HL Deb 16 November 1976 vol 377 cc1212-31

51 Clause 31, page 48, line 24, at end insert of, if on application by the stockholders' representative or the Secretary of State, the arbitration tribunal consider that, having regard to all the circumstances, that amount does not represent fair compensation, such amount as the tribunal shall determine to be fair compensation in respect of those securities.

Lord SELSDON

My Lords, I beg to move that this House doth not insist on their Amendment No. 51 but propose an Amendment in lieu as on the Marshalled List:

51A Page 48, line 23, after ("securities") insert— ("having taken into account, on application by the stockholders' representatives or the Secretary of State, all factors considered relevant by the arbitration tribunal in order to ensure that the compensation in respect of these securities shall be fair").

It is very difficult for those of us who only occasionally have a toe in politics to understand exactly how the Parliamentary system now works. Those of us on these Benches, the Cross-Benches, the Liberal Benches and throughout your Lordships' House, when we see something which we believe is unjust and unfair, feel that we should speak out against it. We feel, too, that the Government of the day—of whatever political complexion it may be—should give us a reasonable answer. On Amendment No. 51 which I tabled originally there was considerable debate and discussion on the principles underlying the method of determining compensation, and to receive a formal communication which says that the Commons disagree to these Amendments because they might involve charges on public funds, and the Commons do not offer any further reason, trusting this Reason may be deemed sufficient, is almost insulting. But I suddenly realised that for one reason or another the Commons were really prevented from discussing the whole question of compensation, as they have been prevented from discussing it almost throughout the passage of the Bill. Therefore I thought it was appropriate not to assume that the Commons were by nature unintelligent but to try to pursue a reply or some information from the Government through other channels.

It was as a result of this pursuance of things through other channels that I received yesterday a letter from Mr. Kaufman. In view of the evidence before me I do not support the view that Mr. Kaufman is totally unapproachable, unwilling to co-operate and unwilling to reply, because I received a communication from him very shortly after I had raised, through various channels, the need for a communication. Whether that communication is acceptable or not is another matter, but surely in seeking information from the Government it would have been preferable for this information or attitude to have been given to us, perhaps in the middle of the night, by the Government rather than that odd letters should be sent to Back-Benchers in an endeavour to explain the principles which underlay compensation. That is perhaps a criticism of procedure rather than of intention.

Noble Lords throughout the House have demonstrated to my satisfaction and to the satisfaction of others that the principles which the Government proposed to adopt for determining compensation were not fair. They were decidedly unfair. We object to the Government saying that a Stock Exchange valuation was a fair price, and we object in particular to the former Prime Minister, the right honourable Sir Harold Wilson, saying that the compensation will be fair but that this will be a matter for Parliament, when in fact it did not become a matter for Parliament. Therefore with this Amendment today I seek further information from the Government which I hope they will be able to give.

I begin by referring to the letter which I received yesterday from Mr. Gerald Kaufman. One is extremely grateful for this because it is the first sign that I have seen of the Government seeking to co-operate with a Back-Bencher who is not a professional politician, who has to work, as many of us do here, and who is trying to do something which he believes is in the interests of the nation. According to Mr. Kaufman, the Government's first concern has been to choose a basis for compensation which is objective. With that we agree. He says that at the same time it was necessary to choose compensation principles of general application which could none the less take account in the fairest possible way of the different underlying circumstances of 43 different companies in four different industries to be acquired.

These are points which we have raised in your Lordships' House and noble Lords opposite were rather unwilling to accept that argument. The Government then, Mr. Kaufman goes on to say, "after careful consideration decided that a share or imputed share basis of valuation most nearly met"—these general criteria. He did not say it does meet; he said it "most nearly" meets. I do not agree that a share or imputed share basis of valuation is necessarily the right method of valuation. But what I would argue now is that we have, first, the Government's declared objectivity; and, secondly, we know there is a need for expediency, and the need for expediency is because of the considerable delay which has taken place since this Bill was first drafted and because of the financial situation of many companies in the shipbuilding industry.

