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Trustee Investments Bill Lords

Volume 644: debated on Wednesday 12 July 1961

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Order read for resuming adjourned debate on Amendment proposed [7th July] on Consideration of Bill, as amended (in the Standing Committee).

Second Schedule—(Modification Of S 2 In Relation To Property Falling Within S, 3 (3))

Which Amendment was:

In page 14, line 18, at the end, to insert:

(c) not being special-range property, accrues to the trustee, after such division as aforesaid, as owner or former owner of special-range property comprised in the fund".

Question proposed, That those words be there inserted in the Bill.

May I remind the House that we had proposed also to take the Amendment in page 14, line 18, at end insert:

(c) being property which, in respect of any holding of special-range property, is or has at any time been acquired pursuant to the power conferred by subsection (4) of section ten of the Trustee Act, 1925".

9.56 p.m.

It was said of the late Serjeant Whittaker who was once engaged as counsel for the appellant in another place, that he sought to put a question to which exception was taken by counsel an the other side. A long dispute followed and their Lordships retired to consider the point. They returned, re-examined the matter and they retired again to consider the paint and finally they told Serjeant Whitaker that he could put his question. He replied that he had, by this time, forgotten it and would proceed to put another question.

I am not precisely in that position because if I tried to put another question you would very properly rule me out of order, Mr. Speaker. But I am in some difficulty in concentrating my mind on the question which was opened on Friday last in the concluding hours of a somewhat arduous day. I rose.

The hon. Member for Crosby (Mr. Graham Page), who had been responsible for the Clause, and I, were here very substantially to put what we thought was an important point which seemed to indicate, perhaps, some possibility that the Act itself had not completely covered a difficulty of trustees.

With that consumate tact for which I am normally noted, I realised at the very late hour that it might be easier for an hon. Member of the Opposition than an hon. Member on the Government side to raise the matter at a time when the Government were hoping to get their Bill. So I opened the question and was about to put to the House a speech on a subject which, I felt, I had mastered in the last few minutes when, because of the time, like an ever rolling stream, you put an end to my observations, Mr. Speaker, because of the rules.

Then I saw the Solicitor-General and I handed to him by brief. Unfortunately, I have not got it back. Whether it is now clogging the usual channels or not, I do not know, and I speak, therefore, in some difficulty. I think I can—because I am sure that the intentions of the Government on this occasion are honourable—with the brevity of the briefless, acquaint the House of the principal nature of the problem which I have in mind.

Section 10 (4) of the Trustee Act, 1925, enables trustees to exercise a preemptive or conditional rights accorded to them by any company in respect of which they hold shares by virtue of a dispensation in the will or by law of the land but, in general, by dispensation of the will because this refers primarily to equity shares. It gives trustees power to have three possible options. They may exercise the right, they may assign the right at a price, or they may renounce a right. But, of course, in either of the first two circumstances they must treat either money they have got by exercising their right or assigning their right from shares they hold as capital.

Then I come to the problem which arises out of the Second Schedule of this Bill. When they have exercised the power under the will to retain shares they have taken no step which is affected by the Act. When they have exercised their powers under Section 10 (4)—

It being Ten o'clock, the debate stood adjourned.

Proceedings on the Trustee Investments Bill [ Lords] exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[ Mr. R. A. Butler.]

Question again proposed, That those words be there inserted in the Bill.

I was afraid, Mr. Speaker, that time, like an ever-rolling stream, was doing something more.

As I was saying, under Section 10 (4) they exercise their right and at that moment nothing has happened which involves the necessity of taking any action even if this Bill becomes law. But when the Bill does become law and the trustees then exercise the rights given by the Bill, in Clause 3, to invest in equity shares, they come under the provisions of Clause 3 and the relevant Schedule and in due course may be called upon to make an allocation and to say which of their trustee holdings are to be classified as one range of investment and which are to be classified as the other. At that stage, of course, the problem is that they have acquired under the Trustee Act, 1925, certain rights, options and shares which then have to be allocated. I am putting the matter as briefly as I can and I hope that I am putting it clearly. If I fail to be clear, I apologise.

