House Of Commons
Wednesday, 19th July, 1967
The House met at Ten o'clock
Prayers
[Mr. SPEAKER in the Chair]
Licensing Act 1964 (Amendment) (No 2)
10.5 a.m.
I beg to move,
The objective of the Bill is very simple: to introduce what I might describe as a modest reform to Section 123(1) of the Licensing Act, 1964, by providing for simple straightforward machinery of appeal. I am, in a sense, indifferent to the precise form that the machinery takes, and I would be happy to discuss it in great detail with the Home Office. The case which I hope this morning to present will confirm that there is urgent need for machinery to be established. I was told a few minutes ago that the Betting and Gaming Act provides machinery of appeal to deal with precisely this type of case, whereas in the Licensing Act there is no such provision for appeal. The case concerns a Mr. Fitt of Portsmouth. It would be easy to illustrate the case if I could display photographs of the site of the licensed premises in question, but we know that that is impossible. I have the photographs in the Lobby and will be glad to show them to any hon. Member who may be interested. After the long hours of the midnight watches, it would be refreshing to you, Mr. Speaker, and not a strain on your pastoral loyalties, if you could imagine placing yourself for a moment on top of one of the finest viewpoints—Portsdown Hill—and looking down from Chichester accoss to the Isle of Wight and almost to your own territory of Southampton. That is the point where Mr. Fitt saw the possibility of building licensed pre- mises, and he made application for permission to do so, in the first instance to the planning committee of the City of Portsmouth. The application was granted and he was given a licence to erect two-storey licensed premises with catering facilities. That began in December, 1960. In September 1961, having been granted his application, he offered the licence with the planning consent to a local brewer, thinking that this was probably the easiest way to achieve his objective. The brewer concerned declined the officer. In February 1963, Mr. Fitt made his first application to the licensing planning committee, as opposed to the planning committee, for the necessary document known as a no objection certificate. On that occasion, the local Portsmouth Brewers' Association opposed the application. In March 1963, his application having been rejected, Mr. Fitt applied to the Portsmouth Council to convert the planning permission which he had received to permission to build nine flats. For a variety of reasons which need not concern us, that application was refused. In September 1964, Mr. Fitt made his second application to the licensing planning committee. This, too, was opposed by the brewers. We can take it as read that throughout the rest of the story the local brewers' association, for reasons which need not concern us, opposed the application. The second application was similarly refused. In November 1964, Mr. Fitt made a third application. This time he introduced support from the local coach proprietors, who carry large numbers of people to this viewpoint to enjoy the views and the amenities which it offers. On this third application, he again met with refusal. In May 1965, a fourth application was refused. After that rebuff Mr. Fitt decided to organise an opinion poll, which he did with great success and great objectivity. The result of the poll, covering a large number of local residents, was wholly in favour of establishing this amenity on the top of Portsdown Hill. In November 1965, Mr. Fitt made his fifth application. At that stage, it was known that the only other public house in the area would be seriously affected by a road development scheme, the details of which had been announced. Again, he met with refusal. In July 1966, Mr. Fitt made a sixth application. On this occasion, however, he decided as a test case to apply for a club licence as well as a general licence, and that was granted. The House can draw its own conclusions from that. It was not Mr. Fitt's objective, because to confine the amenity to the narrow membership of a club would deny it virtually to all the citizens of Portsmouth or of any other city who choose to come to this outstanding scenic point on the South Coast to relax and enjoy themselves. So, again, the general application was refused. In May this year Mr. Fitt made his seventh application. By this time the premises were completed, and the very elaborate road reorganisation affecting the other licensed premises in the area was well under way, and, of course, there had been considerable local and national publicity. But, of course, the answer to all this is that he was not given and still has not this essential no objection certificate, and that debars him from appealing his case in open court with an ultimate appeal to quarter sessions. Irrespective of the general merits of this application—and I would not presume to judge the merits because I think that the bodies immediately concerned with these things often know more than is known to the general public, so that what may appear an apparently untenable position is more tenable than we imagine —irrespective of the merits, which I believe in this case to be absolutely over- whelming, it seems to me an intolerable situation, and that exercise of discretion of this kind conferred by law must be subject to appeal on the grounds of mala fides, or gross incompetence, or undue pressure of local vested interests, which was a ground which was applicable here, although again I do not presume to judge. But I do ask leave to bring in the Bill because, obviously, this sort of situation could recur in applications of this kind, and it seems to me essential that the citizen should have some redress, and it is a redress which at the moment in this area he does not possess at all. The Bill which became law last week unfortunately did not cover this point, as I hoped it might, and so we require a change in the law, and it is perfectly clear, and we also require to get urgent reconsideration of this case, and as I understand the Home Secretary has power under Section 119(3) to order the local licensing planning authority to review its decision, I do hope that the Home Secretary, having listened to the evidence this morning, will indeed use his powers under that Section to order a review of the case.That leave be given to bring in a Bill to amend section 123 of the Licensing Act 1964; aid for related purposes.
