to.

POLICE (SCOTLAND) BILL
3.35 p.m.
Report received (according to Order).
Clause 1:
Amendment of section 18(2) of the Police (Scotland) Act 1956
1.—(1) For subsection (2) of section 18 of the Police (Scotland) Act 1956 (procedure regarding amalgamation schemes) there shall be substituted the following subsection—
(2)(a) Before making a scheme under this section the Secretary of State shall give to the police authorities concerned a notice describing the general nature of the proposed scheme and specifying the period within which objection may be made thereto.
LORD HUGHES: My Lords, with permission, I would speak on the first two Amendments together, as the second is consequential on the first. The first Amendment is similar in intention and wording to that moved by the noble Lord, Lord Drumablyn, in Committee on November 29. I then pointed out that the Government would have no difficulty in accepting the principle of the Amendment, but that I should like to look again at the wording, since consequential Amendments later in the Bill would also be required. The noble Lord agreed not to press his Amendment on that undertaking. The Amendment now before your Lordships has been cast in such a way that consequential Amendments elsewhere in the Bill will not be necessary. The exclusion of the words "in draft" which appeared

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in the noble Lord's Amendment and which I am advised are not necessary, is the only change that has been made. I trust that the Amendment in its present form will be found acceptable to your Lordships. The second Amendment is simply a matter of drafting, intended to make plain that objection may be made to any proposed scheme and not to the notice specifying the period within which objection may be made. I beg to move.
Amendment moved—
Page 1, line 9, leave out from ("shall") to ("the") in line 11, and insert ("send a copy of the proposed scheme to the police authorities concerned and shall specify in an accompanying notice").—(Lord Hughes.)
LORD DRUMALBYN: I would thank the noble Lord for having met the point I made. I think our objectives are entirely at one in this regard and I hope that the change will achieve those objectives.
On Question, Amendment agreed to.
LORD HUGHES: My Lords, I beg to move this Amendment.
Amendment moved—
Page 1, line 12, leave out ("thereto") and insert ("to the proposed scheme").—(Lord Hughes.)
On Question, Amendment agreed to.
LORD HUGHES: My Lords, this Amendment has the same intention as the second Amendment moved by the noble Lord, Lord Drumalbyn, in Committee, which was withdrawn by him on my undertaking to consider the matter. Its purpose is to make clear that the Secretary of State, in laying a draft Order before Parliament, is not bound to lay the identical proposed scheme which he sent to the police authorities and which was in the hands of the person holding the inquiry. As I said in Committee, my right honourable friend may modify a scheme in the light of the report of the inquiry, of representations of the police authorities concerned or in such other manner as he thinks fit.
It might be argued that the Amendment is superfluous in view of the fact that Section 18(1) of the Police (Scotland) Act 1965 appears to have this effect
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already. However, this is a point on which I feel—and I am sure the noble Lord will agree with me—that no harm can be done by making the point explicit, and this is what the Amendment does. I may add that the form of words which I have chosen is taken from Schedule 3 to the Police Act 1964, which implements a procedure in respect of amalgamation schemes that has been fully tested in England and Wales and has not been found wanting. I beg to move.
Amendment moved—
Page 1, line 20, at end insert—
("(c) Where such an inquiry has been held, the Secretary of State shall consider the report of the person holding that inquiry before determining whether the scheme should be made and if so subject to what modifications, if any.").—(Lord Hughes.)
LORD DRUMALBYN: My Lords, again I should like to thank the noble Lord. I am glad that he shares my view on the need to make it abundantly clear that it is possible for the Secretary of State to make modifications as he thinks fit.
THE EARL OF MANSFIELD: My Lords, as one who has been engaged in local administration for about a generation, I should like to thank the noble Lord, Lord Hughes, for the trouble he has taken to meet the points that have been put to him. Obviously, these amalgamations are bound to cause a considerable amount of ill-feeling, but that ill-feeling is equally bound to be diminished if the authorities concerned know that a proper inquiry has been held; that it is not just a question of the acceptance or rejection of a scheme, and that the Secretary of State has power to alter such a scheme as he thinks fit in view of circumstances which may be raised in the course of the inquiry. This ought to go a long way to do away with, or at least to diminish, the bitterness which many local authorities will undoubtedly feel at having their police forces amalgamated, although it must be accepted by all reasonable people that such amalgamations are definitely necessary.
LORD HUGHES: My Lords, I have much more cause to be grateful to the noble Earl for those words than my colleague had a few moments ago.
On Question, Amendment agreed to.

COMPANIES BILL [H.L.]
3.41 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.—(Lord Champion.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 3 [Statement in holding company's accounts of identities and places of incorporation of subsidiaries, and particulars of shareholdings therein]:
VISCOUNT ECCLES VISCOUNT ECCLES moved to add to the clause:
"( ) In relation to a subsidiary the shares of which are without nominal or par value, references in this section to a proportion of the nominal value of the issued shares of a class shall be construed as references to a proportion of the total number of the issued shares of that class."
The noble Viscount said: All the Amendments standing in my name and in the name of my noble friend Lord Polwarth are designed to introduce the system of no par value shares. My noble friend Lord Polwarth asked me to say he regrets that he is kept in Edinburgh he would wish that he could have been with us. It may help the Committee if I am given leave to speak to Amendments Nos. 3, 37, 41, 43 and 85, as well as to Amendment No. 2 which I am now moving. I am grateful for being allowed to do this, particularly because the number and length of our Amendments appear very formidable, but the change of the law which my noble friend Lord Polwarth and I are seeking to make, straightforward though it is in principle, requires some fairly complicated dovetailing into the principal Act.
As long ago as 1952, Mr. Thorne croft, the then President of the Board of Trade, appointed the Gedge Committee to report on shares of no par value. He said that he did so because of the wide demand for this system. That Committee, which was composed of men very well versed in company affairs, recommended, with one dissentient, the introduction of this system of issuing shares, and they took
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great trouble to set out the changes in the law that would be needed were the proposal to be brought before Parliament. Nothing was done. Eight years later, the Jenkins Committee again examined this proposal, and they reported that they had found much evidence in favour of, and none against, the introduction of shares of no par value. This being so, I shall assume that the trade union objection, voiced in the Minority Report of the Gedge Committee, will no longer be pressed. In taking this hopeful view, I am fortified by the remarks of more than one noble Lord opposite who spoke on the Second Reading of the Bill. That was in fact what they said.
Since the Gedge Committee and the Jenkins Committee reported, strong additional reasons can be adduced for the introduction of shares of no par value. In the first place, the value of money has continued to fall. Therefore, the nominal value of the great majority of the ordinary shares quoted on the Stock Exchanges is now even more out of line with the money value of the net assets of which each share represents a fraction. Secondly, we now have a much wider aggreement among political Parties that a mixed economy is the right structure for Britain. Therefore, both sides of the Committee can be expected to welcome as a non-political measure any reform which adds to the clarity and accuracy of company accounts, and which increases the ease and efficiency of raising new capital in the private sector.
With these additional considerations in mind, I turn to the case in principle for shares of no par value as it is set out in paragraphs 8 to 10 and 27 and 28 of the Gedge Report. A share is what its name implies: a right to a certain fraction of the income and assets of the company. As the law stands, a nominal value—that is, a sign of money—has to be attached to these fractions or shares whether or not they were issued for more or less money than is expressed in the nominal value. Even at the moment of issue the nominal value may be misleading. A £1 share may be issued for £2, but the moment it is subscribed it must appear in the balance sheet as a share of £1. For this reason, balance sheets must now have two accounts: the paid-up capital account and the share premium account.
If we had shares of no par value, we should have much simpler accounting and one single capital account. Clearly, once the shares have been issued their true value will depend upon the fortunes of the company—how much profit in the past it has retained; how much profit it is currently earning; how many bonus issues it has made or intends to make, and at what price, or no price at all. Over and above that, the market value of the equity shares will reflect not only all the actions of the company, but any significant decline in the value of money itself.
So it happens that, as the years pass, it is more and more misleading to read in a balance sheet that the capital of a company is so many pounds divided into so many shares each bearing a fixed nominal value. One has to look, and will always have to look, at the balance sheet as a whole to get an idea of the capital represented by the ordinary shares. This is difficult enough to do in all conscience. It must therefore be wrong artificially to introduce the confusion of nominal capital. The figures at the top left-hand side of the balance sheet are nearly always misleading. But with the introduction of shares of no par value that particular form of confusion would be avoided.
I do not wish to delay the Committee with long explanations of the practical advantages of expressing the capital in shares of no par value, but two examples seem to me worth a moment's attention. The system would simplify the raising of new capital. To illustrate that I will take an extreme instance. A company has been through a bad time, and the shares stand in the market well below their nominal value. But there are reasons to think that with some additional risk capital that company may again prosper. In that depressed state, how is it to raise the new equity capital? The issue of new shares at a substantial discount on nominal value presents many serious difficulties. But with shares of no par value those difficulties disappear. The shares can be issued at whatever price is convenient in the circumstances. I think it is urgent now to make this reform for this particular reason, because, technical change being as rapid as it is, many companies are dealt a blow very suddenly and they are, practically speak-
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ing, put on their backs. But yet there is a chance, if they change their way of life, that they may recover. It is a good thing that they should take that chance, but without fresh risk capital they cannot do it. Therefore in our present age, when take-overs, rationalisation and so forth are so much in vogue, this system of issuing new capital would be a real advantage.
Secondly—and I think this is now generally agreed—the declaration of dividends as percentages of an unreal nominal value is confusing. Sometimes it is hard to calculate what those dividends are in shillings and pence. Often it gives a false impression of the rate of earnings on the capital which is actually employed in the business. It is no answer to the possibility of misrepresentation to say that companies can, and some now do, declare dividends in shillings and pence. My own company, Courtaulds, does exactly this: we declare our dividends in pence. But what then immediately happens? The Press commentators, and those perky analysts who know so much about the value of everything, but who I think produce very little themselves, immediately translate our dividends in pence into the percentage on the nominal capital, and the mischief of misrepresentation is with us once again.
In short, the case for no par value shares rests on the common-sense view that to call a share what it is, a fraction of the capital in issue, is both truthful and convenient; and also to express dividends in money on shares of no par value is the best method of showing how the rate of distribution is related to the real value of the shares.
LORD SILKIN: I do not want to interrupt the noble Viscount, because I am tremendously interested in what he is saying. But is he not aware that almost every financial paper translates the dividends, not in relation to the nominal value, but in relation to the actual market value of the shares? Therefore, you get shares, say, having a return of 3 per cent. or 4 per cent. and that is open to everybody to see.
VISCOUNT ECCLES: They do that, too, but the noble Lord, who I am sure like me prowls through the pages of the Financial Times every morning, will also

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know that these commentators say that such-and-such a company has increased its dividend by one point or two points or that it is two points less. They still maintain this description as a percentage of the nominal value and I am bound to say that this is most misleading. At any rate, that is the view of the Americans and Canadians. They have had this system for a long time, and I have no reason to think that they are in any way dissatisfied with it.
May I come to the new clause, Amendment No. 41? The drafting follows the Gedge Report with one minor exception relating to the accounting treatment of revenue reserves on certain amalgamations, and also with the addition of the recommendation of the Jenkins Committee that the system should apply to both ordinary and preference shares. I should not think it would be very much used in respect of preference shares, but Jenkins thought it would be tidier to include this class of share in the reform, and I have followed his advice. Secondly, I have taken care to lay down the manner in which money raised by the issue of no par value shares should be treated in the accounts of the company concerned. These provisions, which are subsections (3) to (6) in the new clause, are, I think, better than those in either of the North American Acts, and I hope your Lordships will find them satisfactory.
Thirdly, the clause is drafted so that companies may either convert shares of nominal value into shares of no par value or vice versa. Fourthly, if your Lordships approve this series of Amendments, there will be modest consequential Amendments to be made in a Finance Bill to cover changes in the assessment of the registration fees and capital duties. It is obvious that now that capital duties are assessed upon the nominal capital of the company there has to be a different system when the capital is expressed in no par value shares. For this reason, Amendment No. 43 leaves it to the Board of Trade to name the appointed date when this system would come into operation. The Board would have to wait until another place had made the necessary changes in a Finance Bill.
These are the main points in the Amendments but, of course, I am ready to try to answer any questions which
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noble Lords may care to put. My noble friend Lord Polwarth and I are convinced that this overdue reform, recommended to us not by one but by two distinguished Committees of Inquiry, deserves the close attention of this Committee. Your Lordships may remember that years ago, when the Gedge Committee reported, there was a whiff of industrial politics about no par value shares. But I am reliably informed that that whiff has disappeared. So I am asking for approval of a non-political reform that will be of real benefit to companies of all kinds, and especially in a period where there is a great deal of change in the pattern of companies, which I think we all support. It is also a reform the nature of which, I hope I am right in saying, is well suited for introduction in your Lordships' House. I beg to move.
Amendment moved—
Page 3, line 34, at end insert the said subsection.—(Viscount Eccles.)
3.58 p.m.
LORD CONESFORD: Perhaps I might add a brief word to what my noble friend has said, because it so happened that I was Parliamentary Secretary to the Board of Trade at the time the Gedge Committee was appointed. In fact in such debates as took place in another place at that time it was my fate to give the opinion of the Government. I am now speaking from memory. In one of the debates I answered I said that, in view of what had been said in the Report on Company Law by the Committee over which the noble Lord, Lord Cohen, presided, it would be appropriate that there should be some further inquiry before any question of legislation, and then the Gedge Committee was appointed.
The case made out in the Report of the Gedge Committee was, I thought and still think, overwhelming. It has now been supported by the latest Report on Company Law. I was delighted to hear from the noble Lord, Lord Goodman, and others, that there was now no substantial opposition in any quarter. If there were such opposition, I should be prepared to answer it and to deal with some of the statements made in the Minority Report of the Gedge Committee. But because my noble friend has said, quite rightly, that there is now no reason to think, after what we heard in

