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Derwent Valley Water Board Bill

Volume 41: debated on Wednesday 11 August 1920

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Order of the Day for the Third Reading read.

Moved, That the Bill be now read 3a .— (Lord Hylton.)

On Question, Bill read 3a .

My Lords, I have to, move that Clause 41 of this Bill be omitted. I dare say most of your Lordships have not had time to study the provisions of the Bill, and therefore I will read Clause 41. It is. in the following terms—

"Section 1 of the Trustee Act, 1893 (which specifies the securities in which Trust Funds may be invested) shall have effect as though there were included therein mortgages by the Board of their revenue and of the moneys receivable by them from the four Corporations granted after the passing of this Act."
The four corporations referred to are Derby, Nottingham, Sheffield, and Leicester.

The point at issue, I am informed, is a very simple one—namely, should a private Bill be allowed to make an extension in the range of trustee securities which is not given by the general law and to which the Treasury and His Majesty's Government object? As many of your Lordships are probably aware, the stock of local authorities of over 50,000 inhabitants is a trustee security under the general law by the Trustee Act of 1893, and the Dement Valley Water Board's stock was put in a similar position in the year 1899. Morgtages of local authorities in general are not trustee securities, but under the Housing Act which Parliament passed last year mortgages of the local authorities entitled to issue housing bonds are trustee securities. That was a special concession strictly limited to housing authorities, and only made, as I am informed, in view of the vital necessity of encouraging housing authorities to raise money. It was not given by the general law to mortgages of authorities which arc not housing auth- orities, and the value of the concession to housing authorities is taken away if a similar concession is given to the competing mortgages of authorities which are not housing authorities.

Clause 41 of the Bill before your Lordships this afternoon proposes to make the mortgages of the Derwent Valley Water Board a trustee security, as your Lordships will have noticed from the terms of the clause that I read out just now. But this Water Board is not, and cannot be, a housing authority; so that what this clause does is to ask for a privilege for a particular authority which is not given by the general law. Your Lordships will observe that in this respect what the Bill asks is quite a different proposition from the privilege given in 1899 to the Derwent Water Board stock, which was a general privilege given to large authorities.

It may be arguable that all mortgages, not merely housing authority mortgages, ought to be trustee securities; but that is not the point to which I am inviting your Lordships' attention this afternoon. They are not all, in fact, trustee securities, and if a change is to be made the Government hold that it should be by general enactment and not in one particular case only, as is apparently asked for by the Bill before your Lordships. The Treasury claim that an extension of the range of trustee securities should not be made lightly in the interests of particular parties but on a general review in consideration of the national interests as a whole.

The general objections to increasing the range of trustee securities do not rest on the safety or otherwise of a particular issue. In this case I have no doubt that the Derwent Water Board mortgages would be as safe as the mortgages of the four constituent members of the board—namely, Leicester, Derby, Nottingham, and Sheffield. But the objections rest on these general considerations: in the first place, that with the present wide choice of trustee securities extension is not necessary to meet the convenience of investors; in the second place, that in these circumstances any further extension tends to compete with, and thereby depreciate, all existing trustee securities; and to admit mortgages of one water board might make it impossible to refuse a similar extension to other water boards, and, in fact, to the mortgages of all kinds of public boards which are not now admitted.

The case of the Treasury against this clause may be summed up as follows. In the first place, there is a general objection to extending the range of trustee securities; secondly, there is a particular objection to doing it in such a way as to deprive housing authorities of a special privilege which was given them as recently as last year; thirdly, there is great objection to making an exception in the general law by a private Act; and, fourthly, we believe that a concession in this case would lead to a wide crop of similar cases. Your Lordships may ask, in the first place, why did not the Treasury object before; and, in the second place, why have the Private Bill Committees of both the Commons and the Lords let this clause through The answer to these questions is as follows. The Treasury did raise the point with the promoters as soon as this clause, which was not in the original Bill, appeared. They informed the promoters of their objection as far back at April 21, and they repeatedly pressed their objections, culminating in a categorical refusal to modify their opposition which was conveyed in a letter from the Financial Secretary to the Treasury, Mr. Baldwin, addressed to one of the Members for Sheffield, Sir S. Roberts, M.P., on July 12, and later, as I am informed, in a letter to my noble friend the Lord Chairman.

Yes, after I had given my decision.