The problem which learned counsel discovered and the difficulty to which the Law Society called their attention was that at that stage the trustees may find themselves forced to 20 back into the long and tortuous financial history of the matter involving the previous trustees, and to ascertain the history of those shareholdings which were acquired before the Measure came into operation. I do not think I need go into the details of the two separate problems which were postulated in the brief which I hope the Solicitor-General still has, and to which I hope he has given more study than I have been able to give because I have had it for a shorter period than he has. This was raised on the Amendment to the Second Schedule and the Amendment which the hon. Member for Crosby had tabled in accordance with a suggested Amendment which was put to us by those who have been exercised by this problem.

It is fair that I should say—and I hope the hon. Member for Crosby will think I am right in saying—that even on that Amendment doubts were expressed as to whether it was drafted in a hurry because the point had only been recently discovered and doubts were expressed by its authors on all the problems which arose from the conflict of these provisions. I understand that Her Majesty's present advisers have had an opportunity of considering the matter, and it may be that at a later stage the House will be asked to recommit the Bill and to consider another possible Amendment.

I express my gratitude to the Solicitor-General and to the Economic Secretary for the promptitude with which they have considered this point, and the hope that they and their advisers will have found a solution which will be acceptable to the House and effective in operation.

It must be very rare indeed that Ministers find themselves able sincerely to express gratitude to an Opposition Member who has talked out one of their Bills. This is quite genuinely one of those cases, because there is no question that the hon. Member for Oldham, West (Mr. Hale) and my hon. Friend the Member for Crosby (Mr. Graham Page) were on a good point here. I am very grateful that we have had a chance of considering it, and, indeed, that the hon. Gentleman was courteous, kind and helpful enough to give me his brief. I am sincerely sorry that I have lost it by now. I handed it immediately to Treasury Counsel, and it is he really who is the dishonest one; but I will try to recover it and hand it back to the hon. Gentleman. However, the hon. Gentleman did remarkably well in speaking without a brief, and he explained the point which we have had a chance of considering. It is not only the actual logic of the position but even more the Practical difficulties which my hon. Friend the Economic Secretary and I had an opportunity of discussing at once with the Public Trustee.

The problem is a genuine one, and it would, I think, have led to real difficulty in the work of trustees under the Bill on the lines which we proposed. I think it would probably be more convenient if I explained at a later stage what we propose to do and why we propose to do it. We found that the only convenient way of dealing with this matter without a muddle was—I am sorry we have to do it—to ask the House to recommit the Bill and make an Amendment to Clause 3. Therefore, I shall in due course move a Motion to recommit the Bill in respect of the Amendment in Clause 3, page 3, line 29, at the beginning to insert:
"or which became part of a trust fund in consequence of the exercise by the trustee, as owner of property falling within this subsection of any power conferred by subsection (3) or (4) of section ten of the Trustee Act, 1925, or paragraph (o) or (p) of subsection (1) of section four of the Trusts (Scotland) Act, 1921".
It is sufficient now for me to ask leave to withdraw the Amendment which I had moved. I hope that my hon. Friend the Member for Crosby will see fit to withdraw his Amendment in the Second Schedule, page 14, line 18, at the end to insert:
(c) being property which, in respect of any holding of special-range property, is or has at any time been acquired pursuant to the powers conferred by subsection (4) of section ten of the Trustee Act, 1925".

The Amendment in the name of the hon. Member for Crosby has not been moved. It has only been discussed.

I am much obliged, Mr. Deputy-Speaker. I hope that my hon. Friend will not feel it necessary to move his Amendment, because the starred Amendment in Clause 3, page 3, line 29 to which I have referred fully meets his point and, as he will see, it does various things which there was not time to cover when his Amendment was being drafted.

The two Government Amendments to the Second Schedule, in page 14 line 21, and in page 14, line 22, fall with the Amendment which I moved and which I now ask leave to withdraw.