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the Second Reading debate, that there is such opposition, I content myself merely with strongly supporting what my noble friend has said, and saying how glad I am that the reform of which the initial steps were taken while I was Minister at the Board of Trade in the appointment of the Gedge Committee, should at last come, as I hope, to fruition.
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): I am afraid that your Lordships will hear a somewhat boring reiteration of a particular response to some of the Amendments to this Bill during the course of the Committee stage, and the item on which I think I may have to repeat myself more than once is the statement that this Bill is intentionally of a limited nature. In the debate last night I had to make this point, and I said that if we had given ourselves a little more licence to cover a larger amount of ground there is no doubt that this Bill would not be before the Committee now.
First, I should like to say that my right honourable friend the President of the Board of Trade has not made up his mind about the issue of no par value shares. It is a matter which has not had sufficient exploration by the Government as yet, because in drafting the Bill they did not propose to extend it in this way. Speaking personally, as an ex-chairman of a company, I must say I find the proposal acceptable. I think it would provide a further degree of freedom, if I may put it that way, and indeed in our society to-day I am almost—and I stress, almost—in favour of change for the sake of change because we are in every way (and I am not sub-dividing my comments) such a stodgy society that we ought to be far less afraid of change than we are.
Having said that, I want to draw attention to some of the difficulties facing Her Majesty's Government in giving the initial, and possibly rather superficial, consideration that they gave to this idea. I think these difficulties can be referred to in terms of what Mr. Derek Walker-Smith (as he then was) said in another place when the Government were asked to implement the Gedge Report. The Parliamentary Secretary to the Board of Trade at that time welcomed the principle of no par value shares, explained the extent and com-
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plexity of consequential financial legislation, and accepted the Motion on the basis of no time commitments. At a later stage he drew attention to the fact that the implementation of no par value shares would undoubtedly mean an amendment to the tax law—profits tax, income tax, surtax, estate duty, stamp duty, and perhaps other things as well. I am aware that some of these taxes no longer exist and others have changed, but there is a big exploration to be carried out and it really means that we should need to have a considerable time for consideration of these matters, and that is the main ground on which we rest our case for not having gone seriously into this matter already.
One other ground on which I must ask noble Lords to reject this Amendment, somewhat regretfully, is that there have been a number of proposals for the extension of this Bill, not only from Members of this House and from members of various associations outside the House but also from within other Government Departments. My right honourable friend at the Board of Trade has turned a rather cold shoulder to these proposals because we want to see the Bill become law within a reasonable space of time. One can imagine the difficulty of letting one proposal of this sort, however good, go through and then having to face all the other proposals which had been refused. In other words, we do not want to open the door to an extension of the Bill before us. It is in this rather sombre tone of voice, which I hope has come over to your Lordships, that I ask the Committee to reject the Amendments concerned with these no par value shares.
LORD SILKIN: I should like to say one thing. I feel very sorry for my noble friend if that is the best answer he can give to an Amendment which he admits is approved in principle.
LORD BROWN: I have not said it is accepted in principle. I said that personally, in my erstwhile capacity of chairman of a company, I would approve it; but I have gone out of my way to say that the Government have not accepted it in principle.
LORD SILKIN: No, not for the purpose of including it in the Bill, but every word the noble Lord spoke indicated that the

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principle was accepted by the Government, and he never gave a single argument against it, except that it was inconvenient to put it in the Bill. When does it become convenient to legislate on a matter which is broadly accepted by everybody? Two Committees have been set up and have reported, both strongly in favour of this. A period of ten years has elapsed since the first of these Committees reported. At what stage does one think it is timely to implement a recommendation and put it in to a Bill? I always thought it was a period of about seven years. Indeed, I used to pull the legs of the late Government about this period of seven years being the normal one between the making of a report and its implementation. Are we going further than that? Are we going to say that even after ten years it is too early? I hope the noble Lord will go back to the right honourable gentleman and will put to him the fact that there is a strong feeling here that, after a Report has been in existence for ten years, supported by a later Report three years ago, it is really time that it was implemented.
4.8 p.m.
LORD ERROLL OF HALE: If I may intervene at this stage I should like to say that it is customary to thank the Minister for a helpful reply, but it is difficult to do so on this occasion because he has not even replied to the case put forward. I think noble Lords on both sides of the Committee might be told the real reasons for the non-acceptance of this Amendment. We have been told that more study is needed, but the matter has been studied for ten years; the present Government have been in office for two years; the Bill has been "on the stocks" for eighteen months, and the consequential amendments to the Finance Act are not very important because the Gedge Report made abundantly clear what was required. So half, if not more, of the work has already been done. My noble friend Lord Eccles has already inserted an additional Amendment to the effect that the introduction of no par value shares shall not take place until an appointed day, so there is no immediate hurry to get through the Finance Bill work, and this Amendment could be brought into operation when the time was ripe.
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Another point on which I am sure my noble friend would agree with me is that it is unsatisfactory to be told at the outset of the Committee stage of a Bill that virtually no Amendments are going to be accepted. What is the point of having a Committee stage? We know, of course, that the Government are rather luke-warm about doing anything helpful in regard to companies. Possibly this is one of the reasons why this Bill does not come up as first business each day. Yesterday I had urgent business in Sweden and I thought perhaps I ought to cancel it in order to attend the proceedings here on the Companies Bill, but I am glad I did not cancel my important meeting because when I returned from Sweden I found that noble Lords had spent only an hour discussing this Bill last night. I hurried back to-day from a snowstorm in Stockholm to find we had to listen to a lot of trivial Scottish business first. So of course there is no time for consideration of Amendments or changes if this is to be the Government's attitude. I sincerely hope the noble Lord will accept some Amendments during the Committee stage of this Bill.
As regards this Amendment, I would put it to him further that it is a great help to be able to say to his own supporters when refusing their propositions, "We had to give way to the Opposition on one or two things and this was the most constructive and valuable of all; and we hope if we appease them at the outset we shall get the Bill more quickly". I hope the noble Lord will think about that and give an assurance that he will reconsider the matter.
LORD HUGHES: May I remind the noble Lord that what has been found such unpalatable sauce for the Scottish goose should occasionally be sampled by the English gander.
LORD CHORLEY: I feel a great deal of sympathy with what has been said by the noble Lord opposite. It really is scandalous that a Bill which is concerned with the structure of much of the commerce and industry of this country, which is absolutely essential to the whole economic well-being of the country from many points of view, should be put back to the last item on the agenda, so to speak, in the way that this Bill has been put back.

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I felt this strongly yesterday when we were discussing a very important topic indeed. I think the criticism of the noble Lord opposite is entirely justified.
I would also support the plea of my noble friend Lord Silken to the Government to look at this question again. I quite appreciate the difficulty of opening the matter up and widening the Bill, but this is really a very important subject indeed. I think anybody who has given much attention to Company Law will realise that. We had this matter solidified in 1861 when the first Companies Act was passed. When in the United States, which had a rapidly expanding economy, it was found that the arrangements which, to a large extent, they took over from us did not work with sufficient elasticity, they introduced the no par value share a very long time ago. It is not as if this was brought up yesterday or even at the time of the Gedge Committee; it had strong adherents before that. I think it was generally accepted by progressive company lawyers, well before the last war and before the Gedge Committee was appointed, that this was a very important reform in Company Law.
There is a strong case for making an exception to the general rule the Government have laid down about widening the scope of the Bill. I appreciate that it involves a number of alterations in various other branches of the law. That could have been done by the new Law Commission, who are particularly well qualified to deal with a problem of this kind, if it had been given to them a few months ago. After all, we had in this House a few weeks ago a very important Bill relating to Criminal Law, in which a very substantial number of changes in the law, going back centuries, had to be worked out. It was handed to the Law Commission only a few months ago, and the noble and learned Lord the Lord Chancellor and everybody else who took part in that discussion complimented them on the speed with which they had carried out the research and put into legislative form the necessary amendments. From the point of view of this Bill, the Amendments in the other law could be carried through over the next month; I am quite sure with the aid of the Law Commission this could be done. There is an overwhelming case for getting
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on with this matter. I hope the plea of my noble friend Lord Silk in and the general argument will appeal to the Government.
THE EARL OF SWINTON: I should like to make an appeal to the Minister in charge of the Bill to reconsider this matter. I am not going to recapitulate the merits, which have been sufficiently set out in debate and overwhelmingly set out in both Reports. I would remind the Minister of what happened in this House when an earlier Companies Bill was introduced here, the Bill founded upon the report of my noble and learned friend Lord Cohen. I was at that time leading for the Opposition in matters of this kind. There were a great many things in that Bill which we thought wanted altering; there were some new things which we thought wanted introducing. The Lord Chancellor, Lord Jowitt, and the President of the Board of Trade, Sir Stafford Cripps, asked me and some of my friends to meet them and discuss the whole matter. We went through the whole Bill together. We made ourselves into an effective committee, quite irrespective of Party; there was really no Party issue in it. Laughingly Sir Stafford Cripps said to me: "You had better take over your old Department at the Board of Trade". I did not quite do that. We did agree. We had the people who had been on the Committee, including Sir Russell Kettle, and he said that nothing would please him more than to have another accountant, a very eminent one, associated with him to go into the matter again. On that there was a complete recasting of the whole system of nominee shareholders, which is the law to-day, and it was regarded as entirely satisfactory. There were a number of other matters. I just give that as an example.
We have plenty of unpleasant Party things to fight about, but here, at a time when it is very important to give the business community every opportunity of making use of the best possible machinery—I should have thought we were all agreed on that—surely is a case where we could get together. My noble friend has produced a great many Amendments; they may want modification in some respects. But what I put most strongly to the Minister is that this is not the proper way to deal with the

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matter. It is not in accordance with a precedent created by two very great Labour Ministers, Lord Jowitt and Sir Stafford Cripps. I hope the Minister will try to follow that example, and, if not, if my noble friend decides to divide I shall certainly be with him.
LORD CONESFORD: I wonder whether I might add a word in reply to the Minister, who made that very discouraging and unwilling speech from the Government Bench. I am speaking with a fairly good memory of the Departmental advice that I received when I was Parliamentary Secretary to the Board of Trade twelve years ago, when this matter was reported upon. As my noble friend has stated in moving this Amendment, and as the Minister has stated, this reform, if it is carried out, requires amendment both of the Companies Act and of the Finance Act. That is the reason why it is essential to seize the opportunity, when a Companies Bill is before us, to effect the necessary amendment of the Companies Act so that the Company Law may be in order when the Commons decide to do the necessary Amendments in a Finance Act. Both have to be done, and that is why there is this device of the appointed day.
Think of the position if we do not make this reform in this Bill so far as the Companies Act is concerned. Then, whatever the Commons may wish to do in a Finance Bill in the direction of shares of no par value, they will not be able to do it, because the necessary foundation will not have been made in the companies legislation whereas if we make the required change in the companies legislation then the matter will be wholly in control of another place in regard to what they put in their Finance Bill.
I think that the case is quite overwhelming when one realises that we must have both reforms, one which will be wholly in control of another place, the other, which has to be made first, in an alteration of the Companies Act. You have had an ad hoc Committee reporting in favour of the reform, you have had the latest examination into the Companies Act in its favour, and we have now had speeches from both sides of the Committee supporting the reform. The Minister himself, with great honesty, has said that
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he likes it but cannot commit the Government. We all appreciate the honesty of that statement, and we are not going to allege that he has committed the Government, because he has not; he has stated the position perfectly fairly. But the arguments have been deployed on both sides of the Committee; they have been entirely in favour of this reform and no reason whatever has been given against it. I would humbly agree with everything that has been said, not least by the noble Lord, Lord Silk in; and I hope that my noble friend will persist in this Amendment and that the Committee will carry it.
LORD TANGLEY: May I add my plea that we should deal with this matter? We are discussing something which most people who know about the subject have known for years must be done. Nearly everybody knows that will be dealt with in due course. I am going to invite your Lordships to do it now. After all, your Lordships' House is now the recognised spearhead of reform in this country. I have the most profound sympathy with the noble Lord, Lord Brown, at having to wear the ultra-conservative mantle prepared for him by his colleagues to-day.
I am going to suggest, further, that this Amendment is well within the scope and intention of the Bill. As I understand it, the main object of this Bill, and the principal reason why I support it, is to bring shareholders into a position where they can better understand their rights and their situation in the company in which they hold shares. That is the main object and intention of the Bill. In my judgment, there is nothing which creates more confusion in the minds of shareholders than this outmoded system of having a nominal value of the shares.
May I give one illustration which constantly happens in my experience? People come and say, "I should like to buy shares in a particular company, £1 shares". One tells them that the price is 30s. They say, "That is very dear." You say "Well, all right, there is another company with 10s. shares. The price is 15s." They say "Oh, that is dreadfully dear." You say "All right, there is another company with 5s. shares at 7s. 6d." They say "Ah, now we are getting something cheap." This is not an imaginary story that I am telling your

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Lordships. It constantly happens, and it can be a cause of the greatest confusion among shareholders, because, as the noble Viscount, Lord Eccles, so clearly pointed out, when you buy a share in a company you are not buying something with a £1 label, or a 10s. label, or a 5s. label; you are buying a share in the assets and the profits of the business.
I am tempted to be a little personal about this matter because I remember in my dim and distant past preparing and presenting the evidence of the Association of Investment Trusts to the Gedge Committee, and I was cross-examined on it on that occasion. Even at that time there was no real division of opinion about the need for this reform. I suggest that this is well within the scope of the Bill, and that the Committee should deal with it.
4.25 p.m.
LORD BROWN: In spite of my own expression of feeling about this of some favour, I am bound to say that I am a little surprised by the strength of the opinion among your Lordships in support of the Amendment. I have said that I think it is a good thing, but it has always appeared to me to be a fairly superficial thing: it is largely a matter of presentation. I do not think I said enough in response to the noble Viscount, Lord Eccles, earlier. I would just add this. He suggested that if a company had a bad year this form of statement of its capital might help it to raise new capital, whereas the existing form of statement of capital might militate against that. But I doubt whether you will get benefit of that kind out of no par value shares. Those who are prepared to subscribe capital in the City are much too versed in these matters to be in the least affected by what is fundamentally a matter of presentation.
The same goes for reporting of dividends. The market and the City are interested in the yield on the share price and the cover on the dividend paid on that share. These matters are unaffected by this Amendment. It is for reasons of this sort that I said that I personally—I keep saying "personally"; I have let myself in for something by giving a personal view—thought it a good thing. Nevertheless it is not an extraordinarily important thing, and I do not think it is
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going to have much effect on our economy. I do not agree with the noble Lord, Lord Chorley, that it is such a tragedy; that it will deprive our industry of help which it needs. Nevertheless, I am surprised, and in view of the fact that I have underestimated the way the Committee feel about this matter, I am quite prepared, if this Amendment is withdrawn, to reconsider the matter. I am always prepared to do that, and I am now more prepared to do it than I was before this debate took place, because, as I say, I have been surprised.
I did not take it too kindly when the noble Lord, Lord Erroll of Hale, suggested that I should give the real reasons for not accepting this Amendment. I thought I had been almost too honest in stating exactly where we stood on the matter. The reasons I gave were the real reasons: that we are desperately scared about extending the scope of this Bill, because if we do we shall find ourselves extending it in other directions, too, and shall have a tremendously complex Bill which will take a long time to get through. Those were the real reasons, and I spoke with sincerity.
But there it is. As I have said already, I have been surprised at the extent of the support for this Amendment, which concerns an important matter, though I think it has been made to look a good deal more important this afternoon than I personally believe it to be. Nevertheless, in view of the support, and particularly because I take the point that this is far from being in any sense a political issue, I am quite prepared, if this Amendment is withdrawn, to debate it seriously again inside the Board of Trade with my right honourable friend the President.
VISCOUNT ECCLES: I feel sorry for the noble Lord, Lord Brown. I think he has had a most difficult job, and I am bound to say, before I come again to the Amendment itself, that I feel particularly badly about the idea that a Bill like the Companies Bill is first introduced into your Lordships' House but with the understanding from the Government that it cannot be improved, or that nothing of any substance can be added.
LORD BROWN: That point was made earlier this afternoon, I think by the noble Lord, Lord Erroll of Hale. He

