Lords Sitting of 9 March 1967

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

TELEX MESSAGES AND THE OFFICIAL SECRETS ACT
3.7 p.m.
LORD ERROLL OF HALE: 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 to what extent the transmission of Telex messages is covered by Section 4 of the Official Secrets Act 1920.]
THE LORD PRIVY SEAL (THE EARL OF LONGFORD): My Lords, it could be contrary to long-established practice to give information about the interception of communications.
LORD ERROLL OF HALE: My Lords, while thanking the noble Earl for that reply, as it is now public knowledge that cables are intercepted, may I ask if he can say whether or not Telex messages are intercepted?
THE EARL OF LONGFORD: My Lords, I am afraid that, as the noble Lord will gather from my first Answer, I have nothing to add.
LORD ERROLL OF HALE: My Lords, is it not the case that it is impossible to intercept Telex messages?
THE EARL OF LONGFORD: My Lords, I have nothing to add on that comment, either.
LORD ERROLL OF HALE: My Lords, does the noble Earl realise that that is not being intercepted?

OVERSEAS STUDENTS' FEES
3.8 p.m.
LORD WAKEFIELD OF KENDAL: 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, in view of the decision of the Fulbright Commission to reduce the number of scholarships for British graduates at American universities, they will reconsider their intention to increase fees for overseas students in universities and other places of higher education; and whether they will make a statement.]
THE EARL OF LONGFORD: My Lords, I understand that the Fulbright Commission decided to spread the effect of increased fees for overseas students in the United Kingdom over certain categories of their awards, including travel grants to British students. As I informed noble Lords in reply to a supplementary question by the noble Lord, Lord Gladwyn, on Tuesday of last week, the effect on the finances of the Commission would have been very much the same if fees had been increased generally. On the last part of the noble Lord's Question I have nothing to add to previous Government statements.
LORD WAKEFIELD OF KENDAL: My Lords, while thanking the noble Earl for that reply, may I ask whether it is not desirable that there should be an increase rather than a decrease in the two-way exchange of British students to America and American students to Britain? Is it not obvious that this decrease is a result of Government policy and is bound to have adverse effects? Is it not also a fact that this action by the Government is the exact opposite of what the Secretary of State for Scotland said in his Party political broadcast last night about Socialist education policy? Therefore is it not yet another example of the hypocritical and two-faced behaviour of the Government in saying one thing and doing something else?
THE EARL OF LONGFORD: My Lords, I do not know what the Secretary of State for Scotland said last night, but I am sure it was very wise and that

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what I say is in no way in conflict with it. But I must suggest to the noble Lord that it is a pity that, so far as I can recall, he was not in the House for, and did not take part in, the lengthy debate on this subject which we had the other day, when I had the honour of replying for the Government to about 15 speeches. At the end of that day, and after another day in the House of Commons when the Secretary of State made a brilliant speech, I thought that most of these issues had been clarified. I am sorry that the noble Lord began using violent language. I would have ventured to retaliate, but I know that he is physically so much one's superior.
LORD DRUMALBYN: My Lords, is the noble Earl quite sure that the Fulbright Commission would have reduced the number of scholarships if the fees had been put up at the same level for everyone and the increase had not been discriminatory?
THE EARL OF LONGFORD: My Lords, that is what is calculated. One cannot be absolutely sure, but I am advised that that is what would have been expected.

BRITAIN AND THE TREATY OF ROME
3.11 p.m.
LORD GRANTCHESTER: 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 whether they will confirm that, before announcing their readiness to adhere to the Treaty of Rome, they were assured of the support of the trade unions in the implementation of Article 48.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM): My Lords, no decision has yet been taken whether to open negotiations for membership of the European Economic Community, and no assurance of the kind indicated has been sought. As regards the Treaty of Rome, the Government's position is, as my right honourable friend the Prime Minister
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stated in another place on November 10, that the Government would be prepared to accept the Treaty of Rome subject to the necessary adjustments consequent upon the accession of a new member, and provided that we received satisfaction on the points about which we see difficulty.
LORD GRANTCHESTER: My Lords, while thanking the noble Lord for his Answer, may I ask whether he would not agree that it is necessary for Her Majesty's Government to define their attitude to these fundamentally liberal provisions of the Treaty of Rome before seeking admission to the European Economic Community?
LORD WINTERBOTTOM: My Lords, I think that the point made by the noble Lord must depend upon detailed negotiations when they start. Of course, we are all aware of the implications of Article 48, but we have not reached the point when detailed discussion would be of use.
LORD BLYTON: My Lords, is my noble friend aware that under the conditions of the Treaty of Paris the trade unions will oppose the mobility of labour, and the putting of French and Italians into British industry here?
LORD WINTERBOTTOM: My Lords, as my noble friend is almost certainly aware, these questions have been discussed between members of the Government and British industry as a whole, and no objection to this aspect of our entry has in fact been raised. We are not deeply concerned by problems arising from Article 48.
LORD CITRINE: My Lords, is the noble Lord not aware that Article 48 deals exclusively with the subject of mobility of labour, and is he not aware that certain limitations are implied—are indeed imposed—on the mobility of labour? First, is the noble Lord aware that it does not apply to the public services? Secondly, is he aware that it applies only to cases where an offer of employment is actually made? Thirdly, would it not he foolish on the part of the trade unions, and on the part of the Government, to give unqualified assent to a clause in such ambiguous terms as to where an offer of employment is actually made, when that might mean

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that, at a time of strike or lock-out, it would be perfectly lawful for an employer in this country to import labour from abroad?
LORD WINTERBOTTOM: My Lords, I think we cannot build up our approach to Europe on the basis of a series of hypothetical crises. In fact, this, as a problem, has not concerned our colleagues in Europe, and I do not see why it should concern us particularly at this moment, when we are at a very early stage of negotiations.
LORD SALTOUN: My Lords, may I ask the Government a question which the noble Lord's answer has prompted? This is a Treaty which has been signed by a large number of people, and into which a large number of countries have entered fully. In approaching the matter, how can we say that we want to modify this Treaty in our own regard? Surely it is a thing we have either to swallow or to reject. It is not like the curate's egg, parts of which may be appreciated.
LORD WINTERBOTTOM: I think we are all in agreement with the noble Lord, but what we are asking is that we, as a new member, should be allowed a period of adjustment. On every point this is our attitude.
LORD SALTOUN: I am much obliged to the noble Lord.
3.15 p.m.
LORD GRANTCHESTER: 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, in view of their announced readiness to accept the Treaty of Rome, how soon we may expect steps to bring their policy into conformity with Article 67.]
LORD WINTERBOTTOM: My Lords, as I indicated in answer to the noble Lord's previous Question, no decision has yet been taken whether to open negotiations for membership of the European Economic Community. As regards the Treaty of Rome, I cannot add to what I said in reply to the noble Lord's previous Question.
LORD GRANTCHESTER: My Lords, while thanking the noble Lord for his Answer, may I ask him this further question? Is it not a fact that there would be no support for this country's admission to the European Economic Community from the citizens of members of the European Economic Community if they thought it would add to the risk of their being subjected to the sort of restrictions which are current in this country?
LORD WINTERBOTTOM: My Lords, as I think those of us who read the newspapers are well aware, this question of the movement of capital arising from portfolio investments is a problem, but it is a problem of the transitional period and will be dealt with as such.

THE EASTER AND WHITSUN RECESSES
3.17 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD SHACKLETON): My Lords, it might be for the convenience of the House if I made a business statement about the Easter Recess. Subject to the progress of business, it is hoped that the House will adjourn for the Easter Recess on Wednesday, March 22, and reassemble on Tuesday, April 4.
EARL ST. ALDWYN: My Lords, I am sure the House will be grateful to the noble Lord for that information. I wonder whether he can give the House any information about the Whitsun Recess. I understand that something was said a month ago in another place, but so far as I know nothing has been said in this House.
LORD SHACKLETON: My Lords, I do not doubt that the noble Earl has seen the statement of the Lord President. If it will help your Lordships, I will repeat it. He said:
"I have…stated the Government's intention to relate the Whitsun Recess to the secular holiday on 29th May"—[OFFICIAL REPORT, Commons, 9/2/67, col. 1830.]
He then went on to say that he understood that it would be for the convenience of Members:
"if the adjournment were to be beamed backwards, that is from the secular to the Whitsun Holiday weekend. In this case, it would be possible if, as has happened before, the adjournment lasts for two weeks, to make it stretch between the two events".

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He further went on to say:
"I am sure that the House will understand that the outcome of this must depend upon the progress of business, and that there must be some time before a final decision is reached".
My Lords, if I may add an additional translation, this means that Tuesday, May 30, is expected to be the end date of the Whitsun Recess, and that it will last for either ten days or two weeks and three days before that date, beamed backwards, depending on the progress of business in both Houses. Of course, it would not be usual to indicate so long in advance the length of the Whitsun Recess, but if it but this seems to me a quite is helpful I can at least clarify to the House the date of the end of the Whitsun Recess.
EARL ST. ALDWYN: My Lords, I am sure we are grateful to the noble Lord, extraordinary arrangement. It is one thing to make holiday plans when you know the date on which you are going away, and are able to adjust it as to when you come back. But that we know only the date on which we are to come back, and not when we can go away, seems to me to be the height of folly. Furthermore, having split the holiday from the Whitsuntide, presumably to spread the load of people travelling, why is it that the Government intend to encourage the whole of Parliament to return on the Bank Holiday itself, as will be necessary if Members are to be in their places the following day?
LORD SHACKLETON: My Lords I appreciate the moderation of the noble Earl's approach. I can only say that I have taken careful note of what he said
LORD MOLSON: My Lords, with regard to the "beaming backwards" of the Recess, can the noble Lord the Deputy Leader of the House say how far backwards the beams are likely to extend?
LORD SHACKLETON: My Lords, I thought I had explained that the beam could be as long as a fortnight, plus such additional days as would normally be added to a fortnight's Recess. The beam would go backwards a fortnight.
EARL ST. ALDWYN: My Lords, may I return to this question of the date when we reassemble? I should like the noble Lord to consider with his colleagues whether it would not be better for the
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House to reassemble on the Wednesday, so that people may travel back the day after the bank holiday rather than on it.
LORD SHACKLETON: My Lords, perhaps I did not make it quite clear. I agree that we are using an unfamiliar technical phrase. The Recess could be of either ten days, or two weeks and three days, depending on business. This, of course, is what the noble Lord was objecting to; namely, that it is more helpful to know when the holiday begins than when it ends. On the noble Earl's final point, again I have taken a note of what he said.
LORD BYERS: My Lords, is it now accepted as part of Socialist planning that everything should be put into reverse?
LORD SHACKLETON: My Lords, I must say that I am disappointed at the lack of ingenuity that has been shown in the replies, but we can occasionally rely on the Liberals to step in and add to the merriment.
LORD SOMERS: My Lords, might I make one appeal to the noble Lord regarding the arrangements for Recesses? Many Members of this House have various engagements which they have to arrange in advance. It would be of great help if we could know a little earlier when we are going to be here and when not.
LORD SHACKLETON: My Lords, I will take note of the noble Lord's point. I will also discuss this with my noble friend the Chief Whip later. Unfortunately, he is in Bermuda at the moment, not on holiday but on business.

FISHING VESSELS (ACQUISITION AND IMPROVEMENT) (GRANTS) SCHEME 1967
3.22 p.m.
THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD WALSTON): My Lords, I beg to move that the Fishing Vessels (Acquisition and Improvement) (Grants) Scheme 1967, a copy of which was laid before this House on February 15, 1967, be approved. This Scheme gives effect to the Government's promise in the White Paper on Investment Incentives of January 17,

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1966, that grants for fishing vessels would be adjusted to take account of the abolition of investment allowances. The adjustment is in three respects: first, the rates of grant are increased by 10 per cent., from 25 per cent. to 35 per cent., for deep-sea vessels of 80 feet or more in length, and from 30 per cent. to 40 per cent. for inshore vessels of under 80 feet in length. Secondly, existing ceilings on the amount of grant payable in individual cases are abolished.
Thirdly, herring vessels are made eligible for improvement grants for the first time. These grants will no longer be restricted to a limited list of improvements; they will be available for all improvements approved as worth while. The new arrangements will be retrospective to January 17, 1966, when investment allowances were abolished, and the opportunity has been taken to combine the existing separate schemes for white fish vessels, herring vessels and improvements into a single scheme.
I should draw your Lordships' attention to three new features which have not appeared in previous schemes. The first is that the safety and seaworthiness of a vessel is specified as one of the objects for which improvement grants may be made. Secondly, provision is made for grants on the cash expenditure incurred by fishermen who build their own boats personally. Thirdly, provision is made for the payment of a reduced rate of grant of 20 per cent. in a case where a vessel is built in a foreign yard at a cost which does not compare fairly with the cost of building a comparable vessel in this country. In the past no grant has been given in such cases. The rate of 20 per cent. is the rate which would be payable in the case of a merchant ship built in similar circumstances. It takes account of the fact that no investment allowance will be payable and is a fair and reasonable compromise from the point of view of fishing vessel owners and British shipbuilders.
Finally, I should tell your Lordships that a further increase of 5 per cent. in grants will in due course be payable on expenditure incurred in 1967 and 1968, but separate legislation will be made before this can be implemented. This Scheme is simple, helpful and I think
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non-controversial. It provides a very fair measure of assistance for the investment we all agree is needed to secure the economic development of the industry and to enable the industry to make its full contribution to the national economy. I beg to move.
Moved, That the Fishing Vessels (Acquisition and Improvement) (Grants) Scheme 1967 be approved.—(Lord Walston.)
3.28 p.m.
EARL FERRERS: My Lords, I am grateful to the noble Lord for explaining this Scheme. We are glad to know that it is being consolidated so that all the grants under various schemes applicable before are now going to come under one heading. We are also glad to see that the herring vessels are going to be able to get grants for the first time. The fishing industry does not have an easy time. The work is extremely arduous, returns are frequently in doubt and the commodity itself is perishable. Coupled with all that is the increasing rise of capital costs. So these grants which the Government are making, and proposing to continue, will help the fleet owners to keep their ships modern and up to date. I was glad to see two other points: one, that the upper limit of the grant is now going to be abolished so that the grant may be as much as the circumstances allow; the other, that owners can get a grant if they make their own ships. That seems to be entirely reasonable.
I thought from what the noble Lord said—there certainly was the impression—that the grant was going to be considerably increased: from 25 per cent. to 35 per cent. for the smaller vessels, and from 30 per cent. to 40 per cent. for the larger ones. This would seem a substantial increase. But, of course, the capital allowances which were available before are now not going to be available. So I would assume that the net result to the trawler owner would probably be the same as, or only a little better than, it was previously. We welcome this Bill.
May I ask the noble Lord some questions because I think the answers will be helpful? Can the noble Lord say how many fishing vessels have taken advantage of these grants over the last year? How many grants have been given for new vessels and how many given for the

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modernisation of older ones? Of the grants that have been given, can the noble Lord give us any indication of the proportion that goes to the near-water vessel, the proportion to the middle-water vessel and the proportion to the distant-water vessel? I do not expect the actual figures, but if the noble Lord could give an indication of whether there has been an improvement generally throughout the whole fishing fleet or whether it has tended to be carried out in only one specific part of the fishing fleet this would be helpful.
Paragraph 10 of the Scheme allows a grant of only 20 per cent., which is less, for those ships which are purchased from abroad or those modernised by equipment purchased from abroad. Can the noble Lord give any indication of the proportion of ships and the proportion of modernisation which is done as a result of purchases from overseas? Is it large, and is it on the increase or the decrease? If the noble Lord can give some information on those points we should be grateful.
LORD AIREDALE: My Lords, may I welcome this scheme so far as it is a consolidation of existing schemes? May I point out to the House that this scheme is, nevertheless, still laid in pursuance of no fewer than four recent Acts of Parliament concerned with the fishing industry; namely, the White Fish and Herring Industries Act 1953; the White Fish and Herring Industries Act, 1957; the Sea Fish Industry Act 1959, and the Sea Fish Industry Act 1962. For the sake of those people who have to find their way about in this mass of recent legislation concerning sea-fishing, may we have not only a consolidation of Schemes, which we are about to have now, but also a consolidation of all these recent Statutes?
3.32 p.m.
LORD WALSTON: My Lords, if I may, I will deal first with the comments of the noble Lord, Lord Airedale. I
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have much sympathy with the point he made, but I think he would agree that it would probably be desirable to defer any attempt to consolidate until we have the further legislation, to which I referred in my earlier remarks, to implement the extra 5 per cent. grant. I will certainly undertake to see that his proposals are considered. Not being a lawyer myself, I am very much in favour of anything which makes something simpler and easier to read or understand, and I think that might well be the case here.
I am grateful for the welcome given to this Scheme by the noble Earl, Lord Ferrers. Regarding ships bought from abroad, the number is very small indeed. At the present time I know of only one, but it is conceivable that there may be a few others. It is certainly not a significant number. With regard to the total amount of money involved in the past under the existing Schemes, it varies between the lowest figure in 1962–63 of£406,000 to a maximum high in 1964–65 of£1,695,000. It is running at an approximate average of£1million a year. The division between inshore and distant water fishing again is somewhat variable, but with considerable weighting in favour of the distant water vessels, either conventional or the freezer type of trawler. Without wearying your Lordships with too many figures, in 1962–63 the distant water vessels received£100,000, the near and middle water vessels£142,000, and the inshore vessels£115,000; but that figure varies considerably from year to year. I do not wish to weary your Lordships, but if the noble Earl would like these figures I can give them to him at a later stage. Once again I should like to thank your Lordships for your support of this Scheme, which I am sure will be of benefit to the industry.
On Question, Motion agreed to.