Question put and agreed to.
Bill ordered to be brought in by Mr. Ian Lloyd, Mr. Fortescue and Mr. Channon.
Licensing Act 1964 (Amendment) (No 2)
Bill to amend Section 123 of the Licensing Act 1964; and for related purposes; presented accordingly, and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 307.]
Orders Of The Day
Housing Subsidies (Interest Rates)
I understand that it is the wish of the Opposition to take the two Housing Subsidies Orders separately.
I beg to move
I am sorry the Opposition have desired to take the Orders separately, because I would have thought the two could have been taken together as they are so intertwined. I would have thought it right o deal with them together, but if they want to take them separately—That the Housing Subsidies (Representative Rates of Interest) Order 1967, a draft of which was laid before this House on 5th July, be approved.
I think it may be convenient to the House to take them separately, because here will be a number of questions I should like to put to the hon. Gentleman, and my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) will have some questions to put to the Scottish Ministers on the Scottish Order. I do not think that this will delay the House.
I am sure we will do all we can to accommodate the Opposition in this matter, which, I know, is not controversial.
These Orders have been eagerly awaited by the recipient authorities because the amount of basic subsidy which they will receive for the years covered by the Order cannot be calculated till the representative rates are determined. I should like to give the House a brief explanation of the background to the Order—although I shall deal now only with the Order for England and Wales as it is desired to take the Scottish one separately. The House will know, the representative rate under the new form of housing subsidy meets the difference between, first, the loan charges on the aggregate approved cost of houses completed in each financial year at a representative borrowing rate; and secondly, the loan charges which would have been incurred at a fixed borrowing rate of 4 per cent. The representative rate is related to the rates of interest paid in the financial year immediately preceding that in which the houses are completed. There are two reasons for this. First, most expenditure on a house is incurred in the year before it is completed. Secondly, it will be helpful for authorities to know the representative rate for any financial year as soon as possible in that year. I should like to say a word about consultation with recipient authorities. There are three types of recipient authority under the Act, local authorities, new towns, and housing associations. As required by the Act, the Minister has consulted with them, or with their representative bodies, before making the draft Order. These consultations covered both the method of calculating the representative rates and also the rates for the three years specified in the draft Order. The recipient authorities are not required to agree formally with the Minister's proposals, but, naturally, I am pleased to inform the House that they have accepted both the method of calculation and the proposed rates, on the understanding that the method of calculation will be reviewed from time to time as may be necessary. Separate rates are specified in the Order for new town development corporations and the New Towns Commission, on the one hand, and local authorities and housing associations on the other. As to new towns, a separate rate for new towns is necessary because the whole of their borrowing requirements is met by advances from the Consolidated Fund at a rate of interest fixed by the Treasury. Since the same rate was in force throughout 1965–66 and 1966–67—that is, 6 per cent.—this is the rate specified in the order for 1966–67 and 1967–68. No rate is specified in the English Order for new towns in 1965–66 because new towns are not eligible for retrospective subsidy and we know that no new town houses approved on or after 25th November, 1965, were completed by 31st March, 1966. So 6 per cent. is the rate which is paid here by the new towns. As to the local authorities, the rates for local authorities and housing associations differ from the rate for new towns because they obtain their borrowing from different sources. Local authority borrowing is a very complex mixture of long-term and short-term borrowing. We have, therefore, been compelled to make an unavoidably complicated calculation based on extensive financial data in order to arrive at the representative rates, and copies of the documents, Mr. Speaker—which, I am