It is not customary for the Treasury to report formally on such clauses to the Commons Committee, and they were not asked to do so by the Committee when considering this Bill in June. The Treasury were at the time in correspondence with the promoters, which is the usual way, as I am informed, of settling such points, and they had no reason to suppose that the promoters would not, as is almost invariably the case in such circumstances, in due course meet their wishes. Counsel for the promoters did mention to the House of Commons Committee that the Treasury had raised objections, but he did not put to the Commitee the real reasons for the Treasury objection. He argued, first, that mortgages ought to be trustee securities—which I hold is a point for the general law; and secondly, that the constituent authorities' mortgages were trustee secu- rities, which is no doubt a fact. I am referring, of course, to the four corporations. But those authorities are housing authorities, whereas a conglomerate body is not, and counsel did not bring out the housing point or the fact that the general law did not give the privilege for which he asked.

I hope I am not saying anything that the Lord Chairman will not agree to, because, of course, he is better acquainted with the details of this case. I dare say his knowledge of the details may go beyond what I have received from the Treasury, but, as I am informed by the Treasury, they are under the impression that when the case came before the Lords Committee my noble friend may, perhaps, have been influenced by the fact that the Commons Committee had passed. the clause. All this time the Treasury were in constant touch with the promoters, who were fully aware that the Treasury objection was not withdrawn. The Treasury, acting for His Majesty's Government, could not, of course, in any case have forced the Committee to take any particular view. All that they could do was to oppose this clause of the Bill now when it comes before your Lordships' House and can be discussed as a Government matter. Those are the facts as they have been given to me, and I beg to move that Clause 41 be omitted.

Moved, That Clause 41 be omitted.— (Lord Hylton.)

My Lords, in the ordinary way I have great sympathy with Treasury action, and at present, in regard to ordinary expenditure, I look upon the Treasury as a good man struggling with adversity. But in this case I would suggest certain reasons why their advice should not be followed. I need not remind your Lordships, many of whom are well acquainted with Private Bill procedure and have sat upon Private Bill Committees, that all Private Bills are, to a certain extent, extensions of the general law; it depends upon the limit within which those extensions are made whether the proposals of the Private Bills are justified or not.

As to the method of this opposition on the part of the Treasury, there is no complaint of notice not having been given; the promoters have had sufficient notice the whole time that the Treasury objected to this. I do not object to that in any way, but I do think it is a rather arbitrary pro- ceeding to try to upset a decision deliberately come to by a Committee of the House of Commons where the point was specifically raised, where the Chairman expressed the opinion that this power ought to be allowed, and indeed, as far as I can see, said he was quite prepared to fight the Treasury about it. That is as regards the House of Commons.

As regards your Lordships' House, this Bill was, I believe, unopposed, and came before the Lord Chairman. I had the pleasure of acting with the Lord Chairman for a short time while I was Chairman of Ways and Means. I learnt at that time to rely on his impartiality and on his sound judgment in regard to Private Bill matters, and I am sure that your Lordships will agree with me that his advice is well worth following in regard to this question. Finally, the opinion of the Treasury is entirely opposed to the opinion of the Ministry of Health, on whom rests the responsibility for sanctioning loans by corporations and by bodies of this kind.

I think, in the first place, the Ministry of Health. But, at any rate, the Minister of Health have in this matter a very special locus, and they are entirely opposed to the. view of the Treasury. As to merits, the view of the Treasury is that it is desirable to cut down the list of trustee securities, and they therefore oppose this slight extension. With great deference to the Treasury, I do not think that is a well-conceived objection. Had I not learned that this view is held by the heads of the Treasury, I really should have thought that this opposition was due to a red-tape proceeding on the part of some minor official. But if the real objection is that it is desirable to cut down the list of trustee securities, why did not the Treasury object to the Bill of last year, the Housing (Additional Powers) Act, 1919? That Act, as I understand it, is not confined to housing at all. As I understand, the effect of that Act in allowing mortgages to be treated as trustee securities applies to all mortgages granted for any purposes by local authorities authorised by that Act to issue local bonds. If that is the case, that Act does not confine the privileges granted to housing; it extends them to borrowing for all other purposes. That Act having passed, each of these four corporations—Derby, Leicester, Sheffield, and Nottingham—could, if the waterworks were their own undertakings, have borrowed money on mortgage for those purposes, with the leave of the requisite Government authorities, and could have these mortgages treated as trustee securities. This Derwent Valley Board has been set up by past legislation of your Lordships and of the other House, but just because these four corporations are joined together it scents to me that the security is no worse; in fact, I should say the security is rather better, and that it would be making use of a highly technical plea if they were to be refused the same facilities, when they are joined together, as they would enjoy if they were acting separately and each had its waterworks.