May I interrupt my right hon. and learned Friend? I suspect that he is about to do something which will prevent me from thanking him at this stage for the course he has taken. I am very grateful to him, and to the hon. Member for Oldham, West (Mr. Hale) who helped me out of an embarrassing situation in this case. I did not want my right hon. and learned Friend to ask leave to withdraw his Amendment before I had an opportunity of thanking him.

I am much obliged to my hon. Friend. I hope that the House will now allow me to take the course I suggest.

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Fifth Schedule—(Repeals)

I beg to move, in page 17, line 30, column 3, to leave out "Second" and to insert "Third".

My right hon. and learned Friend has said that he does not propose to move the Amendments to the Second Schedule, in page 14, line 21 and in page 14, line 22. They are, in a sense, consequential on the Amendment which has now been withdrawn. It remains for me, therefore, to move this Amendment, which is a drafting Amendment.

Amendment agreed to.

Bill re-committed to a Committee of the whole House in respect of the Amendment to Clause 3, page 3, line 29, standing on the Notice Paper in the name of Mr. Anthony Barber.—[ The Solicitor-General.]

Bill immediately considered in Committee.

[Sir GORDON TOUCHE in the Chair.]

Clause 3—(Relationship Between Act And Other Powers Of Investment)

I beg to move, in page 3, line 29, at the beginning to insert:

"or which became part of a trust fund in consequence of the exercise by the trustee, as owner of property falling within this subsection, of any power conferred by subsection (3) or (4) of section ten of the Trustee Act, 1925, or paragraph (o) or (p) of subsection (1) of section four of the Trusts (Scotland) Act, 1921".
The hon. Member for Oldham, West (Mr. Hale) has given the reason for this Amendment. Perhaps I should just outline again why the Amendment is necessary.

Clause 2 (3) deals with accrual to the trust fund. In paragraph (a) it provides that bonus issues shall attach to the part of the fund to which the parent investment of the bonus issue belongs. In line 43, a rights issue is for convenience treated as a new investment and not split between its bonus element and its investment element. It is treated purely as investment and divided between the narrower range and the wider range parts of the fund.

Clause 3, which was virtually rewritten in Committee with a view to making it far more simple and streamlined than it was, deals with property which is held under special powers of the trust instrument. That may be an investment which is expressly authorised or it may be purely covered by some such words in the trust instrument or will as a power "to retain the investments in the portfolio as existing at the time of my death", or it may be simply a power to postpone conversion. That would be sufficient to make them authorised investments.

When we came to deal with accruals in the original Amendment which I moved last week, we sought to deal with accruals to the special range part of the fund—that is, the investments which were specially authorised holdings apart from what was authorised by the general law—analogously to the way in which they were dealt with in Clause 2 (3). That seemed to us to be logical and to fit in with the general scheme of the Bill. But, as the hon. Member for Oldham, West pointed out, that would lead to very great practical difficulties where the trustee had to earmark all acquisitions and sales of rights, and particularly, as he pointed out, the rights issues that were attracted under Section 10 (4) of the Trustee Act, 1925.

It might be all right if we were starting from today, but all this would involve retrospective research. In addition—and I was assured by the Public Trustee that this was a valid point—it would be almost impossible to sort out, particularly in respect of the rights issues under Section 10 (4), which was the original authorised investment and which were the rights issues which were subscribed for under that Clause. We have thought it right to include the rights issues and the investments which are made under Section 10 (3) and also the comparable Scottish statutes.

I wish to express my gratitude to my right hon. and learned Friend the Solicitor-General, because this Amendment covers the point which the hon. Member for Oldham, West (Mr. Hale) and I put forward. It will be of particular assistance to a trustee who finds himself with the power under the trust instrument, or perhaps by means of an administration, to hold securities which are not in the trustee security class and then has an offer of a rights issue which he takes up. As the Bill stood, that matter was left in the air. There was nowhere to place it. The Amendment clearly shows how it should be dealt with, that it should attach to the shares in respect of which he has taken up the rights issues. If the shares are held under special range property, then the shares taken up under the rights issue come under the same category.

10.15 p.m.