sure, you will have read, and which explain the method of calculation we have adopted—have been placed in the Library, and I have no doubt that the hon. Gentleman the Member for Southend, West (Mr. Channon) will have read and understood every word of them and understood the method and the simple approach we have taken. As to housing associations, the representative bodies of the associations, the National Federation of Housing Societies and the National Association of Almshouse Trusts, have undertaken to obtain from their members details of their actual borrowing for the current financial year. This will enable the Minister to decide whether there is a case for a separate rate for housing associations in future years. In the absence of such information the same rate has been specified for housing associations as for the local authorities. I should like to say a word on the general issue of the new subsidies and what now the new level of subsidies will be and what the additional cost will be to the Exchequer. I gave some figures to a private meeting last week, which appeared in the Press in a very muddled form. Some Press reports said that the average cost of a three-bedroom local authority house had gone up by so much since the Bill was first introduced that the cost of subsidies this year would be £20 million more than was originally estimated. This was such a muddled account that it is difficult to sort out, but I am going to try to do so. First, as regards the increase in building costs since the Bill was introduced in November 1965, the increase in house construction costs last year was about 7·7 per cent., about the same as in recent years, and this was partly attributable to the increase in local authority housing standards. The average construction cost of a two storey, three bedroom local authority house, excluding G.L.C., housing was £2,579 in 1965 and £2,782 in 1966, an increase of £200—due partly, as I have said, to rising standards. But, of course, subsidy is payable not only on construction cost but on the all-in cost of new housing, including land, roads, sewers, professional salaries and fees. The average all-in cost of a three bedroom house today is about £3,500, on which the basic subsidy this year will be £78 15s. for local authorities and £61 18s. for new towns, at their fixed rate of 6 per cent. In our earlier debates on the Bill we often quoted the examples of a £3,000 house, on which the basic subsidy, assuming a 6½ per cent. borrowing rate, would be £67; and a £5,000 flat, of which the basic subsidy would be £112. These were simply taken as straightforward examples of how the new type of subsidy would work. We never suggested that they were statistical averages. We reckon that this year the average all-in costs of all local authority dwellings, houses and flats combined, in England and Wales will be about £3,800, including land. On this, the basic subsidy in 1967–68, at the rate of 6·52 per cent. specified in the Order, will be £85 10s. 0d. for local authorities and £67 3s. for new towns. As regards the additional cost of the new subsidies in 1967–68, we said when the Bill was first introduced, in November 1965, that this would be about £3 millions for England and Wales. But, of course, this did not include the cost of retrospection as there was no provision for this in the original Bill. When the Bill was reintroduced last November we revised the estimate to £10 million to cover the cost of retrospection—that is, about £5 million —and to allow for increased costs and standards over the previous twelve months or so. Our current estimate is £11 millions, which is based on a more accurate assessment of house completions this year. But I must emphasise that the total subsidy payable in any one year is not closely related to increases in costs in the previous year, since subsidy is payable on houses completed in the current year, and these may reflect tender prices over the past two or three years. The total cost to the Exchequer of housing subsidies in 1967–68 will be about £100 million for England and Wales, compared with £82 million in 1966–67. This increase, of £18 million, reflects the rising local authority housing programme and the new rates of subsidy. If the 1961 Act had continued in force, we reckon that the extra cost this year over last year would have been about £7 million. So, as I have said, the new subsidies will cost an extra £11 million this year. The subsidies will bring in much-needed relief to those authorities which are taking on an expanded programme of house building to modern standards and I therefore commend the Order to the House.10.24 a.m.