What justice is there in the plea that allowing this privilege to the Derwent Valley Board would depreciate the value of Government securities? The total borrowing powers of the Dement Valley Board are somehere in the neighbourhood of £6,000,000, and they are only increased by a little over £200,000 by this Bill. The amount actually issued, is, I think, about £3,500,000 only. Is it seriously contended by the Treasury that allowing the £3,500,000 already issued to be trustee securities is going to depreciate the value of the vast volume of Government securities? But put it all in, imagine the whole of the £6,000,000 borrowed. For every million that can be borrowed by the Derwent Valley Board there is £1,500,000,000 in Government stock and borrowings and in other trustee securities. It is perfectly absurd to say that this small addition to trustee securities would have any effect upon Government borrowing. On the other hand, it would be very unfair to the Derwent Valley Water Board and these four corporations, who are doing a great public service to their own localities by the work they are undertaking in connection with this water scheme. They say they will be prejudiced if they are not allowed to issue the mortgages as trustee securities. I beg your Lordships to hesitate before you accept the advice of the Treasury on this particular matter.

My Lords, I am very sorry that the noble Lord, as representing the Treasury, has taken the step, which, of course, is a perfectly proper one in accordance with Parliamentary procedure, of moving an Amendment on Third Reading to strike out a clause which has passed through two Committees of Parliament, or, perhaps I should say, which has passed all necessary stages of Parliament but the last one.

I noticed particularly what my noble friend Lord Hylton said that the Treasury are opposed to a wide increase of similar cases. I have no doubt that is a sentiment which will be supported in general terms by all your Lordships, but I think it right to mention, for reasons which I shall explain in a few moments, that though I have not been through a careful schedule ticking off case after case, I, with the assistance of my advisers, am not able to think of a parallel case of an undertaking in the exact position of the Derwent Water Board in the British isles. I do not like the argument that "it is only a little one," but as the point has been raised it is fair, I think, that I should mention that fact to your Lordships.

My noble friend touched briefly on the Parliamentary history of this matter, and I think I ought to explain it in rather greater detail to your Lordships. Of course, the view of the Treasury has been quite clearly before the promoters from the beginning, and this position of affairs was explained to a Committee of the House of Commons which is known as the Select Committee on Private Bills, Group D, over which my right hon. friend Sir Harry Samuel presides. I think it is fair to mention that to your Lordships. I should never criticise a Committee of another House, but I would point out that Sir Harry Samuel is a very experienced man in these matters, so I thought I ought actually to mention his name.

The point was brought before the Committee by learned counsel for the promoters. My noble friend seems to think that learned counsel ought to have argued the case from the Treasury point of view, but I do not think it is any part of the duty of counsel for promoters to do that. I have the Minutes of Proceedings here, and they are sufficient to show that the matter was fully before the Chairman of the Committee. He made his point of view quite clear on the matter. There is no question that he did not understand the point, and his view was quite precise. Perhaps I may make two quotations to your Lordships from what was said by Mr. Vesey Knox, counsel for the promoters of the Bill. After explaining how the matter came before the Committee, learned counsel said—
"The short point is this. A municipal corporation with a population of over 50,000 could, before the passing of the Housing Act, 1919, issue either stock or mortgages, but the stock was a trustee investment and the mortgages were not. It was curious it should be so, because the one is just as good a security as the other, and in fact, from the trustee point of view, rather batter, because a mortgage is repayable generally at short date, say five or seven years, and the trustee gets back his money in full, whereas in the ease of stock he may not get it back in full for thirty or forty years.
The CHAIRMAN: That was just what was behind my mind; I would much sooner have the mortgage than the stock."
Then Mr. Vesey Knox develops his argument in the next few lines, and proceeds—
"Now an amending Act has been passed which makes the mortgages of the constituent authority trustee securities, and what we are asking is that a similar amendment should be made in our case, and that our mortgages should also be trustee securities.
The CHADINTAN: So they ought to be.
Mr. VESEY KNOX: That is the whole point. The Treasury have objected to it, and I thought therefore I ought to call attention to it. They objected to it, I think, on the ground that they think nothing should be made a trustee security by a Private Bill—"
Mr. Vesey Knox, therefore, put this important objection of the Treasury quite openly before the Committee—
"but this is a very special ease having regard to the fact that this Board represents four corporations.
The CHAIRMAN: Yours is practically corporation stock.
Mr. VESEY KNOX: It is practically.
The CHAIRMAN: And if an amending Bill is being brought in to give facilities to corporations why should you not take advantage of it?
Mr. VESEV KNOX: The only thing is that ours is not technically that.
The CHAIRMAN: I know, I am quite prepared to fight the Treasury on it."
I make that extract to show that I do not think the promoters can be accused for one moment of not. having put the case as fairly before the Committee as it was their duty to do.