If something is not done—if this Bill is not passed or other action is taken—there could be considerable unemployment and very serious financial consequences. It does not matter what happens, but some action must be taken. While I do not approve of the action that the Government are seeking to take, it was in the Manifesto and therefore we must try to support it within certain reasonable modifications. One thing that I, as a private sector man and as a banker, cannot support is a method proposed for compensation which, by every rule book in the Western free democratic world, is unfair and wrong. It is the precedent I have argued against, not the application here, because to establish such a precedent which is known to be unfair, and which on consultation throughout the world is seen to be unfair, is damaging not only to this nation now, but to the future of industrial investment in the United Kingdom.

My Lords, I will not go into all the arguments that come with it, but I will try to take heart from a few of the statements made by Mr. Kaufman. I know the noble Lord, Lord Winterbottom, will try as hard as he can to give us some comfort. At the end of his letter, which I have made available, Mr. Kaufman says: I hope that the compensation terms of the Bill represent a conscious attempt to achieve objectivity by recourse to the methods and mechanisms of the Stock Exchange and achieve equality of treatment for all the interests affected through the flexibility with which the terms are drawn. The Government believe that the end product will be fairest. What I am concerned about is that the end product will be fairest. I am not now so much concerned with the various methods that may be employed.

The object of my Amendment concerns the consideration of compensation, and there we come to the phrase "relevant factors". Ideally we would ask the Government to say, "We will take into account all relevant factors in consultation with all appropriate authorities and bodies, and sort out compensation". I believe that is how they started in this. They intended to be fair. I believe their advisers and the whole Civil Service are pathologically incapable of being unfair or unjust. It is not necessarily their intention to be unfair and unjust, but I believe that the Government, perhaps through a failure to grasp or understand the complications of compensation, set out to do something which was unfair and unjust.

Now we come to the point on "relevant factors". If there is no other basis on which to start, I will accept that some form of valuation related to the methods and mechanisms used by the Stock Exchange is a good one. It is not ideal, but it is difficult to find another alternative. The reason why it is so difficult to find alternatives is because of the differing factors of 43 companies in four different industries. There is one case where it can be deemed to be fair; that is, with the one company out of 43 which is quoted on the Stock Exchange. It is only fair for that company because it does not have a single shareholder who has control, but is comprised of many minority interests, all of whom own shares and regard the value of those shares as the price at which they could sell them on a particular day. Whether or not they wish to sell them does not come into it, because the company will be taken over, and they will be forced to sell.

But for the other companies, one starts with the question: If they had been quoted, what would the price have been? What I would repeat as succinctly as I can is that if one starts on that basis, one must take into account various relevant factors. The determination of what those relevant factors may be is a different matter. Mr. Kaufman said: To attempt to list the factors in the Bill would risk injustice. A list might result in a particular shareholder not being able to refer to a particular factor which he considered relevant. If no attempt is made at a list, it is clear that any factor which anyone thinks is relevant to valuation can be put to the arbitrator. This is relevant to valuation, though not necessarily relevant to an imputed or notional share valuation. The letter says "relevant to valuation".

My Lords, my argument is that it seems to me, as the Bill is currently drafted—and I am not a lawyer—that all factors which may be relevant t0o valuation need not to be taken into account. Here we rely to some extent on the Government advisers and on Whinney Murray who will be advising the Government here. If one is a professional firm, such as Whinney Murray, of the highest reputation, it is their duty to act in the interests of their client, to implement and utilise law and all codes of practice. In short, it is their duty to negotiate prices downwards, and to utilise all the measures in their power to do so, otherwise they are not performing their job professionally. But as the Bill is drafted, where the Government have said "relevant factors", it does not refer to all factors that could be classed as relevant.