My first duty is to thank the Parliamentary Secretary for the way in which he introduced the Order and for giving me so much information prior to the debate. I assure him that I have read all the relevant papers. I have marked them and studied them—but whether I have learned anything from them I am not sure.
I thank the hon. Gentleman for making a concession to the Opposition at an earlier stage, and that has allowed this debate to take place. On that occasion an Amendment was moved by my hon. Friends, and on Report the Government moved an Amendment which turned the Order into an affirmative Resolution. It is only right that we should be assured that we can have an annual debate on a matter of this importance. I agree with the hon. Gentleman that today may not be the most exciting occasion, this being the first time that we have debated this matter. However, it is impossible to say what may happen in the years ahead. I am glad that, on this first occasion, there does not appear to be any violent disagreement about the rates of interest that have been chosen. I recall asking the Government in Committee if they could give us details of the representative rate for 1965–66 and 1966–67, and in my view those statistics should have been readily available. However, the Government did not come forward with that information, although I see from the papers which the Minister has sent me that before the Committee stage debate the Ministry of Housing and Local Government already had detailed calcula- tions about the possible representative rate for 1965–66 and 1966–67. These extremely interesting papers, which contain a good deal of detailed calculations, show that, at the time, it was thought likely that the representative rate for 1965–66 would be 6·21 per cent. and that for 1966–67 it looked as if it would be 6·39 per cent. I notice, however, that when the Order was finally made, those rates were brought down, for 1965–66 to 6·19 per cent. and for 1966–67 to 6·35 per cent. I would be grateful if the Minister would say what took place to change the calculations that had previously been made. I agree that it is not an enormous difference, but in the latter case it is reasonable to say that it is not totally insignificant and that it will marginally penalise local authorities rather than be to their benefit. It is impossible for any hon. Member to criticise the detailed figures which the Government have put forward and which they have supported by a wealth of extremely complicated detail. I pay tribute to them for the considerable trouble to which they have gone to make these statistics available. Although I understand that the local authorities have been fairly quick off the mark as well—and I understand that that is one reason why, at the end of the day, the representative rate for 1966–67 is 6·35 per cent. rather than 6·39 per cent.—the only general criticism I have to make of the representative rate, from advice given to me, is that this is an extremely complicated method of making calculations and that it is equally difficult to understand. I hope that it may be possible at a future date for the Government to devise a simpler system that would be equally fair; though I agree that that would not be an easy task to perform. How will the subsidies be paid? I understand that they will be paid half-yearly. Will all local authorities receive the subsidy for the retrospective years or must they wait until the Order is passed? How will this be administered in the years ahead? I hope that the House realises—as my hon. Friends and I tried to explain on many occasions during the passage of the housing subsidies legislation—that these new subsidies represent an enormous open-ended subsidy commitment and a vast expenditure of public money. These subsidies last for 60 years, although the Minister has taken power to reduce them after 10 years. I remind the Parliamentary Secretary that when we took similar powers we were criticised for doing so. I have criticised these subsidies in the past for being insufficiently selective, and I stand by that criticism. I was grateful for the hon. Gentleman's explanation of the cost of the subsidies. It was forecast in the Explanatory Memorandum that the extra cost was likely to be £10 million in 1967–68. The Parliamentary Secretary said that the total cost this year is likely to be about £100 million, which will continue at this rate for 60 years.This very much depends on the number of local authority houses that are built. If the present Government stay in office for the next 60 years, I have no doubt that it will continue at £100 million a year.
It is most unlikely that the party opposite will stay in power for anything like that number of years. Indeed, I very much doubt whether the hon. Gentleman and I will be debating this Order on the last occasion. I want a guarantee that we shall have a similar debate next year.