There is one word in the Amendment on which I should like an explanation. The Amendment begins with the words
"or which became part of a trust fund".
This Amendment fits into subsection (3) of the Clause as a second category of property which becomes special range property. Subsection (3) begins by saying that the special range property shall include the property which is held by the trustee otherwise than as expressed in the subsection, and then this additional holding comes in under the Amendment.

By the word "became", the Amendment seems to refer only to the past, to rights issues taken up in the past. I am sure that I am construing it wrongly, but to the layman it seems to read like that and that the Amendment will not apply to rights issues taken up in the future after the Bill becomes law. I hope that my right hon. and learned Friend 1he Solicitor-General can assure me that I am wrong in my interpretation, but I do not know why the past tense was used. One would have expected the words "has become" or "becomes", or something like that, to include the future.

I should like the Solicitor-General to say whether I am right in assuming that the difficulty which we are now solving arises only from a desire still to divide as to fifty-fifty or any other distribution the kinds of funds held by a trust and that if there were no such division, it would not matter whether it was in the narrower range, the wider range or the special range; it would merely be in the trust itself.

The hon. Member for Gloucester (Mr. Diamond) is right. If there were no narrower range, wider range or special range part, this problem would not arise. It is because we have now created this third category of a special range part that the problem arises of a rights issue which is, if I may put it this way, ascribable to the special range investments.

In reply to the question by my hon. Friend the Member for Crosby (Mr. Graham Page), the word "became" was put in advisedly in the past tense. What we are talking about is what is in the fund already. Whatever is in the fund must have come into it in the past, however immediately in the past. Therefore, the tense was the past tense rather than the present tense.

One other reason is that we thought that the present tense might lead to an ambiguity, but I need not go into that. It faintly suggested that there was the same trustee throughout, and that, of course, is not so. The main reason was that we are talking about what is in the fund and, therefore, it must have come in, however immediately, in the past.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Bill reported, with an Amendment; as amended (on re-committal), considered.

10.19 p.m.

I beg to move, That the Bill be now read the Third time.

I need not detain hon. Members long on this occasion. As hon. Members will be aware, the Bill has undergone something of a metamorphosis since it had its Second Reading in this House. Its head and its tail remain much the same, but its body has changed and become somewhat more flexible. In making the very considerable changes which we made in Committee we have given effect to very many of the views which were expressed on both sides of the House during the Second Reading debate.

Hon. Members on both sides made it clear that perfection of principle should not be bought too dearly, and that it was felt that more weight should be given to the need not only to make the provisions of the Bill more easily understandable to the lay trustee but also to keep within reasonable bounds the amount of work which it imposes on trustees. It was against this background that we considered the Bill in Committee, and I think that the thoroughness with which we tackled the job is evidenced in the fact that it took us twelve sittings to deal with twelve Clauses.

I do not want to take up the time of the House by referring to the specific changes which we made, but I do want to mention one particular matter which, I think, is of importance. There are, I know, hon. Gentlemen who still have doubts as to whether we have gone far enough in this Bill, but whatever one may think about this there can be no gainsaying the fact that the proposed provisions are very big changes in provisions which have been virtually unaltered for the last seventy years. It may be that in the course of time some further relaxation will be warranted, and in that case provision for stepping up the wider-range part of the fund may be invoked, but I should like to correct two misapprehensions about these provisions which seem to have arisen since last Friday. One of them is a misapprehension about which the hon. Member for Gloucester (Mr. Diamond) knows.

In the first place, I have heard it suggested that this provision is such that at any time after the passing of the Bill the Treasury may, if it so wishes, direct that a higher limit than 50 per cent. should apply to particular trusts. Those of us who are familiar with the background to this new provision and the discussions which we had in Committee will, of course, realise that that is not the intention and that the provision if it were introduced at all would be of general application.

The second misconception is that the introduction of the provision on Report reflected some last-minute change of policy by the Government. This again is inaccurate. The Government still consider that in present circumstances the 50–50 division should continue and that basis will apply when the Bill becomes law, but bearing in mind that trustee legislation is a pretty infrequent occurrence—the Trustee Act, after all, is now some thirty-six years old—we recognise that there is merit in the proposal that power should be taken to deal by order with the situation which would arise if at some time in the future it was considered circumstances had changed sufficiently to warrant a higher limit than 50 per cent. The Government tabled the Amendment as long ago as April.