Therefore, my Amendment in lieu is designed to enable the Arbitration Committee to decide whether or not a factor is relevant. In view of the apparent attempt of the Government to drop the insistence that a share price is fair, I have dropped the word "fair" from the original Amendment and propose that it be left to the Arbitration Committee to decide not what price is relevant, but what matters are relevant.

If I can give a simple example without listing all the relevant factors, one can have a company which owns certain assets. These are immediately disposable—land required for housing, or land in a strategic position. These assets can be sold tomorrow by a liquidator, for a large amount of money. There are companies in that situation. Equally, there are other companies who have land and buildings which are in such a position that while the immediate value of that land and buildings is nothing to anyone else, it has some form of agricultural or strategic value. The way in which you treat assets may make a considerable difference. There is also the matter of the performance the companies have undertaken in a particular period of time. Mr. Kaufman says: In particular, both parties"— referring to one side or the other— will consider factors which had a bearing on the prospects as well as the underlying condition of the companies concerned as seen during the reference period, which may have a bearing on the value of their shares". This narrows it down to shares again, but we are concerned with several valuations of businesses.

The objective of my Amendment, in case your Lordships think otherwise, is not so much to increase the price that may be paid by the Government for compensation, but to ensure that those companies which have performed well and have utilised funds well, and will utilise new funds well, will be given a chance to obtain a realistic price, and that those companies which have failed, whether by fault of their own because the world is a hard and cruel place, will not be given unjustly compensation which will then be squandered and wasted. The overall amounts cannot vary, but it is important that the basic principles employed outside by private sectors throughout the world and by other Governments are fair, and are seen to be fair.

I know that the noble Lord, Lord Winterbottom, will go as far as he can on this, but since we are now faced with possibly the last points to be raised on compensation, it may be appropriate for me to point out that I have tried to be as independent as I possibly can be in this case. I have not at any moment participated in other sectors of the debate which could be construed as Party political, although I have voted with my Party. This may be true of others who may be stockbrokers or bankers who have spoken on this subject. It must be one of the roles of this House that those of us who are here by accident or design, if we have anything to contribute, should contribute it as independently as we can. I am conscious, too, of the fear of those on the Front Benches and on all sides of the House when compensation or matters concerning money are raised, which they may not fully understand, that they may be forced into a position of seeking to obtain more money for the capitalist system or raising emotional factors which should be outside the jurisdiction of this House. On that basis, I will sit down and await with eager anticipation the reply of the noble Lord, Lord Winterbottom, and, I hope, some contributions from my noble friends. I beg to move.

7.19 p.m.

Lord GOODMAN

My Lords, may I rise briefly to say that at an earlier stage I indicated my views about the compensation provisions. They have been absolutely impeccably presented by the last speaker in terms of the greatest fairness and with the least possible provocation. I should like to endorse what he said about the seeming apprehension on the part of the Opposition and on the Liberal Benches to intervene in this debate because of the suggestion that might be raised that, in some ways, they were supporting monetary interests against the less privileged section of the community.

I think this is a completely misguided and misplaced apprehension. I think their concern should be to ensure justice. Nothing that was urged by the noble Lord gave rise to any suggestion that anyone was going to get a penny the more. It might well be that people would get less as a result of sensible compensation provisions. I would urge on the Opposition and on the Liberal Benches to consider whether they have not a duty to ensure that there are inserted into this Bill sensible provisions. In my view, without any disrespect to the authors of the Bill, these are not sensible provisions. I cannot see why anyone should be deterred from moving to the point of Division a matter where it is a question of whether sense or nonsense prevails. We have a duty, and we were reminded earlier that we are a revising Chamber. Nothing is more suitable by way of revision than to convert nonsense into sense. I would think it is an absolutely impeccable and classical illustration of the revision of a provision.