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actually used words implying that no Amendments were going to be accepted. We are certainly prepared to amend this Bill in a large number of respects, after discussion. But here we are clearly talking about extension, and it is to extension that my remarks applied, not to amendment of that Bill.
VISCOUNT ECCLES: But the noble Lord said that there was a queue, in which some Departments figured, of those who wished to put additional clauses into this Bill, and they had all been turned down because the Government wanted only a short Bill. Well, the Government have found room in the Bill for such proposals as that to make companies detail every single one of their charitable contributions. If our real purpose is to make the structure and conduct of industry more efficient, I would ask the noble Lord whether the selection of priorities which the Government have put in the Bill is the right one. There are some of us—and we have been supported for many years by those who have great influence in company and financial affairs—who feel that the proposal in the Amendment would be of real assistance.
I will not go into the merits again, but I would say this to the noble Lord, Lord Brown. The noble Lord said that the President of the Board of Trade, having been in office two years, has not yet made up his mind about the principle of no par value shares. Therefore my problem is: how do I make Mr. Jay make up his mind? I do not know any other way except to put this in the Bill. Whether or not Mr. Jay then cared to study it on the proposal of the noble Lord, Lord Brown, would no longer matter. He would have to study it because it would be in the Bill. I am very sorry, but in view of what I think was a very jejeune reply to an extremely difficult piece of drafting (for which no credit was given to any of us; we have done the work for Mr. Jay, and we might at least have had a little thanks for it) I propose, if my noble friends support me, to divide the Committee.
LORD SHEPHERD: It is rather strange for me to intervene in a Committee stage of which my noble friend, Lord Brown, is in charge, but I intervene because perhaps I know more about the
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problem of legislation and its timing than anybody on this side of the House. The Government have been under considerable difficulty, with a tremendous amount of legislation to get through in a very limited period of time. This is a factor which we must continue to live with unless we obtain some reform of our Parliamentary procedure. My noble friend, as I understand it, did not express hostility to the contents of the Amendment. He was standing initially on the instructions of, one might use the phrase, the "business managers" that a Bill of such-and-such a size would have the opportunity of being passed by both Houses between now and the end of the Session.
My noble friend has recognised the weight of opinion which has been expressed on all sides of the House. He has followed the custom of Ministers in previous Administrations in making the offer which he has made. He has said that he will consult with his right honourable friend, and perhaps with others, to see whether some solution can be found to meet the points which have been made so strongly from all sides of the House. I must say that I cannot recall an occasion when a Minister in any Administration has made such an offer and when the House has declined to accept it. I think it would be a dangerous precedent if that practice were to arise. May I say this to the noble Viscount, from my experience of dealing with the previous Administration? If a Minister makes a promise to consider and to consult, in my experience he has never failed to do so. I think that if the noble Viscount were to press this Amendment to a Division, it would be a reflection on my noble friend Lord Brown, and I am quite sure the Committee would not wish that to be the case.
LORD SILKIN: I said to my noble friend when I spoke previously that I hoped he would take the matter back and tell his right honourable friend the strength of feeling which exists in the Committee. Since then he has had further evidence of it. My plea that he should take it back was reinforced by the noble Earl, Lord Swinton, by the noble Lord, Lord Erroll of Hale, and others. They have all pressed that it should be taken back for further consideration. It has been said that that will be done. Therefore, I hope that the noble Viscount, Lord Eccles,

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will be satisfied that, having regard to the strength of feeling which the House has displayed and the appeals which have been made, the matter will be reconsidered. He will then have another opportunity to examine the situation on Report stage.
I am not going to teach the noble Viscount tactics, but for many years with my late noble friend Lord Alexander of Hillsborough I was in charge of the Opposition, and my experience was that if I had got to this stage I was halfway home. In other words, where a Minister had given an assurance in the terms given by Lord Brown to-day, then at the next stage I knew that I should get something out of it. I do not know whether the noble Viscount is a betting man, but I would offer him a bet that something will come out of this discussion in a later stage of the Bill. I think that he would be ill-advised to press this matter to a Division and so solidify the differences which exist at the moment between the Opposition and the Government. I hope he will be content with the undertaking, for, after all, he will have two more chances: he can fight the matter on Report stage, and also even on Third Reading.
THE EARL OF SWINTON: Having, like the noble Lord, Lord Silk in, had a good deal of experience in leading the Opposition in matters of this kind, perhaps I may say a word or two on this subject. Broadly speaking, what the noble Lord, Lord Shepherd, has said is generally done, but subject to this. It is one thing to say, "I am going to take this back to see whether I can table something which will meet the situation"; that is a very reasonable proposition. But what is the proposition here? The noble Lord, Lord Brown, who has handled this matter as skilfully as anybody could, would, I am sure, like to bear a hand in making a good set of Amendments in order to make this Bill legally sound. But is he going to have a chance to do so? We have, I hope your Lordships will forgive me for saying so, a rather monolithic and extremely conservative Minister giving him is instructions. Therefore, is there the least prospect that when he takes the matter back to Mr. Jay, the President of the Board of Trade, Mr. Jay will alter his mind?
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If I thought there were such a prospect, well and good. But if this is to be taken back we do not want to be told, "Well, it might be all right to do this, but we cannot do it because we have a lot of other legislation which we want to get through"—including the provisions in the Bill about making everybody disclose every trivial five bob which they give to any charity or any party. If this matter is taken back, it should be on the clear understanding that if Mr. Jay says "No", this will be put down again on Report. And, what is more, when it is put down on Report, the Bill will have to be recommitted—that would certainly be the case in respect of these clauses.
Let me say this to the noble Lord, Lord Shepherd, who is very reasonable in these matters. In a very complicated set of Amendments of this kind, you must be able to have that "to-ing" and "fro-ing" of friendly, quick, not longwinded, discussion across the Floor of the House which can be done only in Committee. On Report stage you can only speak once, except by leave. I am quite sure that it would be found and the House would insist, that in respect of these clauses the Bill should be recommitted. If there were a clear understanding that when the Bill came back to us this will be put down again, and that those who felt that this matter was really important would move to recommit the clauses—there would not be any waste of time on the matter—then I think that would be all right. But there must be that very clear understanding that the House will have as full a chance of considering the clauses in detail as if they had carried this Amendment to-day.
LORD CARRINGTON: I wonder whether I might just add something, because the noble Lord, Lord Shepherd, has enunciated a principle with which I do not think I really agree. I could name him dozens of cases in which the Minister offered to take back an Amendment and have a look at it, when the offer was not accepted by the Opposition of the day because they felt that, though he said he would take it back and look at it, he was in a sense only getting out of a difficulty. This is perfectly true. I have been in Government and in Opposition for as long as the

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noble Lord has, and I have seen it happen a good many times. It is, of course, quite a different matter when the Minister of the day says that he is going to go back to his Minister and recommend that some sort of change should be made, and says that he is convinced by the arguments which have been made. This, I think, is quite different.
The other observation I should like to make is this. Of course, this Bill is really in a rather different category from a great many of the Bills which your Lordships discuss, because it has been introduced in this House. Very often, when we are on the Committee stage of ordinary Bills which have been through another place, we know the arguments for Amendments of the same sort that have already been put forward and we know exactly what is the Government's view. In the case of this Bill there will be a great deal of time between the Committee stage in this House and the time when the Bill is finally given the Royal Assent. Therefore, there is a great deal more to be said for the Opposition in this House, if they can muster a sufficient majority, putting something in a Bill so that it may be discussed in another place. It is a rather different situation.
Indeed, if the noble Lord, Lord Shepherd, is arguing, as I understand he is arguing, that the Government are very short of time, then this course would be much more sensible, because if the noble Lord, Lord Brown, takes the Amendment back to the Board of Trade and then comes back to your Lordships' House and says that he finds himself unwilling or unable to accept the Amendment, we shall then have this debate all over again and the Bill will probably have to be re-committed for the convenience of the House. Therefore, I should have thought there was something to be said for making the Amendment to the Bill. If the noble Lord, Lord Brown, could say not only that he would go back and discuss it with the President of the Board of Trade, but that, as I understand to be the case, he is personally convinced of the rightness of this and that he would advocate this, then I think my noble friend might find it possible to withdraw the Amendment.
LORD BOOTHBY: I only wanted to say a few words, as I have sat in one or
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other House of Parliament permanently in opposition for 42 years. I should like to start off by saying that Mr. Jay is certainly not the only monolithic Minister whom I have seen; there have been many others. I can also think—and here I support the noble Lord, Lord Carrington—of innumerable occasions on which Ministers have come down to the House and, with their hands on their hearts, have assured us that they had the greatest sympathy with an Amendment, that they would take it back to the Minister, that it would be considered and reconsidered with all the sympathy in the world, that they held out every hope—and then nothing has happened. I should say that in nine cases out of ten nothing has ever happened.
As I see it, the object of this Amendment is to give this House a chance of expressing an opinion—nothing more—in the somewhat wild hope that Mr. Jay may thereby be induced to consider the matter and reach a decision. That seems to me an admirable objective, which can do no harm to Her Majesty's Government or to the Opposition or to anybody else. It can only do credit to your Lordships' House, and I think we should pass this Amendment and then see what happens.
LORD BROWN: We must get the record straight. There have been a number of references to the monolithic figure of the President of the Board of Trade. The word "monolithic" used in this connection, incidentally, is very strange. I believe it means standing alone or something like that.
LORD BOOTHBY: Immovable.
LORD BROWN: It is intended to convey a rigid, unalterable frame of mind, or something like that. Considering the original form of the Bill as it was before another place before the last Election, and the very large number of changes which have been made in it since then in response to pressures, this sort of accusation is completely unjust. I should add that there is always talk about how necessary something is and how it ought to be done, but the last Administration had this accepted in principle by Mr. Derek Walker-Smith (as he then was) in 1956, and what has happened in the intervening years? Nothing at all. So there are plenty of grounds for refuting

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the type of accusation which has been made.
Now let us get the matter straight. I have told this Committee that the main reason for no par value shares not being in the Bill is due to the question of time and the extension of drafting time et cetera. I have added that the Government have not seriously considered the principle itself, because if you are not going to do all the work of putting something into a Bill you are not going to involve all the committees which have to consider these matters in detail. I have undertaken to take this question back to the Government and to say, "There is quite unexpected support for this, which we regarded as a fairly light matter, and I think it is proper for us now to reconsider the attitude which we have taken heretofore". We will discuss it in that way. I cannot, of course, commit the Government. On these grounds I hope that the noble Viscount will withdraw his Amendment.
LORD CONESFORD: Just before my noble friend rises, I think it is only fair to point out, in answer to that last speech, that the reason why action was not taken by the late Administration was, of course, the appointment of the Jenkins Committee in 1959. The noble Lord used the argument that there was a long delay subsequent to Sir Derek Walker-Smith's speech. I think the appointment of this Committee was—
LORD BROWN: It is three years from 1956 to 1959, I might point out, and Sir Derek Walker-Smith committed the Government to accept the principle in 1956.
LORD CONESFORD: In other words, the present President of the Board of Trade has been able to think about this over ten years. He is a quick-witted gentleman and a Fellow of All Souls, and it cannot be beyond his capacity to make up his mind. I do not know in the least what my noble friend is going to decide, but may I state my complete agreement with my noble Leader in that I cannot see why the argument about time put forward by the noble Lord, Lord Shepherd, is good. It seems to me that we are saving time by expressing our opinion this afternoon. We are not losing time we are saving time. Perhaps I have
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indicated what I hope my noble friend will say.
LORD CHORLEY: May I suggest to the noble Viscount, Lord Eccles, that he is much more likely to get this important reform in the law if he leaves it to my noble friend Lord Brown to persuade the Minister than if he insists on a Division here and has the Amendment taken to another place which does not altogether welcome this type of activity?
VISCOUNT ECCLES: My difficulty is this. If I was quite sure that Mr. Jay would consider this question on its merits, that would be one thing. But if his mind is closed on account of the size of the Bill and the time and so on, then the matter is very serious, because it means that a reform which your Lordships in all parts of the Committee have agreed would be helpful to our economy is pushed on one side for, I think, a quite insufficient reason.
Therefore, in asking leave to withdraw I want to put to the noble Lord, Lord Brown, that I trust him to say to Mr. Jay, "This must be considered on its merits". That is all I ask. If it is a bad reform, let Mr. Jay say so next time. Nothing would please me better than that the complicated set of Amendments should be, if they need it, tidied up and put down by the Government. If not, my noble friend Lord Polwarth and I will have to put them down again. On that understanding, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Statement in company's accounts of identities and places of incorporation of companies not subsidiaries whose shares it holds, and particulars of those shares]:
4.51 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved to add to the clause:
"( ) This section shall not require the disclosure by a company of information if the disclosure would, in the opinion of the directors, be harmful to the business of the company, and the Board of Trade consent to the information's not being disclosed."
The noble Lord said: In this clause we are considering the statement in a company's accounts of the identities and places of incorporation of companies not

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subsidiaries whose shares it holds, and the particulars of those shares. It is quite possible to conceive of circumstances in which it could be against a company's interest to disclose shareholdings covered by this clause and where it coincided with the national interest—or, at least, did not conflict with it—that they should not be disclosed. The shareholdings in other companies would have to be disclosed if one-tenth of the nominal value of the shares of a certain class in another company were held, or if one-tenth of the assets of the first-mentioned company were held in another company. I suppose that this might arise particularly in the case of shareholdings in foreign companies. In the Amendment, there is the safeguard of requiring the Board of Trade's consent to the information's not being disclosed.
It is perhaps worth referring to the fact that in the next clause, which deals with the statement in a subsidiary company's accounts of the name and place of incorporation of its ultimate holding company, the same type of facility, not to require the disclosure should it be contrary to the interests of the company—again with the consent of the Board of Trade—appears. It seems to me that in that case it would create anomalies if, under the rules in Clause 4, it were necessary to disclose shareholdings in another company covered by Clause 4. I suppose it is possible to imagine circumstances in which the Board of Trade itself might not want the disclosure, whether or not the company desired to disclose. That is a matter which is not covered by the Amendment, simply because there seems to be no way of covering it. Obviously, companies cannot be expected to consult the Board of Trade in advance as to whether they should comply with the law or whether exemption from it would be in the company's own interest.
I think there can be no doubt that this is a wise Amendment, even though a small one; and, in view of the kind of exemption from compulsory disclosure provided in other parts of the Bill, with the consent of the Board of Trade, I feel sure that the Government will be willing to accept this Amendment. I beg to move.
Amendment moved—
Page 5, line 8, at end insert the said subsection.—(Lord Drumalbyn.)
LORD RHODES: The noble Lord, Lord Drumalbyn, is perfectly correct. Clause 4 requires a company to disclose in its accounts particulars of certain of its associated companies. Such an associated company is a company, other than a subsidiary, of any class of whose shares the reporting company holds 10 per cent. or more, or in which the reporting company's investment amounts to 10 per cent. or more of the reporting company's assets. The information to be given is the name of the associated company; the country, if other than Great Britain, in which it is incorporated; and, in relation to each class of shares held by the reporting company, the identity of the class and the proportion of the issued shares held. The clause provides for no exemption from this requirement. The Amendment would permit a company to withhold information about an associated company if, in the opinion of the directors of the reporting company, disclosure would be harmful and the Board of Trade consent.
On the information we have we do not consider that a valid case can be made out for not disclosing information about an associated company incorporated in the United Kingdom and operating in the United Kingdom. However, let me say here and now, without going on too long, that the Government would agree with the noble Lord that there might be circumstances in which disclosure of information about an associated company incorporated outside the United Kingdom, or incorporated in the United Kingdom but carrying on business outside the United Kingdom, could be harmful. For example, we could relate instances about certain countries in the Middle East, but I do not wish to go too deeply into that.
The Government consider that the proposed Amendment goes rather wide, but I will undertake that if it is withdrawn we will, at a later stage, put down an Amendment in similar terms, but relating only to associated companies incorporated outside the United Kingdom or operating outside the United Kingdom. The proposed Government Amendment would bring Clause 4 into line with Clause 3—I think that is what the noble Lord