TEESSIDE ORDER 1967
3.35 p.m.
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, the Teesside Order, the approval of which I am moving this afternoon, creates a single large County Borough of Teesside by amalgamating the County Borough of Middles rough, the boroughs of Redcar, Stockton-on-Tees, and Thornaby-on-Tees, most of the urban districts of Billingham and Eston; part of the urban district of Guisborough, a small part of the urban district of Salt-burn and Marske-by-the-Sea, and parts of the rural districts of Stockton and Stokesley. What the Order does, therefore, is to wrap up the present very variegated situation consisting of one county borough, three non-county boroughs, three urban districts, two rural districts and a number of parish councils, into a large county borough under a single administration.
The proposal is one of those which came to the Minister from the Local Government Commission as a result of their North-Eastern general review. I will relate the familiar stages, which are the same in this case as in other recent Orders. They started their review in 1959; they consulted the local authorities concerned; they published their proposals in draft form early in 1962, and they then held a statutory conference, as they were bound to do, at which these proposals were discussed with local authorities in statutory form in late 1962; they published their final Report and Proposals in October, 1963, and in January, 1965, an inspector reported to the Minister on the results of the local inquiry which he had held into the objections. The Minister decided to accept the Commission's proposals and issued his decision to that effect in October, 1965.
My Lords, Teesside, as we all know, because we have just been approving a Bill to supply it with water, is an area of enormously rapid industrial growth. The population has increased by more than 50,000 in the last 15 years and so far as one can see that is by no means the end of the story. There is great potential for further growth. The Local Govern-
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ment Commission therefore came to the conclusion that this is substantially a single economic, physical and social entity, and that the present division of the area between 10 different local authorities and two county councils is no longer relevant to the nature and problems of that part of the world.
I should like to quote the two key passages of the Commission's Report. They state that it was:
"necessary to ensure that the pattern of local government was such as to make the planning of development and the organisation of services fully effective, and to make certain that new development, such as houses, main roads, bridges and shops would match the growth and location of industry instead of perpetuating the patterns of the past. We were impressed by the need on Teesside for more housing to relieve over-crowding, to replace outworn properties, and to meet the increase in population due to industrial expansion. Yet unless Teeside could be planned as a whole, it seemed to us impossible to ensure that new houses would be built in places most convenient for the people who would live in them, as it was difficult for the present ten separate housing authorities, each with their own housing list to do other than build within or near their own boundaries."
The Commission also said:
"With the southern moorland, the coast and the river, Teesside has a splendid setting and it ought to be made worthy of its 400.000 inhabitants. This task requires a comprehensive plan for the whole area designed to secure the benefit of its port, its industries and its commerce, the reclamation of its marshlands, the building of new roads and bridges, the renewal of obsolete parts of the old riverside development, the designing of new centres and the provision of new amenities."
For these reasons they recommended a large county borough in the proposal which is now before your Lordships. It was I think only natural, therefore, that this proposal should have the full support of the County Borough of Middles rough and of the boroughs of Stockton and Redcar. These authorities between them represent about 70 per cent. of the population of the area. In order to achieve a single administration, they are content to forgo their historic identities.
Like all such Orders, this one will reduce the counties of Durham and the North Riding. Both will lose urban areas of some importance. Durham will lose the urban districts of Stockton and Billingham, which between them have a population of 118,000. The North Riding will lose the urban districts of

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Redcar, Thornaby and Eston and the industrial development in the northern part of Guisborough Urban District together with the northern strip of Stokesley Rural District. The loss of population will bring the North Riding down from about 428,000 to 316,000. These are both sensible reductions of population, but the Local Government Commission, the inspector and the Minister were convinced that the effects on the two counties would not outweigh the advantages which a new county borough would bring to Teesside.
A word about the familiar vexed question of the relation of this change to the Royal Commission on Local Government. If your Lordships will cast your minds back to November, 1963, you will recall the publication of the Hailsham Report on regional development and growth in the North-East. This Report picked out Teesside as one of the areas fitted to support rapid economic growth and said that there should be discussions with the local authorities about the exceptional step of a planning survey of the area, to be undertaken with Exchequer assistance. This was done and early in 1964 the authorities agreed on how it should be carried out. In 1965 the Teesside Survey and Plan began to be worked out. It was commissioned by the local authorities acting jointly, with the Ministers of Transport and of Housing and Local Government contributing about half the cost. This work is still going forward. It is being done by consultants and consists of a comprehensive land use and transport survey, which will give rise to an overall plan for the area. The final report and recommendations of the consultants are expected to be in hand early next year.
The point of this is the timing compared with the Royal Commission Report. We are going to get this unusual consultants' report on overall planning well before the Royal Commission can report, let alone before the date on which their recommendations can be put into effect. It was for this reason, among others, that the Government thought it right to go ahead with this amalgamation, so that the new large county borough should be all set to take over and carry out the recommendations of the consultants, if they are acceptable, as we hope they will be, and they were unwilling to put all this in cold storage until the Royal Commission on Local Government could report. I will
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not go further into detail at this stage, but if any noble Lords want further details of the background, I will be happy to give them later. I beg to move.
Moved, That the Teesside Order 1967 be approved.—(Lord Kennet.)
LORD PARGITER: My Lords, will my noble friend confirm, having regard to what was said on the setting up of the Royal Commission, that it is going to take all this length of time to report? We were told in another place that this was being dealt with as a matter of urgency and that it would be treated dynamically. Now it appears from what my noble friend says that it will take a long time and that we must proceed with a lot of these Orders in the meantime.
LORD KENNET: My Lords, the Report of the Royal Commission is still expected, as we have always hoped, late next year—that is, towards the autumn of 1968. How long it will take to consider the recommendations, adopt or amend them and put them into effect, is anybody's guess. Different numbers of years have been hazarded, and I should not like to hazard any new figure.
3.45 p.m.
LORD DERWENT: My Lords, may I start by saying two things? First, I have no intention of asking the House to divide against this Order, because, for reasons which have been carefully explained already, many of us do not think it suitable for your Lordships' House to throw out a Government Order of this kind, although of course we have the power to do so. I will not go into the arguments again. Secondly, although some noble Lords do not agree with me, I agree with the Government about the need in the comparatively near future to set up a large new local authority in this area. However, I would ask the Government not to try to force this Order through this afternoon.
This Order, as the noble Lord has said, is based on the recommendations of the Local Government Commission. These recommendations have been adopted with no alterations of any consequence. It seems strange that the Government are relying on this Report to such an extent, because they are coming to the House next Monday to ask us to do away with the Local Government Commission and

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set up a Royal Commission to deal with the same sort of problem. It seems an odd situation. It seems to me inconceivable that the recommendations of the Royal Commisison will be the same as the recommendations of the Local Government Commission. First of all, there has been a lapse in time of several years and circumstances locally have altered; secondly, there are different terms of reference for the two Commissions and, thirdly, already different evidence has been submitted to the Royal Commission from that submitted to the Local Government Commission.
What does this Order do? I will not go into the question of rate able values, because they are liable to extreme fluctuations over a comparatively short space of time. The important thing here is the question of population. The noble Lord has given figures. May I repeat them in round figures, which are easier to remember? The Order will set up a new local authority of approximately 400,000 people—that is, of about the same size as the City of Bristol. At the same time, it will reduce the population of the North Riding of Yorkshire from about 400,000 to about 300,000.
The evidence which has been given before the Royal Commission, which is now dealing with this question, has been variable. Different bodies have put forward different solutions to the problem. May I quote two of them, which show the lines on which this evidence is running. First of all, in the evidence they have submitted the Department of Education and Science have said that in a mixed urban and rural area like the North Riding there should be a minimum population of 500,000. This Order proposes to reduce it to 300,000. They said further that from their point of view there should be no top limit to the population in an urban concentration, but the minimum must be at least 500,000. Teesside is going to be only 400,000.
The County Councils Association said that all first-tier authorities—and these two are first-tier authorities—should have a minimum population of 500,000. There they agree with the Department of Education and Science. They said that in an area of high density of population, such as Teesside, a figure of 1 million
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upwards is probably the most suitable. And so goes other evidence. Neither Teesside nor the North Riding are in line with these recommendations. Under this Order, they will be smaller. One of the reasons is that the terms of reference of the Local Government Commission are different from the terms of reference of the Royal Commission. I will not say that it is impossible, but it is most unlikely that the eventual recommendations of the Royal Commission will be in line with what is proposed in this Order. As the noble Lord has said, this Order becomes operative in 1968. Of course, there will be consultants who will report on parts of it; but apparently it will come into force before they have reported. The Royal Commission have already received virtually all, if not quite all, the written evidence to be submitted to them, and it is expected that they also will report in 1968. So if this Order is passed now, there is a likelihood, if the Royal Commission do not agree with the Order, that there will be two major upheavals in the space of two, three or four years. This really seems nonsense.
With all the respect that I can muster, I must say that all over the country the Government are making a most untidy mess of local government. If the Government are going to try to force through this Order to-day, I think we are entitled to ask two questions, and to have answers to them. The first is: Why now? Why is it impossible to wait a comparatively short time for the Report of the Royal Commission? If the Report of the Royal Commission agrees with this Order, there will be a delay of two or three years, which in the matter of local government is not a very long period. If they disagree, and the Order goes through, then there will be two major upheavals in a short space of time.
The second question that I would ask—and I ask it for my own information—is: Why is it that this Government, whenever they want to do something, always seem to find the most inefficient way of doing it? because this is an inefficient way of running local government. I beg the Government to delay. It will not be for long. This particular set-up is nonsense. I know that Her Majesty's Government believe, quite erroneously, that they are always right. But may I again quote to them the words of Oliver Cromwell,

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which were misquoted by Mr. Silverman earlier in the week:
"I beseech you…think it possible you may be mistaken."
3.53 p.m.
THE EARL OF SWINTON: My Lords, I must first of all declare an interest, because my home, like that of my noble friend Lord Derwent, is in the North Riding of Yorkshire. But if I have a particular interest, I may also perhaps claim to have some special knowledge. I shall be sorry if the Government insist on forcing through this Order at the present time, though most reluctantly, I concur with the advice that my noble friend has tendered, that we ought not to divide upon it. I shall be sorry for that; and I think that, in the long run, the Government will probably be at least as sorry. I regret that we should be unable to divide, because the arguments against implementing this Order now are extraordinarily strong.
As my noble friend has said, a strong Royal Commission are now sitting and have gone a long way with their work. They are charged with the specific duty of recommending what the authorities in local government should be, and (I ask your Lordships to note this especially) their boundaries. Both these issues are being prejudged by the present Order. If the Royal Commission recommend different authorities and different boundaries—as I think is most likely, on all the evidence which has so far been tendered to them, and which has no Party bias aboutit—then, if this Order is put into force, some time at the end of 1968 the whole of the omelette will have to be unscrambled.
There will have been a waste of time and of energy; and, perhaps even more important, there will undoubtedly have been a waste of money: because the first thing that happens when a new local authority is set up is not just that there is an increase in staff; there are also buildings, and so on, required. Just think of the expense that will be incurred. And this waste of money will take place in an area where at the present time I think we all agree—certainly the Chancellor of the Exchequer does—it is vitally important that economy should be used; namely, in the public sector. Why not
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wait for the Report of the Royal Commission?
I was greatly interested in the point made by the noble Lord opposite, but I should like to reinforce what was said by my noble friend Lord Derwent. I do not think we shall have to wait very long for the full Report of the Royal Commission. But there is no earthly reason why the Royal Commission should not be asked, when they have come to their general conclusions and before they have written their full Report, which of the interim Orders that would have been held up for the moment—assuming that they were held up—satisfied their requirements and which did not. If on this Teesside proposition the Royal Commission, in answer to that inquiry say: "Yes; this is a good idea: go ahead", then the Government can go ahead straight away. If, on the other hand, the Royal Commission say: "No; this is not a good plan. It is not consistent with our recommendations. We are going to recommend something quite different in the matter of the size of areas and in boundaries" then nobody on any side is going to contend that the Order ought to go through. But if the Order has gone through, and the Royal Commission so report, the Government will have to undo all the work which they are now insisting on doing.
May I add this comment? There is a special additional reason, which applies only in the case of the North Riding, why it would be undesirable—indeed, quite wrong—to take a decision to-day. We know under this Order what is to be taken away from the North Riding; but what we do not know is what, if anything, is to be added to it. There is a great argument as to whether Ripon and Harrogate, or one or the other, should be added to the North Riding. That is a very natural and normal proposal, convenient in every way. They are both places much more closely related to the North Riding and to Northallerton than they are to Wakefield. In fact, I should have thought that the argument that both Ripon and Harrogate ought to go into the North Riding was quite unanswerable. But we do not know what the proposal about this matter is going to be, and I suggest to your Lordships that, until we know where we stand about that, it is impossible to take any right decision as

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to what the boundaries of the North Riding should be.
The Government are really quite extraordinarily and unnecessarily dictatorial in these matters. I do not mind them dictating to us on what are mere issues of Party policy, if they think they are right, Heaven knows! I think they are not as a rule, but on this kind of issue, which has nothing to do with Party politics, why must they be so dictatorial and lam it into us in this way? If they persist in flouting the Royal Commission they will be incurring unnecessary expenditure when economy should be the order of the day. It is quite unnecessary to take this arbitrary decision and, although I do not know whether this will have any effect upon the Government, I am sure an overriding decision of this kind is not going to be lost sight of by voters in the municipal and local elections.
I have one other question I should like to ask, to which I think we are entitled to have an answer. I see there is a Motion down for Monday next, from the other side of the House, by the noble Lord, Lord Taylor of Mansfield, for a Humble Adress praying that the Sheffield Order 1967, laid before the House on February 8, be annulled. As I understand it, that it is an Order which is to compel a district of Derbyshire, which does not want to be absorbed, to go into Sheffield. We are entitled to ask what line the Government are going to take over that. Are they going to say that Sheffield shall not have it, or are they going to say there shall be a free vote? Why on earth cannot the Government withdraw this Order and have another free vote? The noble Lord is always courteous to the House and he said he would give us all the information we require when he replies. I think your Lordships will agree that one piece of information we certainly ought to have is what course the Government intend to take in regard to the Motion next Monday.
LORD SOMERS: My Lords, I wonder whether I might ask one question about this Order. Can the noble Lord give us any idea of the proportion of local residents who are in favour of it? I quite realise that Her Majesty's Government are not particularly interested in that, since only about a fortnight ago we passed the
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Plymouth Order when it was quite clear that 90 per cent. of the local residents were strongly against it, but none the less it would be interesting to know.
LORD PARGITER: My Lords, I do not intend to make a speech, but in case silence may be taken as acquiescence I should like to make it clear that I strongly disapprove of this Order.
4.5 p.m.
LORD KENNET: My Lords, I feel that in the course of this series of Local Government Orders which I have been presenting to the House recently I may not have gone as fully as I should have done into the general background of the Orders, because it is clear to me that there are many misconceptions still abroad. Therefore, I hope the House will bear with me if I go into this at a little greater length. Until to-day I had thought of holding this back until next Monday, when we have an Order coming forward which is more contentious than this one, but I see now that it will be better to do this to-day.
The noble Lord, Lord Derwent, spoke about two pieces of evidence which had been presented to the Royal Commission and which, taken in isolation, I agree with him would give the impression that the proposed change might be out of harmony with what might come out of the Royal Commission. But I must remind the House that these are only two pieces of evidence out of a large number of submissions which have been made to the Royal Commission, which by no means agree with each other. A great quantity of conflicting evidence has gone into the Royal Commission and, of course, the evidence is not of such great importance; what is important is what is said by the Royal Commission itself. Of this we have at the moment no idea, and it would be quite wrong for the Government to temper their course in these Orders so as to agree with any possible recommendation which might come from the Royal Commission, rather than any other recommendation. We just have to wait until we get the Royal Commission's recommendations.
The noble Lord, Lord Derwent, asked why we had to do this now. The answer is because we need the new county borough ready in 1968 to put into effect the results of this special survey which is

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being carried out, which I would remind noble Lords opposite stems from the energetic intervention of the then Lord Hailsham a few years ago, which I mentioned earlier. So far as my noble friends on this side of the House were concerned, this was considered to be a good thing. We were not very sure at the time, but it has turned out very well. Lord Hailsham went to the North-East because there was an economic crisis, and he came to the wise and far-seeing conclusion that there should be a special survey, the results of which in fact will be ready next year; and we think we should be letting down the people of Teesside rather badly if we did not have the appropriate form of local government ready to put into operation. I think the ghost of Lord Hailsham should be hanging over this Chamber this afternoon. To oppose the Order at the moment would seem to be cutting away a good deal of the ground from under his excellent feet.
The noble Earl, Lord Swinton, asked why we did not ask the Royal Commission whether this Order—and I imagine he would say, whether all these Orders—will satisfy its requirements. The answer why we do not do that is because the Royal Commission does not know what its requirements will be.
THE EARL OF SWINTON: My Lords, if I may interrupt the noble Lord, I am afraid he has misunderstoood. What I said was that the Government should ask the Royal Commission, as soon as it knows and before it makes its final report, what its recommendations are going to be; and, when they have made up their mind on the size of the authority, whether the Orders which have been held back for the moment do or do not conform. If they do, let them go straight ahead; if they do not, even the noble Lord would not agree.
LORD KENNET: My Lords, I do not really see any need to ask the Royal Commission about it. As soon as the Royal Commission says what size it thinks would be right, we shall be able to see for ourselves.
If I may ask the House to stand back a little and look at this matter, I think it has been clear to all Ministers of Housing and Local Government for a good many years—possibly even decades—that the present structure of local government
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dating back to the '70s and '80s of the last century was coming towards the end of its natural life. The demography of the country was changing so fast, people were going in such large numbers to live in cities, transport was improving, and all this made it clear that the day of "dickering" with the present system was rapidly coming to an end and we should be compelled to have a complete, radical overhaul. It so happened that it was the last Minister who faced up to this situation and said, "Right, we will now appoint a Royal Commission to look at everything from the bottom up". The moment he did that he was faced with a problem: what do we do about the existing machinery of adjustment in the local government structure? I would remind the House that this is really quite a complicated matter.
The existing local government order, the old local government order, had three ways of adjusting itself. There was a Local Government Commission, which we are going to wind up, which carried out, first, general reviews and, secondly, special area reviews. In the general reviews the Commission looked at the boundaries and nature of top tier authorities, counties and county boroughs. In the special area reviews it looked at the boundaries and nature of both top tier and second tier authorities. There was a third means of adjustment, the county review, where the counties themselves examined their own second tier authorities. So you had the centre looking at the top tier, you had the centre looking at the top and second tier together, and the top tier looking at the second tier.
All these three machines were producing recommendations of changes under the 1958 Act fairly regularly. There were a good many in the pipeline when the Minister decided to set up a Royal Commission. Clearly, it was a problem of turning the tap off, and the question was: "When do you turn it off? Do you turn it off there and then, and waste the seven or eight years of work which had gone into those proposals which were awaiting decision, or do you examine the pile of proposals on your desk and take those which seem to you most urgently in need of implementation and implement them, although we all know that in a certain number of years the Royal Commission will come up with completely new answers? The Minister

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chose the latter course, and I cannot see anything illogical or indefensible in having done so. He did not accept every recommendation which came from the former adjustment machinery. In no less than seven cases he refrained from taking action on Local Government Commission recommendations, because the Royal Commission was coming up, and he said: "No, these are not urgent; in these cases it will be expedient to hold our hand until we see what comes out of the Royal Commission on Local Government." The Orders coming before the House now are the other cases in which he said: "No, this is so urgent that we will go ahead with it in spite of the Royal Commission." Each has to be judged on its merits.
I should like to turn for a moment to what the noble Earl, Lord Swinton, said about local opinion. It all hinges on local opinion, and it is for this reason that we have the immensely complicated machinery of the old adjustment machine; You have a look at the situation, draft your proposal, and consult with the local authorities. You make a firm proposal, and you send it to an inspector to hear the objections from the local people. The Minister considers all objections, takes his decision, and the decision goes to the House of Commons where representatives of local people can once again come forward and speak in favour or against the decision. What more one can possibly do than that to make sure that local opinion is fully tested and weighed at every stage, I do not know.
In conclusion, I should like to take up the image that the noble Earl, Lord Swinton, gave us: the whole omelette, he said, may have to be unscrambled in a few years. So it may, but the Government believe that it is well worth the effort to keep the omelette up to date in the meantime before any major unscramble.
LORD PARGITER: My Lords, may I put one point to the noble Lord? He mentioned a number of authorities where the Government decision was not to proceed. Does this apply to Tyneside? Is that one of the seven?
LORD KENNET: No, my Lords, Tyneside is in a different position from all
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the others. Nothing will be done that will not have to be confirmed in this House. It is an atypical case. The Local Government Commission made a certain recommendation. The Minister neither adopted nor rejected it, but made a new proposal of his own, and that proposal is at present still lying there and at the moment no steps are being taken to implement it.
On Question, Motion agreed to.

REFRESHMENT HOUSES BILL [H.L.]
4.17 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee—(Lord Brooke of Cumnor.)
Qn Question, Motion agreed to.
House in Committee accordingly.
[The LORD GRENFELL in the Chair.]
Clause 1 [Power to impose conditions on grant or renewal of licence for refreshment house]:
On Question, Whether Clause 1 shall stand part of the Bill?
BARONESS GAITSKELL: I did not warm to this clause when this Bill was first introduced by the noble Lord, Lord Brooke of Cumnor, and I am afraid that on a closer look the cooling process has continued. I find this clause very discriminatory in various ways. The clause deals with one particular kind of nuisance, the occasional noise and disturbance that residents living near a cafésuffer from late at night. Let us be quite clear about this. We are not here speaking of the café which is a dope depot or a gambling den; we are speaking of cafés which serve light refreshments to young people who congregate there perhaps after the cinema or theatre.
I will grant that loud human voices, reinforced by the revving-up of motorcycle engines are disturbing late at night. But why pick on this particular clash of noises? People who live in the overpopulated large towns and cities are subjected to every kind of noise, by day and by night. Up till now noise has been the concomitant of industrial progress.