As I say, I do not want to go into the details of the Amendments which have been made, but in conclusion I should like to express the thanks of my right hon. and learned Friend and myself to all those on both sides who have contributed to our proceedings since the Bill came to this House, and in particular to express my appreciation to the hon. and learned Gentlemen the Members for Kettering (Mr. Mitchison) and Liverpool, Edge Hill (Mr. A. J. Irvine). Whether they were harrying the Government or, on some very rare occasion, speeding the Bill on its way they could not have been more courteous, but whatever our differences I think that it will be agreed by all hon. Members who took part in the debates that the Bill is a landmark in trustee legislation, and I commend it to the House.

10.25 p.m.

I should like to thank the Economic Secretary for those kind words and to congratulate him on his own success, with the assistance of the Solicitor-General and the Lord Advocate, who also appeared at times, in bringing the Bill through its somewhat tumultuous career. It came to the House in one form from another place. It was greeted with almost universal disapproval in detail and approval in principle, in the sense that every hon. Member felt that the present trustee legislation was hopelessly out of date and something ought to be put in its place.

The Bill went to Committee and the Economic Secretary would be wise not to resist too severely the suggestion that the Government sometimes changed their policy on it. They changed it again and again, and whether the final result is really sufficient for the purpose which the Government have in mind I still take leave to doubt. I am not at all certain that the Bill will fulfil all that is required at the moment or even be workable in a sufficiency of cases, though in some no doubt it will. It may well be that we shall have trustee legislation again. Indeed, I am practically sure that we shall have it. If we do we shall see that whatever deficiency is in the Bill at the moment is a deficiency in the direction of not giving sufficient discretion to trustees, who are called "trustees" because the beneficiaries trust them and who should be trusted more than they are in the Bill.

I shall not go into that question now, but I was a little alarmed by our earlier discussions today. We had seen at the very last moment one point and had corrected it. I wondered as we discussed it whether there were not many others which we might have failed to see, especially in a Bill which has suffered so many changes in the way that this one has suffered them. The exceedingly complicated structure that results reminds me of the Greek monster that was a lion in front and a dragon behind and in the middle a chimera. I am rather afraid that there is something of a chimera in this Bill.

I may be wrong but nothing shakes my conviction on two points. Firstly, something badly needed to be done and this, therefore, is a step in the night direction. Secondly the Economic Secretary, the Solicitor-General and the Lord Advocate had a very difficult part to play and they played it with the courtesy and skill which we have come to expect of each of them. The Lord Advocate even succeeded at one point in defending a proposition of Scottish law which to most of us English seemed to verge on the absurd. There was nothing that they could not do.

10.29 p.m.

I, too, sometimes have had doubts about the value of the Bill but for reasons opposite to those expressed by the hon. and learned Member for Kettering (Mr. Mitchison). I hope that that fact will give encouragement to the Government. On Second Reading I said that I viewed its methods with distaste and its principle without enthusiasm. I entirely agree with the hon. and learned Member for Kettering that the method of the Bill has been enormously improved during its passage through the House, but unfortunately that improvement has been at the expense of the principle which was first expressed by the Government and which, as far as it went, I thought was sound.

I am all for testators and settlors giving their trustees the widest power of investment. There I agree with the hon. Member for Gloucester (Mr. Diamond). I would always advise that to be done, but that is, of course, at the start of the trust and at the start there are no vested interests in existence. I am afraid that it is quite a different thing when the Government seek to amend the law affecting trusts many of which have been in existence for a number of years. I am afraid that the Bill will cause a great deal of disappointment.

Many of those who are enjoying the life interest of investments in the sort of properties included in the Trustee Act, 1925, are elderly people who are struggling in great difficulties in these days on a fixed income. Many think that when the Bill is passed they will be able to switch quite easily into those delightful investments which have been described as "blue chips" and which yield astronomic interest on the money originally invested. They will find that when the Bill comes into force and they ask their trustees to make the change which they have been expecting, they will be advised that this can be done only at a very serious loss of their immediate income and, indeed, for the benefit of those who come after them.

