Skip to main content

South-Western Gas Board (Officials' Private Services)

Volume 497: debated on Wednesday 19 March 1952

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Vosper.]

1.5 a.m.

I had a Question which I desired to ask the Minister, Mr. Speaker. It was: whether he was aware that the secretary and solicitor of an area board recently acted professionally in connection with the sale of his chairman's private house; that the board's official notepaper was used for correspondence, and the board's offices used for meetings in connection therewith during normal business hours; and if he would give a general direction to electricity, gas and coal boards to ensure that their professional officials did not so act in future.

That question was inadmissible, Sir, but you kindly said that it was suitable for an Adjournment debate, and I crave the indulgence of the House at this late hour to raise this important issue of principle. Although it arises over a specific instance, there has been more than one instance, as I shall show. I do not wish to raise it in particular, for an important principle is at stake. No names, no pack drill. There are three industries potentially covered in this, electricity, coal and gas, and a vast number of areas. There is, I submit, no need to go into the details of which I have, however, given the Minister information.

The specific instance is one of a £13,500 free conveyance by the solicitor of the board, and that is a considerable benefit to the chairman concerned. There is a total, I am told, of £100,000 conveyances in one area board, and in connection with the chairman alone, taking two transactions, they total some £25,000.

I want to make it clear that I am not seeking in any way to blame the subordinates. It seems to me that a subordinate official, even if he takes the initiative and offers to do the work for his chairman, is not really to blame. It is the chairman, who does not have to accept, but who does accept that offer, who is the responsible person.

Obviously, subordinates like to be in the position of offering something worth £100 to their superior officer. I do not think there is anything particularly wrong, whether it is on a friendly basis or not, in doing that. Similarly, they may be offering it to their colleagues and not just to the chairman, again on a friendly basis. But here again I would say that the chairman of the board is wholly responsible and it is he who is, therefore, taking the initiative in this matter.

We have a fine tradition in the Civil Service and I would like that fine tradition to carry over into these nationalised undertakings. I think we would all agree in this House that it would be unthinkable that the Minister himself or the Permanent Secretary of any Department should use the solicitors or the architects or the quantity surveyors or the accountants to do the Minister's or the Permanent Secretary's own private business for them and give them considerable benefit in doing it. It is quite unthinkable, and I hope that we shall have the same high standard of principle adopted in the nationalised undertakings.

After all, what this involves is adding secretly to the salaries of those who receive these benefits in kind. They may not be always asking or even expecting, but in accepting the services of their professional subordinates they break what I consider is a most important principle of honourable British conduct.

Now, it may be said that in public and private companies this same sort of thing could happen. But I do not think that it greatly does and, even if it did, there are in the Companies Acts, and Section 39 of the 1948 Finance Act, two most healthy safeguards. But they do not apply to nationalised undertakings. In regard to the Companies Acts, there has to be shown the emoluments of the higher officials in terms of their benefits in kind; and if a director received £100 worth of free services from his company that would have to be published and shown on the face of the accounts. What is equally important is that, under the Finance Act, he would have to pay Income Tax on it and, if Surtax applied, he would have to pay that as well.

The officials of the nationalised undertakings are in a doubly privileged position and treated in quite different terms from officials of the Civil Service, on the one hand, or those in business, on the other. Further, this is damaging to the Parliamentary control of this House. The chairman gets £4,500 a year salary, with £500 expenses, but he is able, although he ought not to be, by a subterfuge of devious channels, to get round the law and add to his emoluments. Even if he does, it ought not to be by a secret method not disclosed to Parliament and not even ascertainable unless, by some disclosure, the matter is brought to the attention of an hon. Member who may raise it in this sort of way.

Finally, we have to admit that many hon. Members, as well as the public at large, are disappointed at the way in which the consumers' councils are working; they are not protecting the interests of the consumer; they are not really a restraint on expenditure, but a channel for justifying expense after it has taken place. They do not form a restraint on the Chairman in his extraordinary position of power, but exist as a weapon for justifying him and the board in relation to consumers in general.

So, there is not the effect of competition to keep down the costs of that which is being sold. The cost of any free service to the chairman and others has to be added to the cost of running the undertaking, and this adds to the price of gas, electricity, and coal, to a certain extent. There should be a consumers' council acting to prevent such additional costs, and there should be restraint on the chairman when he takes such free services and adds to costs, and I ask that the Minister should give some general direction. He has the power under the Acts. Either the chairman is acting illegally—and then I ask the Minister to stop him, or the chairman is acting properly, in which case it is a clear case for a direction from the Minister that the area boards should conduct themselves in the way that, for example, the Civil Service so honourably conducts itself.

1.15 a.m.