Then the Bill came before me. As my noble friends have said, this was an unopposed Bill, and contrary to the custom of the House of Commons an unopposed Bill, as your Lordships are aware, comes before the Lord Chairman and does not go before a special Committee. I can assure my noble friend that I was not in the least influenced, by the fact that a Committee of the House of Commons had given a decision one way, in coming to it the same way myself. I had not, of course, read these Proceedings at that time; If have only seen them in the last few days. I am sure my noble friend, who has some experience of Committee work, knows perfectly well that a Committee of neither House follows slavishly in the steps of the Committee of the other House, and I hope, my Lords, that I live up to that desirable position.

The parties appeared before me, separately of course; it is not the custom for public Departments to attend and argue with promoters. I do not think I can more shortly put the case before your Lordships than by actually reading the letter that 1 wrote to the Treasury on August 4, after I had decided not to put out the clause. In that, way everything that was in my mind will be before your Lordships, as it is my duty to put it before you. It is a letter signed by my counsel, Sir Albert Grey, though, of course, I had seen it before it was sent. It is in these terms—
"The Lord Chairman regrets to hear from the Agents of this Bill that the objections of the Treasury to Clause 41 (Power of Trustees to invest in mortgages of the Board) have not been removed. He desires me to inform you that for the reasons following he does not feel justified in interfering with the Clause as passed by the House of Commons. By section 111 of the Board's Act of 1899 the stock of the Board was made a trustee security (with the approval of the Lord Chancellor) on the ground that the stocks of the four boroughs constituting the Board were already trustee securities. By Section 9 of the Housing Act, 1919, the mortgages of local authorities who are authorised to issue local bonds under that Act are made trustee securities; and Lord Donoughmore is informed that the four boroughs have in fact been authorised to issue these local bonds. The mortgages of the Board being practically mortgages of the rates of the four boroughs, Lord Donoughmore is of opinion that Clause 41 is justifiable on the same grounds as those which dictated the allowance of Section 111 of the Act of 1899. Long Donoughmore does not propose to question the policy of the provisions in the Housing Act, 1919, relating to the Trustee Act, as the far-reaching effects of that section were no doubt present to the minds of His Majesty's Government. The Bill stands for Third Reading on Monday next."
It is not a good answer, I think, to say, as my noble friend Lord Hylton said, that this body is not a housing authority. It is not; but its component parts are housing authorities who have taken the action required by the law of last year for housing purposes. The Board is not an ordinary water board such as your Lordships are familiar with like the Metropolitan Water Board. As was explained by Lord Emmott, it is practically a body to provide water in bulk to these four authorities, and it would not be unfair to describe it as the four authorities themselves.

A NOBLE LORD: Which four authorities?

Sheffield, Leicester, Nottingham, and Derby. It would not be unfair, I think, to describe it as the four authorities under a joint name, or even as a Standing Committee of the four authorities having Parliamentary powers. I do not think, therefore, it is unreasonable that they should ask for this privilege by this clause. It will make the raising of their capital easier—a very important matter in these days—and it is a little unfair to characterise this as an extension of the general law. It would be fairer to say that it is an explanation of the general law, because it is really only a technicality that deprives these localities of the privileges of the general law as passed by your Lordships last year. It is not unreasonable that this technicality should be abolished.

My noble friend Lord Emmott has referred to the special difficulty in which we find ourselves. It was stated to me, and no doubt correctly, when this Bill was before me in Unopposed Committee, that the Ministry of Health had expressed their approval of this clause. We are in a difficulty if promoters are to be allowed to go through all the stages of their Bills in Parliament, knowing perfectly well that they have the support of a public Department, and questions like this are raised on Third Reading. I find myself in a position which I do not in the least desire, of deciding between the two Government Departments—and that is the position your Lordships are in. I think I am entitled to say that I hope my noble friend will not divide the House, but if he does feel it necessary to do so I hope he will not feel it necessary to put on the Government "Tellers" in the special circumstances of the case.