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wants—which provides, in subsection (3), a dispensation in respect of subsidiaries incorporated or operating outside the United Kingdom. With those words, I hope the noble Lord will consider withdrawing his Amendment.
LORD DRUMALBYN: In view of what the noble Lord has said, and of his undertaking to introduce a slightly more restricted form of words than appears in my Amendment—and I agree with his arguments—I have pleasure in withdrawing the Amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [Particulars in accounts of directors' emoluments]:
4.58 p.m.
On Question, Whether Clause 6 shall stand part of the Bill?
LORD DRUMALBYN: May I say a word on this clause? This clause requires the disclosure of the emoluments of the chairman; of any emoluments of one or more directors where those emoluments are greater than those of the chairman himself, and in such a case the emoluments of the director who has the greatest amount; and, thirdly, of the number of directors with emoluments in each £2,500 bracket. I think what I have said correctly reflects what the clause is intended to convey.
I am bound to say that it is difficult to see the point of this clause. I wonder what the Government hope that the shareholders or the public or the Government themselves will learn from such figures. Unless the degree of responsibility and the amount of time devoted to the companies' interests are shown, the figures themselves have very little significance. Supposing that one man is the chairman of several companies, no doubt it will be possible for those who like to follow these things to tot up the emoluments he receives from each; but that will prove nothing at all. The time he devotes to the study of some subject and the meeting of people concerned may be equally valuable to all the companies, and he may be well worth his emolument in each.
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Where the directors are not executive directors the requirements will show up, I think, in many cases, how small the emoluments are in relation to the responsibility laid upon directors by law. This may give some quite surprising information. But the information will not distinguish between functional directors and general directors; and it seems to me that on this question of emoluments, as was said at an earlier stage on the Second Reading debate, the Government are either asking too much or too little. But why they ask for this kind of rather potted information is extremely difficult to see. It seems to me to be directed mainly against chairmen. It will, to some extent, place what the chairman receives by way of emoluments in relation to what is received by the highest paid of the other directors.
There is a second objection that I find to this clause, and that is in subsection (4). This says:
"If in the case of any accounts the requirements of this section are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report thereon, so far as they are reasonably able to do so, a statement giving the required particulars."
Broadly speaking, it is the duty of auditors to certify that the requirements of Section 149(1) are complied with, that the balance sheet and profit and loss account give a true and fair view of the state of affairs of the company and of its profit and loss. As to the directors' report under the Bill, if the information required is not stated in the directors' report, the auditor is required to state what the total value of all
"fees and percentages …expense allowance in so far as those sums are charged to United Kingdom income tax, any contribution paid in respect of him under any pension scheme and … any other benefits received by him otherwise than in cash".
This is under Section 196 of the Companies Act 1948. The requirement that the auditors should give this information if not given by the company itself seems to me to be going some way to change the character—I would say the solemnity—of the auditor's report. I wonder very much whether it is right to throw a statutory duty of this kind on to the auditor. I have not put down an Amendment to exclude this particular subsection but

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I think it right that we should at least discuss it with the clause as a whole.
I would point out that if the company fails to comply with the provisions of subsections (1) and (2) of the clause, then, as I understand it, each director will in any case be subject to the penalties of the law, which appear to be six months' imprisonment or a fine of £200; and the auditor will in any case have to certify that the profit and loss account has been or has not been properly prepared in accordance with the Companies Act and with this Bill and that what is stated in the accounts presents a true and fair view. No doubt he will advise the company what the accounts must contain in order to comply with the law. He is also to be entitled, under subsections (5) and (6) of Clause 14 of this Bill (and I paraphrase) to such information and explanation as he thinks necessary for the performances of his duty as an auditor; and if he fails to obtain such information and explanation he is obliged to say so in his report. It is one thing for an auditor to state as a reservation that he is not satisfied with all the information and explanations given to him on a particular matter; but surely it is a different thing for him to have to prepare a statement himself when the company has failed or refused to do so on a matter of this kind.
I regard the whole of this clause as thoroughly unsatisfactory. The noble Lord at an earlier stage this afternoon gave the impression that he was not very anxious to extend the Bill, but he did not say that he would object to its being contracted. We shall have to think seriously whether we shall not have to contract the Bill in some of these matters.
LORD BROWN: May I deal with the question of Clause 6(4) first, for this is fresh in my mind? I will undertake to have this subsection looked at. When I looked at it (I have not gone into the matter deeply) I made an assumption which may not be correct: that in many cases the auditors would have immediate access to the full salaries of directors, and would do it themselves. In other companies, the details of salaries paid to individual directors might not be always available to the auditor. But there will be an aggregate, of course. In that case, the secretary of the company would in-
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clude it himself in the slightly disguised form laid down in this clause. But I will have the matter looked at, because I should like to know a little more about the clause and perhaps I can communicate to the noble Lord the results of my exploration.
In general comment on Clause 6 as a whole, I should like to defend it very strongly. There has been a general growth in secrecy in business in this country over the years. This was understandable when busineses were very small ones, and were situated in small towns where one's neighbours were one's competitors and so on. This tradition of secrecy has continued into big business to-day, and it is not consistent with the growing practice overseas.
It is damaging, to business, because the disclosure of information as between one company and another is a valuable guide to them in conducting their own businesses; indeed, it is becoming commonplace for various associations to organise exchanges of information between one company and another expressly for this purpose. While this secrecy is unhelpful to these individual businesses, it is also unhelpful to the economy. We know too little about business in our economy in the United Kingdom. There is not sufficient means of discovering the facts which we wish to know. Economic research is going to become an increasingly important matter in the future of our economy; it is gravely held up because so much information that we require is not available.
The other leg of the argument is the growing need for a wages and salaries policy in the future of this country. If we are going to be secretive about the top salaries paid to directors of industry, then we shall inhibit the growth of a salaries policy in other levels in industry. So the general reason for this clause, and for many others, is that it would be a good thing to banish secrecy at any point in our economy unless very strong reasons can be put up against the banishment of that secrecy. There are some points of secrecy that have to be kept. One or two of them are coming out in Amendments this afternoon. But a very strong case must be made for secrecy if it is to be maintained, and I do not think a sufficient case has been made here against the publication of directors' emoluments.
LORD ERROLL OF HALE: I must say that the Minister's defence is one of the most extraordinary things I have ever heard—that all secrecy is wrong and bad for the affairs of a company. There is no proper justification at all for this assertion. Why should not firms keep the details of their operations confidential? The noble Lord was imputing that there was something wrong about the non-disclosure of top salaries and directors' fees. But I cannot see that he has made a case for disclosure, and even if he had made a case, why does the Bill not do the job properly? Why not disclose all directors' emoluments, instead of banding them in this extraordinary way? It gives me the impression of a Government who are afraid to do the job thoroughly, because they fear the reaction, so they put everybody into bands except the chairmen and top executives. What possible difference is it going to make to the economy if the noble Lord knows or does not know the salary of the chairman of a company in the Midlands? Information of this kind can perfectly well be obtained from the Central Statistical Office or other statistic collecting organisations—the volume of money that goes into salaries and the breakdown by grades the sort of information that a Government need.
If the noble Lord intends to proceed in the way he is indicating, are we going to have a whole lot of civil servants going through all these company accounts, solemnly picking out the salaries of chairmen and top executives, aggregating them and comparing them with last year's to see whether they are in line with some salaries policy? The noble Lord distinctly said that this was a precursor to a salaries policy. Such a policy can become effective only if there are some "eager beavers" in the Civil Service sorting out salaries and finding out where changes have taken place. Is this really going to take place?—because if this is not going to take place, there is no need for this information at all.
LORD BROWN: I think that the noble Lord is asking whether this is a presursor to a salaries policy with "eager beaver" civil servants sorting out the figures produced. A wages and salaries policy is already the policy of the Government, and noble Lords know this. I think that my words were that, in the
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light of the need for a future wages and salaries policy, a disclosure of directors' emoluments is the proper thing to do, because we cannot keep them secret if we seek to control wages and salaries of other sections of the population. I can give a positive assurance to the noble Lord that we will not have "eager beaver" civil servants rooting round among directors' emoluments. It gives an opportunity to those who have to make sociological and economic studies of the salary structure of our industries to do reasonable studies of this nature—perhaps to discover whether they are not too low or to see the capacities of people we employ in various posts. If all the vital facts are kept secret, these studies cannot be done.
LORD ERROLL OF HALE: But all the vital facts are already available to the Inland Revenue and it is perfectly possible to make a selection, with proper safeguards for anonymity, if the Government really mean business. But the Government seem to be providing a sort of charter for economists in the various universities to write elegant theses. I know that it is the professors who are most highly thought of in our society to-day, and this is simply a charter for increased professional activity into industrial organisations. But in this clause the Minister is not even doing the job properly. The directors are only banded together in various bands. Why not do the job properly, if it is so important in the Minister's view? The figures that really matter are already made available under Section 196 of the existing Act, under which the aggregates of directors' salaries have to be published each year in company accounts. That gives all the information needed about the general movement by industry or by groups of companies and the like. The banding does very little to refine it, but it makes a lot of extra work all over the country, which in turn will generate more work for people looking up these figures. I suggest that the Minister has not made out any justification that this will improve the economy, because I cannot see that it will have any influence on the economy one way or the other.
LORD CHORLEY: May I say that I resent the noble Lord's sneer at the work done by the universities in research into industry. Some of the most enterprising industrial concerns in the country pay

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very substantial sums to professors of economics and of other branches of university work to do these researches. They certainly would not do that if they did not find them of considerable value. It is time that the noble Lord got himself out of the 19th century into the 20th century.
Clause 6 agreed to.
Clause 7 [Particulars in accounts of directors' emoluments the rights to receive which have been waived]:
On Question, Whether Clause 7 shall stand part of the Bill?
LORD HAWKE: I have tried hard to discover what subsection (2) of this clause means. Though I am not in the least hostile to the principle which I believe is embodied in this subsection, I should be grateful if the noble Lord could explain what subsection (2)(a) and (b) means and is intended to do, because the drafting is a little on the obscure side.
5.17 p.m.
LORD BROWN: Subsection (2) is based on Section 196(6) of the 1948 Act which states that the amounts to be shown as directors' emoluments for a company's financial year shall be sums receivable in respect of that year, whenever paid, or in the case of sums not receivable in respect of a period, the sums paid during that year. The effect of paragraph (a) of the subsection is that if the waiver is in respect of a sum not receivable in respect of a period, it shall be assumed that that sum would have been paid at the time when it was due to be paid. Without this assumption the sum is not necessarily one which would have been shown under Section 196(1)(a) in the accounts for the financial year in question. For example, in the absence of the waiver the sum, although due to be paid in the financial year, might have been held over for payment in the next year. Paragraph (b) deals with a sum payable on demand. I trust that I have said sufficient to explain the matter to the noble Lord. We are dealing with waivers of sums for which there is not a definite term of payment and making a construction in order that the clause may be drafted.
LORD HAWKE: Am I to take it, then, that if a sum was normally receivable and was waived, that sum will be shown among the directors' emoluments as due during the year, but waived; and if the amount was receivable only on demand, a similar distinction will be made, so that the shareholder, on reading the accounts, may know that in some future year the said director might demand a fee that had been waived in a preceding year?
LORD BROWN: The answer to both questions is, Yes. The object of the clause in its simplest form is to make certain that shareholders know that sums have been waived and that but for the waiver a larger sum would have been payable, and that in a future year they have a potential liability about which they would not otherwise have known. The complexity of the clause is due to the need to make two constructions of the sums, legally liable to be paid to a person, which do not have a fixed date on which they should be paid.
Clause 7 agreed to.
Clause 8:
Particulars in accounts of salaries of employees receiving more than £10,000 a year
8.—(1) In any accounts of a company laid before it in general meeting or in a statement annexed thereto, there shall be shown by reference to each pair of adjacent points on a scale whereon the lowest point is £10,000 and the succeeding ones are successive integral multiples of £2,500 beginning with that in the case of which the multiplier is five, the number (if any) of persons in the company's employment (other than directors of the company) whose several emoluments exceeded the lower point but did not exceed the higher.
(2) For the purposes of this section, a person's emoluments shall include any paid to or receivable by him from the company, the company's subsidiaries and any other person in respect of his services as a person in the employment of the company or a subsidiary thereof or as a director of a subsidiary thereof (except sums to be accounted for to the company or any of its subsidiaries), "emoluments", in relation to a person, includes fees and percentages, any sums paid by way of expenses allowance in so far as those sums are charged to United Kingdom income tax, any contribution paid in respect of him under any pension scheme and the estimated money value of any other benefits received by him otherwise than in cash and "contribution" and "pension scheme" have the meanings assigned to them respectively by section 196(3) of the principal Act.
5.20 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved, in subsection (1), after "emoluments" to insert "in the United Kingdom". The noble Lord said: This clause deals with a requirement to state salaries of employees where they are over £10,000, and then a number of salaries contained within each bracket of £2,500 over £10,000. The purpose of the Amendment is to exclude emoluments that are paid outside the United Kingdom. I suggest to your Lordships that if information is to be meaningful in making comparisons of any sort, then it is essential that like should be compared to like. Emoluments of British employees when posted overseas are normally higher, and often much higher, than those for corresponding posts in this country. This applies not only to business; it will be familiar enough in Government circles as well. The emoluments have to vary from country to country, depending on the cost of living, taxation, prestige factors and so on.
To include emoluments paid overseas in any statement of higher-paid employees would, I suggest, be both misleading and embarrassing. It would tend to give an entirely false picture of the level of remuneration obtaining in a particular company, and could be the cause of ill-grounded discontent among employees of the company in this country. In many cases it would reveal information quite unnecessarily to our competitors overseas. For example—and I have seen a good deal of correspondence on this point—in companies which operate mainly abroad, it is fairly obvious which are the countries in which the top salaries to the top men in those companies are paid, so the competitors in those countries would have a pretty shrewd idea what the companies' top men were earning. This, as I have said, would be both undesirable and embarrassing. I hope the noble Lord will see his way to accept either this Amendment, or possibly the following Amendment, No. 6, in the name of the noble Lord, Lord Tangley. I beg to move.
Amendment moved—
Page 7, line 24, after ("emoluments") insert ("in the United Kingdom").—(Lord Drumalbyn.)
LORD TANGLEY: As there is an Amendment in my name next on the Marshalled List, which, as the noble Lord, Lord Drumalbyn, said, deals with
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the same matter, it might be convenient if I add my few points to his before the noble Lord, Lord Brown, replies. This is not an abstract problem, but a practical one for me, in that it very much affects certain companies for which I am responsible—and if a problem is an interest, then I suppose I ought to declare that interest. The situation is this. There are companies in many parts of the world who have both British and other employees. I think the noble Lord, Lord Drumalbyn, spoke of British subjects abroad, but this applies to the subjects of any nationality if they are employed by a British subsidiary overseas.
I suggest, first of all—and this is a serious point—that it is dangerous to make it compulsory to reveal these salaries. I can think of a good many companies—and I am speaking from personal experience here—in countries where my competitors are laughing to-day (this happened to me last week in a foreign country) at the thought that if this Bill goes through in this form they will only have to look at the parent companies' accounts in England to find out just what the top people are being paid in a foreign concern. This, I suggest, cannot be desirable.
The second thing I want to say is that I do not believe that it can really do any good to the shareholders in this country. The object of the Bill, of which I thoroughly approve, is to let shareholders know everything that is accurate and relevant about their company. Perhaps I may give one example of the sort of problem that arises. A company is operating, let us say, in a Latin American country. They are paying an employee there a salary, including foreign service allowance, house allowance and entertainment allowance in accordance with the law and in accordance with the business practice of that particular country. They are paying those forms of remuneration in, let us say, bolivars and cruzeiros, or whatever the appropriate currency is. And it must be borne in mind that that country is almost certain to have two or three different rates of exchange which it uses for different purposes.
I would ask the noble Lord who is to reply whether he can inform me, from his great experience, how that remuneration, paid in that currency, with its varying rates of exchange, can be translated