I do not know what discussions are going on in Government circles about the future of the social services, and I want the hon. Gentleman to tell the House this morning that there is no question of any change being made in the level of housing subsidies, or at least in the working of the housing subsidies, in the immediate future, and that the system will not be changed in the interim period. The hon. Gentleman knows that there are two things which govern the amount of money which local authorities receive and can use, the representative rate of housing subsidies and the cost yardsticks. Can the hon. Gentleman say what review, if any, is taking place of these yardsticks? There is already evidence in certain areas, particularly in London, that the yardsticks are far too restrictive. I hope that the hon. Gentleman will look at this again, and will be able to say something about it this morning. The hon. Gentleman fairly admitted that the National Federation of Housing Societies and the National Association of Almshouses had some reservations about the representative rate which had been chosen by the Government. Their reservations stem, in particular, from the fact that they have been given the same representative rate as local authorities. I am advised that at the moment most housing societies are paying about 7⅛ per cent. for their money, and, as the House knows, the representative rate is 6·52 per cent. They have to pay well over the Public Works Loan Board rate. I take the point which the hon. Gentleman made when this matter was debated on Report when he said:I accept that, but these are, on the whole, a small percentage of housing societies. The Minister has power to make separate rates, and I am grateful to him for the assurance which he has given that he will look at this again next year when the housing societies put forward the case which they will have been able to prepare during the course of this year. Today we have three rates which are generally agreed for the three years. I have not dealt with the development corporations or the Commission for New Towns. They have a separate rate of 6 per cent. and there is no possible dispute about that. I am glad that no one has suggested that the smaller local authorities have been penalised, which was the fear of some hon. Members during the Committee and Report stages of the Bill. As the hon. Gentleman said at the time, the fact that they borrow more from the P.W.L.B. may help rather than penalise them, but this is something which must be watched each year. This while extremely complex system places a great burden of responsibility on the treasurers of local authorities, and, as my hon. Friend the Member for Northants, South (Mr. Arthur Jones) said in Committee, on a scheme of £1 million a mis-assessment of ¼ per cent. might cost a local authority as much as £2,500 a year for 60 years. The House will be aware that there are many years in which interest rates fluctuate considerably. In 1958 there were five changes in the Bank Rate. This year there have been three changes in the Bank Rate, all welcome ones in a downward direction, but whether they will continue in this way must be a matter of speculation in the House. No serious objections have been made to these rates by the local authority associations, but if the interest rates fluctuate widely, different local authorities will find that they will receive different treatment. Some will do well, and others will do badly. I think that the whole system is one of extremely rough and ready justice, and that in the future some local authorities will find that they have not done as well as they had hoped. I welcome and warmly support the Order, and the fact that agreement must have been reached in the extremely complicated negotiations which must have taken place."…some housing associations receive gifts of capital or obtain their capital from various sources at preferential rates of interest. This is especially true of charitable societies."—[OFFICIAL REPORT. 8th March, 1967; Vol. 742, c. 1647.]
10.35 a.m.
On behalf of my colleagues crowding these benches this morning, I would like to congratulate my hon. Friend the Joint Parliamentary Secretary for what he has done. It is the realisation of something which has been pressed for ever since interest rates went up in about 1956. I warmly welcome my hon. Friend's statement, which will do a lot to help people living in intolerable circumstances.
There will always be further demands, and there are two matters in respect of which pressure will be exerted. My hon. Friend explained this morning that the rate is 6½ per cent. for local authorities, and it is quite anomalous that housing associations will be able to buy property at 4½ per cent., the new rate which we welcome, whereas local authorities who buy property, very much needed in many cases, will still have to pay the 6½ per cent. rate. I am sure that this is an anomaly which time will remove. Since the Housing Subsidies Bill was first introduced, there has been a big reduction in interest rates. There have been three reductions in the Bank Rate. It has come down by 1½ per cent. and market rates are tending to come down, too. The subsidy given by the Govern- ment is therefore less than was expected when the Bill was introduced. As my hon. Friend knows, there will be further pressure if this downward trend in interest rates continues—which we hope it will—for a further reduction below 4 per cent. in respect of interest charges to local authorities.10.37 a.m.