In speaking on this subject I should declare an interest, because I am a member of the solicitor's profession. I believe that the profession as a whole will welcome that my hon. Friend the Member for Bath (Mr. Pitman) has raised this matter, because it is giving concern to the profession how those members who are engaged in nationalised industries are placed if they have to give free legal advice to the members of the nationalised boards.

I am not suggesting that in either case my hon. Friend mentioned it is not perfectly proper, but even on the actual issue of whether they acted properly in giving free professional advice, it seems to me that is a matter for the Law Society, which controls the professional conduct of solicitors. I have no doubt that the Law Society has the matter very much in mind, but it occurs to me that, if the practice is to continue, all kinds of complications will occur in the nationalised industries.

For example, if a solicitor is handling clients' money, as indeed he must do in particular transactions, he is bound to keep a clients' account, and have it properly certified by an accountant. I should be interested to know whether these matters are being dealt with in the nationalised industries by solicitors, and whether they are keeping proper clients' accounts in accordance with the solicitors' rules.

The other issue which occurs to me, which is wider and which I regard as more important, is the one to which my hon. Friend referred; it is whether it was proper for members of the nationalised industries, in whatever capacity they are members, to receive free legal advice, and not return it for the purposes of emoluments. As we know, and my hon. Friend has properly said, under a recent Finance Act—I think it is the 1949 Act—there is a provision whereby directors and companies have to return emoluments received, and quite properly have to pay tax on them. This is a close corollary to that position. I hope that if that is to become the custom in the nationalised industries, consideration will be given to that point.

There is another point which I should like to mention. It is whether this free legal work was done during the office hours and time of the boards or industries concerned. If it was done in office hours and there is a strong case for the solicitors employed by nationalised industries having time to do outside work not connected with their immediate task, then some consideration should be given to cutting down the number of solicitors employed by the nationalised industries.

I hope that the Minister will give this matter consideration. I am not criticis- ing the case to which my hon. Friend referred. I have no doubt the solicitors concerned acted perfectly properly, but I think that the whole question of solicitors engaged by nationalised industries wants careful consideration, and I hope we shall hear something from the Minister about it.

1.19 a.m.

The Parliamentary Secretary to the Ministry of Fuel and Power
(Mr. L. W. Joynson-Hicks)

In the first place, I should like to express my thanks to my hon. Friend the Member for Bath (Mr. Pitman) for letting us have notice of the detailed questions he was going to refer to during the debate.

I should like straightaway to deal with the question of the special case to which he has referred. I think that this debate has been a good thing. I think it shows that there are in the minds of some Members some doubts on this problem, which is a difficult one, and that it will help considerably to clear the air, and disperse any misconceptions there may be.

Before I actually come to the special case, I should like to make the general situation quite clear from the point of view of the desire of the House to know what my right hon. Friend thinks about it. In general, the House as a whole, and my hon. Friends, too, would wish to avoid any possibility of an impression going out from this House that my right hon. Friend would countenance a practice of board members requiring officers of a board to act professionally for them in their private affairs. That is the broad principle which should be made clear in the course of this debate, and I think it will help to clear the air and prevent any misconception.

To come to the facts of this case, my hon. Friend, with great consideration, endeavoured to cloak the circumstances with anonymity, but I doubt very much whether he has really been successful. He is well known as the hon. Member for Bath and there are not all those numbers of boards which are likely to come within his purview. So let us say straight away that he is referring to the South-Western Gas Board.

He also referred to the fact that, in his understanding, a sum of about £100,000 worth of purchase money had been dealt with in the form of conveyances carried out by the solicitor to the Board on behalf of members of the staff. I am not in a position to comment upon that figure, and I do not know whether it is correct or not, but I think that the circumstances to which he refers can again be made quite clear.

I shall submit to the House that it was a right and proper thing to do. The setting up of the boards necessitated at very short notice not only the appointment of the members of the boards themselves, but also the collection of staff and officers from different parts of the country and their concentration into the new organisation at great inconvenience and with great difficulty. It was a decision of the South-Western Gas Board, taken as a whole, in order to assist some 15 newly-appointed officers of the Board—not members of the Board—who had to come into Bath to take up residence to serve the new Board.

There was no other way of getting these officers housed except by their buying houses for themselves, and the Board decided that the conveyancing and legal work involved should be done for them by the solicitor to the Board. That was a Board decision, a matter of policy, and would account for a very large proportion, at any rate, of the £100,000 purchase money to which my hon. Friend referred. I submit that that was a proper business decision for the Board to make and a proper exercise of the functions of the solicitor of the Board.

I now come to the case in which my hon. Friend referred to the sale of the house by one of the Board members. Again, let us not cloak that with anonymity. The gentleman in question is the Chairman of the Board, and he would be the last person in the world to seek to avoid the criticism of any of his actions by hiding under any anonymity. Mr. Chester, the Chairman, is a gentleman of the highest integrity, and he is quite prepared to accept in public any criticism which there may be of his action.