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into English currency so that I can make the necessary comparisons which I am required to make by this clause of the Bill. It would be very dangerous if I did it; but I do not see how I could do it. And even if I could, the only way that I can tell my shareholders the true situation, which is what we all want to know, is to write a little essay about the cost of living in the country concerned, the value of the currency, the state of the rate of exchange and so on. I submit that this is really dangerous and impracticable, and, in so far as it is both dangerous and impracticable, I suggest that, without in any way impinging on the general intention and object of the Bill, one of these two Amendments should be adopted.
LORD HAWKE: I feel that I ought to declare an interest, because I am a shareholder in a company to which I think the noble Lord, Lord Tangley, was referring. I should like just to instance the extraordinary distortions which this particular type of information sometimes produces in the case of the Diplomatic Corps. Our Ambassador in Washington (I am not sure whether I saw the late Ambassador on the Bench in front of me) is paid a sum which looks quite fantastic when it is translated into English pounds. Obviously, it is quite different from that of an Ambassador in a different post probably of the same or even of a higher grade. Very much the same considerations apply to the larger scales of commercial companies.
LORD BROWN: I do not think that we need spend too much time over this matter, because there is justification for the Amendment and it is acceptable in principle. However, the term "emoluments in the United Kingdom" apparently presents some potential difficulty to those who have to draft the Bill, and it may need to be redefined. If the Amendment is now withdrawn, the Government will undertake to put down at a later stage a further Amendment to achieve the end which the noble Lord, Lord Drumalbyn, has in mind.
While I am on my feet, perhaps I may turn to Amendment No. 6, discussed by the noble Lord, Lord Tangley. I am not clear whether the statement I have just made would satisfy the full purpose of that Amendment, which he has yet to
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move, but on which he has spoken, because there seems to be a slight difference between Amendments Nos. 5 and 6. Amendment No. 6 proposes to except any sums paid to or receivable by the employee from any company or other body corporate incorporated outside the United Kingdom. This would seem to base the exclusion of the employee on the source of his salary rather than on the geographical position of his employment. In that sense it looks as if the intention may be different.
LORD TANGLEY: I agree that it should be both.
LORD BROWN: The proposal I am making to the Committee to accept Amendment No. 5 does not envisage going further than that Amendment. Perhaps we can come to the debate on this point when Amendment No. 6 is moved. I think I shall get things confused if I go further now. In view of my assurance, perhaps the noble Lord, Lord Drumalbyn, would agree to withdraw his Amendment.
LORD DRUMALBYN: I thank the noble Lord for accepting the spirit of the Amendment, and I beg leave to withdraw.
Amendment, by leave, withdrawn.
LORD TANGLEY LORD TANGLEY had given notice of his intention to move in subsection (2), after "its subsidiaries" to insert:
"and expect any sums paid to or receivable by him from any Company or other body corporate incorporated outside the United Kingdom".
The noble Lord said: With the benevolent intention of assisting the noble Lord, Lord Brown, perhaps I had better move this Amendment. I indicated its object when I was supporting the last Amendment. I do not for a moment suggest that any loophole should be left whereby a foreign subsidiary could nominally pay the remuneration of somebody in this country. I was wishing to deal only with the case which I mentioned, that of a person working abroad under the conditions of the country in which he is working and employed by the subsidiary in that country. If my Amendment goes further than that, then it needs alteration. In the circumstances, perhaps I need not move this Amendment, and may rely on the same undertaking which

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was given in respect of the last Amendment.
5.32 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved to add to the clause:
"( ) The Board of Trade shall have power from time to time by regulations made by statutory instrument to alter the amount (£10,000) fixed by subsection (1) above as the lowest point, or the amount (£2,500) fixed by the said subsection as the amount of successive integral multiples, and the provisions of this section shall have effect subject to and in accordance with any alteration made by regulations for the time being in force under this subsection.
( ) A statutory instrument containing regulations made under subsection ( ) above shall be subject to annulment in pursuance of a resolution of either House of Parliament."
The noble Lord said: In Clause 8 there are a number of figures, one of which is the sum of £10,000 and another of £2,500, the idea being that there should be a series of successive integral multiples of £2,500. Leaving aside the question of the possible fall in the value of money over the years, there is also the question whether £2,500 is the right sort of bracket, and whether £10,000 is the right sort of figure. The Government will know about this only in the light of experience. I think it would be unfortunate for the better working of this Bill if, having done their best to produce two sensible figures, the Government found in practice that they did not happen to be the right figures and were unable to change them.
The purpose of my Amendment is simply to give the Board of Trade power to vary the figures by means of Statutory Instrument, subject to the normal procedure, and thus introduce a small measure of flexibility into the Bill. If the Government could agree to this Amendment, or at least to the principle of it, it might be worth considering applying it also to Clause 6, where there is the same question of the multiples of £2,500 which the Government might wish to alter in the light of experience. I beg to move.
Amendment moved—
Page 8, line 33, at end insert the said subsections.—(Lord Erroll of Hale.)
LORD BROWN: I do not think this Amendment raises a great issue of principle. When I first saw the Amendment I thought it appeared sensible, but
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on looking at it further it seemed that, as these bands could go up and up—in other words, we could get up to any multiple of £2,500—there was not a great deal of substance in proposing that they should necessarily be changed.
The other point is that if you begin collecting information about salary structure in terms of the numbers of people in different bands, and then, in subsequent years, you begin changing the width of the bands, it makes the information which is collected from year to year non-comparable. I lay emphasis on this business of comparing salary structures. Already industry is very interested in this matter, and I think it is bound to become more interested as companies grow bigger. For this reason I would ask the noble Lord to consider withdrawing this Amendment, because I think we can take care of inflation if, unfortunately, it proceeds as it has done for the last twenty or thirty years, because there is no limit on the number of these bands in an upward direction. If we do change these bands from time to time we shall undoubtedly lose the value of information about the past, and that would be a great pity. I hope that in the circumstances the noble Lord will see fit to withdraw his Amendment.
LORD ERROLL OF HALE: If the Government do not want a more flexible approach; if they prefer to be stuck with these figures, we must let them be rigid in the matter. I am only trying to save them from their own dangers and dilemmas in the years to come. If they wish to have it rigid and fixed, I shall be glad to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, whether Clause 8 shall stand part of the Bill?
LORD DRUMALBYN: May I say a word about this clause. Here again, what one is in doubt about is whether this information will be of value and, if so, for what purpose. It has generally been accepted that, so far as the shareholders are concerned, they have a right to know what the directors pay themselves out of the shareholders' money. But the question of what salaries are paid and what emoluments are given to employees is essentially a management

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matter, and is therefore left by the shareholders in the discretion of the directors. This is not customarily a matter that is included the accounts, and it seems strange that it should now be included.
If it is to be included at all, the trouble about Clause 8, as it stands, is that it gives an impression that the Government are in some way "gunning for" the higher salaries. They are asking only for the salaries over £10,000 to be reported. If this is to be meaningful to any researcher, it will give a very partial result, and as the value of money changes there will not be a proper comparison between one year and another. The only immediate comparison possible will be between particular companies at a particular time over this minimum salary of £10,000. It is difficult to see what is the real purpose of the Government here. Who asked them to do this? What representations have they received about this? What purpose have they in mind about it? At the least, it seems a very odd thing to expect companies to have to disclose in this form. I would ask the noble Lord to give the Committee some explanation.
LORD BROWN: As the Committee know, I have been in a Ministerial position for only about a year, and this Bill was not one that I expected to handle. It was therefore only in the last two months that I started to read it. I have not had to seek reasons for Clause 8, because I feel, as a businessman myself, and as one who over a large number of years has taken a great deal of interest in research into organisation and salary structure, the acute need for this information about industry as a whole. I do not want to sound bombastic, but I have lectured in many countries of the world on the subject of organisation. If one is talking to businessmen and students, the absence of information about salary structure is always deplored.
You may ask, as the noble Lord has done: "Why go for the top men?" It may have the flavour of a political point, but I can assure the noble Lord that this is not so. The salaries of (shall we call them?) the middle echelons of management are nearly always available to the serious inquirer, not only because they are not the salaries of the chief executive from whom you are inquiring,
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but also because the further down the executive structure you go the less anonymity there is, and the more there are of them. Particular salaries which are never available, at any rate easily, are those at the top. This is in contradistinction to the situation in some other countries, as the noble Lord will realise.
If one were to quote the opinions of some of the American business schools I think they would say unanimously that the availability of the salary levels of the senior executives in American industry has been of great help to their economy, in that it has given them a target to look at in the management of a company. For instance, there may be a large corporation having a certain number of employees which pays a salary of 100,000 dollars—I do not know offhand what the figures are. But one looks across and sees another company, where the responsibilities appear to be similar, where a salary of 140,000 dollars is being paid. One might then have to face the fact that by and large in these days of full employment we get what we pay for, and the secret of our lack of success is due to the fact that we are not buying ourselves a sufficiently high level of capacity to operate our company, and if we are prepared to raise our salaries we shall get a better man into a job which needs a better man.
It is impossible to think in this way unless one can see the top salaries of executives, and it is because some other countries have been able to see these that they have been able to do better. I hope that with these disclosures we shall do better in this country. It is for this sort of reason that I support Clause 8.
VISCOUNT ECCLES: This is a splendid argument which had been adduced by the noble Lord, Lord Brown. He is a member of a Government which says that they believe in an incomes policy and therefore we all ought to restrain ourselves in regard to prices and incomes. He now tells us that Clause 8 is specially designed so that we may find out that we are being underpaid and may look across at someone who is getting £15,000 a year and ask why we cannot have the same. Indeed, this is what I said on the Second Reading of the Bill.
This clause, to which I personally do not object, is going to cause a rise

1613
in salaries because people will do exactly what the noble Lord has said. This shows the complete contradiction in the Government's policy. On the one hand they say, "Let us keep all incomes the same", and, on the other hand, they know very well that if they are to have an efficient economy then employers must pay the proper rate. Therefore, the Government introduce a requirement into Clause 8 which will cause us to know what the highest level of salaries are and therefore we shall be in a much better position to ask that our own salary, if it is a bit low, shall be increased.
I welcome the clause for another reason. I can tell the noble Lord, Lord Brown, what will be the result of this clause. It will be that the pressure to get surtax down will become acute, because as soon as people see how idiotic it is to pay these enormous salaries just to give a few pounds more while the rest is taken by the Inland Revenue, it will lead to a campaign, which in my view is absolutely essential, that for every pound that anybody earns he shall keep, say, 5s. I think these disclosures may very well help us to have a more sensible level of surtax, and there for I welcome the clause.
Clause 8 agreed to.
5.44 p.m.
LORD DRUMALBYN LORD DRUMALBYN moved, after Clause 8, to insert the following new clause:
"Exemption from requirements of is 6. 7 and 8
. Sections 6, 7 and 8 of this Act shall not apply to a company if no shares or debentures of the company or of a body corporate of which it is the subsidiary have been quoted on a recognised stock exchange or offered (whether in Great Britain or elsewhere) to the public for subscription or purchase."
The noble Lord said: I suppose I could describe this as an exploratory new clause related to Clauses 6, 7 and 8. As has been mentioned several times already in these discussions, the Jenkins Committee recommended in paragraph 351, at page 137, of their Report that the information about directors' emoluments at present required by Section 196 should not be required to be included in the accounts filed with the Registrar of Companies in connection with companies whose securities have not been quoted or offered to the public and which are
1614
not subsidiaries of companies whose securities have been quoted or offered to the public. The Report recommended, however, that such information should be distributed to members and debenture holders.
This new clause would simply disapply Clauses 6, 7 and 8 in the case of such companies, and the effect would be that such companies would not have to disclose the information about the emoluments of the chairman and, if any director or directors received more than the chairman, the director who receives most, or about any waivers of emoluments, or emoluments in excess of £10,000. It is for consideration whether a new clause should be put down to except such companies from having to comply with Section 196 entirely, and of course we reserve the right to put down such a clause at the next stage. It is possible that the Government have good reasons for wanting the information required in Clauses 6 and 7 in connection with some companies whose shares and debentures are not offered to the public, and if so this debate will give the Government the opportunity of stating their reasons and the particular targets they have in mind.
I believe that what the Jenkins Report actually said in paragraph 351 has already been referred to, but perhaps I ought to mention it again:
"We recognised, however, that some information required in the accounts, while of interest to the members, was not of prime importance to creditors, and that its public disclosure by some small companies might be embarrassing to them; we had in mind particularly the requirement to disclose directors' emoluments."
If that applies in the case of directors of small companies in small towns, or even in larger private companies in small towns, or even in larger private companies in larger towns, it plainly applies equally in the case of employees. The argument for not applying Clause 8 to at least the smaller private companies seems to be quite overwhelming. It is not the job of shareholders to decide what salaries shall be paid to employees; that is a managerial function. I suppose in the case of the chief executive it is a job for the board. Still less is it a matter of concern to the Press. But, in the case of this new clause, I want the Government to say quite frankly, in the case