I do not intend to keep the House long; there are many matters to discuss. But I would say just this. On the question of the quoted companies, it is not, I think, unfair to say that a quoted price should be taken. The quoted price to a large extent is a roulette consideration, but the fact remains that the owner of the shares could have sold at that price. On that footing, although objection could be taken, it is not an objection I propose to take at this moment. On the question of the unquoted companies, the idea that there should be a notional listing seems to me to be absolutely Alice in Wonderland. I do not know how you can possibly achieve a notional listing. I am not going to repeat what I said last time, but if you take into account the factors necessary to procure a Stock Exchange listing it is quite clear that no arbitration tribunal could, except by the exercise not only of rule of thumb but of absolute guesswork, arrive at any conclusion based on that notion.

I cannot see why this Amendment—which is a highly sensible Amendment; it merely says that the arbitration tribunal should take into account all relevant factors—should give rise to the slightest difficulty. You cannot take into account how many shares would be placed on the market. You cannot take into account how many shares would be overhanging the market as a possible means of depressing or enhancing the price. You cannot take into account what the public would think of the status of particular directors. You cannot take into account what form of service agreements would have been entered into with the directors of the company, which would have a bearing on the actual listing. There are about 11 million matters you cannot take into account in trying to arrive at a notional listing.

I venture to think that only the most honourable tyro in these matters would have evolved this piece of drafting. Nobody wants to take objection to drafting efforts by honourable tyros. Nor does one want to enact them. I do still plead with the Government to consider that this Amendment would restore a good deal of sanity to this provision, which is notably missing in relation to the unlisted companies. I would also urge that, even if it is felt as a matter of principle that no one should divide on so vulgar a question as money, nevertheless those of us who have a feeling that this is not much of a principle where justice is concerned should take the law into our own hands in this matter.

Lord CULLEN of ASHBOURNE

My Lords, I should like to add a very few words in support of my noble friend's Amendment on one particular point which I think is important. During the course of the debates on this matter, several noble Lords have pointed out that actual, quite apart from notional or imputed, share prices represent prices at which willing buyers and sellers are prepared to carry out transactions. But in the back of their minds there is always the feeling that there might possibly be a take-over bid coming, and they know that if that does happen for the bid to be successful the price would need to be substantially higher.

Oddly enough, only today one of the most distinguished professional investors, in an interview with a City editor, made the point that there are now two markets in equities. The first is the ordinary market for those who buy and sell shares, and the second is for the whole companies, which prices are one and a half to twice the market price of the other shares. The point I am seeking to make is that if the base value of a security is determined with reference to the market price, or what the market price would have been if a share had been quoted, agreement between the Secretary of State and the stockholders' representative will be highly unlikely. Furthermore, I would hope that the arbitration tribunal would consider that the difference between the values of the two types of equities is an extremely relevant factor in assessing the proper value of the shares to be nationalised, since it is quite evident that there is a substantial premium over the market price to which the shareholders are entitled. This is the very point that was underlined in today's paper, to which I referred. It is a professional view by a person with a lifetime of experience, and it is not—I repeat not—a Party point.

Lord MONSON

My Lords, I rise to support as strongly as I am able the Amendment moved by the noble Lord, Lord Selsdon; if the Government do not accept it, like my noble friend Lord Goodman, I hope, that he will press it to a Division. The noble Lord, Lord Selsdon, has been exceptionally polite throughout in his assessment of the Government's assumed motives when we have been discussing these compensation terms, and it has not got him terribly far. Therefore, I am afraid I must be somewhat more blunt. Some days ago a noble Lord on the Opposition Front Bench revealed that the compensation terms for one particular naval shipbuilder would be the equivalent of one year's profits. Let us not mince words; these are the politics of the Mafia. I doubt whether, supposing there were any private industry left to nationalise in Yugoslavia, Poland or Hungary, the compensation terms would be as low as these. I think one would have to go to post-Dubcek Czechoslovakia or to Albania to find such derisory terms—a price equal to one year's profits. Things have come to a sorry pass when Her Majesty's Government indicate that they are behaving really no better than Maoist Albania. Why have intelligent and moderate members of the Labour Party accepted this? Could it have something to do with what was revealed this morning by that Right-Wing Labour group, the Social Democratic Alliance; namely, that 33 Labour Members have philosophies more in tune with Eastern Europe than with the West? It would seem that Labour moderates are so terrified of these people and of the Marxists in Transport House, and, above all, in the constituencies, that they are driven to act against their better judgment.