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I am sure that many noble Lords must have noticed the houses along the railway line when approaching Paddington or King's Cross stations. I have often wondered how the people who live in them endure the continuous noise from the trains. There are thousands of people who live literally on the banks of the main railway lines, the major highways or on the edge of an airport.
Should we then not begin to legislate against the continuous noise from which these people suffer? Are we out simply to preserve small pockets of amenities in the more fortunate neighborhoods, as in this clause? In that case, we are fighting a losing battle. Democracy is fast catching up on us, on the remaining oases of quiet. Hampstead, one of the districts whose amenities the noble Lord, Lord Brooke of Cumnor, has in mind, I believe, is as full of trippers at weekends as any South coast seaside resort. Amenities these days are spread wider and thinner; and I say firmly: why should that not be so? If the object of this clause is as stated:
"…in order to avoid disturbance to residents of the neighbourhood and to preserve reasonable enjoyment of the amenities of the neighbourhood…"
and if this object is achieved, late-night cafés will be relegated to districts which presumably have no amenities to be enjoyed. Is this really what we want for our young people?
I maintain that this is not a good way to tackle this problem. Local authorities should have proper discretion in the first place for their licensing. What will happen, if a threat of withdrawing the licence, without even a warning, is held over the head of a cafe proprietor, is that cafés will be turned into clubs, and then there will be much less control of any kind over them. Moreover, local authorities already have too many niggling powers, and I, for one, have no urge to increase them.
Much play has been made of workers who have to start early and so need to go to bed early. In my experience, it is not always the people who retire early who are the hardest workers in this world; nor do I feel that there is anything immoral about staying up late. When there are so many problems with our young people to-day, when we have to re-think so many of our past attitudes towards our children, I cannot believe that this clause tackles them
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seriously. After all, we in this Chamber are not like a lot of retired nannies and governesses, legislating to tuck up our teenagers at night. This is no solution whatever.
Finally if it is indeed true that there is widespread disturbance and noise from late-night cafés all over the country, then it is time for the law and the police to take vigorous action, and not for local authorities to fiddle with licences. If, however, these outbreaks are sporadic among our young people, then this clause is something of a sledgehammer to deal with what is, after all, a social nuisance and irritation, and not a social evil. I think we should leave our heavy ammunition for those social evils that we have to cope with.
4.23 p.m.
LORD BROOKE OF CUMNOR: I wish the noble Baroness, Lady Gaitskell, would go and repeat that speech in the neighbourhoods where some of these late-night café-bars are operating and causing such intense annoyance to the neighbours. She spoke of "occasional noise and disturbance". If it were "occasional noise and disturbance", as on Burns Night (which I think was an instance quoted by the noble Lord, Lord Bowles, on Second Reading), well and good. It is because this is happening night after night throughout the year, and particularly on Fridays and Saturdays, that sleep becomes impossible. And I submit to your Lordships that this is a matter to which we in Parliament should give some consideration.
The noble Baroness said that we should give proper discretion to the local authorities, and she thought that they might use unreasonably the threat of withdrawal of a licence. My Bill does not provide for the withdrawal of a licence. I particularly made sure that it did not. All that my Bill does is to empower a local authority, if it receives complaints that one of these places is excessively noisy, to fix a closing hour, which must not be before 11 p.m.; and if the owner or manager of the café-bar objects, then he can lodge an appeal with the local magistrates, who I submit are the best people to reach a final decision on the matter.
Perhaps I can best answer the noble Baroness if I may have your Lordships' permission to read a letter that I have received from what is certainly not, in

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my opinion, one of the more "fortunate areas"—I am quoting the noble Lady's words, because she seemed to imply that the only complaints came from people who were living quite comfortably and did not like people making any sort of noise around them. This letter is from an eastern part of London, and it says:
"Congratulations on your caféBill. May it become law! What is good for main business roads is bad for areas like this. Cafés offering very little refreshment attract the lay bouts and loose girls for miles round; unlicensed cars block the roadway for residents, and it is from 11 p.m. to 2 a.m. that engines rev. and shouting and abuse take place. Your critics would soon change their minds if they spent a night here."
I have received a number of letters since the Second Reading of the Bill, all of them to that general effect, and not one of them has included a criticism of my Bill.
I stress that this is a matter in which, as the noble Baroness said, the local authorities should have a proper discretion. She intimated that perhaps responsibility should be taken away from local authorities and left to the police. The complaint of the police in dealing with these matters is that there are no statutory powers which they can invoke. All they can do is to frequent the places in the late hours of the night. As a result of their presence the noise is probably quelled for a time, but the moment they leave it springs up again. Meanwhile, of course, it becomes well known to people who have more criminal intent that on Friday and Saturday nights the police are likely to have to congregate around these places, and that leaves a free rein to the burglars elsewhere. I am sure your Lordships are aware that the police in London and big cities are grossly under strength. One of my purposes is to try to relieve the police of duties which take up their time but which are not really connected with the suppression of crime.
I am sorry to have to sneak like this to the noble Baroness, but from all the evidence that I have received I am quite convinced that some new power is necessary here. If any noble Lord, or any Member of another place, can think of a better way of achieving this end, then, as I made quite clear in my Second Reading speech, I shall be only too glad to consider Amendments. But I have had discussions in certain quarters, and
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this appears to me to be the best way in which we can try to check this late-night nuisance. I note that there have been no Amendments tabled on this Committee stage of the Bill, except two by my noble friend Lord Ilford, which do not in any way strike at the main purpose of the Bill. I hope, therefore, that the Committee will be persuaded by me to agree that this clause should stand part of the Bill.
Clause 1 agreed to.
Clauses 2 and 3 agreed to.
4.29 p.m.
LORD ILFORD LORD ILFORD moved, after Clause 3, to insert the following new clause:
Delegation of county council's functions
".—(1) A county council shall, if so requested by the council of any county district situate within the county and having a population of sixty thousand or more, delegate to that council their functions under this Act and the Refreshment Houses Acts 1860 and 1964.
(2) Where such functions are delegated to the council of a county district council under this section that council, in the discharge of those functions, shall act as agents for the county council".
The noble Lord said: I beg to move Amendment No. 1 which stands in my name on the Marshalled List. With the leave of the Committee, I think this Amendment can conveniently be discussed with Amendment No. 2, which also stands in my name. The purpose of the first Amendment is to insert a new clause which will make it possible for the larger county districts to claim responsibility for the administration of this service. As your Lordships know, this is not an uncommon arrangement in local government. There are many cases where the large county districts are given power to claim from the county council responsibility for administering a particular service. The figure which is usually taken is a population of not less than 60,000. Accordingly, I have taken that figure in my Amendment which proposes that a county district having a population of 60,000 or more shall be entitled to claim delegation of the functions to be exercised under this Act.
There are substantial advantages to the public in this arrangement. In the first place, it makes the administration of the service more local and, because it is more local, it is more readily accessible to the public than is the case when the administration is carried out by a more distant

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authority. There are a number of large towns which are county districts with populations exceeding 60,000, in some cases very considerably exceeding that figure, which will not be responsible for administering this service unless this Amendment is adopted. The City of Cambridge is one such town. I think that the citizens of Cambridge would be rather surprised if they were to go to the Town Hall to discuss with the officials whom they expect to be responsible for administering the service to find that the Cambridge Corporation is not the authority for this service at all, and to be sent to offices of a very much smaller authority, to the Cambridge County Council.
There are a number of examples of this sort. Worthing is another case in which the residents would be rather surprised if they heard that their local council is not the authority for carrying out a service of this nature. There are in fact about 25 towns which fall into this class, having a population exceeding 60,000, and who will be entitled to claim the administration of this service. In addition to these non-county boroughs there are 11 urban districts whose population exceeds 60,000. Again, I should think that as regards all those authorities it will come as a surprise to their residents who may be interested in this matter if, when they go to their town hall or council office, they are told that the local council is not the authority responsible for this very simple matter.
A service of this sort is a service which is very readily administered by the smaller authorities. It is in fact just the sort of service which they can undertake. They have the necessary staff, and they have the accommodation. I have very little doubt that the majority of authorities who would claim this service will be able to administer it with their existing staffs or with very small additions. That is not necessarily so with the larger authorities, and I think that here is an example of the sort of service which ought to be administered locally by the local council, and which can conveniently be administered in that way. I hope that my noble friend will look at this matter in the light in which I have been endeavouring to present it. This Bill will provide a useful new service—I am afraid I am a long way from agreeing with the noble Baroness's views.
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It is essentially a service which ought to be administered locally.
Amendment moved—
After Clause 3 insert the said new clause.—(Lord Ilford.)
LORD BROOKE OF CUMNOR: I have listened with a great deal of sympathy to what my noble friend Lord Ilford has said, and I am attracted by many of his arguments. Nevertheless, I hope that the Committee will not decide to add this new clause to the Bill. I will explain why. The new clause, of course, does not merely alter this Bill: it goes right back and alters the Refreshment Houses Acts of 1860 and 1964, and it alters them in a way which is bound to attract controversy. I would suggest to my noble friend that if he wishes to pursue this matter further he should initiate (and I should be glad to lend my good offices to this end) discussions with the County Councils Association and other bodies which may be interested. If he would do that, perhaps an agreed solution could be found.
To the best of my knowledge, these Amendments appeared on the Order Paper in your Lordships' House for the first time yesterday, so that few people outside could have had any time to give consideration to them. I submit that it would be wrong in principle for the Committee to subtract a power from the county councils—because in certain instances it would amount to subtraction—without the county councils generally having had any opportunity to consider the matter. This Bill has still to go through another place, so there is plenty of time.
My noble friend has just said that he is a supporter of the Bill, as I understand are the County Councils Association and the Association of Municipal Corporations. But if at this stage of the Session we send the Bill to another place with a point of unresolved controversy in it, nothing is more certain than that it will not get a Second Reading. Therefore I express the hope that my noble friend will be willing to withdraw the Amendment at this stage. If, as I say, I can lend my good offices before the Bill reaches the Statute Book, as I hope it will, to examine further whether in a place like Worthing, for example, it would be better for the decisions to be

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taken in Worthing than in Chichester, or wherever the headquarters of the County Council are situated, well and good. But, in my view, not only would it be wrong in principle to alter the Bill in this manner and to alter the 1860 and 1964 Acts at such short notice, it would also imperil the chance of the Bill reaching the Statute Book.
LORD PARGITER: I have listened with care to what the noble Lord, Lord Ilford, said in moving his Amendment, and also to what the noble Lord, Lord Brooke of Cumnor, has said in reply. I should like to confirm that so far as this is concerned there has been no consultation whatever as to the desirability of extending the power to authorities beyond those proposed in the Bill. The Bill was considered by the County Councils Association, and in general terms it was approved, and was thought to be a useful addition to the powers of local authorities to control something which is an undoubted nuisance. They accepted the Bill in that spirit. There may be arguments in favour of extending the powers to other authorities, but certainly we should have the strongest objection to this being done without consultation. We should strongly oppose such a step, not only in this House but also in another place, to the best of our ability. I am speaking from the Association's point of view. Quite fortuitously, there happened yesterday morning to be a meeting of the Parliamentary Committee of the Association and we were able to take a quick look at this matter. Without prejudice to the possibility of what might come about as a result of negotiation, we should certainly strongly oppose any alteration of the Bill at this stage.
There are certain factors to be considered. When one comes down to administering something which is of fairly general application over small areas, there is the possibility that two adjoining local authorities may exercise these powers in different ways. In that event, all you do is to drive a nuisance from one area where the local authority decide to close the place to another area where the authority decide to leave it open—which might be in the next street or a couple of streets away. There will therefore be a confusion about what may happen if there is any change in the Bill as at present
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drafted. There are strong arguments in favour of local application, and I am not opposing local application as such but on many occasions it creates anomalies which are difficult to iron out. However, my Association is always glad at any time to enter into consultations.
I should also like to refer to the fact that the Amendment is not limited only to this question of a closing hour for refreshment houses: it brings in also the whole question of their control. I do not know what is involved in that, and certainly I am not prepared to see a change in the law unless I know what the Amendment is inclined to do. For the reasons I have given, I hope that the noble Lord, Lord Ilford, will accede to the appeal made by the noble Lord, Lord Brooke of Cumnor, and withdraw the Amendment, without prejudice to consultations which might take place to consider whether or not it is desirable that it should go forward at a later stage.
LORD BOWLES: May I at this stage intervene, and perhaps make the Government's position clear, in case the consultations which have been referred to fall through and are abortive? The position seems to us to be that since 1949, under Section 15(1)(d) of the Finance Act of that year, the duty-levying and licensing authorities under the Refreshment Houses Act 1860 have been county boroughs and county councils. The purpose of the new clause appears to be to give the larger county district councils a greater say in the control of refreshment houses, if they wish to have the county councils' functions delegated to them. The normal provisions for delegation by county councils, Section 274 of the Local Government Act 1933, worked the other way round: the county council does the delegating, the district council concurs.
Notwithstanding the Government's neutral attitude to the Bill introduced by the noble Lord, Lord Brooke of Cumnor, I must say that this new clause is open to certain objections on the part of the Government. First, this is a Private Member's Bill which deals with a relatively minor nuisance. It is not an appropriate medium, we think, for introducing a radical change in the allocation of functions to local authorities. It would apply not only in the special cases aimed at by the Bill, but also, as I think the noble Lord, Lord Brooke of Cumnor, said, in

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respect of applications for refreshment house licences. Secondly, the result might well be an uneven pattern of responsibility, as my noble friend Lord Pargiter pointed out, with one county district requesting delegation and its neighbour not. This could give rise to uncertainty and confusion.
Thirdly, and finally, I would again mention the fact that, as every noble Lord in this House must now be well aware, a Royal Commission is sitting at the present time. This fact calls for a specially strict scrutiny of any changes in the distribution of functions to local authorities—although it is true that this is a minor function. It will be some time before any recommendations by the Royal Commission can be given effect to, but, even so, the Government regard the proposed change as inopportune at this stage in the consideration of local government, unless there are very strong reasons based on the merits of the case. In the Government's view, no such reasons have yet been put forward. The Royal Commission will doubtless have things to say about delegation as a principle, and about the 60,000 population as an appropriate line of demarcation for functions. Meanwhile, the Government would not wish to see either of these concepts given additional support now.
LORD ILFORD: It is true that these Amendments were put down at a rather late stage, and I have no objection whatever to my noble friend's consulting with the County Councils Association before he comes to a final decision. I hope that he will not listen too long or to attentively to what he may hear from that quarter. But I do not wish to press this Amendment to-night and, with my noble friend's assurance, I ask leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
House resumed: Bill reported, without amendment; Report received.

IRON AND STEEL BILL
4.46 p.m.
Report of Amendments received (according to Order).
Clause 3:
General duty of the Corporation
3.—(1) It shall be incumbent on the Corporation—
(b) to secure that neither the Corporation nor a publicly-owned company shall show undue preference to, or exercise unfair discrimination against, any such persons or any class thereof in the supply and price of such products, but without prejudice to such variations in the terms and conditions on which such products are supplied as may arise from ordinary commercial considerations or from the public interest;
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, in subsection (1)(b), to leave out "ordinary". The noble Lord said: My Lords, it might be for the convenience of your Lordships' House if when debating Amendment No. 1 we were to consider Amendment No. 2 at the same time. It has always been made plain by Her Majesty's Government that the Corporation shall act on a commercial basis, and shall work on ordinary commercial lines. During earlier stages of the Bill, and also in another place, there was some doubt cast upon whether it was therefore appropriate to include the phrase, "or from the public interest", because it could be held that if the Corporation is to act on ordinary commercial principles, then it could not necessarily always act in the public interest. There might be occasions when to act in the public interest would be to go against the duty of acting on ordinary commercial lines. The two Amendments seek to help the Government out of their difficulty, and Amendment No. 1 seeks to do this by deleting the word "ordinary", so that the Corporation will have to operate only on commercial lines. The term "commercial lines" is somewhat broader than "ordinary commercial lines", and would cover certain matters which might otherwise only be appropriate or intra vires under the heading, "the public interest".
I submit to your Lordships that there might be cases where it would be undesirable for the Corporation to do what

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it wished under the blanket heading of "the public interest" because, of course, there would be no means of challenging the Corporation's action at any time. It would be able to say, "We are doing this in the public interest." But "the public interest "is nowhere definable, and this would really enable the Corporation, if it so wished, to do very much as it liked. But we have been assured that it is intended that it shall operate on ordinary commercial lines, and we therefore think that it would be best if this were made plain in the Bill.
There are one or two cases where it might be difficult for the Corporation to justify operating on ordinary commercial lines as distinct from commercial lines as, for example, if one considers that feature of the Geddes Report which suggested that steel should be supplied to shipbuilders for ships at a fixed percentage below the standard prices, in order to give shipbuilders an advantage. Of course, this would be a clear subsidy to another industry, and it could be held that that was something in the public interest. But it could also be held to be an operation on commercial lines, using the phrase in its broadest sense because, if the discount was not forthcoming, the shipbuilders might not win orders and so the steel industry would not be able to sell the steel at all.
So it would be a perfectly permissible commercial concept to fall in with the Geddes Committee's Report if the Corporation in fact wished to do so. But, of course, if we left in the phrase "or from the public interest", one could on occasions get very severe discrimination, perhaps on a geographical basis or for other reasons. The defence by the Corporation could be, "We are acting in the public interest", in which case they could not be called to account in any way. As the intention is that the Corporation shall act on commercial lines, I submit that we should write it into the Bill in that form; and I very much hope that Her Majesty's Government will see their way clear to accepting these two Amendments, the first of which I beg to move.
Amendment moved—
Page 4, line 11, leave out ("ordinary")—(Lord Erroll of Hale.)
LORD SHACKLETON: My Lords, it is interesting, and an indication of the
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thoroughness with which it has been discussed, that at this stage of the Bill one is able to narrow our discussions down to points about which it can still be argued there might be an ambiguity, and I sympathise with and appreciate the pertinacity of the noble Lord. We have, of course, seen the second of these two Amendments many times before; and on this occasion the noble Lord has tried to meet our point by suggesting the deletion of the word "ordinary". I am afraid that this would not help; indeed, on some counts it might be regarded as almost more objectionable than the deletion of the words "or from the public interest". It would allow the Corporation to vary prices according to any considerations which could be described as commercial instead of only those commercial considerations which are normal and standard in business dealings. In this respect, the Corporation's freedom would be greatly increased in a way which noble Lords opposite would not, I think, welcome. On the other hand, the deletion of the word "ordinary" would do nothing at all to allow the Corporation to act purely in the public interest. So these Amendments would not overcome the difficulties which the Government see in the removal of the reference to "the public interest" without creating new difficulties.
Let me again state why there is this reference to the public interest. I want to emphasise at the outset that the Government intend (and I think there is no dispute that this is the Government's intention) that normally the Corporation shall behave as a commercial body, and that its financial objectives will be set with this object in view. It is the view of the Government—and, indeed, of noble Lords opposite—that no other course would be possible in such an internationally competitive market as the steel market. The question at issue is not whether the Corporation should in general act commercially—for on that I think we are agreed—but whether it should never, in any circumstances, act in any other way. I suggest that it is impossible to say—indeed, I go so far as to say that it would be absurd to say—that a publicly-owned organisation should never in any circumstances act otherwise than commercially in fixing its prices. Governments of both Parties have in practice recognised that it is sometimes

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desirable for nationalised industries to behave in such matters other than commercially.
We cannot necessarily foresee now all the circumstances in which the Corporation, in fixing its prices, might have to take account of considerations other than the purely commercial. Indeed, this is really the argument for leaving in the reference to the public interest: it gives the Corporation a greater freedom to react to circumstances which cannot necessarily be foreseen. Even so, we can point to some cases which might arise. In Committee, my noble friend Lord Shepherd gave us one example; namely, the need to reduce prices selectively to meet competition from imports. The noble Lord opposite would probably say that his Amendment to the phrase, by the deletion of the word "ordinary", would meet that; but, although this might be very strictly in the public interest, it might mean a very long stretch of the words commercial considerations". There might be a strong national interest to compete effectively with imports, and we want to make sure that the powers of the Corporation to do so are beyond question.
Again—and here the noble Lord himself gave an example—it might be desirable for the Corporation to give specially favourable treatment to certain areas or certain classes of consumers, and the noble Lord might object to one of these. As regards areas, it certainly might he desirable to take into account the Government's regional development policy; and, as regards classes of consumers, again there are those who might be in a special position. The noble Lord referred to the Geddes Report, which contained a recommendation that special treatment should be given to shipbuilding consumers of steel. Although this has not proved appropriate in this instance, similar cases might arise elsewhere in future when action of this type would be desirable. If we accept this Amendment, by deleting the word "ordinary", we introduce a new element without a very precise meaning attached to it, but we do not make clear (which is desirable) that there is freedom to act in the public interest. Any of these cases would have to be looked at on its merits, and no doubt on such occasions the Minister would be consulted, as this could be almost a major issue of policy. But although, again, I well appreciate
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what the noble Lord is trying to do, I do not believe he has got over this difficulty.
In all cases, of course, the Corporation would be answerable to the Minister and, through him, to Parliament for the way it carried out its duties, under Clause 3(1)(b). The need to retain for the Government and Parliament the ultimate right to direct nationalised industries as to the public interest is recognised in the standard provisions (in the present case, Section 4(1), which is the revived part of the 1949 Act), which give the appropriate Minister power to issue the nationalised body with general directions on matters which appear to him to affect the national interest. Administrations of both Parties have incorporated such a provision in Statutes affecting nationalised industries, and the reference to the public interest in Clause 3(1)(b) follows the same principle. Indeed, I believe it improves the ultimate control by the Minister and Parliament in matters affecting the national interest.
I do not suppose that I have completely satisfied the noble Lord on the fact that the intentions of the Government are wholly honourable, which I am sure the noble Lord accepts is in itself a justification; but I am quite satisfied, having listened very carefully to his arguments previously, and having gone into this very thoroughly, that we need to retain these words in the form in which they are now in the Bill.
5.0 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, might I support this Amendment, very briefly? What worries me about it, of course, is that in nationalised industries, owing to political movements, you are inclined to get certain pressures mounting up, and the Articles of Association of these 14 companies which the Corporation are taking over in the public interest are so wide that they cover every form of business activity in the country. I am afraid that if this phrase, "from the public interest" is left in the Bill then, in spite of what the noble Lord, Lord Shackleton, has just said, it really gives the Corporation ample excuse to indulge in any form of commercial activity in the country.
With their vast powers they may—I will not say that they will—run some small business out of existence, and they