1615
of unquoted companies, from which kinds of companies and for whom they want this information. Also, I should like them to give some indication whether or not they want to contradict the Jenkins' view that disclosure of this information can be embarrassing in many cases to private companies and, if they do not want to contradict it, then what countervailing advantage do they see in public disclosure?
The Government will indicate what their targets are, and if they can make a case for disclosure in some circumstances I hope we shall be able, during the passage of this Bill, to devise between us some means of exempting those companies for whom disclosure would be embarrassing and in the case of which there is no overriding reason of public advantage. I am sure your Lordships will want to make up your minds in the light of the case being made by the Government to what extent, if any, private companies whose shares or debentures are not quoted on the Stock Exchange should be relieved of any requirement to give information about emoluments, whether of directors or employees, and whether such emoluments are received or waived. I would say seriously to the Government that, in view of the considered recommendation of the Jenkins Committee, we on this side of the Committee do not readily agree that such information should be required in the case of all such companies merely because, as the Board of Trade stated to the Committee in paragraph 57 of the Jenkins Report,
"some of these exempt private companies are not very small in membership or in capital or in the extent of their undertakings'."
Disclosure of this kind of information is certainly not part of the price that need be paid for limited liability. A company which does not seek money from the public at large ought not lightly to be forced to disclose what seems essentially private information outside the circle of those who have a shareholding interest in the company. It is for the Government, I suggest, to make the case as to the extent, if any, to which such disclosure is justified. I beg to move.
Amendment moved—
After Clause 8, insert the said new clause.—(Lord Drumalbyn.)
LORD BROWN: I do admire the persistence of the noble Lord, Lord Drumalbyn. We are having very nearly the debate which we had on Clause 2 last night; at least many of the arguments used are similar. May I start by pointing out that the Amendment itself would enable private companies to withhold the information not only from the publicly filed accounts but also from the members. I have no doubt that that was not the intention, but I think it is fair to put it on record. I am informed that if one were to exclude from these provisions all companies whose shares were not quoted—that is to say, in the colloquial sense of the term, all private companies—we should exclude 97 per cent. of all the limited liability companies in the country. This figure of 97 per cent., a large proportion, includes a substantial number of very large companies and a quite large number of companies of the size from which we feel it is right to demand this information. In view of the fact that we were not especially desirous of getting disclosure of this information from the very large number of tiny businesses that exist in limited form, attention was given to working out demonisms provisions so that one could draw these boundary lines.
But, as the Cohen Committee pointed out and other people have pointed out since, the drawing of these lines is intensely difficult, and we are advised by those paid to advise us that they do not think this could be done without very severe risk of initiating the sort of loopholes that were initiated by the 1948 Act, which allowed so many companies rather unexpectedly to become exempt private companies at that time. Therefore we do not wish to repeat the experience of putting a fence round a particular section and then finding that people can get through the fence almost at will. That is what we are afraid of, and it is for that reason we have adopted one form of limited liability company only, without subdivisions.
LORD DRUMALBYN: Perhaps it would help the noble Lord if I intervened to ask him this question. Surely he is not referring to the wide issue that we were discussing on Clause 2 last night, which was the whole question of whether companies should be exempt or not and to what extent they should be

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exempt. We are here dealing with a very narrow issue, as to whether the additional information that this Bill will require should be required from private companies: not whether the information that is required already under the Companies Act and which they are not at present exempt from giving should be required.
LORD BROWN: That is quite true. What we are dealing with is limited information. But if we are to require this limited information of some companies—that is, the public companies and the larger private companies—and not to require it of the smaller private companies, the "tinies", we have somehow to draw a line of demarcation between the two, and this is the difficulty we cannot get over. We have felt, therefore, that rather than give up getting this information from the large band of companies that are not public it would be better to insist that we get it from the smaller companies in addition to the large band from which we want it, because we believe that in years to come it will become increasingly clear that we do need this information. The history of Companies Acts has been one of increasing disclosure as the years went by, and we are taking a little jump into the future and getting information which we do not need now because we can find no way of putting these tiny companies in a position of not supplying it. Therefore, it is better to go ahead on this basis rather than mess about with demarcation lines that probably would not work.
The noble Lord has asked that a cogent argument should be put up for disclosure of this information. I do not believe he really wants me to argue in the case of the public companies and this band of private limited companies to which I have been making reference the need for the information which would be excluded under this Amendment. The arguments are, in the interests of the creditors and the employees, in the interests of salary policy, income policy and indeed shareholders' rights. I do not think I need go over all those arguments again. I hope that in the light of the arguments I have put forward, and in view of the fact that I think the noble Lord introduced his Amendment as a probing Amendment, he will see fit to withdraw it.
LORD CHORLEY: May I make two points? The first is that if this Amendment were accepted it would be an incentive to companies, or to some companies, not to seek quotations on the Stock Exchange, which I think would be a very bad thing. I have always thought that the Stock Exchanges, especially the London Stock Exchange, have had particularly high standards in regard to these companies. Indeed the Companies Acts have followed the Stock Exchange requirements rather than vice versa, and every credit is due to the Stock Exchanges for the high standards they require. It would be bad to provide an incentive for companies not to seek quotations, especially as they would be the type of companies which it is very important should satisfy Stock Exchange requirements.
My other point is that what the Minister has been saying, I submit, very strongly reinforces what I was saying last night, that we require another type of organisation for the small company. It may be—this to some extent reinforces in effect what the noble Lord, Lord Goodman, was saying on the Second Reading—that all these requirements may persuade small businesses no longer to seek incorporation as limited liability companies but to return to the older type of partnership, possibly the limited type of partnership under the 1907 Act, which has never been properly used because the great attraction of limited liability was granted in the same year as the Partnership Act and attracted businessmen away from this very reasonable and sensible form of business organisation. As I said last night, the old-fashioned partnership, even as modified by the 1907 Act, is not altogether satisfactory; quite apart from limited liability there are a number of very cogent reasons for incorporation, partly legal, partly business. I again suggest that what the Minister has been saying reinforces my plea that provision of some new form of structure should be looked at as quickly as possible, and possibly entrusted to the Law Commission.
6.0 p.m.
LORD HAWKE: As your Lordships know, I differ from some of my colleagues in not being in favour of the filing of accounts by exempt private companies,

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and one of my reasons has been abundantly confirmed by the noble Lord, Lord Brown, who mentioned that if we excluded this information we should be excluding 97 per cent. of the people who would otherwise conform. One of my reasons has always been the enormous quantity of what I regard as unproductive work which this Bill is going to create—thirty-three times as much work at Bush House as there is at present. The Government are keeping up their reputation as being the greatest employer in the country of unproductive labour. For that reason alone, I am strongly against requiring the filing of accounts. But as we have agreed that the accounts must be filed, these three particular clauses are, I think, more innocuous than some of the others, such as those dealing with turnover and so on.
So far as I can see, the present exempt private companies, or a great many of them, are not going to have top executives drawing over £10,000 a year each: the vast bulk of them will be much nearer £1,000 a year. But they will be affected in some degree, in that in small towns, for example, the curious will be able to discover what the family directors in some shop or other are drawing out of the business. This will satisfy a certain amount of curiosity. I do not think it will do the slightest good to anybody at Bush House. As for the members of the company generally, the rest of the family, I suppose it is to their advantage to have the information under Clause 7; but, as I say Clause 8 will not apply. However, when it comes to disclosure of turnover, I think that greater damage will result to the company than disclosure in regard to these matters.
LORD DRUMALBYN: My noble friend who has just spoken is, I think, quite right in saying that to a large extent the information is innocuous. I did not say that it was harmful, and Jenkins did not say that it was harmful. He said that it was embarrassing. It would be harmful more to the social than the economic life. In this regard Lord Brown did not deny that the information might be embarrassing. He did not contradict what Jenkins said on this, but simply adopted a non possumus attitude, saying that some of these unquoted private companies are big and ought to be treated like the public companies so far
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as this matter is concerned. So, as he says, or implies, it then becomes a question of definition. It looks to me as if between now and the next stage of the Bill we shall have to try to help the Government to find some feasible manner of carrying out the Jenkins recommendation. There is no point in causing embarrassment if it can be avoided, so I think that between now and the next stage we shall simply have to do that. I said that this was an exploratory Amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clauses 9 and 10 agreed to.
Clause 11 [Statements annexed to accounts showing certain items to include corresponding amounts for preceding financial year]:
On Question, Whether Clause 11 shall stand part of the Bill?
LORD ERROLL OF HALE: There are two points here on which I should like some information from the Government. The first is the main purpose of the clause which is, if I understand it aright, to ensure that the figures for the immediately preceding year are shown in the statement or in the accounts in relation to the requirements of Clauses 6, 7 and 8. But what is to happen in the case of an executive whose duties have changed substantially during the year, whereby he deserves either more or less remuneration? A comparison which these two sets of figures will make possible will not be very productive.
I presume that there is nothing in the clause which would prevent explanatory notes from being added to the account. Unless that is done a most misleading result may often be produced. In 1966 a man may have earned £11,000, but in 1967 he may earn £14,000. Unless explanatory notes are added, some people are going to assume that he has helped himself to a big pay rise, whereas he may have taken on substantial additional duties justifying the higher rate of remuneration. While comparative figures are quite fun and worth putting in, I have never felt that they are absolutely essential.
Then, why the savage fine in this clause, or the alternative of a term of imprisonment not exceeding six months, because he has failed to put down a figure for

1621
the preceding year? It seems a savage penalty. It only makes it more easy for the curious individual to examine the position. I should be grateful if, before we part with this clause, the Minister would explain what is to happen where the remuneration varies from one year to another, particularly when a top executive may well earn commission as well as salary, and why the penalties for this rather small matter should be so severe.
LORD RHODES: All this clause does is to remove an uncertainty, because the Companies Act, 1948, contains a requirement that the corresponding amount for the preceding financial year shall be shown for any amounts relating to directors' or employees' remuneration which are shown in a statement annexed to the accounts instead of in the accounts themselves. This has been going on since 1948, so I do not think that the question of the noble Lord opposite is valid. I would explain what this clause does. Whereas Section 196 of the 1948 Act, and Clauses 6, 7 and 8 of this Bill, require certain information about directors' and employees' remuneration to be given
"in any accounts of a company laid before it in general meeting, or in a statement annexed thereto",
paragraph 11(11) of the Eighth Schedule to the existing Act requires that there shall be shown in the balance sheet the corresponding amounts at the end of the immediately preceding financial year for all items shown in the balance sheet. Paragraph 14(5) imposes a similiar requirement for all items in the profit and loss account.
If a company chooses to give the required information about directors' and employees' remuneration in a statement annexed to the accounts, it is doubtful whether paragraph 11(11) or paragraph 14(5)of the Eighth Schedule would require the corresponding amounts for the preceding financial year to be given. This is the view of our Legal Department. Clause 11 removes any doubt and makes it quite clear that the corresponding amounts would have to be given. Subsection (1) provides that where an item required, under Section 196 of the Companies Act 1948, or under Clauses 6, 7 or 8 of the Bill, to be shown in the accounts, or in a statement annexed, is shown in a statement annexed, the statement must also contain the corresponding
1622
amount for the previous financial year. The purpose of Clause 11 is to clear up a legal doubt as to what should be shown.
We come now to penalties. I do not see any penalties here which have not been employed by previous Governments for a long time. I do not think we have "cooked up" anything very wilful here, and I hope that my explanation of the clause satisfies the noble Lord.
LORD ERROLL OF HALE: I should like to thank the noble Lord for his reply. I do not think the noble Lord dealt with my point about cases in which there is a substantial change in the remuneration in a given year. Under the 1948 Act it was simply an aggregate of remuneration for all the directors; now, for the first time, it will stick up like a sore thumb in regard to the individual remuneration of the top executive, and the comparative figure will be there. Is there anything in this clause that will prevent the company from having an explanatory note as to why the person's salary should have gone up or gone down?
LORD RHODES: I should not think so. What Clause 10 does is to make some exceptions about the giving of information. The noble Lord knows as well as I do that there can be a long gap between the making up of accounts to the end of a financial year and the time when the general meeting takes place. Clause 10 dealt with the situation so that the figures would not need to be given in the particular year where the end of the financial year occurred within six months of the passing of this Act. I do not think there will be much difficulty over this.
Clause 11 agreed to.
Clauses 12 to 15 agreed to.
Clause 16:
Additional matters of general nature to be dealt with in directors' report.
16.—(1) The directors' report shall state the names of the persons who, at the end of the financial year, were directors of the company and the principal activities of the company and of its subsidiaries in the course of that year and any significant change in those activities in that year, and shall also—
(b) if, in that year, the company has issued any shares, stock or debentures, state the reason for making the issue, the classes of shares, stock or debentures issued, the number of shares of each class and the amount

1623
of stock and debentures of each class, and the consideration received by the company for the issue of the shares, stock and debentures of each class;
(c) if, at the end of that year there subsists a contract with the company in which a director of the company has, or at any time in that year had, in any way, whether directly or indirectly, an interest, or there has, at any time in that year, subsisted a contract with the company in which a director of the company had, at any time in that year, in any way, whether directly or indirectly, an interest (being, in either case, in the opinion of the directors, a contract of significance in relation to the company's business and in which the director's interest is or was material), contain—

(i) a statement of the fact of the contract's subsisting or, as the case may be, having subsisted;

(ii) the names of the parties to the contract (other than the company);

(iii) the name of the director (if not a party to the contract);

(iv) an indication of the nature of the contract; and

(v) an indication of the nature of the director's interest in the contract;