With the permission of the House, perhaps I might reply to the hon. Member for Southend, West (Mr. Channon), and my hon. Friend the Member for Salford, East (Mr. Frank Allaun).
My hon. Friend knows that in Committee I gave an undertaking that if borrowing rates came down to 5 per cent. we at the Ministry would look at the matter again. I went no further than that then, and I repeat it this morning. I hope very much that the situation will arise in which borrowing rates come down to such levels, but because the Bank Rate comes down it does not automatically follow that the borrowing rate changes. The 6½ per cent. rate has been the prevailing borrowing rate for some time, in spite of fluctuations in the Bank Rate. I say to my hon. Friend that when the happy day arrives when the Bank Rate comes down to 5 per cent. we will discuss the matter with the local authorities concerned. The hon. Member for Southend, West asked a number of questions, and I shall do my best to answer them. He talked about earlier figures in another document. I think that the document to which he referred was the first draft of a Memorandum which we sent him earlier in the year to show the method of calculation. The rates were later recalculated before we contacted the associations. We did, the sums on a slightly different basis in the original draft. I assure the hon. Gentleman that there is nothing mysterious about this. The hon. Gentleman asked for an assurance that the present method would not be changed before next year, would not like to give this automatic assurance, because local authorities may ask us to reconsider certain points of assessment, and it is therefore in their interests that I should not say that what we have done here in the way of calculation will remain for ever and a day.
I appreciate that. I am asking the Government for an assurance that the Housing Subsidy Act will not be amended during the next 12 months.
The hon. Gentleman is now asking me to commit the whole Government. This Act has only just gone on to the Statute Book. It has only just got under way. Speaking as the Minister responsible for this matter, I can say that I see no immediate likelihood of any change being made. We have only just got this Measure on to the Statute Book, and started to find out how to work out the calculations. I do not think that the hon. Gentleman need be too worried about this.
The hon. Gentleman also asked about supplementary payments. The Ministry made special arrangements for councils to submit advance subsidy claims before enactment, and as a result the payment on account of the new subsidies began within a week of the Bill receiving the Royal Assent. These payments were made prior to the Order, and classed as extra statutory. They are being made with Treasury approval, and the Ministry's appropriation account for the Housing Vote for 1967–68 will include a note of the amount paid on these forms. In fact, we took action the moment the Bill received the Royal Assent to start paying money in advance, and we have carried local authorities with us on this and have obtained their good will. The hon. Member asked about yardsticks. We have already given an assurance that yardsticks will be considered within six months if it is felt by any individual authority that there are doubts about them. In any case we are committed to a review within 12 months. It would be sad if it were not clearly understood by local authorities that the whole purpose of bringing in these cost yardsticks was an attempt by my Minister and my Department to obtain a measure of control over cost. It is the duty of every local authority to do its best to make sure that every scheme promoted comes within these cost yardsticks. We believe that they are generous enough for that. I concede that there may be individual difficulties with certain schemes, and I have recently read of an architect bitterly attacking these yardsticks, wholesale, because they do not happen to fit in with his ideas. I am afraid that, like everybody else, he will have to try to make these yardsticks work. If he does not think that they will work, he will have to prove how and why. We are quite determined to see that they are given every chance of working. As the hon. Member will know, if the cost yardsticks work, it will mean that local authorities will know in advance that any scheme coming within their limits will automatically be approved by the Ministry, thus avoiding a great deal of delay. We will consider any scheme individually within six months, and the whole principle of yardsticks will be considered within 12 months. As for housing associations and the representative rate, the hon. Member knows that there is a great deal of good will on both sides in the matter. Only a few housing associations will receive the charitable concessions. We have asked them to give us details of the cost to them of the interest rates charged in the current year. They have willingly agreed to do this and, acting on their figures, we shall be as generous as we can, within the terms of the Act.Question put and agreed to.