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could say that it was, "from the public interest". I think it could lead to great danger in the future. If the Corporation were not bound entirely by commercial interest and by commercial considerations, by unfair trading, they could play havoc within the whole commercial field of the nation. I wish the noble Lord could have given us a little more satisfaction on this point. I feel sure that in the future we will regret that the words, "from the public interest" were left in the Bill.
LORD HAWKE: I should be happier about this if it were left entirely to the Ministry to give directions when they are to do something against their own inclinations and "from the public interest". It does not seem to be so in the Bill. If, for instance, as is occasionally the case, a public airways corporation is ordered in the public interest to buy British aircraft, everybody knows about it; it is mentioned in their annual report, and so on. I am not so much afraid of the Corporation acting wildly in the alleged public interest, because ultimately they have to be a profit-making body and, therefore, if the public interest is going to prejudice their profit and loss account they will be reluctant to act in the public interest. It is ministerial interference in the name of public interest which is to be guarded against.
I do not know whether it is generally known, but during the first Labour Government, when the steel industry was in private hands, the Ministers of the day decreed in the public interest that prices for exports were to be at a certain level. I remember getting a small quantity of British rail at£20 per ton and then having to make up with Belgium rail at£45 or more. But Her Majesty's Ministers, for some unknown reason, thought it in the public interest that British goods should, in a sellers' market, be sold vastly underneath world prices; and this led to all sorts of trouble. Once you start doing things "from the public interest" you get into very difficult terrain.
On Question, Amendment negatived.
Clause 5:
Publication by the Corporation of lists of prices and conditions of sale
5.—(1) The Corporation shall from time to time publish, in such manner as appears to them best adapted for informing the persons affected, and in such form as appears to them
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appropriate, notices containing prices which they propose should normally be charged in the United Kingdom by them and publicly-owned companies for iron and steel products, and terms and conditions on which they propose iron and steel products should normally be sold in the United Kingdom by them and publicly-owned companies.
5.5 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved, in subsection (1), after "sold" to insert:
"including all sales and conveyances by way of sale between the publicly-owned companies and their subsidiaries."
The noble Lord said: My Lords, Clause 5 of the Bill concerns the duty of the Corporation to publish its prices and conditions of sale. We believe this to be a most important provision, but as the wording is at present the duty that is placed on the Corporation is, I would submit, insufficiently precise to meet one particular set of circumstances. This is where the Corporation is selling to one of the publicly-owned companies or any subsidiary which is itself a steel-consuming company.
In an important statement on the consequences of steel nationalisation in the structural steelwork and bridgework industry, made by my noble friend Lord Erroll of Hale in Committee, of which I think the Government will have taken note, it was pointed out that in this industry there are nine subsidiary companies of the 14scheduled companies in the Bill, which between them control about one-third of the total output, by value, of the industry. These companies will be part and parcel of the organisation under the control of the Corporation which will itself include the steel-producing companies. The remaining companies in the structural steel industry, that two-thirds which remains in private hands, will buy their steel from the Corporation or from the publicly-owned companies at the best prices; and the prices must be published under this clause of the Bill.
The private sector in the structural steel and bridgework industry hopes that the prices procedure will also be applied to the publicly-owned companies in the construction steel work industry, so that they, the subsidiaries of the publicly-owned companies, are charged exactly the same prices on the same terms and conditions of sale as are the privately-owned companies. The Government's answer to this

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Amendment might be that the Consumer Council is the correct body through which any private industrialist in the structural steel industry should pursue his complaints; because he will be a consumer. Therefore the Consumer Council exists for that purpose. It is true that Section 6(4)(a) of the 1949 Act which gives the Consumer Council the duty to consider any matter affecting prices and other matters concerning consumers is revived in this Bill, so the power is there. But how are the privately-owned consumers in the structural steel work industry to know what prices are being charged to the publicly-owned consumers? Is there a possibility of book sales? Is there a possibility of purely notional prices? How is any preferential price, even if it be suspected, to be proved? What, in any event, could the Consumer Council do about it other than to make a report to the Minister?—which I would suggest is not much of a sanction.
The only way out of this—and it arises solely because the publicly-owned companies can be both producers of iron and steel products and consumers of iron and steel products in this industry—is to require the Corporation's published list of prices to apply to all consumers, including both publicly-owned and privately owned companies. That is the purpose of the Amendment. However unintentionally, it seems that some companies in the private sector in the structural steel work industry could conceivably be placed in a less advantageous position than those in the public sector. This is clearly not the intention of the Bill; nor is it the intention of the Government. That is the purpose of the Amendment. I might add to the noble Lord who is to reply that the words, "conveyances by way of sale" in the Amendment are intended to cover the possibility of purely book sales by one of the public sector iron and steel producers to a public sector iron and steel consumer. I beg to move.
Amendment moved—
Page 5, line 24, after ("sold") insert ("including all sales and conveyances by way of sale between the publicly-owned companies and their subsidiaries")—(Lord Windlesham.)
5.10 p.m.
LORD SHACKLETON: My Lords, I am afraid that for a number of reasons I cannot advise your Lordships to accept
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this Amendment. First, it is technically defective, although I appreciate that this can always be overcome at a later stage. But it is technically defective because it would apply only to terms and conditions of sale of iron and steel products and not to prices, and because it would also appear to cover only sales between publicly-owned companies, on the one hand, and their subsidiaries, on the other, and not sales between different publicly-owned companies.
Secondly, it is unnecessary because Clause 5(1) covers all sales by publicly-owned companies regardless of the identity of the buyer. Thirdly, it would carry positive disadvantages because a reference to sales inside the public sector might imply that sales outside it do not so fully come within the scope of Clause 5. Those are the technical objections, but the noble Lord, Lord Windlesham, is concerned about this and we shall have an opportunity to discuss in particular the position of the structural steel manufacturers or operators on a later Amendment.
The noble Lord is obviously concerned that the steel consuming subsidiaries of the Corporation may get an unfair advantage over their competitors in the private sector because they could purchase iron and steel products more cheaply than those competitors. This again raises the question of arm's-length trading which was discussed in the Committee stage, although it covers only part of it. My noble friend Lord Shepherd gave some important undertakings. Indeed, the noble Lord, Lord Erroll of Hale, was kind enough to say, on first impression, that they had gone a long way to meet the views of those affected.
These undertakings were, first, that under Clause 25 the Corporation would inevitably have to explain a good deal of the basis on which trading takes place between different sectors of their activities. Secondly, my right honourable friend the Minister of Power would discuss with the Corporation the possibility of including in their first report on organisation, under Clause 4, a discussion of the principles on which trading between different sectors of the Corporation's business will be based. Thirdly, the final responsibility would rest on the Minister as a result of Clause 7(2) and he would be prepared, when he gets the Corporation's first report under Clause

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4, to discuss this issue further with interested organisations, such as the Confederation of British Industry.
I believe that these undertakings, which I reiterate unreservedly, go a long way to meet the substance behind the present Amendment. In view of this, and of the technical objections to the Amendment which I think are overwhelming, I hope that the noble Lord will feel able to withdraw it. If there is anything more that he feels I might usefully say on Third Reading, or if there is any point which I have not made clear, I should be glad to do so; but, for the reasons I have given, this is not an Amendment which I can recommend your Lordships to accept.
LORD WINDLESHAM: My Lords, I should like to thank the noble Lord for his answer. I know that it will be studied with great interest in the structural steelwork industry. When we come to Amendment No. 15 I think that the undertakings given by the noble Lord, Lord Shepherd, on arm's-length trading during the Committee stage are relevant. These two Amendments cover to a certain extent some of the same ground, so that might be the time to return to the assurances given by the noble Lord, Lord Shepherd.
LORD SHACKLETON: My Lords, before the noble Lord, Lord Windlesham, withdraws his Amendment, perhaps I might inform him that I do not share his view as to the ineffectiveness of the Consumers' Council.
LORD WINDLESHAM: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn
Clause 8:
Re-establishment of Consumers' Council and committees
8.—(1) On such day as the Minister may by order appoint for the purposes of this section (which shall not be later than six months after the vesting date as defined in the next following section), the Council that was established by section 6 (1) of the 1949 Act by the name of the Iron and Steel Consumers' Council and ceased to exist in consequence of the enactment of section 1(1) of the 1953 Act shall, by virtue of this subsection, be re-established by that name, and the following provisions of the said section 6 with respect to the Council shall, by virtue of this subsection, be revived and shall again
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have effect with respect to the Council, namely, subsections (2), (4), (5), (7) to (10), (13) and (15).
LORD ERROLL OF HALE LORD ERROLL OF HALE moved, in subsection (1), to leave out "subsections (2), (4), (5), (7)"and insert
"subsection (2) (with the omission of paragraph (c) and the word 'and' where occurring immediately before that paragraph) and subsections (4), (5), (8)".
The noble Lord said: My Lords, in seeking to move this Amendment I submit that it might be for the convenience of your Lordships if we considered at the same time Amendments 23, 24, 25, 28, 29, 30 and 31. This group of Amendments, although formally we are discussing only the first one, deals with membership of the Consumers' Council. In the Committee stage I made the proposition by means of an Amendment that we should delete from the proposed membership of the Consumers' Council the two members drawn from the National Steel Corporation. It seemed to me and to my noble friends on this side of the House somewhat wrong that the Corporation should have members on a Council whose function, in acting as consumers' representative, was to consider complaints against the Corporation.
The case was argued in the contrary sense by Her Majesty's Government, but, nevertheless, towards the end of the debate the noble Lord, Lord Hughes, said that he thought I had made out a good case and that he would have the matter looked into again. Having been given that encouraging opening, I venture to take up your Lordships' time by tabling these Amendments again but speaking to them only briefly. I hope that my little hook will draw forth Government acceptance of this series of Amendments, the first of which I now beg to move.
Amendment moved—
Page 7, line 2, leave out ("subsections (2), (4), (5), (7)") and insert the said words.—(Lord Erroll of Hale.)
LORD SHACKLETON: My Lords, the noble Lord, Lord Erroll of Hale, moved Amendments similar to these in Committee, and such was the power of his eloquence that my noble friend Lord Hughes promised to consider their principle again in consultation with my right honourable friend the Minister of

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Power. The Government have been considering very carefully the arguments for and against, including representatives of the Corporation on the Council. My righthonourable friend has had a further talk with representatives of the C.B.I. Undoubtedly there are arguments on both sides. There is a good deal to be said for having representatives of the Corporation sitting with the Consumers' Council and getting the full flavour of the discussion; but we have decided, despite these arguments, that the need to increase the independence of the Consumers' Council is decisive and that it is necessary to make plain that the Council really is an independent body.
The Government are anxious that the Council should develop into a vigorous and effective body, and if it is to do this it must have the confidence of all steel consumers. May I point out to the noble Lord, Lord Windlesham, that there are powers, in an Amendment which has gone into the Bill, under which the Minister has to lay before each House of Parliament a statement on any matter brought to him by the Council, and his reasons for not giving any directions thereon. So I believe that it could be a powerful body. To further that, and because it is argued that confidence would be increased if the Corporation's representatives were excluded from membership—although no doubt it will often be convenient for the Council that they should attend as assessors—I am happy to advise your Lordships to accept these Amendments.
On Question, Amendment agreed to.
Clause 9:
Vesting in the Corporation of securities of scheduled companies
9.—(1) Subject to the provisions of this section and to the provisions of Part II of the 1949 Act revived by the following provisions of this Part of this Act, all securities of the companies specified in Schedule 1 to this Act shall, on the vesting date (as defined in subsection (5) below), vest in the Corporation by virtue of this section, free from all trusts and encumbrances.
(2) Securities created by a company specified in the said Schedule 1 as collateral security for a loan to that company shall be excepted from the operation of the foregoing subsection, but any securities so created shall be cancelled as from the besting date.
5.20 p.m.
LORD CONESFORD LORD CONESFORD moved, in subsection (1), to leave out "securities" and to insert: "ordinary and preference stocks and shares" The noble Lord said: My Lords, on February 27 last I moved this Amendment in Committee, but withdrew it, without prejudice to later proceedings, on the Minister's assuring me that he would carefully consider the arguments that I had put forward. I look forward in due course to hearing what the noble Lord, Lord Shackleton, has to say. I think that it will be convenient to the House to take this Amendment and the next three together, since they are consequential on the one which I now move.
LORD SHACKLETON: My Lords, I had thought that Amendment No. 6 was on a slightly different point—the subject of collateral securities.
LORD CONESFORD: My Lords, I think the subsection becomes meaningless because it is based on the securities in this subsection. Perhaps the point can be raised when we reach the next Amendment.
LORD SHACKLETON: I thought it a rather pointless Amendment, but I see now that the noble Lord intends to "mop it up".
LORD CONESFORD: My Lords, it was not intended to attack that subsection, but that subsection would lose any meaning in its grammatical construction and sense if we adopt this one. That is the only purpose of the next following Amendment. I must apologise to the House if I repeat some of the arguments that I used in Committee. That is necessary because one cannot be sure that the House is constituted this afternoon in the same way as the Committee was constituted on that occasion. It may also, perhaps, be for the convenience of the Minister who is to reply.
The effect of my present Amendment will be that the ordinary and preference stocks of the 14 companies will vest in the National Steel Corporation, but the present owners will retain the fixed interest stocks and the contractual rights that go with them. The Government will thus acquire the control of the 14 companies at a reduced expenditure of public money—something which, other things

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being equal, I imagine they would welcome. A more important result is that they will acquire that control without the injury to the credit of the British Government at home and abroad which I fear will otherwise result from the present proposals for the compulsory acquisition of these fixed interest stocks.
I assure the noble Lord that my concern for the credit of the British Government—the present Government and future British Governments—is the main ground on which I am moving this Amendment. I want to explain again to the House why I think that the credit of the British Government is endangered. If the Bill is passed in its present form, the immediate result will be that the 14 companies and the fixed interest stocks will all remain in existence, but the stocks will pass from the present owners to the National Steel Corporation. In return, those owners will receive a Government stock, particulars of which are not yet known, and will lose all their existing contractual rights to the redemption of the stocks that they hold.
May I again remind the House how the public acquired these stocks? The public acquired these stocks, and the contractual rights that go with them, either through the public sales of these stocks by the Iron and Steel Holding and Realisation Agency (which I shall refer to as ISHRA) or direct from the companies. Since everybody agrees, I think, that the two categories should receive the same treatment, I shall for brevity and convenience deal in my argument only with stocks offered for public sale by ISHRA. This Agency was set up by the 1953 Act. Its members were appointed by the Treasury to return the industry to private enterprise
"as they may with the approval of the Treasury determine".
The Agency was given statutory power to acquire and to sell securities. Section 28 of the Act declared that the Agency was not to be regarded as a servant or agent of the Crown. I mention that in fairness, because that provision is sometimes used against the argument which I shall put forward, though in my submission it in no way affects the principle of English law to which I shall later refer. One important consequence of Section 28 was that the Agency did not, and does not, enjoy Crown immunity.
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Under these powers conferred by Statute, ISHRA acquired the stocks concerned with monies provided by the Treasury, and under Treasury control, and offered them for sale to the public on the terms of prospectuses. Every prospectus provided for all the usual matters dealt with in a prospectus—that is to say, the rate of interest, the date or dates of repayment and the price at which the security would be repaid. Of all these contractual rights the Bill will deprive the owners. As a result, stocks redeemable at par or over will be acquired at the price of allotting Government stocks worth (to give one example) £81 or less.
Of this proposal I would say two things. First, it has struck many authorities in the City as unprincipled and wrong. Secondly, it contravenes an established principle of English law. Let me deal with these two points in order. On the first point, again for the sake of brevity, I will give one example only. I expect that the point will be dealt with more fully and far more authoritatively by the noble Lord, Lord Tangley, whose name also appears to the Amendment, but let me quote a few sentences from the letter sent by the Chairman of the Stock Exchange to the Chancellor of the Exchequer on November 15 last. He wrote:
"My Council has been considering the compensation terms proposed for holders of those redeemable fixed interest securities of the iron and steel companies which were offered for sale by the Iron and Steel Holding and Realisation Agency. The Iron and Steel Holdings and Realisation Agency is a Government agency which was established under the Iron and Steel Act 1953, and in the prospectus or document of offer the securities to which we refer were clearly stated to be redeemable on certain conditions. In view of the terms on which these stocks were sold to the public, my Council consider that it is only equitable that the holders should be given the opportunity of retaining their securities and thereby of obtaining the redemption price at the appropriate time. The absence of such options would lay the Government open to the allegation that there had been a breach of good faith."
I give that as a representative example of the representations made by important City interests.
The principle of English law which Her Majesty's Government propose to contravene is the principle laid down by Cockburn, Chief Justice, in 1864 in the case of Stirling v. Maitland, a principle

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expressly approved by the House of Lords in Southern Foundries (1926) Ltd. v. Shirlaw, reported in [1940] Appeal Cases, at page 701. I should like to quote the principle as stated by the Chief Justice, and the brief words of Lord Atkin in approving that principle in the House of Lords. The Chief Justice used these words:
"I look on the law to be that, if a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative."
That is the principle of English law which I say the proposals in the Bill, as they now stand, contravene. After citing the words of the Chief Justice which I have just quoted, Lord Atkin, in the House of Lords case, said:
"That proposition, in my opinion, is well-established law".
If any other body were to behave in the manner in which Her Majesty's Government propose to behave under the provisions of this Bill, as they now stand, then, in my submission, there would be a remedy in the courts. I concede at once that if the Bill passes into law as it now stands, there will be no remedy in the English courts, because Parliament can make law whatever it wishes. But that will not necessarily protect Her Majesty's Government in proceedings in a foreign court, and, above all, in proceedings in an international court. That fact, I think, is calculated to do great injury to British Government credit.
Perhaps I may add another consideration, which I ventured to mention in Committee, and to which the Minister on that occasion made no answer. Needless to say, I do not complain of that, because he heard it then for the first time and was not prepared. I think, however, the point is one of some importance. If it were held, or thought, abroad that the National Steel Corporation had acquired its assets or escaped from its liabilities too cheaply, that might cause great difficulty to Her Majesty's Government in their negotiations for entering the European Common Market; and, further, that fact would make relations difficult between the National Steel Corporation and the European Iron and Steel Community.
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When I say, "acquired its assets or escaped from its liabilities too cheaply", let me make it plain to the noble Lord who is going to reply that I am not here criticising or mentioning the price at which the ordinary stocks and shares are about to be acquired. What I am talking about is the treatment of the debenture holders. Even if the present debenture holders have their stock compulsory taken from them and given to the Corporation, the Corporation will itself have the same rights on redemption of these stocks that the present holders have against the various companies.
What reasons have been given by the Government for insisting on acquiring these fixed interest stocks, with all the disadvantages that I have mentioned? When I last spoke, the only reason I could discover that had been mentioned by Her Majesty's Government was the reason given by the Chief Secretary to the Treasury in Standing Committee of another place on November 23, 1966. Again for the sake of brevity I do not propose to quote what the Chief Secretary then said, because it will be well known to the Minister who is going to reply. What I will say is this. He made the point that all this was required in order to give the Government, or the Corporation, the powers it desires for reconstruction; and he was of the opinion—I say under the illusion—that if these stocks were not acquired the debenture holders would be in a position to prevent the liquidation of one of these companies, should such a liquidation be desired by the Corporation.
I gave reasons on the last occasion, which I hope I need not repeat in detail, for saying that that is just bad law. There would be no such power in the debenture holders to prevent a liquidation—though I concede at once that their security might then become repayable. But I know of no reason why the companies or the Corporation should be relieved of the ordinary consequences under English law. A company has an unfettered right to go into liquidation; but, as I say, the effect may be that the debenture may become repayable, according to the terms of issue.
On the last occasion, the noble Lord, Lord Shepherd, called my attention to one or two other matters, which again, for the sake of brevity, I will deal with