6.13 p.m.
LORD DRUMALBYN: This Amendment deals with a very small point, but it would appear to be sensible to state in the directors' report not only the names of those who, as the Bill as now drafted requires, were directors of the company at the end of the financial year, but also those who were directors at any time in the course of the financial year. This would seem to be relevant to the conduct of the company's affairs. I beg to move.
Amendment moved—
Page 14, line 8, leave out ("the end of") and insert ("any time during").—(Lord Drumalbyn.)
LORD HAWKE: My noble friend might like, at another stage of the Bill, to go further and state the dates during which they were directors of the company.
LORD BROWN: I am afraid that I have not grasped the point raised by the noble Lord, Lord Hawke. I was rising to thank the noble Lord, Lord Drumalbyn, for a helpful Amendment which we happily accept. I do not know whether the noble Lord, Lord Hawke, would care to make his point again.
LORD HAWKE: It would be of interest to the shareholders to see the date on which a certain director resigned.
LORD DRUMALBYN: I should think that that information would be stated, and that if a director were no longer a director the date on which he ceased to be a director would be set out. If, however, this needs to be spelt out, by all means spell it out; I would agree with my noble friend.
LORD BROWN: We take note of the point.
On Question, Amendment agreed to.
LORD BROWN: This is purely a formal Amendment to improve the drafting. I am in a little doubt whether to read the rather terrifying explanation of the reason for this Amendment, or merely to leave it to the good sense of your Lordships to accept the Amendment on my "say so" that it is purely formal. I think, to save time, I will try the first way. I beg to move.
Amendment moved—
Page 14, line 22, leave out paragraph (b) and insert—
("(b) if, in that year, the company has issued any shares, state the reason for making the issue, the classes of shares issued, and, as respects each class of shares, the number issued and the consideration received by the company for the issue, and if, in that year, it has issued any debentures, state the reason for making the issue, the classes of debentures issued and, as respects each class of debentures, the amount issued and the consideration received by the company for the issue;").—(Lord Brown.)
LORD DRUMALBYN: I think we would agree with the noble Lord.
On Question, Amendment agreed to.
LORD DRUMALBYN LORD DRUMALBYN moved in subsection (1)(c), to leave out all words after "interest", where it occurs the second time, down to and including "material),"and to insert:
"(being, in either case, a contract whereby any person other than a director undertakes or undertook the management and administration of the whole or a substantial part of any business of the Company, and in which, in the opinion of the directors, the director's interest is or was material)".
The noble Lord said: These are rather technical Amendments. I understand that, as drafted, subsection (1)(c) would include a director's contract of service

1625
with the company. Such a contract is in fact covered already by Clause 25, which requires registration of the contract in a register kept for the purpose, so that disclosure in the directors' report as well seems inappropriate. Paragraph 99(l) of the Jenkins Report recommended that there should be
"a saving for cases where a director can show that he had no knowledge of the contract and that it was unreasonable to expect him to have had such knowledge."
It is not quite clear why statements about a director's interest in contracts other than management contracts should be disclosed in the directors' report.
It is common practice for a person to be appointed a director of a company because he is a director of another company which supplies or is supplied by that company. If each significant contract between the two companies, together with the director's interest in it, had to be declared, it seems that the directors' report would be unduly cluttered up with quite unnecessary detail. Therefore, it seems preferable to adopt the Jenkins recommendation and an attempt to embody that recommendation is to be found in Amendment No. 12, which could perhaps be dealt with at the same time. This requires the director—I think I quoted the wrong recommendation—to disclose his interest at the first meeting of the directors at which it is reasonably practicable for him to do so. What is really necessary is that the director's colleagues should have knowledge of any interest the director may have in a contract, rather than that all such interests should have to be reported in the directors' report. I beg to move.
Amendment moved—
Page 14, line 37, leave out from ("interest") to ("contain") in line 40 and insert the said new words.—(Lord Drumalbyn.)
LORD BROWN: The Amendment proposed would limit the requirement to management contracts. The supporters of this Amendment are relying on Jenkins. The Jenkins Committee said, in relation to disclosure of directors' interests to members, that it would not be desirable or practicable to require any such general disclosures. They therefore recommended disclosure only of management contracts. They had in mind the type
1626
of arrangement sometimes adopted by shipping, tea and rubber companies, whereby agents are appointed to manage the whole or a substantial part of the company's business. If a director has an interest in a managing agency, he is, in effect, drawing part of his remuneration from managing the company through his interest in the agency.
The Bill introduced in February followed Jenkins in this respect, and required only interests in management contracts to be disclosed. However, it is now the Government's view that the members of a company should be informed of any contract in which the director is interested, provided that the contract is of significance in relation to the company's business and that the director's interest in it is material. For example, a director might purchase an undertaking and then sell it to the company. As your Lordships know, this has happened in recent years; and in very recent years there have been one or two nasty cases of this. It is on these grounds, and having given due consideration to this Amendment, that I would ask that it be withdrawn. I do not think it ranks particularly important in the noble Lord's mind, and I think it would be better if the clause were unamended.
In relation to the more difficult subject matter of Amendment No. 12, which covers the question of directors' interests in the contracts made by the company of which they are directors, I appreciate the noble Lord's difficulty. If one gets a large number of interlocking directorships, clearly one has a situation where a company is liable to be placing contracts with a large number of other companies which have the same directors as the first company. If the directorship of a supplying company is to be construed as having an interest in the contract, then, indeed, in the case of large companies, there will be a great many contracts in which directors have interests which will have to be declared.
This matter is being explored at the moment. If, in fact, the holding of the position of director in another company is to be construed as an interest of a material sort in the contract, then I think the Amendment has some validity. If it is not to be so construed, then I do not think it has that validity. If the noble Lord is prepared to withdraw

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Amendment No. 12 now, I will undertake to have it examined further.
LORD DRUMALBYN: I am grateful for what the noble Lord has said in regard to Amendment No. 12. With regard to Amendment No. 11, I am wondering whether the special case to which he referred would be caught by paragraph (c) of subsection (1) as it stands. This covers
"a contract with the company in which a director of the company has, or at any time in that year had, in any way, whether directly or indirectly, an interest."
In the particular case which the noble Lord had in mind, it would be only at the stage where the director came to make the contract with the company that the matter would arise. This is not at issue, and would not disclose anything at all. So, in so far as the noble Lord has this in mind, I think he is missing the target.
The reason for including management contracts is that they are a special case, and we want to distinguish between the director's contract of service by virtue of his being a director of the company and a contract of service by virtue of a management contract. This ought certainly to be included. The question is whether a wider definition altogether is required. I am still not certain on this, and I should like the noble Lord to go a little further. I would ask him whether, in the light of what I have said, he would look again to see whether the kind of case we have in mind—which I think we all agree should be caught—is in fact caught by this paragraph; or whether, on the other hand, it goes too far and brings in contracts of service of directors by reason of their being directors of a company, where disclosure is required elsewhere. I am grateful for his undertaking to look at the content of Amendment No. 12, but I should also like the noble Lord to say that, in the light of what I have said, he will also look at Amendment No. 11.
LORD BROWN: I am perfectly prepared to do that. These are fairly complex matters and worthy of more study. If the noble Lord will withdraw this Amendment we will have both this Amendment and Amendment No. 12 looked at.
LORD DRUMALBYN: I am grateful to the noble Lord, and I would beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 16, as amended, shall stand part of the Bill?
LORD HAWKE: I just want to confirm that we shall not insist on so much information being disclosed that the directors' report will be in the nature of a prospectus. Would the following information, for instance, be sufficient? Suppose that one of the directors has a service contract. Could one say: "Mr. A has a contract with a company—a service contract. Mr. B has a contract with the company—a contract for the supply of bricks or raw material"? Is that sufficient information?
LORD BROWN: I am afraid the noble Lord will not receive a very satisfactory answer from me at this stage, because, as I said when we were debating Amendments pertaining to this matter, we are having a close look to see precisely what is the legal interpretation of some of the phrases in the clause. So I prefer to reserve my comment on that. I will try to give the noble Lord an answer at a later date.
LORD HAWKE: I think it is quite all right, but we want to see that we do not have to publish in every directors' report the sort of facts which one puts in a prospectus.
Clause 16, as amended, agreed to.
Clause 17 [Directors' report to state, where business of certain different classes carried on, attribution of turnover to, and profitability (or otherwise) of, business of each class]:
6.27 p.m.
LORD ERROLL OF HALE LORD ERROLL OF HALE moved to add to the clause:
"( ) This section shall not apply to a company if no shares or debentures of the company or of a body corporate of which it is the subsidiary have been quoted on a recognised stock exchange (whether in Great Britain or elsewhere) or offered (whether in Great Britain or elsewhere) to the public for subscription or purchase."
The noble Lord said: Amendment 13 seeks to remove from companies which are unquoted the requirement under this clause. Its purpose is to simplify the

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amount of work which they have to do, and also to safeguard their position vis-à-vis the large public companies, to whom this sort of information would be of great value when it came to deciding on the degree of competition which was likely to be experienced, or whether they should try to take over a little firm, and so on. There is also the difficult question, particularly for a smaller firm, of deciding when they have entered into another class of business. They may do a certain amount of preliminary work and, luckily, get the odd sale or two, but they may not know for two or three years whether they are really in the new class of business. Therefore, all this considered, I suggest that Clause 17 need not apply to companies whose shares are not quoted on the Stock Exchange.
Amendment moved—
Page 17, line 12, at end insert the said subsection.—(Lord Erroll of Hale.)
LORD BROWN: The noble Lord is no doubt appreciative of the fact that the provision in the Bill is one of the requirements of the Stock Exchange for publicly quoted companies to-day, and it would seem on the whole a salutary thing for a British company which is trading in a number of different markets, and for its shareholders, to be aware of the differential results obtaining in those sectors. There have recently been one or two startling cases—admittedly, among public companies, because, of course, those are the only ones which we know of—where disclosure has shown that a relatively small part of the assets of a business has been earning an enormous proportion of the total profits. Of course, the other side of the penny is that relatively large parts of the assets have possibly been used inefficiently.
It has been our view that the publication of figures in the directors' report, based very largely on an assessment of the situation, is something which the shareholders are entitled to have, because there is a habit in many companies—I am not going to say British companies, although I suppose it happens in all countries—of hanging on to the old basis of the business, of perhaps running it in a very inefficient manner and not making much in the way of profit, or of not investing much capital in the job, and not doing it properly. We think
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these situations should be brought to the notice of the shareholders in order to prevent a perhaps slightly tired management from continuing to do something it should not do.
There is one problem about the clause, and that is that questions have been thrown up as to what is meant when we talk of different types of business. If we are to have a discussion on the adoption of the clause as a whole, perhaps I might say something about that then. Otherwise, I might be drawn into saying it now, if noble Lords want to hear what I have to say on that subject.
LORD ERROLL OF HALE: Must I withdraw my Amendment?
LORD BROWN: I am very sorry. I should be very grateful to the noble Lord if he would.
LORD ERROLL OF HALE: In the spirit of amity and co-operation, I am very happy to do so.
Amendment, by leave, withdrawn.
On Question, Whether Clause 17 shall stand part of the Bill?
LORD HAWKE: The sound amplifiers seem to have gone rather wrong, and I did not hear properly what my noble friend on the Front Bench said in moving the last Amendment. But, on this clause generally, I should regard it as rather disastrous to attempt to apply these criteria of turnover, and so on, to the small local companies, which will be the ones most concerned. One of their greatest fears nowadays is of being stalked by a competitor and bought out, and it will be only too easy for the chains to go round and see exactly how much business these small people are doing. They can look up their profits and see what they are drawing out of the business; and then they will be in a perfect position to pounce. I cannot see that the information is going to be of the slightest use to anybody, like so much information which is being solemnly collected by this Government and stored away in offices all over London. Incidentally, I hope the noble Lord will be able to tell us at some stage of the Bill what extra premises will be required to house the accounts of these 400,000 companies which he is now demanding should be produced.

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The turnover and profits on individual lines are of interest to shareholders of public companies—I find it interesting to see what portions of the business are paying and what are not—but, on the whole, we are dealing almost entirely with family firms. The shareholders there could go to their husband or their brother, or someone or other, and ask him for details about the company. They cannot get out; they cannot sell, even if they want to. The information is going to serve no useful purpose whatsoever. I agree that in the case of public companies it serves a useful purpose, but in these cases it is merely information which these particular companies fear will be of the greatest benefit to their competitors and of none to their family shareholders.
VISCOUNT ECCLES: I think I heard the noble Lord, Lord Brown, say, when speaking to the Amendment on this clause, that he thought there was some difficulty about distinguishing between classes of business. Subsection (3) says:
"For the purposes of this section, classes of business which do not differ substantially from each other shall be treated as one class."
I think this is sometimes very difficult. I suppose that if a manufacturer for a group of companies manufactured some foodstuff he could fairly easily say, "My food section turnover is so-and-so, and my profit is so-and-so." Then, if he manufactured the containers to put the food in that would be a separate business.
When we come to a shop, of course, there are many multiple stores which sell both dry goods and food. Are they now to be made to analyse their turnover as between one section of what they sell and another? If the answer is, "No"—and I should think it probably will be "No"—why should they have the advantage of being able to carry lines on which, for one reason or another, they are temporarily not making a profit? We all know that that happens with a large chain store. They run a loss leader. Why, then, should the wretched manufacturer not have the same freedom if he is trying to build up business in a new line? I can think of certain new products which have taken years to bring to the stage of profitability. Has one to disclose all that while the development is going on? I can also think of new lines which have had to be shut down, which have been a failure.
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It seems to me that one of the advantages of being in business on a large scale is that from time to time you can take big risks of that sort. But if you have to tell all your competitors and the whole public that in fact you are running a considerable section of your business for the time being without a profit, it may be very embarrassing. I think big companies now comply with what the Stock Exchange want, more or less, but they do not feel they have to reveal absolutely every single line, even if it is not doing well. Would the noble Lord tell us whether the Board of Trade will be reasonably flexible in this matter? Because, otherwise, I think it is going to be extremely hard to know where one's duty is to make a separate declaration about one class of business.
LORD BROWN: I think I can assure the noble Viscount that the Board of Trade is prepared to be extremely flexible and sensible in this matter. The subsection is drawn, I think, wisely. I will read it again:
"For the purposes of this section, classes of business which do not differ substantially from each other shall be treated as one class".
That is pretty broad. The intention of the clause is not really to ask people trading in a particular market, and who may be making a mild loss on one product and a correspondingly larger profit on another, to disclose this information, because we all know that one gets this situation of one product supporting another, so to speak, in a particular market. What it is intended to disclose is the situation where a company is trading in two distinct markets, with two different groups of customers, probably with different products, so that there is not this characteristic support.
The benefit of disclosure is to show where the interests of the shareholders are not being observed, in that some particular type of business is being hung on to for no good reason. If a company is launching a new product, perhaps into a new market, and it is not doing very well in that market, there is no reason why it cannot explain that. It can state that this is at a very early stage, that it is losing money so far, and so on. I think, also, that at a very early stage it would not in any case necessarily fall within the definition of this clause. If