My Lords, during the time I have occupied my present office this is the first occasion on which I have been unable to agree with my noble friend the Lord Chairman, with whom on so many points I have been able to co-operate. My excuse for addressing your Lordships is that I rest under a special responsibility to this House in the matter of trustee securities, and I should be wanting in my duty if I did not call attention to one or two important points which, if they had been adequately put before the Lord Chairman, would in my humble opinion, have been likely to have influenced and perhaps have altered his decision. I think Lord Donoughmore has ground for complaint, though not against any special Government Department, that fuller material was not placed before him. I am satisfied that if the whole case had been placed before him he would have thought it a matter which required more consideration than he was able to give on the material supplied to him.

It is not for us to criticise the decisions or the dicta of the Chairman of Committees in another place, but the Lord Chairman read a number of extracts from observations made by the Chairman of the House of Commons Committee to show that he reached a conclusion upon a very important matter somewhat rapidly and without any very considerable argument. I take the responsibility of saying, on a matter on which I am responsible to Parliament, that a very grave issue is raised here. It is a graver issue than the Lord Chairman can possibly have discovered from the proceedings as they were presented to him. In the first place, I believe it to be absolutely without precedent for a Private Bill Committee to alter the general law on the question of trustee securities. I have had great experience at the Bar in these matters, and frequently practised in them, and I should have regarded it as a revolutionary proposal, destructive of the authority and jurisdiction of this House, if I asked any Private Bill Committee to alter the general law on the question of trustee securities.

Parliament has most jealously safeguarded its own rights and distinguished them from the functions and powers of Private Bill Committees. When the advocacy of the Ministry is relied upon by the Lord Chairman, I extend to him my utmost sympathy. I think he was placed in an impossible position, but, frankly, in this House we can decide it with fuller knowledge. The Ministry of Health, in so far as it intervened, had no locus standi whatever in the matter. The position is quite plain. The Ministry of Health has the power of approving of loans. They have neither the statutory authority (nor had the Local Government Board), nor any power at all, to express any view as to trustee securities, and whatever mismanagement there may have been the Ministry was never consulted, the matter was one which did not concern the Minister and he had no right to offer an opinion.

The only public authorities who are entitled under the law of this country to express opinions to a Parliamentary Committee on the question of trustee securities are the Lord Chancellor and the Treasury. It cannot be contended that the Ministry of Health has any locus standi in the matter. The question really is one that cuts very deep, and I think it should be most attentively considered by your Lordships in all its aspects. The Treasury has always taken the view that, if any change in the law is to be made which would admit mortgages as trustee securities the decision should be arrived by Parliament after it had examined the situation as a whole; not merely in relation to one particular body, but in relation to all the manifold considerations which must be measured and appraised.

I have often had to give my mind to the question. I have discussed it with the Treasury and I have been convinced by the view, which is held by every competent financial authority in the Treasury, that to make such a general change in the law would undoubtedly lead to a depreciation in the value of trustee securities. That may be right or wrong—I am not competent to judge as to whether it is right or wrong—but it is the view held by every competent financier at the Treasury, and it has influenced me and my predecessors in assisting the Treasury view that there shall be no such general change in the law.

That being the policy of the Treasury, we are now asked in Private Bill procedure to say that in a particular case mortgages Shall be made trustee securities. When the Lord Chairman says that it refers only to this one corporation he would be the first to assent to this, that there are hundreds and thousands of institutions in this country who could put forward arguments as strong as those put forward by this corporation for making their mortgages trust securities and could contend that it would be equally right to make their mortgages trust securities. It is impossible to treat this as a limited and particular case. The decision would involve first, an inroad on our general law through Private Bill Committee, and, secondly, open the door to appeals which would have the certain result of reducing the value of trustee securities.

That is not all. The next point taken by the Lord Chairman is that the principle of the Treasury was departed from when leave was given to housing corporations to treat their mortgages as trustee securities. Let me take your Lordships into the confidence. of the Government as to the circumstances in which that concession was made. It was made only after the most anxious consideration, and after prolonged opposition on the part of the Treasury. Whether the Treasury was right or wrong in giving way I cannot tell your Lordships, but the position was this: it was vital that more progress should be made with the housing difficulties than, as your Lordships very well know, was being made, and it was most strongly pressed upon the Government and the Treasury that if this concession was made to the housing authorities it would make an enormous difference in the speed with which the deficiency of housing was filled up. After long discussion, the Treasury most reluctantly surrendering, and only in the face of vital public necessity, their point of view, they made this exception in that case, and they hoped and believed in that case only.