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quite shortly. He drew my attention to Section 307(1) of the Companies Act 1948, which reads as follows:
"The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court."
I was not unaware of that provision. But it does not have the effect—nor does any other provision of the Companies Act have the effect—of enabling the debenture holders to prevent or sensibly to hold up the liquidation, provided that their rights are properly dealt with in accordance with their contract.
Since I am to have the valuable support, among others, of the noble Lord, Lord Tangley, I will only say one thing in conclusion. As the House knows, I am opposed to this Bill. I do not think it is a wise Bill, but I ask the noble Lord who is to reply to believe that I am speaking with complete bona fides when I assure him that I should equally press this Amendment if I were in favour of the Bill, because if this Amendment were adopted it would be in no sense a wrecking Amendment. The Government would acquire control of the 14 companies, which they say is their object; they would not be held up in any reconstruction that they or the Corporation might desire, but they would avoid entirely that injury to the credit of British Government, at home and abroad, now and in the future, which is likely to result from ignoring a well-established principle of English law. I beg to move.
Amendment moved—
Page 7, line 32, leave out ("securities") and insert ("ordinary and preference stocks and share").—(Lord Conesford.)
5.42 p.m.
LORD TANGLEY: My Lords, I rise to support this Amendment and I think we all ought to be grateful to the noble Lord, Lord Conesford, for having put it down again, because this matter raises an important question of principle and I do not think your Lordships can consider it too deeply. I wonder whether we might bear in mind, as we discuss this matter, two thoughts which seem to me to be of vital importance. The first is that we are dealing with a proposal to
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repudiate debt—a partial repudiation of debt, of course, but none the less a repudiation of debt. The second thing I ask your Lordships to bear in mind particularly is that many of the principal victims of this repudiation of debt will be the holders of life policies and those who depend upon pension funds for their retirement, when that time comes. I suppose I ought to declare an interest because I am interested under both heads, but perhaps that is an unnecessary point of punctilio, because I doubt whether there is a single noble Lord present who would not have to declare an interest under one or other category, or perhaps both.
Those are serious things to say, and I propose to justify them both. The investors who, for the most part, subscribe for or buy the sort of stocks we are talking about to-day are the insurance companies or the pension funds. The insurance companies buy them for their life funds and the pension funds buy them for obvious purposes. A life fund is managed and built up in an extremely careful and skilful way. It comes entirely from the skilful and careful and wise investment of the premiums paid by the policyholders, and in investing those funds two principles are always followed by the manager of the fund.
The first is that he goes to his actuary and asks, "In the year so-and-so how many of my policy holders are likely to die and how much money shall I have to find for them?" The actuary will tell him with remarkable accuracy about how many people will die in that year and how much money will have to be found. Of course he cannot identify the particular people, and every one of us here hopes that each of us will beat the average. The actuary joins cordially in that long life wish, unless we happen to be annuitants as well, in which case his loyalty is divided! None the less, the manager of the fund knows within narrow limits how much money he will have to pay out in any particular year. So the first thing he looks for in an investment is one which has a fixed redeemable date which falls in that year, and then there is a complete balance on each side of the account. He knows within reasonable limits of accuracy what is going out and what is coming in. That is the first investment

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criterion, and the same process applies to a pension fund.
The second investment criterion is that not only must the money be available on redemption in the right year, but it must carry a proper yield in the meantime. This yield contains two separate components. One is what is called the "running yield", which is the interest which comes in year by year, related to what is paid for the stock. The other is the difference between what is paid for the stock and what is promised on redemption, and the combination of these two gives the result and it is what the actuary or the life manager will call the yield to redemption.
So there must be redemption in the right year and there must be the right yield to redemption. Both those factors exist and are known under the stocks as they stand to-day. The object of this Bill is to deprive those companies and those funds of both those factors. It proposes to substitute a stock the redemption date of which is unknown, and one cannot tell whether it will fall into the right year for a life fund or a pension fund; and it proposes to abolish altogether that part of the yield to redemption which is related to the difference between the price of purchase and the price of redemption. The first point is perfectly obvious and I need not elaborate it. The second is perfectly obvious, but if your Lordships will do me the favour of thinking about it for a moment, it will be seen that in each case the stock which it is proposed to issue is not£100 for£100 but a stock which is related to some past purchase price or market price.
Those are general remarks and I should like to bring them home by an actual illustration of what is proposed under this Bill. I could take many examples, but I will weary your Lordships with only one. That is the 4¾per cent. debenture stock 1968–78 of the United Steel Companies Limited. The history of that stock is this. It was created in 1953 by a trust deed in the ordinary way, a solemn covenant with a trust deed, and the stock was subscribed by ISHRA. The provisions with regard to redemption of that stock do not come from the subsequent offer for sale; they are solemnly set out in the covenants to the trust deed, and they are these. The stock was to be redeemable finally at par
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on December 31, 1978. The company had the right to redeem it earlier than that: at£102 between 1968 and 1972, at£101 between 1973 and 1977, and at par from 1977 onwards. And—this entirely reinforces the point made by the noble Lord, Lord Conesford—the trust deed specifically laid down that in the event of liquidation the stock should be repaid by the company at whatever was the appropriate premium or price, having regard to the year in which the liquidation happened.
There is nothing these debenture holders can do to stop or impede the liquidation of the company at all. All that happens is this. If the company goes into liquidation the liquidator has to pay the debts of the company, the commercial debts, bank overdrafts, bills of exchange, every debt except this solemnly secured one which he is relieved under this Bill from having to repay. There is absolutely no obstacle to the amalgamation or merger or liquidation of the company. The only object of the Bill in this respect is to make quite sure that if that happens the debenture holder is penalised by getting substantially less than he would have done if this solemn covenant had remained.
That was the position, and the stock was taken up and subscribed for under that trust deed on those terms by ISHRA. In 1961 ISHRA made an offer of this stock to the public, and they put that trust deed on public exhibition so that everybody could see exactly what were the terms of the stock. The money, of course, which had been subscribed for the stock by ISHRA had been put up by the Treasury, and ISHRA, directly or indirectly, sold it on behalf of the Treasury. In fact, they took care to say in their offer for sale that
"no part of the proceeds of the present offer is receivable by the United Steel Companies Limited."
Of course not. It was going directly or indirectly to the Treasury, so it could not go to the company. This was done by or on behalf of the Government, and what was sold was the stock on the terms of that trust deed, which is just as legal and valid to-day as it was at the time. The life companies and pension funds who bought this stock know exactly where they stand. It is in the right slot, so to speak, for the year, and it is in the right

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bracket for the purpose of yield to redemption.
What necessity, let alone what justice, can there be in impeding the operation of a pension fund or life fund by taking away part of the rights that they have, by repudiating that part of the debt which is the difference between the running yield and the yield to redemption, and giving a stock where no life manager can say that it fits into his life fund, and no pension manager can say it fits into his pension fund? This is a really serious thing to do. It is a very bad thing to do. There is no reason for doing it. I wholeheartedly support this Amendment, and I hope your Lordships will say in no uncertain way that this is not the way a British Government ought to conduct business.
5.53 p.m.
LORD MITCHISON: My Lords, the reasons for doing it are that the British electorate since the 1920's have had before them the question of nationalising the iron and steel industry, and at the last Election they decided decisively that it should be nationalised, and this is one of the necessary parts of the nationalisation process. It has been awfully like a rather High Church service up to date. I have listened with reverential attention to words which I found it extremely difficult to understand. It is on the face of it extremely unlikely that some remarks made by a judge, however distinguished, about one hundred years ago, about something quite different, are going to have much effect on what Parliament has to do nowadays. What I think the noble Lord, Lord Conesford, has forgotten is that Parliament does not follow the law; it makes it, and every Statute, unless it is a purely codifying or explanatory one, in fact changes the law, and of course it is perfectly true that this Statute is changing the law.
Whether it is changing it rightly or wrongly is, in a democratic country, I suggest, to be decided by the will of the people, and under our Constitution, by the results of the last Election, in a matter on which there is the clearest possible mandate and the clearest possible dispute. Your Lordships, I am sure, will appreciate that if this Amendment is carried to-day—and your Lordships having a built-in
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Tory majority here will no doubt be able to carry it if you so choose—it will go back to another place and it will there be turned down, and the practical result will be nothing so far as that goes, except the wasting of a certain amount of Parliamentary time and perhaps galloping a step or two further down a rather dangerous slope.
Let us just see a little more what really is proposed. What is suggested is that by this Bill the Government are taking certain debentures, certain preference shares and certain ordinary shares, and they ought not to take over the debentures. That is only part of the picture. What the Government are taking over is not the whole but the major part of the iron and steel industry of the country. They could of course do it in other ways. They could do it, as was done by a Tory Government before the war by taking over the assets—in that case the assets of London Transport. They could do it in that sort of way now. But after the war, beginning, I think, with the railways, it was found more convenient—and I think there are reasons for it, good reasons of convenience—in cases of this kind to take over the securities of the various companies concerned. Of course, when the railways were taken over by the Transport Act a year or two after the end of the war very large numbers of debentures were taken over, and they were not paid for at par and they were not left standing as they were.
I rather doubt whether anybody had thought about this argument at that time. I cannot find it, at any rate. Probably something was said about it—there were very long debates—but I cannot find it. But now, what was done then was apparently quite wrong; it was a gross injustice, particularly to life assurance managers.
LORD TANGLEY: My Lords, if I may intervene, I said nothing about life assurance managers. I am talking about the interests of those of us who pay premiums to life companies and pension funds and who were certainly not told at the last Election that the intention was to erode their funds under their feet.
LORD MITCHISON: I hope life assurance managers will have full regard to the interests of their policyholders. I

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assume that the noble Lord, Lord Tangley, would have agreed with that. I do not mind which he talks about, life assurance managers or policyholders. Of course they were not told; of course you do not tell people in detail at a General Election what you are going to put in a Statute as long as this. They would not be interested; they would be bored stiff. It was nothing strange. This has been done before. I have given one instance of the railways companies, and there are a number of others if one cares to go through them. They may not have known the form the Statute was going to take, but they must have been much more stupid and blind than I believe them to be if they were not well aware this was a distinct possibility.
I will go further. If this was to be done by taking over shares—and it is not necessarily the case that it would be done in that way—then it was almost inevitable that the debentures would be taken over, too. The reason is perfectly obvious. At the present time the steel industry is in a difficult position. It is not the only steel industry in the world to be in a difficult position. One of the objects of this Bill is ultimately to get what I think I would call a rationalisation of the industry, and it would undoubtedly involve changes in the structure of the companies whose shares and so forth we are now considering. That being the position, is it really suggested you can leave the debenture holders sitting there?
It is not a question of whether they have or have not a technical right to stop a liquidation. One thing is perfectly clear. If a steel company, the XYZ steel company, disappears for reasons of national interest—that is what is happening—the debenture holders will have to be paid off, and what the debenture holders are really after is a little more money. That is part of it. They hope to have a certain nuisance value,—which noble Lords who have spoken have given to them—and the Chief Secretary to the Treasury was referring to this in the comments he had to make on this question. He quite rightly put his finger on this as the real obstacle to doing what is done now.
I must say that when I heard the case put for it to-day I said to myself: "Well, this of course is pure politics. There is
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nothing personal about it; it is Party politics; indeed it is". This is nothing but Party political mudslinging, and that is all it is. For noble Lords to get up and say that we are breaking principles of English law—which is irrelevant to what we are doing at the moment; we are carrying out the will of the Electorate—and that we are depriving people of their vested rights, and all the rest of it, seems to me completely off the point.
Any nationalisation Bill, any Bill that involves a change of ownership of this kind effected by Statute, is bound to take over things. Whether they are taken over in the form of assets or shares and obligations of the company is, I suggest, really quite immaterial. The real point is that they are being taken over because it is in the public interest—and it is what the public have voted for. That is the essential point. When they are being so taken over then quite obviously you have to pay people and compensate them fairly; and I say with some pride that my Party, at any rate, have always compensated fairly, and indeed rather more than fairly. I think we paid the railway companies too much, but that is a matter of opinion and it is long past now.
So far as this Bill is concerned, what are these people being given? They are being given the market value of the rights they have. A debenture holder has a long trust deed which has a Stock Exchange quotation; and the Stock Exchange quotation is, we suggest—and it has not been denied—a fair and proper measure of the value of the rights that are being taken over. These rights include the rights to redemption, the rights to redemption at a premium, if they are there; the rights to interest and any other incidental rights of debenture holders.
I say that there is no more injustice, and no less injustice if you think there is injustice at all, in taking over debentures than there is in taking over shares or than there would be in taking over assets. All this stuff we have heard to-day is really completely off the point and it is highly undemocratic. We are not yet being governed by the City of London in matters of this kind. The people of this country have a right to take over into public hands any industry which is vital to our country, and they should exercise

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that right and not try to deal specially with one particular part of it, and one particular set of rights. It is quite off the point.
6.5 p.m.
LORD TERRINGTON: My Lords, I should like to endorse what has been said so far in favour of this Amendment. At the same time, may I take this opportunity of briefly raising a supplementary point which I do not think has been discussed before. I do not want to confuse the main issue by introducing compensation terms in any detail, but I think there is something to be said for considering the anomalies which will arise under the Bill. It has been pointed out already that trade, bank and ordinary creditors are to be left intact with their contracts, while funded creditors are to have theirs forcefully terminated. However, even this general rule has its exceptions.
John Summers 4 per cent. first mortgage debenture, for example, is apparently exempt, because Schedule 4, paragraph 59(1) of the Bill, which defines "securities" very widely, excludes those parts of loan capital which can be redeemed with not more than a year's notice, or at a price not exceeding par. Then there is the case of holders of John Summers 6½per cent. second debentures dated 1976/78, who will receive much more favourable treatment than the holders of any other debenture stock, although the security is inferior to many. They will be bought out at a price at which if they can secure a return of only £6·3 per cent. from another source, they will not be losers. Holders of United Steel, the 4¾ per cent. 1968/78, to which the noble Lord, Lord Tangley, has referred, will, on the other hand, have to secure a gross redemption yield of £7·3 per cent. if they are not to suffer. This despite the similarity of the redemption dates.
This discrepancy arises from the artificial method of assessing compensation under the 61-month formula. During many of these months, as noble Lords are aware, the Summers debenture holders have the potentially valuable right to convert their holding into the equity capital, as it was in fact a convertible debenture, and therefore commanded a relatively higher price in the market than other comparable stocks. This right has run
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out, but holders are apparently to be compensated at this relatively higher level as the result of a special situation which came to an end nearly twelve months ago.
I do not want to labour these points as there are many more examples, and in any case I said that I wished to treat them merely as supplementary to the main argument. But in giving my wholehearted support to this Amendment I felt it was worth while drawing attention to these anomalies which I do not believe have been previously pointed out, since, in fairness, I do not think that their existence ought to be overlooked.
6.17 p.m.
LORD SHACKLETON: My Lords, I have listened very carefully to everything that the noble Lord, Lord Conesford, has said, and I fully accept the spirit and sincerity of his speech, in particular in relation to the spirit in which he moved this Amendment and his purposes behind it. I have read all the arguments on this matter, both here and in another place. I have been at great pains to satisfy myself personally that what was being done in a difficult field was in fact the right and, indeed, the honourable thing for the Government to do. I shall set out as best I can the various considerations and I shall also state, as fairly as I can, the arguments as I understand them of the noble Lord, Lord Conesford. I therefore ask the House to forgive me if I am somewhat lengthy, because I want to be sure, and I want the noble Lord to be satisfied, that I have understood what he had to say.
I shall also deal briefly with some of the points of the noble Lord, Lord Tangley, though I slightly regret his use of words like "repudiation of debt". In my view, there is no question of repudiation of debt. It is always possible to use language of this kind if one disagrees with what is offered, but I can assure the noble Lord that the Government do not regard this as repudiation of debt. I should be sorry if too much emphasis were given to this suggestion and I hope that the arguments which I shall put forward will be such as to ensure that the good name of the Government, and therefore of this country, is not damaged by what the Government are proposing to do.
LORD DRUMALBYN: My Lords, would the noble Lord forgive me for a

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moment? If he does not like that colourful word, "repudiation", would he accept "depreciation" of debt?
LORD SHACKLETON: My Lords, it the noble Lord, whose ingenuity is great and, as I have already indicated, is of a kind that makes me reluctant to exchange arguments with him on matters of terminology, would allow me to make my speech, I think he will be able to attach whatever phrase he wishes to what I have to say. The reason I say this is that I want to make clear that what the Government are doing we believe to be honourable and correct; and I am sure that the noble Lord, although he may not himself believe it to be honourable and correct, will do me the credit of accepting that at least I am convinced on this matter.
One of the main arguments of the noble Lord, Lord Conesford, against the vesting of debentures in the Corporation was based on the established legal principle to which he referred which was enunciated by Chief Justice Cockburn and subsequently adopted by your Lordships' House sitting in their Judicial capacity on appeal cases. I cannot remember whether he in fact referred to this matter to-day, but he certainly did on the previous occasion. That principle is founded on the simple and sensible proposition that:
"…if a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, this is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative."
I say this to make clear that this is fair.
Having said that, I must say that I thought my noble friend Lord Mitchison really demolished the argument, though I shall go on to deal with it, in the first few points of his speech on Committee stage. I think it must be conceded by the noble Lord, Lord Conesford, and those who advanced this principle in support of their case against the vesting of the debenture stock that it would not be invoked in the courts of this country to found a remedy against such vesting. It is also common ground that, for the purpose of applying the principle the Iron and Steel Holding and Realisation Agency, when they sold debentures to the public, were not, in law, acting as
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agent for the Crown and therefore the Government cannot be said to be a party to the sale.
I am coming on to deal with the moral argument. It is recognised that in law the principle has no application to the circumstances which we are considering. This is not to suggest that there is not something to be learned from it; but, at most, it seems to me that it can only serve as the basis of some moral argument against the Government's proposals in the Bill to vest the debentures of the Schedule companies in the Corporation.
I should like to say a few more words about ISHRA's position in all this. ISHRA was merely the seller of those debentures and as such—and if any noble Lords feel inclined to think that I am skating over this, I will pick up the various arguments—cannot be regarded as having incurred continuing obligations towards the purchasers, any more than any other seller of debentures in the course of ordinary dealings on the market can be said to guarantee to the purchaser a continuing state of affairs. For this reason, I find it hard to see how the quoted principle can be said to be relevant. If it is accepted that the proposals in the Bill involve no departure from relevant legal principles, those who object to the proposals must fall back on moral arguments which, it seems to me, boil down to a claim that fair compensation for the debentures is not being paid and that in fact there is an element of repudiation.
This is a claim which I find very difficult to credit when one compares the compensation prices for these debentures with their present prices on the stock market. There have been a number of quotations and some interesting examples given in relation to John Summers, 6½per cent., which was originally a redeemable stock. I think that was the one to which the noble Lord, Lord Terrington, referred, and he also referred to United Steel. I have a number of figures before me. I am not sure that they are entirely relevant to the basis of the argument, but it is true that the estimated compensation price of United Steel is about £80 as opposed to the last price in dealing of £76 10s., and of course it was sold to the public at £81.
An argument has been used, and was used on the previous occasion by the

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noble Lord, Lord Somers, that the market prices have been depressed. Well, no noble Lord has raised the question of whether nationalisation has depressed prices, so I will perhaps leave that unless any noble Lord wishes me to deal with it later. Some of your Lordships—and this is the basis of the argument from both the noble Lords, Lord Cones-ford and Lord Tangley—feel that something more is due to the debenture holders to allow for the price on the redemption of their debentures; and they refer to the solemn nature of the arrangement which is set out in the trust deeds. I realise that as the result of the vesting of the debentures in the Corporation the present holders will not enjoy the gain they may have looked to receive from holding their securities to redemption, but the current value of this gain must surely be among the factors taken into account in stock market prices, which leads to the switching from stock to stock and which is reflected in some fairly lively dealings in these debentures. I was surprised to find that this was so. It is therefore reflected in the compensation that will be paid. It cannot, in my view, be contended that fair compensation has not been paid for the bundle of rights represented by these securities.
The suggestion has been made elsewhere that compensation should be given to prior charge stockholders in the form of stocks with terms the same in all material particulars as the stocks being taken over by the Corporation. This would be tantamount to a bonus for the debenture holders. Instead of their securities being backed by particular companies, they would be backed by the Corporation and in effect by the Government. They would in consequence have a higher value and would thus be receiving what we regard as fair compensation plus a bonus because the nature of the stock is thereby changed. This I submit would be unfair to the Exchequer, and unfair in comparison with the compensation for other classes of security. I would ask noble Lords to face this particular dilemma. They may argue that the simple solution is not in fact to take over and abolish the stock.
During the Committee stage the noble Lord, Lord Conesford, questioned the
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need for the vesting of debentures in the Corporation; and he made a number of interesting and, I thought, entirely fair comments. The remedies of debenture holders are many and varied. Some of these remedies derive from the general law relating to the enforcement of charges over property and some derive specifically from Statute. In every case the terms of the relevant trust deeds specify the particular rights of the debenture holders in question. In general terms the position of a debenture holder might almost be likened to that of a mortgage. A debenture holder can apply to the court for the appointment of a receiver if he considers that his security is in jeopardy—where the company has been wound up, or where the winding-up is imminent, or where a company is disposing of its undertaking in violation of the terms of its security. There are, of course, many other examples which could be given of circumstances in which a debenture holder might apply to the court for the appointment of a Receiver; and, indeed, of other proceedings which he might bring against a company in appropriate circumstances.
The plain fact is—and I have looked into this as carefully as I can—that the continued existence of these debentures in the hands of persons other than the Corporation would constitute—and I put it no higher than this—a continuing risk of interruption and delay in the execution of the Corporation's plans to reorganise the structure of the industry quickly and effectively. Anything which might stand in the way of a rapid and effective reorganisation of the industry cannot be accepted, and it is for this reason that the Government propose that the debentures of Schedule 1 companies should vest in the Corporation, but at the same time they have ensured that the holders of those debentures are fairly compensated.
I should like—and again I hope I can do this fairly—to sum up the arguments which have been made against the vesting of the debentures. They are, first of all, that by acquiring the debentures compulsorily the Government are defaulting on financial obligations entered into by a Government agency; secondly, that debenture holders are entitled to certain rights under their contracts with the companies and these should not be overridden; and, thirdly, that the acquisition