Conversely, there will be a number of people who have been looking forward to the Bill as providing some means of saving what they regard as the wreck of the capital left them by their father. They will press their trustees to make the change at the expense of the tenant for life, and that will arouse very unfortunate conflicts. Those conflicts may be resolved by going to the courts. It would be a great pity if a Bill such as this merely resulted in further litigation, but where trustees do not go to the courts they will have to take most invidious decisions themselves. That is putting an unfair burden on trustees, and in the long run it will not do any good to our trust law.

For these reasons I do not regard the Bill with any great enthusiasm. I think that it has some good points. With regard to future trusts it is perhaps even to be welcomed. But I think that it will cause disappointment, and it may well be that we shall be considering this matter again before a great many years have passed.

10.31 p.m.

I am in a somewhat ambivalent position tonight. I recognise that, as has been said, the Bill is completely unrecognisable compared with when it was introduced, and that the changes have gone in one direction only—the direction which my hon. Friends have been pressing and with which I have been most happy to be associated. I am most grateful to the Government for having advanced in that direction.

I think that perhaps the matter was understated when the Minister said that we had spent twelve sittings discussing twelve Clauses. There are fifteen Clauses in the present print of the Bill, and I think that there is another to be included as soon as it is printed again. In fact, the Bill that we are now considering has at least sixteen Clauses and five Schedules. It is a quite considerable Bill. I want to stress, lest it should be misunderstood, that that Bill has been considered with the greatest possible dispatch and that the minimum time was spent on its consideration.

I want to add to what my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has said. No one could appreciate the courtesy of the Solicitor- General and the Economic Secretary more than I do. I can say this because I recognise that one method that I choose of trying to put my point of view is perhaps rather pointed and forceful. I make no apology for it in the light of the fact that it is from time to time admitted, but I realise that it is difficult to have to sit on the Front Bench and listen to all this prodding and goading and maintain the complete and perfect courtesy and charming manner maintained throughout the proceedings on the Bill. I register my very deep and sincere appreciation of it.

Although there has been considerable advance in the line which my hon. and learned Friend has pressed, the Bill should not be regarded as an advance in all respects on the previous Trustee Act. It bears, unfortunately, the mark of retrogression in the sense that, whereas trustees previously had complete discretion to choose from a list of trustee investments, they no longer have that discretion. I have made this point so many times that it must be extraordinarily boring for the House to have to listen to it again, but it is right for us to bear in mind at this late stage that this is a major difference. I believe, as does the hon. Baronet the Member for Hendon, South (Sir H. Lucas-Tooth), that all trustees should be given discretion with new trusts and investments. I regard it as an unfortunate development that trustees should not have the same discretion as they have had since 1925 to choose from a list.

It was right that the list should be widened. It was right that the trustees should be required, as they are in one Clause, to take advice. It was wrong that they should have an arbitrary limit put on their selections within the list, notwithstanding that these selections might not be right and in the best interests of those whom they are looking after. I regret that, and the purpose of my intervention at an earlier stage was to reinforce the point that the Amendment which was last introduced into the Bill makes the matter simpler and more straightforward than it would otherwise have been, but that, where there is a rights issue of a certain kind, instead of having a narrower range of investments, a wider range, a special range and one range "in the air", although we no longer have the one "in the air" there are still three different categories to take care of, and the trustees are to be responsible for seeing that these categories are taken care of all the time.

Although this is a simplification of what would otherwise have been the case had my hon. Friend the Member for Oldham, West (Mr. Hale) not talked the Bill out on Friday, this cannot be regarded by a prospective trustee as a matter of absolute simplicity, and it is one which will not encourage people to take on trusts gladly.

I therefore repeat that it is unfortunate that this principle became embedded in the Bill in another place, and it is unfortunate that we have not got completely rid of it. But I feel that once the 75–25 proportion is introduced, trustees will undoubtedly select equities, which continue to rise over a long period as gilt-edged do not, and that, once the other Clauses are taken advantage of, we will get to a stage where there is little difference in practice between the 100 per cent. latitude I have always advocated and compliance with the terms of the Bill.