It is said that the constituent bodies of this Water Board are housing bodies, and I imagine the argument to be that because the constituent bodies are housing authorities, and their mortages can be treated as trustee securities, therefore the body of which they are part should enjoy the same privileges. If I may respectfully say so, never was a more illogical argument used. The method by which the objections of the Treasury were overcome was by saying "You must make inducements to people who can supply houses." The four constituent bodies can supply houses, and therefore you want to make inducements to them; but you do not make any inducements to the body composed of those four constituent bodies, because it has no power to supply houses. Are we to-day to sanction a course which is entirely without precedent, which is respectfully protested against before your Lordships by the Treasury and by myself, who are the two Departments that by law are alone charged with advising Parliament on the subject of trustee securities, and which is equally protested against by the Housing Department, because they desire most earnestly to press upon your Lordships that the wholly exceptional privilege which Parliament gives will be so whittled down as to remain almost worthless.

I am authorised, speaking on behalf of the Treasury and of course on behalf of my own Department and the Housing Department, most earnestly—without reflecting in the slightest degree upon the Lord Chairman, for the sagacity of whose decisions I have the most profound respect, but before whom I am sure this matter was never properly argued—to express the hope that you will vote for the Amendment of my noble friend. I have one word only to add. It is not convenient or usual for Government Departments to attend before these Private Bill Committees. If the case which I have attempted to present to your Lordships had been argued before either the House of Commons Committee or before the Lord Chairman, I cannot doubt that they would have reached a different conclusion. The method always adopted in these cases is for the Government Department concerned to make its view clearly known to the promoters, and at an early stage the Treasury informed the promoters of the objections which they held; and it is the invariable practice, when a Government Department so influential as the Treasury does this, for the promoters at once to adapt themselves to that view. So it is only at this late stage that the Treasury is able to make a proposal—I can assure the Lord Chairman that it is so—

I can assure the noble and learned Lord that it is not so. The officials of my Department had a long interview with the Treasury on the subject.

When matters are before a Parliamentary Committee the issue is presented and argued at length by counsel. It is a very different thing to acquaint the subordinates of the Chairman of the Committee, either in another place or here. The statement of the Lord Chairman reinforces my main argument, because it shows that from first to last the Treasury, so far as they could, acquainted the promoters with the strong views which they held. What I mean was that they did not enjoy the opportunity of representing those views through the agency of counsel when the matter was debated and discussed. I can only express a strong hope that your Lordships will not lightly set aside the Treasury view.

I think that your Lordships are placed in a very great difficulty in regard to this matter, and I shall express my opinion for what it is worth with the greatest possible diffidence. I do not know where the mistake arose, but I think the attitude of the Government Departments in this matter does leave your Lordships in an extremely difficult position. Not merely have we the very unbecoming fact of two Government Departments being opposed on the floor of the House in this matter, because I presume that if the representative of the Minister of Health were here he would have risen to—

I am able to reassure the noble Marquess in regard to that. He had not heard of it, and if he had he would have taken a different view.

It was done by the Department without the assent of the Minister. That is not very satisfactory either. I should like to call attention to a very striking circumstance which affects in the first degree the Treasury. I do not pretend to be as familiar as the Lord Chairman and the Lord Chancellor, and the noble Lord on the Cross Benches, with Private Hill procedure, but certainly it does seem to me that in some way or other—

It was as far back as April 27 that the Treasury objections were made known to the promoters of the Bill.

To the promoters! But what about Parliament? The Treasury is represented in Parliament by several highly-placed officials in the House of Commons, and that House, if I may use so colloquial a phrase, is the happy hunting-ground of the Treasury. There it lives and moves and has its being. The Treasury, of course, is a direct service of the House of Commons. It represents the finance of the country. I listened to the debate which has taken place, and I was listening to hear what happened when the Report of the Committee came before the House of Commons. There was a Report stage and a Third Reading in the House of Commons, and there was the Financial Secretary sitting on the Treasury Bench, and there was also the Chancellor of the Exchequer, not to speak of the First Lord of the Treasury. Did none of these officials raise the Treasury objection? If not, why not? It is a most incredible thing. Why should the House of Lords, who are most anxious to do their duty, at the very end of the sittings prior to the adjournment be called upon to deal with this matter, which is more emphatically a House of Commons question than anything else? It seems a very astonishing proceeding. I do not know what the answer is.

Then we come reluctantly to the merits of the question, and upon them I want to express a most diffident opinion. Certainly, as I heard the speeches of the Lord Chairman and the noble Lord, Lord Emmott, who was Chairman of Ways and Means in the House of Commons—I call your Lordships' special attention to that, because that is to say that Lord Emmott had greater authority upon this subject than any other person in the House of Commons during his time of office—as I listened to them it struck me—

I do not think Lord Emmott ever had to deal with a case like this.