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of the debentures is not essential to the transfer of the steel works to public ownership. I believe that those are the three main complaints. There were also certain detailed criticisms of the kind which the noble Lord, Lord Tangley, explained in an extremely interesting and informative way with regard to the operation of pension and life funds. Those of us who have at times been involved in this are aware of these arguments, and I do not dissent for one moment from what he had to say in that regard.
I have explained that when ISHRA sold the debentures, legally it did so on its own behalf and not as an agent of the Government and it incurred no continuing obligations towards the purchasers of the securities. Their rights were, and those of the present holders are—I am putting the legal position—against the companies concerned. Under the Bill the rights under the contracts with the companies are not being destroyed or modified, but transferred—compulsorily it is true—to the Corporation, by whom they will continue to be enjoyed pending any reorganisation of the companies. In exchange for their debentures and for the rights which they confer against the companies, the present holders will receive compensation which, in the Government's view, is on the generous side of fair and just. In these circumstances, I cannot see how it can be said that the Government are defaulting on any obligations of a Government agency.
6.24 p.m.
LORD HAWKE: My Lords, may I ask the noble Lord a question, as he will not be allowed to speak again? Am I to understand him as saying that the receivers of this Government stock will receive such quantity of it as they will be able to sell in the market and, with the proceeds of that, buy a security of at least equivalent status, with similar running and redemption yields, and date of redemption, as the stock which they are giving up?
LORD SHACKLETON: My Lords, I am always nervous when the noble Lord gets up. But, in fact, they are receiving Government stock in compensation at a higher value than anyone would have to pay if they were to move into these stocks to-day. Indeed, as the noble Lord knows,
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there will in effect be a bonus to those who buy such stocks at the moment.
LORD SOMERS: My Lords, may I interrupt the noble Lord for one moment. I must reintroduce the argument which I used on the Committee stage. I quite agree that the compensation is going to be a small fraction above what the holders are receiving at the moment. But one must go further back than that. It was from the time when the Labour Government won the Election in 1964 that steel stocks and shares began to fall, and they fell not because of any inefficiency in the steel industry but because steel nationalisation was part of the Labour programme. They have continued to fall steadily every since. Therefore, having fallen practically to the bottom of the market, the Government are now, of course, stepping in and taking them at a very cheap price and giving, as the noble Lord said, a fraction more.
LORD SHACKLETON: My Lords, I find it difficult to reply when the noble Lord makes a point which I had deliberately skipped because he had not previously raised it. I will, if I may, return to that point if there is time at the end, but I do not think it is entirely significant in relation to the arguments which I am now trying to put. The holders of the security stocks will have the option of retaining the Government stock issued in compensation, which will be dated, or selling it and reinvesting in another industrial stock with terms closer to their requirements. Certainly there is disturbance, which is regrettable, to the insurance funds, but I should be a brave man to attempt to suggest what are the various components and factors and influences which weigh in the market in determining the price at which any particular stock can be purchased.
I hope I can find where I was in my speech. I think I was saying—and this is perhaps what triggered the noble Lord, Lord Hawke—that I could not see how it can be said that the Government are defaulting on any obligations of a Government agency, and in that respect I was on the narrower point of ISHRA. I went on to say that debenture holders have contractual rights. But surely it is a completely untenable proposition—it may be that the noble Lord, Lord Tangley, will not agree with me—that the contractual

1603
rights of debenture holders must never be disturbed.
Compulsory acquisition of property for public purposes against fair compensation is nowadays accepted as essential by all the Parties in your Lordships' House, and there is no reason why debentures should be treated differently from other property rights; nor indeed have they been. Debentures were compulsorily acquired on the previous occasion, as indeed—as my noble friend Lord Mitchison said—they were under the nationalisation of other industries such as the railways. So that precedent does not support the omission of the debentures. If the steel companies' debentures were left with their present holders, the Corporation and the Minister might be inhibited from carrying out with the speed which the situation demanded a far-reaching re-organisation of the present company structure. It is therefore essential to the policy of nationalisation that all the rights attaching to the debentures should be vested in the Corporation.
I hope that, whatever else I have done, I have convinced your Lordships that the Government are not proposing to take over the debentures in a fit of absentmindedness. I hope, too, that it is common ground that debentures are not in some way sacrosanct and immune from compulsory transfer under all circumstances. I also hope your Lordships will now agree that the disposal of some of these securities by ISHRA has no direct bearing on the matter. The Government have considered very carefully all the arguments which have been made on this subject. As I said, the point was thoroughly debated in another place. It was examined again by your Lordships in Committee, and to-day I think it has been even more exhaustively argued. I think I can claim—and I think noble Lords will agree—that throughout the debates on this Bill the Government have shown themselves ready to meet criticism and to make changes in the Bill whenever there appeared to be genuine fears and difficulties. But this is not a case where the Government are persuaded that a change would be justifiable.
In the light of this full discussion I hope that your Lordships, even if unable to give full agreement to what I have said, will at least be satisfied that I have
1604
deployed the argument fairly, and that it carries a measure of conviction that, in a situation which is not as simple as some people have thought, and where in fact a judgment has to be made one way or another as to what is the appropriate figure, this is a solution which, if not satisfactory from the point of view of some noble Lords, is at least one in the case of which the Government have attempted to act with fairness, and on which they have been heavily criticised by some of their own supporters. I therefore hope very much that the noble Lord will not decide to press this matter to a Division.
6.32 p.m.
LORD CONESFORD: My Lords, I am grateful to the noble Lord the Minister for a very careful reply and for accepting (and I was sorry that the noble Lord, Lord Mitchison, did not accept) my own bona fides in the matter.
LORD MITCHISON: I am so sorry if I appeared not to do that. I did not mean to give that impression in the least. If I am going to disallow the noble Lord's bona fides, I shall tell him so in no unmeasured terms.
LORD CONESFORD: I am grateful to the noble Lord for making that clear. As regards the argument of the noble Lord, Lord Mitchison, I can be very brief. He implied at one stage that I was attacking nationalisation, or the principle of nationalisation. I was doing, as the House knows, nothing of the sort. Of course I accept nationalisation, and the main object of this Bill. The motive for my Amendment is that I am absolutely convinced that the Government, whatever their intentions, are in fact injuring British credit, and are doing it for no good reason whatsoever.
There was one really important matter, with respect, that I hoped the noble Lord the Minister would answer, but which he did not. That was the point I ventured to make about the difficulties that could be caused to our entry into the European Community. That, I think, does deserve a little further consideration, for this reason. I agree with a great deal of the analysis of the Minister; that is, that the present owners will lose their present stock and will get in its place another stock of which we know very little. What he has not told us about is on what terms

1605
these debentures will be repaid to their new owners; namely, the Corporation. If the Corporation simply excuses the debt or treats it in some way quite different from the ordinary practice of English law, then it is my view—I may be quite wrong—that that may cause quite serious difficulties in the negotiations to enter the European Community, and certainly in the relations of the Corporation with the European Iron and Steel Community.
LORD SHACKLETON: My Lords, may I interrupt the noble Lord? I am sorry I did not deal with that point. Of course, this argument could be applied to all the compensation terms. All I would say to the noble Lord is that there is no question of there being any hidden subsidisation of the Corporation of a kind that would bring in doubt the bona fides (or perhaps the word should be "purity") of their trading operations in this respect. These matters are bound to be revealed at various stages—and I give a positive assurance of that kind. I do not myself believe, from all the inquiries I have made, that this particular matter would be a serious impediment. I know that there are other aspects on which noble Lords have doubts, although I do not agree with them, but I can give an absolutely categoric reply to the noble Lord on this matter.
LORD CONESFORD: My Lords, I am again grateful to the noble Lord. I genuinely believe, for the reasons that I tried to give to the House and that I gave to the Committee, that the present proposals of Her Majesty's Government are injurious to British credit and are unnecessary for any of the purposes of nationalisation that they have in mind. As to the statements which the noble Lord has made, and which another Minister made on a previous occasion—that if these debentures were not taken over, a reconstruction could be successfully delayed or prevented—I can say only that I believe that to be a contention which, in law, is quite unfounded.
Now the question is: should I withdraw the Amendment? I think I should not—and I will tell the noble Lord why I have formed that conclusion. This matter has never been yet discussed on the Floor of the House of Commons. It was discussed one day in Committee, and on a Division the Government majority was only four. I know that that is a sufficient majority; but, that being the case, it seems to me that, if this House shares my view of the possible threat to British credit, we should give the House of Commons an opportunity of considering this matter. I say at once that T should certainly accept their conclusion; but I think they are entitled to know our view and to give their own view on whether this is injuring British credit, and is injuring it unnecessarily. For those reasons, I believe that it is in the interests of Parliament that we should divide on this issue, and I therefore do not think fit to withdraw my Amendment.
LORD SHACKLETON: My Lords, may I, with leave, say just this, in the light of the constitutional doctrine enunciated by the noble Lord? I find it strange that, in the case of a matter which we have discussed fully and which has certainly been discussed in Committee in another place, in a Bill which was never guillotined—as have been so many measures introduced by both Labour and Conservative Governments—it should be suggested that we make an Amendment to a Bill merely to enable another place to discuss it on the Floor of the House. The suggestion seems to me to have—and I mean this in no offensive way—a specious attractiveness but little real validity; and I hope that noble Lords, in voting for this Amendment, will not do so for that particular reason.
6.40 p.m.
On Question, Whether the said Amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents 39; Not-Contents 26.

CONTENTS

Aberdeen and Temair, M

Colville of Culross, V.

Drumalbyn, L.

Airedale, L.

Colyton, L.

Erroll of Hale, L

Ampthill, L.

Conesford, L. [Teller.]

Fortescue, E.

Audley, Bs.

Cullen of Ashbourne, L.

Gough, V.

Barrington, V.

Derwent, L.

Hacking, L.

Birdwood, L.

Dilhorne, V.

Howard of Glossop, L.

Ironside, L

Redmayne, L

Strathclyde, L

Killearn, L

Rowallan, L

Swansea, L.

Massereene and Ferrard, V

St. Helens, L.

Tangley, L. [Teller.]

Merrivale, L.

Selkirk, E

Terrington, L

Monson, L

Sempill, Ly

Teynham, L.

Napier and Ettrick, L.

Somers, L

Thurlow, L

Reay,L.

Strange of Knokin, Bs.

Vivian, L.

NOT-CONTENTS

Addison, V

Gifford, L.

Peddie, L.

Bowles, L.

Hall, V.

Phillips, Bs. [Teller.]

Burden, L.

Hilton of Upton, L. [Teller.]

Raglan, L.

Champion, L

Kilbracken, L

Ritchie-Calder, L.

Chorley, L.

Leatherland, L.

Shackleton, L.

Citrine, L.

Longford, E. (L. Privy Seal.)

Sorensen, L.

Crook, L.

Mitchison, L

Stocks, Bs.

Gaitskell, Bs.

Moyle, L.

Stow Hill, L.

Gardiner, L. (L. Chancellor.)

Pargiter, L

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
LORD CONESFORD: My Lords, this Amendment is consequential. I beg to move.
Amendment moved—
Page 7, line 36, leave out subsection (2).—(Lord Conesford.)
LORD SHACKLETON: My Lords, I do not agree that this Amendment is consequential. I do not want to waste time on it, but in my view there is no point in fixing collateral securities. In order to save the time of the House I wonder whether the noble Lord would prefer not to press this. If we find that it is essential, perhaps he would move it at the Third Reading. The Government for the sake of consistency would then accept it.
LORD CONESFORD: Willingly. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 10 [Compensation for vesting of securities]:
LORD CONESFORD: This Amendment is consequential. I beg to move.
Amendment moved—
Page 8, line 35, leave out ("securities") and insert ("stocks and shares").—(Lord Conesford.)
LORD CONESFORD: I beg to move Amendment No. 8, which is also consequential.
Amendment moved—
Page 8 line 44, leave out ("securities") and insert ("said stocks and shares").—(Lord Conesford.)
Clause 11 [Valuation of securities quoted before May 1966 and of new issues]:
LORD SHACKLETON: My Lords, I beg to move this Amendment. It is a technical Amendment designed to facilitate the proposed merger between Dorman Long, Stewarts and Lloyds and South Durham, about which noble Lords will have read. In order to save time, I will not give the arguments in favour of this merger, which are well known. It is almost a consequential Amendment designed to make it clear that technical changes in rights which might result from the merger do not affect the present compensation position of the different classes of shares. The concern is to ensure that compensation rights are the same. The companies also are anxious that the compensation of the different classes of security shall not be prejudiced or put in doubt.
Amendment moved—
Page 13, line 3, at end insert ("and for the purposes of subsection (1) of this section, an alteration effected, after the last of the relevant days, in rights attaching to securities shall not be taken to have changed them into different securities.")—(Lord Shackleton.)
LORD WINDLESHAM: I have only two comments to make on this Amendment. First, it illustrates the usefulness of your Lordships' consideration of this Bill. This is a case of defective wording which the Government themselves have now amended. Were it not for the opportunity of giving consideration to this Bill in your Lordships' House, the merger between Dorman Long, South Durham and Stewarts and Lloyds could probably not have been taken account of in the Bill at all. Secondly, this merger shows that rationalisation can take place within

1609
the steel industry along the lines indicated by the Benson Committee without nationalisation at all. This brings us back however to the general arguments discussed at Second Reading which I shall not pursue now.
Clause 15 [Provision of production facilities to be subject to Minister's consent in certain cases]:
6.50 p.m.
LORD SHACKLETONmoved, in subsection (2), to leave out, "a notice published in such manner as he thinks best adapted for informing the persons affected ", and to insert, "order". The noble Lord said: My Lords, again we have a whole stream of Amendments which it might be convenient, if noble Lords agree, to consider together, Amendments Nos. 10, 11, 12, 13, 19 and 20. They arise out of an Amendment to Clause 46 moved by the noble Lord, Lord Windlesham, in Committee. That Amendment provided that a notice issued by the Minister under Clause 15 should be subject to Affirmative Resolution procedure. For reasons explained by my noble friend Lord Hughes, the Government felt that the Affirmative Resolution procedure would not be appropriate in this case, but we undertook to introduce Amendments to make the substance of the notice subject to the Negative Resolution procedure, and this group of Amendments fulfils that undertaking.
My Lords, perhaps I should say that under this clause the notice relates to the publishing of notices defining those projects in the private sector which must be submitted to the Minister but that they will now he given by way of Order which will be subject to a Prayer. I beg to move.
Amendment moved—
Page 15, line 38, leave out from ("by") to ("require") in line 40 and insert ("order")—(Lord Shackleton.)
LORD WINDLESHAM: My Lords, these Amendments, resulting, as the noble Lord, Lord Shackleton, said, from Amendments putdown from this side of the House on Committee stage, represent a considerable concession by the Government in the interests of Parliamentary accountability, and we welcome them. They do not go so far as we had originally asked, which was for an
1610
Affirmative Resolution procedure. This was indicated as the most appropriate form of procedure by the Select Committee on Delegated Legislation when they made their recommendations on the subject of Statutory Orders of special importance. None the less, it is a substantial gain from the point of view of those concerned with the degree of ministerial answerability.
The only other point I should like to make on these Amendments is that they deal with a politically explosive area of potential controversy. The whole question of the extension of production facilities in the private sector will be affected by this clause when the Bill becomes law. Millom cases will no doubt arise. The Minister will set the level of production facilities by tonnage, by price, or by whatever standard may be decided, and that Order can be considered in Parliament. A motion to negative it can be tabled. But thereafter, once the level is fixed, as I understand it, the Minister's own decision will determine whether or not consent to proceed is given. Some of these, as Millom is already, may be very difficult social and political decisions. We would be wise to note that as we welcome these Amendments.
LORD SHACKLETON: My Lords, I beg to move Amendment No. 11.
Amendment moved—
Page 15, line 41, leave out ("notice") and insert ("order").—(Lord Shackleton.)
LORD SHACKLETON: My Lords, I beg to move Amendment No. 12.
Amendment moved—
Page 16, line 5, leave out ("publishing a notice") and insert ("making an order").—(Lord Shackleton.)
LORD SHACKLETON: My Lords, I beg to move Amendment No. 13.
Amendment moved—
Page 16, line 14, leave out ("A notice") and insert ("An order").—(Lord Shackleton.)
Clause 25:
Information respecting certain classes of business of the Corporation and publicly-owned companies to be contained in the Corporation's report to Minister
25.—(1) If a body in the group consisting of the Corporation and the publicly-owned

1611
companies has, in the course of a financial year of the body ending after such date as the Minister may determine for the purposes of this subsection, carried on business of a kind to which this section applies, or business of that kind of two or more classes that differ substantially from each other, the Corporation shall determine the amount of the turnover of the body for that financial year in respect of business of that kind or, as the case may be, of each of those classes; and if the amount of turnover in respect of that business or, as the case may be, of any of those classes, is determined by the Corporation to have exceeded £250,000, there shall be contained, if the body is the Corporation, in the report which, by section 4(6) of the 1949 Act, they are required to make next after the end of that financial year or, if the body is a publicly-owned company, in the report which the Corporation are by that section required to make next after the end of the financial year of the Corporation with or within which the first-mentioned financial year ends, a statement of—
d) the interest rates charged to publicly-owned companies for loans made to them by the Corporation or by the Minister, and the amounts of such loans; and
6.53 p.m.
LORD SHACKLETON LORD SHACKLETON moved to leave out paragraph (d) of subsection (1). The noble Lord said: My Lords, the Amendment I am proposing reverses a decision of your Lordships' House taken on a Division, and in the circumstances I hope that your Lordships will forgive me if I go rather thoroughly into the considerations which have led the Government to put down this Amendment. I should like to begin by reminding your Lordships that the publicly-owned companies will have four sources of funds for financing their capital expenditures: First, their internal resources, consisting of provisions of one kind and another (notably depreciation) and any retained surpluses on revenue account; secondly, temporary borrowings from persons other than the Corporation (notably the banks) made under the provisions of Clause 19(3); thirdly, the issue of shares or stock; it may be assumed that issues of this kind will normally be subscribed for by the Corporation; and, fourthly, loans from the Corporation.
On the average, internal resources provide about two-thirds of the capital requirements of companies in the private sector. There is no reason for assuming that the publicly-owned companies of the
1612
Corporation will on average contribute less than this proportion towards their capital requirements; but even if they did fall somewhat short of the general average, it would be surprising if loans from the Corporation became the preponderant source of capital for the publicly-owned companies. Even in the exceptional case where a company in, say, its early years, is more than normally dependent on loans from the Corporation, it is easy to exaggerate the saving to the company in interest charges over the cost of borrowing from the market. Over the years, the difference between the Exchequer borrowing rate and the rate for good industrial debentures has been in the region of½per cent. per annum. If we take the ratio of turnover to capital employed as averaging 3 to 2, and if we assume that all new investment by a publicly-owned company is financed by loans from the Corporation at the Exchequer lending rate, the saving as against borrowing from the market would be in the region of only 0·3 per cent. of total costs. Normally, the saving would be even smaller, as any saving would only apply to that part of the increment in total capital employed that is financed by loans and the ratio of this to turnover would be quite small.
My Lords, I have, of course, been speaking of averages and the normal case. This is an average across the whole of industry. Noble Lords will remember this appeared recently in The Times in relation to the 300 leading firms. This is the ratio of turnover to capital. There will always be exceptional cases—new businesses, for example—where the proportion of investment financed by Corporation loans could be very high and where the ratio of turnover to capital employed might be unusually low. But in considering the need for a legislative provision, it is useful, I submit, to start by looking at the situation in the round and at the normal case. I think the truth of my contentions is demonstrated by the borrowing provision in Clause 19. Your Lordships will see that provision is made there for new borrowings by the Corporation up to a limit of £400 million. The Corporation's total saving in interest on future borrowing from the Exchequer may thus be estimated as about £2 million per annum after five years. I do not want to suggest that this saving in interest is the complete measure of the