It was unfortunate that the Patronage Secretary was not present when the Solicitor-General congratulated my hon. Friend the Member for Oldham, West on talking out the Bill. This is a precedent which should be borne in mind on both sides of the House. I was doing my best on that occasion to help the Government get the Bill before Friday was out. This shows how one should not seek to limit the process of democracy which, in the long term, always turns out to be right.

I take pleasure in the fact that here is an example of courtesy, good will and flexibility by the Government. It shows that there are occasions when backbenchers can put their views, when the Government are prepared to listen, and when it is not right to say that backbenchers waste their time by preparing carefully drafted Amendments only to see the Government voting them down. This Bill has proved that when private Members put forward views sensibly and when they are on a sound point, Governments do yield in the course of battle to the merits of the argument and produce Bills which are considerably better in the long run.

I invite whoever is to reply to say one thing more about the 75–25 proportion. It is being understood very rapidly among the people that this proportion is not a power which the Government may introduce later but is already on the Statute Book. It is not on the Statute Book. I understand that the Government's position is the 50–50 ratio and not the 75–25 ratio.

Having regard to the fact that so many are already under this misapprehension and that trustees will naturally, as soon as the Bill becomes law—if they have not done so already—consider how far they will go, many will say, after taking the advice of their lawyers and finding out that it is likely to be 50 per cent., "If we are going to make a division as is required under the Act had we not better wait a little until the Government make, up their mind about the 75 per cent.? After all, it would be better to do the thing in one go." There is no time limit on the 50 per cent. or the 75 per cent.

I am sure that it would be a matter of convenience to a vast number of trustees and to the gilt-edged involved if the Government could give some indication when they would turn their mind to the 75 per cent. as opposed to the 50–50. We have got over the stage of the Amendment being introduced and no one is making any special point about the breach of principle. We are now on the point of the convenience of trustees in managing their trusts.

Although I recognise the slight difficulty in which this might place the Government, I am sure that it would be an enormous convenience if something along these lines could be done. Even if the Government were to say, for example—although I should be very disappointed if they did—that under no circumstances shall we consider this matter for five years, trustees would know that they would have to make their decision on the basis of the 50–50.

The Government may say that as things are going they will reconsider the position in a year's time. This would be a sufficient indication to trustees to make up their minds appropriately. It would be an enormous convenience to trustees, and I hope that the Government will do what they would not normally do on a Bill of this kind having regard to the fact that as the Amendment was introduced very late in the proceedings—I agree that it was an undertaking given in Committee—it did not get the same sort of publicity as would an Amendment introduced on the Floor of the House and having regard to the fact that a newspaper such as The Times, in its City column, virtually represented it as an existing part of the law rather than as something which the Government have power to bring in. Having regard to all those things, I hope that the Government will be able to say something on the matter.

10.43 p.m.

May I extend my congratulations to my hon. Friend the Economic Secretary and to my right hon. and learned Friend the Solicitor-General on their conduct of the Bill? I do so with considerable enthusiasm and sincerity because throughout the proceedings on it they had to face not only frontal attacks but attacks from the rear, and they always did so with the greatest courtesy and good humour and provided very full explanations of the Government's reason for turning down our Amendments on many occasions and accepting them on others.

This Bill, of course, sprang from the admirable idea of greater selection of securities for investment by trustees. Unfortunately, in the course of legislation it has got rather bogged down in technicalities and it may well be that many trustees and their advisers will say that it is so technical, complicated and difficult that they do not want to be bothered with it.

My reason for rising is to put on record—this has not been mentioned very much—that such trustees may well find that they come within the sphere of the Bill without taking advantage of the 50–50 division of their trusts. Under Clause 5 there are some changes in the law relating to trustees whether they take advantage of the division of the trust under the Bill or not. They are bound as trustees under Clause 5 to consider the diversification of their investments. They are bound to consider the suitability of their investments. Indeed, if the trust instrument gave them special powers they still have to take advice on investments which come within Part II of the First Schedule—investments which the ordinary trustee may well think are very like trustee securities, and wonder why it is that he now has to take advice about them when he did not have to do so before.