There never was a case like this. This is the first time it has arisen. I am sure my noble friend does not dispute Lord Emmott's knowledge and authority.

The noble Earl agrees with me. It seemed to me, as I heard them speak, that there was rather a technical distinction—I do not put it higher—between the stock of a particular corporation and the stock of corporations when acting together. I quite agree with the Lord Chancellor's main contention that the country ought to be very careful how it expands the area of trustee securities. It is a formidable thing to have that area too much diluted, as it were, but one ought not to rest upon a very narrow technicality if it can possibly be avoided. Upon the merits as they stand I should be rather inclined to support the Lord Chairman and Lord Emmott. I speak with very great deference, because I do not pretend to be an authority. When you come to think that we have had the strong opinion, first of all, of the House of Commons' Committee, secondly, of the Chairman of the House of Commons' Committee, then of the Lord Chairman of Committees in your Lordships' House, and then of Lord Emmott, who is the late Chairman of Ways and Means in the House of Commons, that seems to me to be a body of authority which is very difficult to overset, and I should be rather afraid t o vote against it on a matter which is directly within their competence, especially when, as I reminded your Lordships, the Treasury, who had abundant opportunity of raising this question before when the Bill was in another place, have delayed until August 11, on the Third Reading in the House of Lords, before they take effective action.

My Lords, I should like to say one word on the question of procedure, to which Lord Salisbury devoted the bulk of his remarks. This is really not the first occasion upon which the Treasury has tried to act in this matter. It is not the eleventh hour of the Third Reading on August 11. It began four months ago. From that date onwards, at every stage, the Treasury has consistently done its utmost to oppose this particular clause. Lord Salisbury really ought to be the last Person in the world to object to your Lordships' House, as a whole, acting in its capacity of a revising Assembly. That is what we are inviting your Lordships to do. The stage may be late and, as Lord Salisbury says, perhaps with justice, it may be unbecoming that there should be conflict between two Government Departments. The noble and learned Lord on the Woolsack has, I think, explained one particular aspect of that matter which was probably not known to your Lordships as a whole, but why Government Departments should never be allowed to be in conflict, when all of us in the Government are, we fail to understand.

Of course they are. Noble Lords who act very harmoniously together are constantly in conflict, and the Government is just the same, of course. The Treasury attitude is not a red tape attitude. It is not acting on a mere technicality. This is a question of high finance, and if there were a conflict between these two Departments, I submit to your Lordships that on a matter of high finance, which may affect Leicester, Sheffield, and the two other authorities directly, and which, indirectly and obliquely, may affect the value of scores of millions of trustee securities—on a question like that I submit that the authority of the Treasury should take precedence. The noble and learned Lord has explained with unanswerable cogency that they have no desire to do anything which will permit a new depreciation of other trustee securities, and I ask myself why these four bodies are so anxious for this concession. So far as I remember it was not in the original Bill. It looks as though they felt a certain lack of confidence in their own security without this adventitious aid. And here let me add to Lord Emmott that the Treasury do not desire, using Lord Emmott's words, to cut down the list of trustee securities. They merely wish to prevent the inflation of that list, and when Lord Emmott says it can only add, I think he said, £6,000,000 to the total and that it was too small a figure to count, I dissent. £6,000,000 in itself is by no means a negligible figure, and it would extend. It is not merely this £6,000,000 but the right which would be conferred by analogy on other authorities to enjoy this same privilege. A parallel case would arise next week and it could very easily be contrived by any authority.

Here is a concrete case where, on the strength of being allied to the housing authorities, this privilege is claimed. I think it would be very easy for other public bodies to try to do something of the same kind and I think the freedom of Parliament would be greatly limited in checking that desire if your Lordships passed this clause to-day. Lastly, may I reinforce what the Lord Chancellor said just now. It is impossible for a public Department to impress its view on a Private Bill Committee where it only intervenes as a public Department and without the locus standi of the local interest which may find its concerns injured by the Bill. The Treasury alone can intervene in this matter. Your Lordships heard from the Lord Chairman how the question was raised in the House of Commons. Apparently, it was raised in the most casual conversational manner. Had the interests been represented, through the local authority with its own locus standi, by counsel, the whole case would have been laid before that Committee, but in these matters it is neither the interest nor the duty of local people to take objection to stocks of this kind. It must be done by the Treasury, it must be done by Parliament. The Treasury, as the Lord Chancellor told us, attaches the very greatest importance to this question. It is a matter which must be dealt with by Parliament. I regret that it should be on the Third Reading as Lord Salisbury indicated, but the fact that it is deferred to the Third Reading does not impair the responsibility, and still less the duty, of your Lordships to put right what seems to me to be a dangerous and grave precedent.