1613
importance to the Corporation of borrowing from the Exchequer, but in comparison with a total turnover already exceeding£1,300 million a year it is plain that the saving on interest is negligible as a factor in the publicly-owned companies' competition with the private sector.
Your Lordships, while accepting what I have said as true in general, may still be concerned about the exceptional case and the possibility that the Corporation may occasionally make loans at rates well below the rates at which it borrows itself from the Exchequer. In the Government's view, what is material in such cases, as indeed in all cases, is not the terms on which capital is made available but the use that is made of such capital; that is, not the cost of the capital to the publicly-owned company but the earned rate of return. The Government introduced Clause 25 so that Parliament, and companies in the private sector and the public generally, could calculate the rate of return on capital which was being obtained on their non-iron and steel activities by the Corporation and the publicly-owned companies and could therefore judge the efficiency with which the capital was being used, and be satisfied that the Corporation and the publicly-owned companies were not competing unfairly with the private sector by accepting unduly low rates of return in particular instances.
Under Clause 25, as it originally stood, the Corporation would have to provide details of turnover, profit or loss and capital employed, separately in respect of nearly all the non-iron and steel activities of itself and the publicly-owned companies; and it is required to do this in such a way as to ensure that a true and fair view can be obtained of the rate of return on capital as your Lordships will see from subsection 4 of this clause. This is a more far-reaching obligation than will be imposed on companies in the private sector, even after passage of the Companies Bill. It is an important safeguard of the interests in the private sector that may be affected by the non-iron and steel activities of the new Corporation and, as it applies to all capital employed, in the Government's view it makes unnecessary any provision confined to fresh borrowings.
There appear to be some 50 or 60 future publicly-owned companies which
1614
will be engaged mainly in non iron and steel activities. Loans may be made to them on a number of separate occasions in each year. The publication of the details of all these separate loans could become very lengthy and serve no useful purpose. The terms of the Corporation's borrowings from the Minister will undoubtedly be given in the Corporation's accounts, in the same way as they are for other nationalised industries. In the ordinary case, these rates will constitute a floor for loans by the Corporation to the publicly-owned companies.
Despite what I have said, some of your Lordships may still like to have regular confirmation that the Corporation is not making loans at low rates of interest to publicly-owned companies whose principal operations are outside the field of iron and steel. In the Government's view, as I have said, this is unnecessary, but in deference to your Lordships' view and to the fact that we had failed to convince the noble Lord, I have consulted my right honourable friend the Minister of Power, and if your Lordships were able to agree to the Amendment I am proposing I am authorised to undertake that in respect of loans made by the Corporation to publicly-owned companies whose business consists wholly or mainly in activities not being iron and steel activities the Corporation's accounts will include a statement that the loans had been made at rates of interest not less than those at which the Corporation could have borrowed from the Exchequer, at the time and on equivalent conditions as to duration, frequency of payment of interest and so on. In the event of any loans being made at rates lower than the Exchequer lending rate at the time, details of the amounts advanced and the rates chargeable will be given, together with a note as to the reasons for the exceptional treatment.
It may well be that on Committee stage we were not as convincing or as clear as we might have been in the explanation we gave in resisting the Amendment, which was passed on that occasion. If so, I must take some of the blame. But I think that something has been achieved, and I hope that the noble Lord will feel that the positive undertaking which we now give freely on behalf of the Government will go a long way to relieve the anxiety he had on this matter and that he

1615
will feel it would be appropriate now for the House to agree to this Amendment.
I beg to move.
Amendment moved—
Page 25, line 17, leave out from beginning to second ("and") in line 19.—(Lord Shackleton.)
LORD ERROLL OF HALE: My Lords, I am grateful to the noble Lord for the full statement he has just made on this Amendment. When we inserted into the Bill in Committee the words which he now proposes should be left out, restoring this clause of the Bill to what it was before Committee stage began, I emphasised that, although the Amendment might be technically defective, an important issue of principle was raised and that by putting the matter to a Division we should be ensuring that the Government would look at the matter closely and carefully and would be able to return to it on Report stage. I think that our Division in Committee has proved to be abundantly justified by the full and helpful statement which the noble Lord has just made. His assurance towards the end of his speech goes a long way to meeting the points we made, and I think that good has been done. I am grateful to the Minister and would advise my colleagues on this side not to resist this Amendment, because we have obtained nearly all we asked for.
7.8 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved, after Clause 30, to insert the following new clause:
Right of objection of consumers of iron and steel products to trade practices of the Corporation and publicly-owned companies appearing to be unfair.
".—(1) Subject to subsection (5) below, the three next following subsections shall have effect where a consumer of iron and steel products, being neither the Corporation nor a publicly-owned company, makes to the Minister written complaint about a practice employed by the Corporation or a publicly-owned company in selling iron and steel products, being products of an activity specified neither in paragraph 4 nor in paragraph 6 of Schedule 3 to the 1953 Act, and the complaint is expressed to be made on the ground that the practice is unfair to the complainant and specifies the respect in which he considers that it is so unfair.
(2) The Minister shall forthwith after receiving the complaint send a copy thereof to
1616
the Corporation and, after such period for consideration of, and comment upon, the complaint by the Corporation as the Minister thinks reasonable has elapsed, shall send to the complainant a statement of the comments, if any, made by the Corporation on the complaint and shall, if he is of opinion that the complaint raises a question of substance and that the complainant has a reasonable case to make in support of the complaint, afford the complainant and the Corporation an opportunity of appearing, either personally or by a representative, before a person appointed by the Minister.
(3) The Minister shall consider the report of the person appointed under the last foregoing subsection and may, if it appears to him that the practice complained of is unfair to the complainant, give to the Corporation such directions as appear to him to be requisite to secure the removal of the grounds on which it is so unfair; and the Minister shall furnish the complainant with a statement of any such directions and the Corporation shall give effect thereto.
(4) Where a complainant avails himself of the right conferred by subsection (2) above to appear before a person appointed by the Minister, the Minister shall furnish the complainant and the Corporation each with a copy of the report of the person so appointed, and a statement of the conclusions reached by the Minister on considering the report.
(5) The Minister may by order give a direction that subsection (1) shall have effect as if the reference to products of an activity specified neither in paragraph 4 nor in paragraph 6 of Schedule 3 to the 1953 Act did not include a reference to products of a specified description or that that subsection shall have effect as if the first-mentioned reference were omitted."
The noble Lord said: My Lords, in this Amendment we return to the subject discussed earlier under Amendment No. 3; that is, the relations between the Corporation or the publicly-owned companies in their non iron and steel activities, and the privately-owned enterprises with which they will be competing. This new clause has been drafted on the basis of the Government's own new Clause 30, in which a complaints procedure for iron and steel producers in the private sector has been incorporated into the Bill. Our Amendment seeks to provide a parallel right for consumers of iron and steel products, so that complaints can be brought against the Corporation or the publicly-owned companies where their trading practices appear to be unfair. I suggest that the Government have conceded the validity of our argument by inserting what is now Clause 30.
Until the Committee stage, there was little recognition that in the structural

1617
steelwork and bridgework industry there will be a substantial public sector, amounting to about one-third of the industry by value. My noble friend Lord Erroll of Hale at that stage tabled a proposal to set up a tribunal. Perhaps that went a little far. It was not acceptable to the Government. Now we return to the same point, but with a modified procedure, modelled closely on what the Government themselves proposed as appropriate for producers of iron and steel in the private sector.
I should like to deal briefly with something said by the noble Lord, Lord Shackleton, when we discussed Amendment No. 3—that is, the assurances given in Committee by the noble Lord, Lord Shepherd, on arm's-length trading. To deal with Lord Shepherd's three concessions in detail these were set out in Hansard of February 28, at columns 1058–59. The first was (col. 1058) that:
…Clause 25 requires the Corporation to publish much information about each of their main diversified activities…"
This is useful, but it does not deal with the question of a procedure for handling complaints by the consumers of iron and steel products against the Corporation. Secondly, while we are glad to have the assurance that:
"the Minister of Power will discuss with the Corporation the possibility of including in their first report on organisation under Clause 4 a discussion of the principles on which trading between different sectors of the Corporation's business will be based…"
this again does not seem to deal directly with a complaints procedure on the lines we have proposed; that is where there is a private sector and a public sector outside the iron and steel producing industry.
Thirdly, the noble Lord, Lord Shepherd, said (col. 1058–59):
"…the final responsibility in this matter will rest with the Minister as a result of Clause 7(2) which enables him to give the Corporation specific directions on organisation."
Frankly, I find it difficult to see the relevance to a complaints procedure of the directions given by the Minister on the subject of the Corporation's internal organisation. I hope that the noble Lord who is going to reply may at this stage, or, if he has had inadequate notice, on Third Reading, help us with this, because it is likely that the Minister
1618
will be inclined to see things the way the National Steel Corporation sees them, and this may not help the private sector.
We discussed the Consumers' Council a little earlier this afternoon. It has been the experience of the steel industry, in the two most recent instances when it has made representations to the Industrial Coal Consumers' Council, that recommendations were made by that Council to the Minister but that in each case, after the correct procedures had been gone through, the Minister found (for understandable reasons) that he had to support the National Coal Board. So where one has both private and public sectors of an industry, and complaints going up to the Minister, as in the Consumers' Council procedure, the private sector may feel that it is not getting a fair deal. I beg to move.
Amendment moved—
After Clause 30, insert the said new clause.—(Lord Windlesham.)
7.14 p.m.
LORD SHACKLETON: My Lords, imitation is certainly a sincere form of flattery, and I am glad to see the noble Lord take Clause 25 and adapt it so skilfully to another purpose. Again, I think this Amendment is representative of the state that we have got to on this Bill. We are arguing in increasingly narrow areas, where there is just a tendency one way or the other. This is not to suggest that this Amendment is without interest. As one goes through the Bill, one gets to feel instinctively what it is that is concerning noble Lords when they put down Amendments, and one would wish to give as full satisfaction as possible. But I must make clear that I think this new clause goes too far. It would mean a reduction in the Corporation's commercial freedom, which I really think would be unacceptable. It is a principle recognised by both Parties that the nationalised industries should, except in very special circumstances, and subject to such safeguards as the existence of consumer councils, be given reasonable freedom to conduct their own commercial affairs. Such freedom would indeed seem to be essential if the Corporation is to be vigorous and enterprising, a result which both the Government and the Opposition, and even the noble Viscount, Lord Massereene and Ferrard, want to

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see achieved. To give any dissatisfied customer a right to appeal to the Minister when he thinks the price he is being charged is unfair would be a very considerable potential interference in their commercial freedom, expose them to harassment by querulous and disputatious customers, and involve them, and the Minister, in time-wasting argument. It would also put them under a liability to which no private firm, and no other nationalised industry, is subject.
In making these general remarks, I fully appreciate that the noble Lord, Lord Windlesham, has a particular section of industry in mind, and that there are, on the face of it, reasons why he wants this particular group considered. My other main objection to this new clause is that it would cut across the position of the Consumers' Council. Indeed I doubt whether there would be a point in having a Consumers' Council. One would get into arguments as to how a matter was to be dealt with, and whether it should go before the Consumers' Council. We are anxious that the Consumers' Council should develop into a vigorous body, in which the Corporation's consumers have complete confidence; and we have taken steps to-day to strengthen even more the Consumers' Council, at least in regard to its independence. Again, here, presumably, the Opposition are in favour of this because they have suggested Amendments which we have accepted.
This new clause, I must say, would leave the Council with practically nothing to do so far as the sale of iron and steel products was concerned. Consumers of these products who felt that they were being treated unfairly would look, not to the Council, but to the Minister for redress, and to that extent the Council would be weakened. And this would be all to no purpose, I would submit since under the Bill as drafted consumers of the Corporation's major products can make representations to the Council whenever they think they are being treated unfairly, and the Council can in turn make representations on the subject to the Minister, who, under Amendments accepted by the Government in Committee, is required to tell Parliament if he takes no action on such representations. Therefore, it is argued that adequate means of making complaints already
1620
exist: the new clause would add nothing to them, while weakening the body which represents consumers' interests.
Noble Lords may ask why, in view of these general considerations, the Government have incorporated into the Bill Clause 30, which allows iron and steel producers to complain to the Minister about unfair trading practices by the public sector. The reason is this. Private sector iron and steel producers are in a unique position. They will be simultaneously in competition with a dominant nationalised sector, and dependent on it for supplies of semi-finished steel. They will, therefore, be in a very special position—indeed, one so special that the Government felt that special safeguards were necessary and therefore inserted Clause 30 in the Bill. Iron and steel consumers in general are not in this position, and there is therefore no need for the special safeguards of Clause 30. Moreover, Clause 30 does not cut across the responsibilities of the Consumers' Council as this clause would, since Clause 30 covers those who, although they are consumers, have special difficulties arising from the fact that they are also competitors of the Corporation; and the Consumers' Council is plainly not meant to protect the interests of the Corporation's competitors.
The noble Lord referred in particular to the steel constructors and an area where, like private sector iron and steel, they are both consumers and competitors of the Corporation. The private firms in the constructional steel industry are, in our view, not in quite the special position of the private sector iron and steel producers. Unlike the private sector iron and steel producers, they are not in competition with a wholly dominant nationalised sector, since the Corporation will control only some 40 per cent. of the constructional steel industry, and they are much less dependent on the Corporation than are the private sector iron and steel producers for their basic supplies, since they can also get the finished products they need (except at the heavier end) from the private steel producers or from merchants as well as from imports.
It is therefore plain that the special considerations, which in the case of private sector steel producers justify the exception from the general principles governing the nationalised industries, do

1621
not apply to the constructional steel industry, but members of the British Constructional Steelworks Association will of course be able to appeal to the Consumers' Council, and the Association will be quite free to make representations to the Minister of Power if it thinks that in relation to the constructional steel industry the Corporation is taking action against the public interest.
I can understand the anxieties, but I hope that for the reasons I have set out it will not be acceptable to go as far as the noble Lord has suggested.
LORD WINDLESHAM: My Lords, I take note of what the noble Lord has said. This is arguable either way. The proof will be the manner in which the National Steel Corporation and the publicly-owned companies do in fact conduct their business. In this House, and no doubt in another place, people who have been interested in this Bill will watch carefully the trading practices, not only of the iron and steel producing companies, but also of the publicly-owned steel consuming companies in the constructional steel industry. Having said that, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 43:
Restriction of disclosure of information obtained under Iron and Steel Acts
43.—(1) No information obtained under this Act, the 1953 Act or the 1949 Act shall be disclosed except—
(c) for the purpose of enabling the Corporation or the Minister to discharge their or his functions under this Act or the provisions of the 1949 Act thereby revived or of enabling the Iron and Steel Board to discharge their functions under the 1953 Act or this Act; or
7.23 p.m.
LORD WINDLESHAMmoved, in subsection (1)(c), to leave out "the Corporation or". The noble Lord said: My Lords, with the leave of the House it might be convenient to take Amendments Nos. 16, 17 and 18 together. These Amendments return again to the subject discussed on Committee stage of the extent to which consent of a company or an individual who is required to produce information to the Corporation or the Minister, may be needed. In the
1622
Bill as it stands at the moment, a number of criteria are set out. In some cases, the consent of the informant is required; in other instances his consent is not necessarily required.
The argument is a somewhat complex one which I will not repeat again at this late hour. It is set out in the House of Lords Hansard for February 28 at column 1048. In reply to that detailed argument the noble Lord, Lord Winter bottom, who answered for the Government, said in column 1051 that the Amendment was not effective in relation to Clause 39(1). But it is clear that the privately-owned companies, so far as I can see, do not really come within the province of Clause 39(1). On Clause 39(2), the noble Lord, Lord Winter bottom, suggested that the Amendment went too far, as it would prevent the disclosure to the Corporation of information about the plans of individual companies, even when that disclosure could do no conceivable commercial damage to the company concerned.
The position here surely is that in those circumstances, where nobody thought there could be any commercial damage, the company concerned would be quite willing to give its permission, or the information could be given to the Corporation in the form of a summary. Having looked at Hansard quite carefully, which is what we said we would do, I feel that a little further explanation is required from the Government on the question of obtaining the prior consent of the people who are required to furnish information. That is the purpose of these three Amendments. I beg to move.
Amendment moved—
Page 39, line 1, leave out ("the Corporation or").—(Lord Windlesham.)
LORD SHACKLETON: My Lords, I do not think there is any difference or disagreement between the two sides about the need to provide complete protection for the legitimate commercial interests of the private sector. The Government have many times made plain, both in this House and in another place, their desire to protect these interests and, generally, to ensure that the private sector is strong and competitive. This is, therefore, common ground between noble Lords opposite and the Government. The only question at issue between us is whether the Bill needs to

1623
be amended to provide this protection for the private sector. I hope to show that an Amendment is not necessary; but I hope in doing so I can meet the noble Lord's point by giving assurances which will allay the private sector's fears at this point.
The Amendment deals with the disclosure of information to the Corporation. The only person, apart from the Corporation, who is enabled to collect information under the Bill or the revised provisions of the 1949 Act, is the Minister. The question is, therefore, under what conditions the Minister can pass on to the Corporation information obtained under the Bill. The Minister is empowered to collect two classes of information under the Bill. First, Clause 41(1) allows him to collect certain information mainly to support the safeguarding, vesting and compensation provisions. I do not think this power need worry us now. It can, because it is wanted for a limited purpose, be collected, so far as the private sector is concerned, only from persons having property owned in 1964 by a company coming into public ownership. And in any case the power expires a year after vesting date. As the Bill was originally drafted, these powers also extended to the collections of information from private sector producers, but in Committee in another place the Government, in order to allay the fears of the private sector, removed them from the scope of this provision. So I do not think that there is anything in the existence of the powers in 41(1) which need concern the private sector.
The second class of information which the Minister can collect under the Bill consists of the forecasts of iron and steel productions and capacity which he can collect from private sector producers under Clause 41(2). On this point, I do not think I can do more than to repeat the categorical and unqualified assurance given in Committee by my noble friend Lord Winterbottom that no commercially valuable information obtained by the Minister under Clause 41(2) about individual companies would be disclosed to the Corporation, even when it was necessary to enable the Corporation to discharge their functions.
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I said that the Bill empowers the Minister to collect two classes of information. But inevitably, in his general administration of the Bill—perhaps especially in his control of private sector development under Clause 15—he will acquire a great deal of information about private sector companies. Indeed, I would almost say that I hope he does, since I hope that really good and close relations will grow up between the Minister and his Department and the private sector, and that the private sector will keep the Department continuously aware of their thinking and their problems. The fact that the Minister is also responsible for the nationalised steel industry does not in any way weaken such responsibilities as he has as the sponsoring Minister for the highly important private sector, and certainly my experience of Ministers is that in these matters prejudice does not influence them when they are discharging duties that clearly are laid upon them. All the information acquired in the way I have mentioned should be protected where it is confidential, and the Government are anxious that this should happen in order to encourage the development of mutual trust and confidence between the Department and the private sector.
So I am glad to give the noble Lord, Lord Windlesham, the additional assurance that no commercially valuable information acquired by the Ministry in this way will be passed on to the Corporation. I hope noble Lords will agree that these are comprehensive assurances, and that they cover every aspect of the matter conceivably of interest to the private sector. I hope that here I have at least met the noble Lord's wish that we should go further and explain the position a little more clearly, and that he will feel he can now withdraw his Amendment.
LORD WINDLESHAM: My Lords, I was interested to hear the assurance the noble Lord has just given, which repeats what Dr. Jeremy Bray, who was Parliamentary Secretary at that time, said in Standing Committee D on December 14 in another place. The reason why we moved these Amendments both on Committee and again to-day was that we had hoped that, in order to implement the assurance given by Dr. Bray and repeated now, the Government might be able to see their way to amend the Bill so that a safeguard was written into the Bill.