Lord ROBBINS

My Lords, I will be very brief. There is clearly a head-on collision between the starting assumptions from which the Government proceed in setting out what they regard as fair provisions for compensation and the starting point of those of us who disagree with them. The noble Lord, Lord Melchett, said with serene confidence, dogmatically, that the provisions in the Bill were entirely just. If I could muster such serene confidence about anything on this earth, I would say equally emphatically that they seem to me to be supremely unjust.

But the purpose this evening is not to rehearse the technical arguments, which have been mentioned already and well discussed at the Committee stage, but rather to question whether the Amendment moved by the noble Lord does anything to improve matters. From my point of view, if this were accepted by the Government then whether they start from what the noble Lord, Lord Goodman, has called the Alice in Wonderland basis of initial valuation, or whether they adopt something more sensible, if this provision—namely, that on application by the stockholders' representatives or the Secretary of State, all factors considered relevant by the arbitration tribunal …"— could be taken into account, I should be satisfied. I find it extraordinarily difficult to conceive the frame of mind in which a provision of this sort can be resisted. Clearly the Reason given in No. 55 Because they might involve charges on public funds, and the Commons do not offer any further Reason trusting that this Reason may be deemed sufficient is not such as to appeal to anyone who is not deeply committed to one point of view. I hope that this Amendment will be adopted, and if it were pressed to a Division I personally, having regard to all the consequences, would certainly be prepared to go into that Lobby.

Lord HACKING

My Lords, I rise simply to acknowledge the submissions which have been made by the noble Lord, Lord Selsdon, to say that he has support from another quarter.

7.31 p.m.

Lord WINTERBOTTOM

My Lords, the noble Lord, Lord Selsdon, who has made such a valuable contribution to our discussions over the nights that lie behind us, has made a further attempt to amend the compensation terms on lines which he considers to be more equitable. My only regret is that in looking at the communication which he had from my honourable friend the Minister of State he looked at a gift horse in the mouth with, I thought, rather excessive intensity. After all, it was an attempt to clarify the argument that the noble Lord and I, and other noble Lords in this House, have had over a rather long period as to what is fair and how shares should be valued. We have not been indulging in a dialogue of the deaf. The noble Earl may have a small snigger, but the noble Lord, Lord Kings Norton, today received proof that it was not a dialogue of the deaf. I was able to present him with what he wanted at the appropriate moment in the process of this Bill. It is not a dialogue between the deaf. Sometimes some Governments may be a bit deafer than others.

Earl FERRERS

My Lords, I was only smiling at the expression, not at the inference.

Lord WINTERBOTTOM

Well, my Lords, we are on our way. May I say that I thought that the noble Lord, Lord Monson, was rather spoiling his case by overstatement. I am not anybody's creature, whether he be an Albanian or someone very far to the Left of centre of my own Party. What I am talking about is this Bill and its implications for the economy of the country and two major industries.

Lord Selsdon's Amendment is similar to Amendment No. 53, which was pressed by the official Opposition at Committee and which the Government were unable to accept. Indeed, the Commons have also disagreed with Amendment No. 53 for Reason No. 55. The terms provide for quoted securities to be valued on the basis of their Stock Exchange quotations and unquoted securities on the basis of imputed quotations. In the case of unquoted securities, the value will be arrived at by negotiation between the Secretary of State and the stockholders' representative, or with recourse to independent arbitration.