Would the noble Earl explain why the opposition of the Treasury was not taken in the House of Commons?

I do not think I will. It was not made in the House of Commons, but the Treasury is anxious that it should be made here.

My Lords, may I offer an observation on this question? I cannot see what it matters now whether the Treasury has been late in taking objection or not. I do not see what it matters whether two Departments have been at loggerheads or not. I should imagine they often were. The real question is, Ought the privilege of becoming a trustee stock, which is a high privilege and of very considerable importance to trustees and beneficiaries, to be granted ad hoc in particular cases by the insertion of clauses on the application of promoters, or only subject to a regulation laid down in a public general Act?

The Trustee Act of 1893 lays down in a long schedule what are the conditions under which certain stocks shall be trustee securities unless the terms of the trust deed forbid it—that is to say, it lays down a general regulation with which all stocks created under private Acts are to conform. It is a very simple and a very wholesome thing to know that the law has been laid down by both Houses of Parliament in a public general Act that such and such stocks only shall be trustee stocks. If you adopt the other plan and let promoters come with a private Bill and say, "Ours is a most excellent security; ours is, in fact, a combination of four very excellent securities; ours is a security emanating from four boroughs all of the greatest importance," and put it before the Private Bill Committee that they really ought to be permitted to have their stock made a trustee security, you are every time advancing particular instances. The proper procedure, I submit, is that you should ask, "Does the particular security come within the general rule that has been laid down by Parliament, or does it not?" It appears to be quite clear that this does not.

I do not for a moment doubt that if I had any money to invest—which I never expect in my life to have again—I should be proud to invest it in this particular security, but that is not the point. The point is that trustees are dealing with somebody else's money, and if the security were to go wrong the trustee is safe and the

CONTENTS.

Denbigh, E.Ebury, L.Roe, L. [Teller.]
Lanesborough, E.Emmott, L. [Teller.]Rotherham, L.
Hutchinson, V.Farrer, L.Southwark, L.

(E. Donoughmore.)

NOT-CONTENTS.

Birkenhead, L. (L. Chancellor.)Hood, V.Gainford, L.
Bedford, D.Knutsford, V.Hindlip, L.
Bath, M.Peel, V.Hylton, L.
Bradford, E.Islington, L.
Doncaster, E.Ampthill, L.Killanin, L.

(D. Buccleuch and Queensberry.)

Annesley, L. (V. Valentia.)Kintore, L. (E. Kintore.)
Grey, E.Armaghdale, L.Lambourne, L.
Lytton, E.Askwith, L.Ranksborough, L.
Midleton, E.Auckland, L.Shandon, L.
Onslow, E.Chaworth, L. (E. Meath.)Sinha, L.
Selborne, E.Clwyd, L.Somerleyton, L. [Teller.]
Vane, E. (M. Londonderry.)Colebrooke, L.Stanmore, L. [Teller.]
Cozens-Hardy, L.Sumner, L.
Bertie of Thame, V.Crawshaw, L.Wavertree, L.
Chaplin, V.Elgin, L.Wester Wemyss, L.
Hardinge, V.

(E. Elgin and Kincardine.)

Wigan, L. (E. Crawford.)
Erskine, L.Wittenham, L.

Resolved in the negative, and Amend-

beneficiary loses. The beneficiary has to look to the general law laid down by Parliament for his protection. I submit, therefore, that the principle is a serious one, and that the rule should be followed that only those securities which are made trustee securities under some general terms laid down in a public general Act ought to be trustee securities, and that the practice of inserting clauses of this kind, and trusting that the Treasury may find some opportunity of speaking to someone at the right time and in the right tone to prevent it, should not be followed. I suggest that, late as it may be, and subject to every possible condemnation that can be showered on public Departments (who very likely deserve it) the right thing will be to support the Government on this occasion.

My Lords, I am extremely reluctant to go against my noble friend the Chairman of Committees, or Lord Emmott, but on the simple and sole point that this privilege ought not to be given under any circumstances in a private Act—as was so cogently argued by my noble and learned friend on the Woolsack and now by Lord Sumner—I should be compelled, if there is a Division, to vote for the Government.

On Question, whether the clause shall stand part of the Bill?—

Their Lordships divided:—Contents, 9; Not-Contents, 46.

ment agreed to accordingly.

Moved, That the Bill do now pass.— (Lord Hylton.)

On Question, Motion agreed to, and Bill returned to the Commons.