1625
However, the assurance has been given to us again to-day by the noble Lord. We take note of it, and, having said that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 46:
Regulations, orders and rules
46.—
(4) The power conferred by the said section 4 and that conferred by the said sections 5 and 30 to make an order shall include power exercisable in the like manner to vary or revoke an order.
LORD SHACKLETON: My Lords, this Amendment is consequential. I beg to move.
Amendment moved—
Page 40, line 11, after ("5") insert ("15").—(Lord Shackleton.)
LORD SHACKLETON: My Lords, I beg to move Amendment No. 20.
Amendment moved—
Page 40, line 19, leave out from ("by") to ("to") in line 20 and insert ("each of the following provisions, namely, section 4 of the 1949 Act and sections 5, 15 and 30 of this Act") .—(Lord Shackleton.)
Schedule 3 [Amendments of revised provisions of 1949 Act]:
7.34 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved to add to the proposed amendments to Section 4 of the 1949 Act:
"In subsection (6) after the words 'financial year' there shall be inserted 'and in any event within six months thereof' ".
The noble Lord said: My Lords, it might be convenient to take Amendments Nos. 21 and 26 together; 26 is consequential on 21. Both of these Amendments seek to place on the Corporation a limit of time of six months in which they would have to publish their annual report. At the Committee stage an Amendment was moved from this Bench to set a period of four months instead of six. We have now extended that by two months in the hope that the Government will be able to accept this slightly longer period. There is one additional argument that can be put to the noble Lord: that six months is exactly double the period in which the scheduled companies now produce their
1626
annual reports. We have added a further period of three months because it is accepted that the Corporation may need a longer period to co-ordinate and gather in the information from the 14 companies, in the first instance anyway. The period of six months would therefore seem to be generous.
The Government might reply that no other nationalised industry has this obligation placed on it to present its report in a fixed period, so why should it apply to the National Steel Corporation? That must be one of the stock ways of blocking any proposal. We are now twenty years after the main body of post-war nationalisation Statutes. At some time a new pattern has to be set. Somebody has to be first, and this amendment is not meant as a criticism of the National Steel Corporation before it is set up. There is a need, I should have thought noble Lords on both sides could agree, for more speedy production of Government statistics and official reports.
Having said that about the detailed wording of his amendments, I would add one rider. The effect of a provision of this sort would be to increase the Minister's accountability to Parliament for the whole steel industry, the private sector as well as the public sector, and it was for that reason that we originally introduced it. We have not yet had in this House, and I have not found in reading the debates in another place, an explicit statement by the Government of the extent to which the Minister of Power will accept responsibility in Parliament for the National Steel Corporation. If the noble Lord felt it possible to make a statement now I think it would interest the House. I beg to move.
Amendment moved—
Page 47, line 44, at end insert the said words.—(Lord Windlesham.)
LORD SHACKLETON: My Lords, first of all on a small technical point, the effect of this Amendment would be to require the Corporation to submit their annual report to the Minister within six months of the end of a financial year, and I assume that what is in fact intended is that publication—which takes place some considerable time after submission To the Minister—should be within six months of the end of a financial year. But I fully take the point of the

1627
noble Lord. I think this is an interesting Amendment, and one which personally I have been rather sympathetic to. But there are objections which I should like to give. We have considered this point very carefully since it was discussed in Committee, as has my right honourable friend the Minister of Power, and I cannot advise your Lordships to accept this Amendment.
The noble Lord has suggested that the argument that it has never been imposed on other nationalised industries is not necessarily valid. On the other hand, it might well be a valid argument, and the reasons why it was not imposed on other Corporations might apply equally to the steel industry. The noble Lord referred to what he regarded as a reasonable length of time. I must point out that if the scheduled companies produce their reports within three months these are very much simpler; and a report covering the whole of the steel industry, with all the things which are required to be put into it and which Parliament is asking for, will be a very substantial report anyway. Last year the annual reports of the Gas Council and Boards and the Electricity Council and Boards were all published within a week or two after six months from the end of the financial year. The task of producing the Corporation's annual report will, moreover, be greater because of the much greater diversity of their activities and the new requirements of Clause 25. This, therefore, would require the Corporation to produce its reports significantly more quickly than the Gas and Electricity Councils and Boards have found possible.
An extremely tight timetable would be vulnerable to delays, and I will not repeat the arguments that I advanced previously. But it could be awkward if some snag led to the Corporation's failing to meet the statutory requirement, and indeed it might be damaging to the quality of the reports themselves. Up against the hard timetable, as we all know, at certain times when you have to fulfil a requirement you do the best you can, but it is not as good as you could have done if you had had a little longer.
The annual report will contain important information, but I think our main reason for rejecting this request must
1628
be that its implication is that the Corporation cannot be trusted to produce its report as soon as possible. Although I agree one can meet this argument that it has not been imposed on the other Corporations, by saying, "It is just too bad, but at least we will impose it on this", I am confident—and I have gone into this fully—that the Corporation will act, and indeed will have the strongest reasons to act, reasonably. It is so much in the interests of the Corporation that they should get out their report, because this is their opportunity to explain what they are doing and to put their best face alongside the various facts they have to put before the world. Furthermore, I am sure that their duty to Parliament and to the Minister will ensure that this report will come out as soon as possible.
The noble Lord asked, as I think it is reasonable in this context, whether I would say something about the Minister's answerability to Parliament. I regret taking the time of your Lordships so late in the evening, but it may be convenient if I do so now because it will enable noble Lords to study what I have to say, and if noble Lords have any points which they wish to raise about it or in regard to its interpretation there will be an opportunity on Third Reading.
I do not think anyone has yet brought together in a single packet all the main points in regard to the Minister's accountability to Parliament for the activities of the National Steel Corporation, or indeed the extent to which it compares with other nationalised industries. Ministers are answerable in full to Parliament for the action which they may take under powers conferred on them by Statute, or for not taking action which they have the power to take. And it follows that the extent to which the Minister of Power is answerable for the National Steel Corporation depends basically on the powers in relation to the Corporation conferred on him by this Bill now before us.
Many of these powers are similar to powers conferred on Ministers in relation to other nationalised industries. They include the power to appoint members of the Corporation, the power to give general directions when this appears to the Minister to be in the national interest, control over the general lines of investment, and research and development programmes,

1629
and control over borrowing. These general powers taken together mean that the Minister has the responsibility to ensure that anationalised industry is conducted efficiently and in the national interest; and it follows that Ministers are answerable to Parliament for the general efficiency of the industries under their sponsorship.
Ministers are also answerable to Parliament for the action which they take, or refrain from taking, in those fields where they have specific powers, such as the power to approve the general lines of investment and research and development programmes, the control of schemes for the provision of pensions, redundancy compensation and similar payments, and the power to give specific directions arising out of the reports of the consumer councils. In all these respects the powers of the Minister under the Iron and Steel Bill are similar to the powers of Ministers under other nationalisation Acts, and the degree of answerability to Parliament will be broadly the same.
There is one important limitation on this which is well known and I feel bound to mention it. The then Lord President of the Council, the late Lord Morrison of Lambeth, whom I had the privilege of serving as a Parliamentary Private Secretary, and who was well known in your Lordships' House, said in a statement in another place on December 4, 1947, that:
"it would be contrary to the clearly expressed intention of Parliament in the governing legislation if Ministers were to give, in replies to Parliament or in letters, information about day-to-day matters".
That statement has been endorsed by successive Governments, and although the rules about the admission of Parliamentary Questions have been somewhat relaxed or dented, it remains the case that Questions about day-to-day matters are not generally admissible. Questions about the general policy of the industries are, however, normally accepted and answered, and the position of the National Steel Corporation in this respect will be the same as that of other nationalised industries.
The Iron and Steel Bill, however, differs from earlier nationalisation measures in two important respects. First, it gives the National Steel Corporation wider scope than any other nationalised in-
1630
dustry. Second, most of the earlier Acts, although the Coal Industry Nationalisation Act is an exception, laid down in some detail the organisation of the nationalised industry, whereas this Bill does not. For reasons which have been explained on a number of occasions, the Government are satisfied that it is entirely right to give this greater degree of flexibility to the Corporation; but as a corollary, the Minister has a number of specific powers in relation to the Corporation not enjoyed—if that is the right word—by Ministers in relation to other nationalised industries.
They include the provisions in Clauses 2 and 39 under which the Corporation and the publicly-owned companies require the Minister's consent before acquiring interest in or forming companies, and the Corporation require his consent before engaging in non-iron and steel activities. Clause 7 empowers the Minister to give the Corporation specific directions on organisation, and forbids substantial alterations in organisation except with his consent. Section 4(4) of the 1949 Act empowers the Minister to give the Corporation specific directions to cease activities or to dispose of assets other than iron and steel activities or assets in Great Britain, and to secure the winding up of any publicly-owned company. The Minister will be answerable for the use he makes of these powers and for any action he might have taken under them but refrains from taking. Thus, in return for allowing a greater measure of flexibility in the original Act Parliament will have a greater opportunity to call the Minister to account than in the case of any other nationalised industry.
It is here that I can link this up again without too much difficulty to the noble Lord's Amendment. It is the Corporation's annual report and accounts which are laid before Parliament which will provide the foundation for consideration by Parliament. Under Clause 25 it will contain much information about the diversified activities, and under Section 4(7) of the 1949 Act it will contain copies of any direction given by the Minister to the Corporation unless, in the Minister's opinion, publication would be contrary to national security or to the Corporation's commercial interest. In accordance with undertakings given in

1631
another place, the Minister will use his powers under Clause 6 to require the publication of a wide and comprehensive range of statistics relating to all the main activities under the control of the Corporation.
In another place the National Steel Corporation will come within the ambit of the Select Committee on Nationalised Industries. All this means that there will be available to both Houses almost a mine of information, going in some respects beyond that provided by other nationalised industries, on the basis of which it will be possible to hold the Minister responsible in the way I have described. I apologise to the House, and I am grateful for the patience of noble Lords. I hope that what I have said by itself will have justified the putting down of the Amendment, which certainly raises points of interest, though I hope that the noble Lord will now feel that there is no need to press it.
LORD WINDLESHAM: My Lords, I am sorry that the noble Lord, Lord Shackleton, is not able to accept the Amendment and the arguments which have been advanced on a limited period of time. One argument he offered, that the Gas and Electricity Councils had presented their reports to the Minister in a period of time just over six months, seemed, if I may say so, the weakest of the arguments he deployed. However, I will not press this point. The general statement which he made—and he has confirmed that it is the first time that a comprehensive statement has been made—on the extent to which the Minister will be responsible for the steel industry to Parliament is extremely important. We are grateful to him for making it at this stage, so that, as he suggested, we can look at it rather carefully between now and Third Reading. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.52 p.m.
LORD WINDLESHAM LORD WINDLESHAM moved to add to the proposed amendment of Section 4 of the 1949 Act:
"In subsection (6), for the words 'the publicly-owned companies' there shall be substituted the words `their subsidiaries'."
The noble Lord said: My Lords, this Amendment also relates to Amendment
1632
No. 27, and if it is acceptable to the House perhaps I may speak to both together. The purpose of the Amendment is to ensure that more information on subsidiary companies than might otherwise be the case is included in the Corporation's annual report.
Those of your Lordships who took part in the Committee stage will remember that from this side of the House we tabled a series of Amendments concerning the publication of the annual report, and that these contained two different proposals in the same Amendments. The first was a limited period of time, on Committee four months, which we have now changed to six months; and the second was more information on subsidiaries. At Committee stage these two aims were wrapped up in the same series of Amendments. In replying for the Government the noble Lord. Lord Shackleton, gave an encouraging response on the second of our two aims in those Amendments. That was the desirability for the reports to contain information on subsidiary companies. We have therefore separated the subsidiary company point from the period of time point, and have tabled these two Amendments, Nos. 22 and 27, in the hope that the Government may be able to accept them. I beg to move.
Amendment moved—
Page 47, line 44, at end insert the said words.—(Lord Windlesham.)
LORD SHACKLTON: My Lords, we saw the force of the noble Lord's arguments; and, although we were not able to accept the Amendments as they then stood, I am glad to say that these new Amendments, which are technically correct, are Amendments which the Government would support. Therefore, I would advise your Lordships to accept them—a happy note on which to end the Report stage.
LORD DRUMALBYN: My Lords, before we part with this Amendment, may I ask the noble Lord one question? I take it that quite a number of the subsidiary companies will be governed by company law in the ordinary way and will be making their reports and giving all the necessary information, depositing their accounts with the registrar of companies, and so forth. So that what the noble Lord is now giving is something additional to that; and, if I understand him

1633
correctly, it is something we very much welcome. Perhaps I may take the opportunity of congratulating the noble Lord on the way in which he has handled this Bill. He has been most helpful and has given a great deal of information. We are very grateful to him.
LORD SHACKLETON: I am grateful to the noble Lord. If I may, with permission, reply to the noble Lord, I would say that this is something additional. It was something for which the Opposition asked, and it is one of the ways in which I believe we have improved the Bill together, in the co-operative and almost model way in which we have dealt with the Bill. Again, I should like to thank noble Lords opposite for their help.
LORD WINDLESHAM: My Lords, I beg to move Amendment No. 23.
Amendment moved—
Page 47, line 48, at end insert ("and at the end of paragraph (a) there shall be inserted the word and' ").—(Lord Windlesham.)
LORD WINDLESHAM: My Lords, I beg to move No. 24.
Amendment moved—
Page 48, line 8, column I, leave out ("and (10)").—(Lord Windlesham.)
LORD WINDLESHAM: My Lords, I beg to move the next Amendment.
Amendment moved—
Page 48, line 9, at end insert:—

("Section 6(10)

The words 'with the approval of the Minister' and the words from and copies' onwards shall be omitted").—(Lord Windlesham.)

Schedule 4 [Form in which Provisions of 1949 Act have Effect by Virtue of this Act]:
LORD WINDLESHAM: My Lords, I beg to move Amendment No. 27.
Amendment moved—
Page 61, line 16, leave out ("the publicly-owned companies") and insert ("their subsidiaries").—(Lord Windlesham.)
LORD WINDLESHAM: My Lords, I beg to move the next Amendment.
Amendment moved—
Page 61, line 29, at end insert (" and")— (Lord Windlesham.)
LORD WINDLESHAM: My Lords, I beg to move.
Amendment moved—
Page 61, line 37, leave out from (" companies") to end of line 39—(Lord wi ndlesham.)
LORD WINDLESHAM: My Lords, I beg to move.
Amendment moved—
Page 62, leave out lines 20 to 27—(Lord Windlesham.)
LORD WINDLESHAM: My Lords, I beg to move the last Amendment.
Amendment moved—
Page 62, line 41, leave out from second ("Council") to end of line 44.—(Lord Windlesham.)

PRIVATE PLACES OF ENTERTAINMENT (LICENSING) BILL [H.L.]
7.58 p.m.
Read 3a (according to Order), and passed, and sent to the Commons.

PARLIAMENTARY COMMISSIONER BILL
7.59 p.m.
Order of the Day for the Third Reading read.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Parliamentary Commissioner Bill, has consented to place her interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purposes of the Bill. My Lords, I beg to move that the Bill be now read a Third time.
Moved, That the Bill be now read 3a.—(The Lord Chancellor.)
VISCOUNT COLVILLE OF CULROSS: My Lords, I should not wish this Bill to be dispensed with entirely formally, even though the hour is late. There is one question that I should like the Lord Chancellor to answer. It is a point which was raised by the noble Baroness, Lady Burton of Coventry, during the Second Reading debate, and I think that I myself mentioned it also. It concerns the inter-relationship between the Parliamentary Commissioner and the Council on Tribunals.
I noted with interest the list of examples—and it was only a list of examples and not a comprehensive list—of the things which the Parliamentary Commissioner might be able to deal with, which was given by the noble and learned Lord at one point in the Committee stage of the Bill. He included in it a series of incidents or occasions which might be investigated by the Parliamentary Commissioner, which are also quite clearly within the jurisdiction of the Council on Tribunals. I refer particularly to the operations of a Government Department in dealing with matters of appeal; for instance, against planning permission and other similar events. In those circumstances, it seems to me that the Council on Tribunals and the Parliamentary Commissioner would have overlapping functions. I know that the Parliamentary Commissioner is to be an ex officio member of the Council on Tribunals, and I have no doubt that there will be the most sensible liaison between him and that body. Nevertheless, these are matters which are of interest to citizens and of which I hope they will want to avail themselves; and possibly their advisers will wish to do the same.
I wonder whether the noble and learned Lord could therefore confirm that, notwithstanding the advent of the Parliamentary Commissioner upon the scene, the Council on Tribunals will still be seized of the same matters as it was seized of before, and that there will hereafter be a choice for a member of the public either to refer the matter direct to the Council, or, through the noble and learned Lord himself or his Member of Parliament, to seek to have the matter raised by the Parliamentary Commissioner so that both channels are still open and a citizen may make use of either of them as he thinks fit in the
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circumstances. Of course, how it is then worked out behind the scenes is another matter. But it would be useful if the noble and learned Lord could confirm that this is still the position, and that there is in no way a derogation from the powers or position of the Council on Tribunals as a result of the new powers given to the Parliamentary Commissioner. I think it would be a good thing if that point were dealt with, because I do not think it has been covered since the noble Baroness raised it.
The only other thing I want to say from these Benches is that we hope that the Parliamentary Commissioner will now be able to undertake his task, and to come into his kingdom to which he has been for rather a long time a shadowy heir apparent. We wish this experiment very well indeed, and we realise—and I hope that the public realises—that it is a limited experiment, as it must be in a country with so many people who might wish to complain about these matters. But we hope that out of this experiment experience will grow, so that in due course it may be possible to see whether we can extend the limits of the Parliamentary Commissioner's jurisdiction and give him an even more comprehensive task to do than that which pertains to him under the Bill. With those words of welcome, I think it would be a good thing to send this Bill, having been improved by this House by Amendments from all three Parties, on its way to another place.
THE LORD CHANCELLOR: My Lords, may I, in the first place, make it clear that I was not seeking to dissuade the noble Viscount from addressing the House. I had thought that perhaps our observations might more usefully, or more usually, be made on the Motion, That the Bill do now pass. But, of course, any noble Lord is equally entitled to address the House on the Motion, That the Bill be now read a third time.
I think that the House has substantially improved this Bill. It is not for me to express an opinion as to whether another place was or was not wise not to include Members of your Lordships' House among those through whom the Parliamentary Commissioner might be reached. I am sure that another place having, whether wisely or not, taken that view, your Lordships were wise to deal with

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the matter in a dignified way and not to get on a high horse about it, and to express the view which after a Division your Lordships took.
We have considerably clarified what I think was the common intention throughout in wanting, first of all, the Parliamentary Commissioner to have as wide powers of investigation as possible; but, secondly, that he should not act as a one-man Court of Appeal from discretionary decisions. In the form in which the Bill reached us, this was, I think, open at least to doubt as a matter of construction, and I have no doubt that we have considerably improved the Bill in that respect. We have, again I think rightly, altered the Bill to provide that not only annual reports but also all the special reports to the Select Committee shall be published to this House as well as to the other House; and, speaking for myself, I am equally sure that we were wise in not including Regional Hospital Boards to start with.
It has always seemed to me, if I may say so, that there were three requisites to the success of this enterprise. The first is that we should get the right man as Parliamentary Commissioner—and all noble Lords in all parts of the House have agreed that the Parliamentary Commissioner-designate comes under that expression; secondly, that he should have the widest possible powers of investigation; and, thirdly, that he should not be overwhelmed to start with. We have always had to recognise, first, that the largest country in which the idea of a Parliamentary Commissioner has ever been tried has a population of 6 million; secondly, that it is most important that it should not only be the fact, but should be known to be the fact that the Parliamentary Commissioner himself looks at the cases—which is why his personality is so important; and thirdly, that there may be a great tendency for anybody with any sort of grievance, whether it comes under the Bill or not, to try out the procedure to start with. That is why I feel we were Quite wise not to include Regional Hospital Boards, at any rate to start with, because they can always be included later if we think fit.
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To deal with the point which the noble Viscount has raised, it occurred to us that there is a field within which there may be some overlap as between the Parliamentary Commissioner and the Council on Tribunals. After considerable consideration, we came to the conclusion that it was quite impossible to write down on a piece of paper what would be the best thing to happen in every case of that kind. It is for that reason that we have provided, in Clause 1(5), that the Commissioner shall be ex officio a member not only of the Council on Tribunals but also of the Scottish Committee of that Council, because we felt that this possible overlap was best left to them to work out together. I confirm, in answer to the request, that there is nothing whatever in this Bill which derogates in any way at all from the present powers of the Council on Tribunals, and there will be some cases in which the citizen will have a choice and will be able to do what he likes. But I think the presence of the Commissioner himself on the Council will ensure that there is no duplication, and, obviously they will consider together what is the best way in which to handle any particular case.
I have been an Ombudsman enthusiast throughout, and I believe that here we have something which is going to be a considerable arm for ordinary Members of another place against the Executive, to a far greater extent than they could ever have controlled the actions of Ministers or Departments before; secondly, that this will provide a remedy for grievances of the citizen against the central Government; and, thirdly, while I do not know of any country which has a better Civil Service than we have, everything is always capable of improvement in administration and this step will also, I believe, have that effect.
On Question, Bill read 3a, with the Amendments, and passed, and returned to the Commons.

HOUSING SUBSIDIES BILL
Brought from the Commons; read 1a, and to be printed.

GREENOCK CORPORATION ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed
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to have been read 2a and reported from that Committee.
House adjourned at ten minutes past eight o'clock.