We believe that the terms of the Bill ensure that compensation will be fair on two counts. First, the Stock Market provides an independent and objective means of assessing a company's worth at any given time. The price of shares as quoted on the Stock Exchange represents the price at which these shares will be bought and sold. The use of the past reference period does not render this argument invalid. The stock market is lower now than during the period up to February 1974 and, in most cases, the shares quotations of parent companies are well below the reference period levels, some substantially so. The fact that a reference period extending over six months has been chosen enables the future trends of a company to be clearly identified. The Stock Exchange does not think from day to day; it analyses the situation, and during this period they have six months in which to make a long-term analysis of the future of these companies.

Secondly, independent arbitration is provided for under the Bill so that all security holders will be treated both equally and impartially. This means that not only are the terms of the Bill fair but also their method of application. Amendment 51A requires that the tribunal, at the request of the Secretary of State or the stockholders' representative, shall take account of all relevant factors in order to ensure that the compensation is fair. However, the Bill already provides in Clause 38(3) that the Tribunal shall have regard to all relevant factors. As I have made clear, the tribunal is an independent body and it would not be acting properly if it had regard to factors relevant to a Stock Exchange valuation yet failed to take account of them. The present words may be different, but since the effect is exactly the same there is no need to duplicate the provision as the Amendment seeks to do.

The Bill currently provides for unlisted securities to be valued on the basis of what would have been their quotation on each of the relevant days had they been quoted at that time. The arbitration tribunal, in determining the basis value is required to have full regard to all relevant factors. There is nothing novel in this approach. It is analogous to the process undertaken by the Stock Exchange in fixing a price for a previously unquoted security. In fixing a price, the Stock Exchange acts within the requirements of its own code of practice set out in the Listing Agreement. This Agreement goes much wider than any legislative requirements and requires the publication of a great deal of very detailed information with particular emphasis on price sensitive information. I wish to assure the House that, in the compensation negotiations, it is not the intention of the Government to seek to carry out the valuation on any less stringent a basis than that used by the Stock Exchange.

Indeed it could be argued that the Bill goes further. It allows for the arbitration tribunal to take account of all relevant factors, not just those required by the Listing Agreement. Either party to the negotiations is free to bring into the negotiations, and before the Tribunal, any factor which it considers relevant. And it will ultimately be for the tribunal to decide what weight should be placed on that factor. The mechanisms of valuation which will be used are therefore closely akin to the well established and well tried practices of the stock market itself. As the noble Lord knows, we are talking about Stock Exchange mechanisms in this matter, and rather not, except indirectly, comparable prices.

As has been made clear in another place, much of the work of the valuation will be carried out by experts specifically retained for the purposes of the negotiations. The Government have secured the services of a leading firm of city accountants, Whinney Murray and Company, who will be involved in the detailed mechanics of the valuation. In addition, the Government will be calling on the detailed advice of the Government Broker, Mullens and Company, to assist in assessing the particular stock market factors which would have affected the price of securities during the reference period, had they been quoted. The association of these two companies with the valuation process only serves to emphasise what we believe is the inherent fairness of the basis and method of valuation laid down in the Bill. It is for these reasons that I ask the noble Lord not to press his Amendment.

Lord GOODMAN

My Lords, might I ask the noble Lord a question before he sits down? He mentioned the name of a very reputable and highly respected firm of accountants. Have those accountants been asked whether in their view it is sensible to attempt to value unquoted shares on the basis of a notional quotation?

Lord WINTERBOTTOM

My Lords, my noble friend who is in charge of the Bill reports that they have, but I would have thought that a firm of that eminence would not have undertaken the duty unless they were satisfied of the background situation.

Lord GOODMAN

My Lords, may I be permitted to ask a further question? This is a highly technical matter; it is not a political matter. It would be most unfortunate if it were pressed to a Division. This is a Bill which in many aspects so far as the shipbuilding and aircraft industries are concerned is fairly free from controversy, and it would be a great pity if quite needless controversy were brought into it. Would the Government be prepared to consult with Whinney Murray on the question I have asked and reflect again if they get an answer which accords with my own view of the matter and that of many other Members here?