He has been in the industry for some 30 years—he grew up in the industry—and he is well known as one of the most competent and efficient leaders in the industry. In fact, I would go so far as to say that the consumers in my hon. Friend's constituency, and throughout the South-Western area, are fortunate in having a gentleman of his ability and prominence as Chairman of the Board. As past president of the Institution of Gas Engineers he is well known throughout the gas industry internationally, in addition to being a prominent member of the industry in this country.

He was one of the gentlemen who had to uproot their homes and move with their families. He had lived for many years in the place he had to leave to fulfil his duties as chairman of the Area Gas Board. He had to move to Bath. That was not an easy thing to do, and he was settling down when tragedy came to him and his family. The House, I know, will have great sympathy with him when I say that they were bereaved through the sudden death of a daughter living in the home. That did not make things any easier, and after continuing for a period in close association with the place, Mr. Chester decided to get rid of his house.

As I think may be imagined from what I have said about this gentleman, he is one who has a great capacity for friendship, and many of his friends, sympathising with him in his bereavement, sought to help him in any way they could. One of his closest friends was Mr. Curtis, the solicitor to the Board. It was but natural that from the close bond of friendship between them Mr. Curtis should offer to relieve him of the trouble and worry over disposing of his property.

My hon. and gallant Friend the Member for Cheltenham (Major Hicks Beach) referred to the work being carried out in working hours. Mr. Curtis, as a senior officer of the Board, has no working hours. It is not inappropriate at this hour of the morning that I should say that Mr. Chester rather takes the same line as you and I do, Mr. Speaker, that so long as there is work to be done those are the working hours. The hon. and gallant Member for Cheltenham also referred to the professional aspect of the matter. Here I would apologise to the House for not disclosing my personal interest as a member of the profession, not a practising member, perhaps, but still a member of the profession. But, even in that capacity, it is not for me to comment upon professional conduct.

As a member of the profession, all I would say is that I am sure that no member of our profession who is in full knowledge of the circumstances and the facts would have the slightest objection to what Mr. Curtis did. I am glad to say that it has never been our custom, and I hope it will not become our custom, to prevent a man, because he is a solicitor, helping a person in trouble.

Those are the circumstances. There is nothing secret or underhand about the matter. Before undertaking the task, Mr. Curtis—as I think my hon. Friend said—wrote to the Law Society for confirmation of his opinion that it would be proper for him to act, and in his letter he said that this was an exceptional type of case which would not often arise. I believe he was perfectly correct and that was a right statement of the situation and I submit that this special case, approved by the Law Society, would be endorsed by the profession as a whole, and is one to which this House in particular would, I believe, be the last to take exception.

If I may return for a moment to the general theme of the speech of the hon. Member for Bath, I do most wholeheartedly agree with the tribute he paid to the integrity of our Civil Service. The high standard they set is an example to us all. I think he referred to the attitude which should be adopted by Ministers. Ministers come and Ministers go, but I think not only Ministers but members of public boards or directors of public or private companies may all benefit by seeking to emulate the high standards set by the Civil Service.

I believe myself, from such personal experience as I have, that these standards are rising, because in the olden days it was not uncommon for business executives, whether directors of companies or public utility concerns, to enjoy the services of their office. I am quite certain that in the case of members of area boards it would be entirely wrong to say, as the hon. Member for Bath said, that they were adding secretly to their salaries by these benefits in kind, or to use such expressions as he used—subterfuge, devious channels and secret methods.

I am sorry to have to say to my hon. Friend that / resent those expressions, which carry with them implications and innuendoes which are unjustified, and I most certainly do not accept them as being a correct representation of the facts so far as I am aware of them.

I was talking in purely general terms and referring to the dangers of the situation. I should not like to say that in this particular case there was anything of that. It seems to me to be perfectly clear that the principles of disclosure to proprietors and for taxation which apply in ordinary cases are matters of general principle and wide application.

If I have misunderstood my hon. Friend I am very pleased indeed, and I apologise for misunderstanding him. I sincerely hope that it will not go out from this House that such implications or innuendoes can be drawn from the present circumstances.

I had hoped to be able to make some comments upon the remarks of my hon. Friend regarding the consultative councils, but I rather think we shall have to leave that for another debate—and an excellent subject it would make for another debate. I would add one word about it. I think that these councils and the consumers' councils are, in fact, providing better and greater representation of consumers' interests at the present time than my hon. Friend is prepared to give them credit for.

Question put, and agreed to.

Adjourned accordingly at Twenty-six Minutes to Two o'Clock a.m.