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these provisions are interpreted with wisdom by those in companies who have to interpret them, and if the attitude of the Government in drafting these clauses is clear, I think we may get something of benefit without too much difficulty.
VISCOUNT ECCLES: May I ask the noble Lord a question? In a case where the company discloses that it is not making a profit and that it is hanging on to some line which is, perhaps, a bit old-fashioned, whose business is it going to be to tell that company to stop that line—the Government's, the shareholders' or whose?
LORD BROWN: It would be the shareholders' business. It is disclosed for their interest. It is certainly not the Government's business to suggest how each individual business can make more profit. They might issue some general dicta, I suppose, about the tendency of business in general to do this or that, but I do not think the Government could go further than that. It is the shareholders who need the information and it is the shareholders' job to protect their own interests by drawing these matters to the attention of the directors.
VISCOUNT ECCLES: I hope that the noble Lord will tell his colleagues in the Government that this is his view; and I hope it is theirs, too.
LORD CHORLEY: Would it not be true to say that in the past the majority of shareholders of companies have never had this information?
Clause 17 agreed to.
Clause 18:
Directors' report to include particulars of contributions for political and charitable purposes
18.—(1) If a company (not being the wholly owned subsidiary of a company incorporated in Great Britain) has, in a financial year, given money for political purposes or charitable purposes or both, there shall (if it exceeded £25 in amount) be contained in the directors' report relating to that year a statement of the amount of money so given and of such of the matters referred to in subsection (3) below as are applicable in the circumstances of the case.
6.42 p.m.
LORD RHODES: Before we come to the fascinating subject of the next clause, may I suggest how we should go about it? If I may, I would respectfully sug-
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gest that Amendments Nos. 14 and 18, having figures in them, should go together; that Amendments Nos. 15, 17, 19, 20 and 21 could be taken together; that Amendment No. 16, which is drafting, should be taken on its own; and that Amendments Nos. 22, 23 and 24 should also be taken on their own.
LORD ERROLL OF HALE: I am grateful to the noble Lord for his suggestions on dealing with all the Amendments on page 4 of the Marshalled List, except that of the noble Lord, Lord Tangley (Amendment No. 24). These arrangements are agreeable to us.
I now beg to move Amendment No. 14: in subsection (1), to leave out £25 and insert £105. It is quite simple and I think its purpose is clear: to raise the lower limit from £25 to 100 guineas. Particularly in the case of charities, I do not think that members of the Government who were concerned with the drafting of this Bill can have realised what a large number of small subscriptions the big companies of this country give away each year, especially in the case of a large group with factories in different parts of the country. The individual manager often has discretion to give up to £50 or so to any one local charity or organisation which is in some way connected with the business. It is left to his discretion up to a certain overall limit, perhaps in multiples of £25 or £50. Without this Amendment the ordinary directors' report is going to be several pages longer than it would otherwise be because of the inclusion of all manner of details of donations to local good causes and the like.
This is a purely practical Amendment designed to reduce the vast mass of detail which otherwise would clutter up the company reports of Britain's leading companies, and would also make substantial additions to the report of a number of smaller ones. I have suggested altering the figure in respect of political contributions to £105 so that the two sets of contributions, charitable and political, march in step. I beg to move.
Amendment moved—
Page 17, line 16, leave out ("£25") and insert ("£105").—(Lord Errol of Hale.)
LORD AMPTHILL: I rise to support my noble friend in his Amendment, particularly as it refers to charities, for

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I have sat on various boards and management committees for the past thirty years, except during the war. Every month there are a large number of requests from charities for assistance, and if all the details are to be published in the annual report it will need a lot of paper or very small print. I do not think it would be of great interest to shareholders; I do not think it would be at all helpful. What worries me is that when this report is finally filed somewhere in London there will need to be another recruitment of civil servants to analyse it and make up statistics about it.
I do not see that this requirement can help industry to become more efficient; I do not think that it will help the shareholders to know that their companies have made a total of, say, a hundred subscriptions, some of them perhaps very small, some of £500, a few of £1,000, to charities. In the case of the companies I know, we subscribe to the Boy Scouts, to the Girl Guides and to various churches in different parts of the country where we are located. These local contributions are decided by the local people who know the conditions; the bigger ones come from the central board; the national appeals are handled by the central board. If all this information is to be printed it will need to be in very small print; there will be page after page of it; and if all companies in the country are to do the same thing, where is all this paper to be filed? How many more civil servants are going to have to analyse it; and when they analyse it, what use is the information to anybody?
LORD RHODES: I think that the noble Lords who spoke to this Amendment "have got something". I cannot guarantee that I will go as far as they want to go; but I have no doubt that if it were put to the President of the Board of Trade he would agree to go at any rate part of the way. If the noble Lord will leave it like that, I will see that that is done.
LORD HAWKE: Before my noble friend withdraws his Amendment or divides on it, could the noble Lord, Lord Rhodes, say what his attitude is going to be to Amendment No. 22 of my noble friend Lord Polwarth? That, to my mind, is a great deal more interesting
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than any of these others, and it has a great bearing on them.
LORD RHODES: We shall have to debate that Amendment when we reach it, because we are going to take that Amendment on its own.
LORD ERROLL OF HALE: I am grateful to the noble Lord for considering this matter and for having declared that his right honourable friend may go part of the way. I should have preferred him to say he would be prepared to go more than half way; but in the hope that that may be a possibility, I will gladly withdraw the Amendment at this stage and see what the noble Lord puts down on Report.
Amendment, by leave, withdrawn.
LORD DRUMALBYN LORD DRUMALBYN moved, in subsection (1), after "statement of the" to insert "aggregate". The noble Lord said: The effect of Amendments Nos. 15, 17, 19, 20 and 21 taken together is that the information which companies will be required to give about payments made for charitable purposes and political purposes as defined in subsections (4) and (5) will be restricted to the aggregate given for each of these two purposes. My noble friend Lord Polwarth (for whose absence my noble friend Lord Eccles has already apologised) has down an Amendment which would depend upon these Amendments, but I do not propose to deal with it at present. It may be argued that this should be dealt with at the same time, and, if so, I am quite prepared to deal with it at the same time if that is what the noble Lord would wish.
The point I am concerned with is the need to set out in detail in the directors' reports for large companies every single one of the contributions made to charities. That is certainly a requirement which is both onerous and invidious: onerous because it may double the volume of the directors' report; and invidious because many shareholders will clamour to have their charities included in the list, and many charities, seeing so many others in the list, will pester the companies to let them have a donation.
It might be argued that shareholders have a right to know which charities they are supporting as shareholders. Certainly it cannot be argued that anyone other than shareholders has any such right.

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It follows that if the Government are not content that contributions should be shown only as an aggregate figure, the right thing is to provide for a special register for charitable contributions. This could be available for inspection at the registered office of the company. Surely the right thing is to trust to the discretion of directors in the matter of charities and simply to require that they should show an aggregate figure.
Exactly the same argument could be applied to contributions for political purposes, as defined here. The justification for contributions of either kind, or for disbursements of any kind, is that directors believe that it is in the interest of the company to make them. That is the similarity between them. The main difference is that while there is a profusion of charities, there are only four political Parties to choose from, one of which at least is unlikely to attract many contributions from companies, whether of limited or of unlimited liability. While there is no reason why the Government should want details of charitable contributions set out, it appears that they are exceedingly—I would say, obsessively—anxious that the details of contributions to political organisations should be set out in detail. But they do not want to appear too anxious, so they seek to cloak their anxiety by bringing in charitable as well as political contributions. This has not fooled anybody, so patent and obvious is it, in view of what they have said in the past and of the fact that this is the only political part of the whole Bill. But whatever they propose to do about contributions to political organisations, they might discard the transparent veil with which they try to cover their real intention, and be content with an aggregate figure.
As to the disclosure of details of political contributions, we shall not object to details of contributions over a certain figure being given, provided one condition is fulfilled. It will reassure shareholders to see that contributions are made to those organisations that serve their interests and the best interest of their company. The condition, though, is a very important one: it is that there shall be no discrimination and no victimisation as a result. That is only fair. We all know that many trade unions make contributions directly or indirectly to the
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Labour Party and that the system of contracting out of the political levy has the undeniable effect that those contributions come from money levied on members who, though not supporters or even in sympathy with the Labour Party, do not think it worth while or prudent to exercise their right to contract out. But no discrimination or victimisation ensues from those payments. In the same way, no discrimination or victimisation should be permitted to result from payments made by companies to political organisations.
If the Government accept our Amendment providing that aggregates should be disclosed in both cases we shall be very pleased, though admittedly surprised in one case but at least the Government should agree that aggregates will suffice in the case of charities. If they insist on the disclosure of details in regard to contributions which they choose to define as "for political purposes", we shall have no option but to put down an Amendment at the next stage to prohibit discrimination as a consequence of those contributions. So I hope that the noble Lord will be able to say that he is prepared to accept this Amendment limiting the information to be given to the aggregates. I beg to move.
Amendment moved—
Page 17, line 18, after first ("the") insert ("aggregate.")—(Lord Drumalbyn.)
LORD RHODES: It behoves me to reply to the noble Lord. He talked about the dragging in of charitable contributions along with the political, but I am afraid that that idea did not spring from us. I noticed that Sir John Rodgers said in another place on February 21 of this year:
"I understand and have some sympathy with the argument that all payments made by a company for all purposes beyond the immediate running of the business should be disclosed; that figures should be given for charitable contributions, education contributions, trade protection arrangements and research proposals as well as political contributions."—[OFFICIAL REPORT, Commons, Vol. 725, col. 85; 21 /2/66.)
And Sir Frederic Bennett said:
"if their purpose is simply that shareholders are entitled to know what has happened to this money outside the normal running of the business, they are entitled to know what is happening to their money over the whole range of outgoings and not just in one limited direction."[col. 121.]

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So charitable contributions were included in this Bill.
LORD DRUMALBYN: Nothing is said there about whether the information was to be in aggregates or not, and I am quite certain that my honourable friends meant aggregates.
LORD RHODES: I am not so quick as all that—I am coming to it now. The first Amendment is surely a drafting one and the second Amendment is the one which the noble Lord regards as more important. The Amendments would make the last line of the subsection read:
"… statement of the aggregate amount of money so given for political purposes and charitable purposes respectively."
The subsection as drafted requires a single figure for the total of political and of charitable contributions together with the information required by subsection (3)—the name of every donee to whom more than £25 was given. The second Amendment would leave out reference to subsection (3) and another Amendment to line 33 would leave out the whole subsection. The purpose of the second Amendment is therefore to require a company to give only the aggregate of contributions made for political and charitable purposes.
May I at this juncture put our case explicity? There is a view, which the noble Lord has put strongly, that the best way of doing it is to give the aggregate amount. But we as a Government do not regard it as sufficient to aggregate these donations in this way. I think, on the whole, that if we make some concession on this question of the amount to be disclosed, that should satisfy the main bulk of opinion on this question. Supposing for the sake of argument we raised it to £50, the number of entries would be halved on the basis of what it was originally in the Bill—namely, £25. On the question of the contributions, I would ask the Committee to leave it as it is, because I do not think it would be too onerous, and, in any event. I do not think the information that would be given on the basis of aggregation would be sufficient.
House resumed.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
7.18 p.m.
The following Bills received the Royal Assent:

Land Registration,

Expiring Laws Continuance,

Arbitration (International Investment Disputes),

Local Government,

Tribunals and Inquiries,

New Towns,

Liverpool Corporation,

Brighton Corporation,

Hove Corporation.

House adjourned during pleasure.
House resumed.

COMPANIES BILL
7.28 p.m.
House again in Committee.
LORD RHODES: So that we may get the record straight, we have dealt with Amendments Nos. 14 and 18 and we are now taking Nos. 15, 17, 19, 20 and 21. We agreed that we should take No. 16 on its own, and Nos. 22, 23 and 24 are yet to come. When we adjourned I was caught at an awkward moment, in the middle of a sentence, so to speak, because I had listened to all the arguments about these Amendments and had put forward what I had to say in the way of a case, and had just arrived at the point of saying that I could not accept any of them. I hope, therefore, that the movers of these Amendments will not be too disappointed, but we cannot agree with the aggregation. We need to be more specific than that. That is how I wish to leave the matter.
VISCOUNT BRIDGEMAN: Before my noble friend replies I should like to say that I hope the noble Lord, Lord Rhodes, listened to what my noble friend Lord Drumalbyn said about the results if details of all the subscriptions given to charities became public property. I quite see the

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arguments for making information about every subscription to every charity accessible to shareholders in the company. That being so, the point is covered in the Amendment. The report and accounts of every company quoted on the stock exchange are in fact, if not in name, public property. Therefore, they are accessible not only to shareholders but to people like the secretaries of appeal committees. I leave the matter there, and only quote to the noble Lord the last line of the well-known limerick:
"The rest'll be wanting one, too".
LORD WOLVERTON: It seems to me that Lord Polwarth's Amendment answers the point. If the position is made too difficult, subscriptions to charities will just dry up. The whole object of this Bill is to give more information to shareholders. If companies are obliged to keep a register, as is proposed in Lord Polwarth's Amendment, and shareholders can have adequate access to the register both at the company's office and on the table at the annual general meeting, I cannot see why the Government should not accept Lord Polwarth's Amendment. Otherwise there will be pages in the directors' report with all the charities to which they are subscribing over £25—it will make a very long report. If shareholders can get that information from the register I should have thought that was all we want. I strongly support Lord Polwarth's Amendment, and also the one to increase the £25 to £105. The Minister has said that he will look at that. I think something should be done, otherwise the charities may suffer very severely.
LORD RHODES: To be courteous to the noble Lord, Lord Wolverton, we are not at the moment discussing Lord Polwarth's Amendment.
LORD HAWKE: As a director of a company which exists entirely in order to make profits which we distribute to charity, we object most strongly to the idea of putting a list of our donations in annual reports. On the other hand, we would accept quite cheerfully Amendment No. 22, to which we are coming shortly. These Amendments have been so heaped that it appears to me we are in some danger of getting into a muddle. There seem to be two different categories, political and charitable, and I hope that
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we shall treat them as quite different categories. There are three or four methods of dealing with them; there is the £25, the £105 and the "aggregate" and the charity register. The charity register may be a combination of £25 or £105; so we have numerous permutations and combinations, and the most important Amendment, No. 22, comes at the end. We are really getting into a hopeless mess.
LORD ERROLL OF HALE: I apologise to the noble Lord for being late and not hearing the final sentences of his speech. Our purpose in putting down these various Amendments was to find out some of the Government's intentions and attitudes not only towards the Amendments but towards their original proposals. It seems to me that this would be a convenient moment to adjourn, because I understand that the intention is that we should resume the Committee stage on Thursday. We shall by then have had an opportunity of looking at what the noble Lord has said, and at the Amendments still to be discussed; and perhaps we can resume our discussion of this very important aspect on Thursday afternoon.
LORD RHODES: I do not want to leave the position just as it is. I should prefer to go on and finish the clause, if that is acceptable. I cannot accept this series of Amendments at all. I made a gesture by saying that we would see what we could do on the money items, but on the aggregate, no; and I want it to be made quite clear that we do not propose to come back to this series of Amendments.
LORD ERROLL OF HALE: I did not make myself clear to the noble Lord. Of course we should finish the particular batch of Amendments we are discussing, but should not go on to discuss further Amendments, or the Question, That the clause stand part. It might assist if I beg leave to withdraw this particular group of Amendments, and thus enable us to continue another day.
LORD CHAMPION: I understand that the noble Lord will withdraw No. 15, and will not move Nos. 17, 18, 19, 20 and 21, but that he feels there is a different point on No. 16.
LORD ERROLL OF HALE: I understood the debate was on No. 15, and therefore I beg leave to withdraw Amendment No. 15.
Amendment, by leave, withdrawn.
House resumed.

BRIGHTON CORPORATION BILL HOVE CORPORATION BILL
Returned from the Commons with the Amendments agreed to.
House adjourned at twenty-two minutes before eight o'clock.