Lord CARR of HADLEY

My Lords, I am sorry that the noble Lord felt inhibited in replying to the last question from the noble Lord, Lord Goodman. May I raise one point about what he was saying? I believe that the noble Lord was genuinely trying to reassure us about the Government's intention in relation to the compensation being fair. He rested considerably on Clause 38(3), a subsection which brings in the arbitration tribunal. The noble Lord was stressing that this subsection provided that: The arbitration tribunal…shall have regard to all relevant factors". I wonder whether he would look at subsection (3) rather carefully as I try to speak about it. What disturbs me about the subsection—and I hope the noble Lord can tell me that I read it correctly—is that it says: The arbitration tribunal, in determining the base value that any securities would have had if they had been listed…shall have regard to all relevant factors.". In other words, they can only have regard to all relevant factors in relation to the base value which securities would have had if they had been listed at the time in question. If I interpret that subsection correctly I am worried about its restrictiveness to a past date, whereas when I read the letter which Mr. Kaufman sent to my noble friend Lord Selsdon, and to which he referred, I see that in the middle of the second paragraph on the second page of his reply Mr. Kaufman said: Both parties will consider factors which had a bearing on the prospects as well as the underlying condition of the company.". If the Government could tell us that subsection (3) allowed the tribunal to have regard to all relevant factors in relation to the prospects as well as the underlying conditions in accordance with Mr. Kaufman's letter, I for one should be a lot happier. I am not a lawyer or a financier or an accountant, but I have been trying to apply my lay mind to this. It seems to me that if we could absorb all the relevant factors which could be taken into account by the tribunal and that Mr. Kaufman's letter was indeed correct, that the prospects as well as the underlying factors at the time could be taken into account, we should all feel a lot easier and feel that the chances of justice being done were considerably greater than we at one time felt. I wonder whether, with the leave of the House, the noble Lord would feel able to explain his understanding of the subsection.

Lord MELCHETT

My Lords, as my noble friend has exhausted more than once his ability to speak in this debate it might be helpful if I attempted to reply. I think it is the tradition of the House that unless people are moving or replying to the debate on the Amendment they should speak only once. My understanding is that the Government's case is that in regard to securities quoted on the Stock Exchange part of the price will reflect the future prospects of the company. In other words, as my noble friend said in replying to the debate, the value of the securities as quoted on the Stock Exchange is not simply a matter of looking at the thing from day to day. In listing securities the Stock Exchange will have taken into consideration the future prospects of the company; that is the current value of the shares and the future prospects and the trading picture on that particular day or week.

Therefore, it is quite clear that when we are going through this exercise of imputing a value to the shares which are not quoted it would be open to the tribinal—I hope the noble Lord, Lord Carr, will take this point because it is the direct answer to the question he asked—to take into account the prospects of the company, and that will be a relevant factor in the tribunal's consideration because it would be a relevant factor if the securities were listed on the Stock Exchange in arriving at the value.

Lord WARDINGTON

My Lords I think I understood the noble Lord, Lord Winterbottom, to say something to the effect that the negotiators could have recourse to the Stock Exchange Listing Agreement. This is very important and is different to a price. The Stock Exchange Listing Agreement actually takes into account something that I tried to explain the other day—the possibility of a notional price. If you are bringing a new issue to the market you have to make a guess, and prospects are part of it. In effect, the Stock Exchange has to monitor the information and protect the public and the seller from a wrong price

Lord HARMAR-NICHOLLS

My Lords, the difference is so narrow that I really cannot see why a reasonable answer could not be given to the noble Lord, Lord Goodman. Everybody wants to be fair. If the noble Lord, Lord Winter-bottom, represents the view of the Government—as of course he must—what he wants to do is not at all dissimilar from what the noble Lord, Lord Selsdon, is trying to achieve. It would be a pity to push this question to a Division. It is so near that it ought not to give the impression of a confrontation on a matter to do with the proper spending of money. Is there no way of approaching this? The noble Lord said that nobody could speak again but the House could give permission to the noble Lord, Lord Winterbottom, to do so.