Resolved,
That the Housing Subsidies (Representative Rates of Interest) Order 1967, a draft of which was laid before this House on 5th July, be approved.
10.42 a.m.
I beg to move,
Since the Scottish Order is very much on the same general principles as that for England and Wales, I do not propose to go over it in detail. In the Library there is a comparable Scottish analysis, similar to that referred to by my hon. Friend the Parliamentary Secretary in relation to England and Wales, which I hope the hon. Member for Moray and Nairn (Mr. G. Campbell) and other hon. Members have read. I hope that, like me, they will agree that the working party of the local authority associations and the Scottish Development Department has done very well in this work and that the way in which it has carried out the analysis not only of interest rates, as referred to in paragraphs 3 and 4, but of weighting, in paragraph 5, is very commendable. When we read paragraph 8, on subsidies, we see that it has applied itself vigorously and come to the right decision. I will not go into all the points of analysis unless I am asked to, but I want to draw the attention of the House to the differences between the Scottish and the English Orders. The local authority representative interest rates show some marginal differences. These relate to the different mixture and timings of borrowings as between English and Scottish authorities. The English and Scottish rates are the same for 1965–66. The Scottish rate is ·01 per cent. higher in 1966–67 and ·04 per cent. lower in 1967–68. The second difference is that the Scottish Order specifies a separate rate of 6 per cent. for the Scottish Special Housing Association. There is no English equivalent. We all recognise that the Scottish Special Housing Association is a kind of floating new town. It seeks to build over 5,000 houses a year, as, for hat matter, do the individual new towns of Scotland, running at about 1,000 each. That is their aim. The Association is in the same position as the new towns, receiving Exchequer advances at the same rate of interest fixed by the Treasury. Another difference is that we have quoted the representative rate of interest, in paragraph 2 (b) of the Draft order for the financial year commencing 1st April, 1965, for the new towns and the S.S.H.A. This is not the case with the English Order. They have chosen to work over two years. This is because the English are applying different formulae in relation to retrospective grants than we do in Scotland. At this stage we in the Scottish Development Department are not quite certain of the number of houses to which this may apply in the new towns and in respect of the S.S.H.A., but we think it should be specified so that the retrospective rates of subsidy are applied by the Government to building by the S.S.H.A. and the new towns in that year, as they have applied them to those local authorities who had built houses at that time. There are these three differences, and I hope that if there are any questions for me to answer the House will permit me to reply.That the Housing Subsidies (Representative Rates of Interest) (Scotland) Order 1967, a draft of which was laid before this House on 14th July, be approved.
10.46 a.m.
First, I thank you, Mr. Speaker, and the Government for allowing this Order to be taken separately. There are Scottish points to raise, to which it would be more appropriate for the Scottish Minister to reply. When we considered the relevant Clause of the 1967 Scottish Act in Committee—the Clause which has now become Section 2—we had a long discussion on subsection (3) and the word "representative". We all agreed that the rate of interest could not be an average of the rates over the relevant financial year, because it would depend on the difference between long-term and short-term borrowing and also on the rates at which most loans had been raised, as opposed to what the rates had averaged over the year.