The first few subsections of Clause 5 impose upon trustees new and quite onerous duties of continually attending to their trust investments, continually seeing that they are suitable, and taking advice before making new investments. These are new duties which affect even those trustees who do not wish to take advantage of the 50–50 division and to invest half the trust fund in the wider-range securities.

I do not think that many voluntary trustees will be affected—and by "voluntary trustees" I mean trustees who have been asked by the settlor whether they will be trustees, and have gone into the matter and allowed themselves to be appointed trustees with their eyes wide open. They know that they are undertaking a trust. The present number of trust instruments which bind such a trustee to trustee securities must be very few. The type of trustee who will be caught by Clause 5 is what I would call the involuntary trustee—the administrator who has taken on the administration because he happens to be the nearest relative. He finds himself holding funds under the statutory trusts. He is holding them under a special range property and, holding them as such, he comes within the terms of Clause 5 (2) and has to get advice, and so on.

He is the person who will be mainly surprised by the Bill, and who needs to be warned by his advisers of what he is in for. It has not been sufficiently recognised outside the House that this is not merely a permissive Bill, telling trustees, "You may divide your trusts and invest half in wider-range securities if you adopt the procedure laid down in the Bill", but a Bill which imposes new duties, which should be well publicised. I am not complaining about those duties; I merely express the hope that trustees and their advisers will realise that these new duties are contained in the Bill and that it is not merely permissive.

10.48 p.m.

Perhaps I should say a word or two in reply. In Committee we discussed at considerable length the scope of Clause 5 and the extent to which it imposed new duties in relation to the powers conferred by Clause 1. I will not go into details now, but my hon. Friend the Member for Crosby (Mr. Graham Page) will appreciate that Clause 5 (2) and (3) refer to the taking of advice before exercising any power conferred by Clause 1. My hon. Friend is right in thinking that Clause 5 (1) is of more general application, but it was my view in Committee—and it still is—that that subsection, although being of more general application, does little more than codify the existing law.

The hon. Member for Gloucester (Mr. Diamond) asked me a specific question about the power to vary the proportion of investments which can be held in the wider range as a result of the power to introduce a Statutory Instrument for that purpose. I think that he asked whether we had made up our minds about the possibility of going to 75 per cent. Our minds are made up. We believe that at present the division of 50–50 is right. The provision to vary that proportion upwards in the case of equities is a provision which may be used in the future if circumstances change, but certainly there is no such intention in our minds at the present time.

From what has been said, the House will appreciate that the Government have been extremely flexible in the way that they have dealt with the representations made from both sides. We have the hon. and learned Member for Kettering (Mr. Mitchison) on the one hand, and my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth) on the other, taking almost divergent views, and we have tried to do the best we can to make everybody happy, including the trustees.

May I correct what was really a careless and discourteous action on my part? The hon. Gentleman also had—and I am sure that he appreciated the value of what they had to say—the advice of my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine), my hon. Friend the Member for Gloucester (Mr. Diamond), and my other hon. Friends who diligently attended the long meetings of the Committee upstairs.

I am sure that anybody who attended the meetings of the Committee upstairs will be glad to admit that we had advice from all quarters. Even this evening I noticed that once again we had this divergence of view among hon. Gentlemen opposite. The hon. Member for Gloucester said that the Bill bore the marks of retrogression, and the hon. and learned Member for Kettering said that it was a step in the right direction.

Question put and agreed to.

Bill accordingly read the Third time and passed, with Amendments.

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That one tenth of the sums deducted or set aside in the current year from the salaries of Members of Parliament under section one of the House of Commons Members' Fund Act, 1939, and one tenth of the contribution determined by the Treasury for the current year under section one of the House of Commons Members' Fund Act, 1957, be appropriated for the purposes of section four of the House of Commons Members' Fund Act, 1948. —[Mr. J. Griffiths.]