Lord MELCHETT

My Lords, if I may by leave of the House make a second speech, my noble friend Lord Winter-bottom has made three and it would be trying the patience of the House if he were to make a fourth. As the noble Lord said, I do not think there is very much between us. Therefore, we hope that the noble Lord, Lord Selsdon, will not feel it necessary to press his Amendment. An Amendment in a similar form to this one has already been discussed and divided on and rejected by another place, so it would not appear to be particularly constructive, when things between us are so narrow to put this Amendment into the Bill. Having heard the very clear exposition and the full statement which my noble friend has been able to give, and also given the fact that I was able to give a straight, Yes in reply to the question which the noble Lord, Lord Carr of Hadley, asked me, which seemed to be the point troubling him. I hope that that is not the intention of the noble Lord, Lord Selsdon. It seems that in fact there is nothing left between either side of the House and I hope noble Lords will agree to leave the Bill as it was.

I did not understand exactly what the noble Lord, Lord Goodman, was asking us to do but I can certainly give an undertaking to look at what he said in Hansard, and if there is any further information we can give the noble Lord or any further facts which he has brought to light and which have not been considered I will undertake to look into the matter and, if necessary, to write to him.

Lord GOODMAN

My Lords, I have been impressed by what has been said from the Government Benches in the last few moments and if the noble Lord, Lord Melchett, will look again into the question whether the accountants consider that the suggestion of a notional Stock Exchange quotation is something on which they could work, I should be very influenced by that.

Lord MELCHETT

My Lords, I am grateful to the noble Lord, Lord Goodman, for making that point, which I confess I had not fully taken when he first put the question. I will certainly look into that matter again. My understanding is that the accountants have been asked about it, but I will look into it and write to the noble Lord.

Lord SELSDON

My Lords, it almost seems that we have here a classic case of the professional versus the politician; that does not imply that politics is not a profession. When one listens to noble Lords who come from the same walk of financial life as I do or from legal life, one believes them and knows that they share one's own views and that they do not share views that have been imposed on them or put forward by the Government Benches. If, at the beginning of the drafting of the Bill, the Government had consulted those who know this field, had made it clear that consultations were going on and that the end product would be, as Mr. Kaufman said, fairness, many of us need not have spent half the night—or was it the whole night?—discussing this issue in your Lordships' House.

Whatever comes out of this compensation discussion, it is clear that when a Government seek to impose their will, and their uninformed will, on a nation, they are entering difficult waters and that gradually the hackles of those who feel that they know rise, until one arrives at confrontation, the very confrontation that Governments should seek to avoid; confrontation among the financial sector, industry and Government. The Government may not have been aware of the hare that started to run and the dangers that could have come if this hare had been allowed, as it could still do, to gather pace.

I do not intend to press the Amendment, but I will not press it for reasons different from those which the noble Lord, Lord Winterbottom, put forward, because I detected from some of his remarks that he was speaking very much from a prepared brief. I also know that he shares my view that it is the end result that must be fair and must be seen to be fair. I should like the Government, perhaps on another occasion, to give an undertaking that they do not believe that a share price or imputed share price is a fair valuation for a company. It may be used as a starting basis for valuation, but to declare to the outside world that that is the Government's view is dangerous to foreign investment.

We have spoken enough on this subject. It is tedious and can become extremely boring. If the Government will assure us that they will in the end be fair, then that is something one must accept, but I warn them about the commitment into which they are entering. They are entering into a financial commitment which will exceed £2 billion. That is merely money. They are, however, trespassing on certain aspects of morality which are far more damaging to the nation. While £2 billion for an enormous industry is not a fantastic amount of money compared with what may be required for the future, if they damage one factor that still remains so far as the United Kingdom is concerned on a worldwide basis, that of good will, they will have done something they will regret for the rest of their days. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.