For example, it could be that, by chance, most of the borrowing had been done during two main periods of the year, in which case the rates which had applied during the rest of the year would have been less relevant. Therefore, the word "representative" has been left to the Secretary of State to interpret. He has been given discretion, in consultation with those concerned—including the recipient authorities—to decide what the rate should be. As this governs the size of subsidy it is important, and, like my hon. Friend who spoke in the English debate, I am glad that the Government have agreed to the affirmative procedure, so that we can discuss this matter in the House every year. I note that the rates which the Secretary of State has determined for the three years covered by the Order have been accepted by the bodies concerned, but that they want periodical reviews of the method of calculation which has been applied in this case. I agree with that. I hope that the Government have an open mind on the matter and are not completely wedded to the present method of calculation. I also note that, as in the case of England and Wales, the Scottish branch of the National Federation of Housing Societies is not happy about being put into the same group as the local authorities in Scotland. I would like the Minister to tell us more about this. Are the Government prepared to move them to another group, or to a separate group of their own, or are they determined to keep them with the local authorities in future? On the general question of grouping, the Act allows for different representative rates to be determined by the Government for different categories of recipient bodies, including different categories of local authority. In Committee my hon. Friends and I attached considerable importance to this. All the local authorities are put together in this Order. But small local authorities might have had to borrow at higher rates of interest than large ones and perhaps the hon. Gentleman will make it clear that the Government are prepared to separate the authorities into different categories if they consider that there are grounds for doing so.indicated dissent.
This may not be the case in England—I see the Parliamentary Secretary shaking his head—but the Scottish Minister of State will recall that the Government appeared sympathetic to this during the Bill's passage and I understood him to agree to it in Committee.
There are only two groups in the Order —first, the local authorities and the housing associations, and second, the S.S.H.A. and the development corporations. The reason is clear for the second grouping, which borrows wholly from the Exchequer at a separate rate of interest, but I should like to know more about the dates. Section 2(3) of the Act refers to "the preceding financial year", but the first group has a financial year starting on 16th May. In many local government matters in Scotland, the Scottish financial year starts in May, but this can cause confusion, particularly over the second group, for which the financial year starts on 1st April. It may be difficult to move different categories from one group to another if they have different financial years. For example, housing associations might be adversely affected, depending on when their financial year started. The financial year seems to start on 1st April for all categories in England and Wales, so this is a particularly Scottish point. Would the hon. Gentleman also explain why the Scottish Order was laid and then suddenly withdrawn from the Vote Office and reissued last Friday? I have a copy of the original and one of the later Order which show that it is the dates which have been altered. Both groups in the original Order had a financial year beginning on 16th May, but in the second Order the dates for the second group were changed to 1st April. Is this simply a misprint, or is there doubt or controversy about the dates, and about what financial year should apply to different bodies?10.54 a.m.
The coal dust in my lungs after a night shift in the House will prevent me from speaking too long, but I do not apologise for allowing more time for the farmers' lobby to assemble. I have not read the document in the Library, which may or may not put me at a disadvantage. My hon. Friend did not explain the difference between the representative rates in England and Scotland in 1966–67. What effect, if any, does the amount of industrialised building have on this calculation, which is obviously a cost factor of considerable importance?
Why the difference in Scotland between local authorities and new towns and the S.S.H.A., which applies in England and Wales? Is this a simple assessment of the subsidy to new towns? Presumably, if the Treasury gives money to new towns at 6 per cent. and cannot raise it at 6 per cent., there is some concealed subsidy. I do not object, but does it account for the enormous pressure on new towns, if not to balance the books, at least to try to do so? Does it also account for the pressure on the S.S.H.A. to keep down its deficit to about £2 million? As to the effect of the calculations on the rent interests which are demanded by the Government, I have never opposed investigating the revenue side of housing expenditure, because we are always arguing that some money should be supplied by the central authority, but I am very concerned about the pressure on the S.S.H.A. in the light of its contribution to Glasgow's housing. For example, the association intimates that there will be further rent increases in 1969–70, in spite of the fact that the new towns have apparently been trying to avoid them during that period. Another anomaly is that, on a difference of a £5 per week wage level, the rent charged can vary by as much as £1. In other words, 20 per cent. Of—Order. I am afraid that we cannot discuss rent and variations of rent on this Order.
I accept your guidance, Mr. Speaker, but I am commenting on the fact that the representative rates charged to local authorities and new towns and the effect on housing revenue has a bearing on what happens in housing finance generally. This is something which causes great concern because we do not seem to be getting the benefit of the undoubtedly generous increases in subsidies. Therefore, in the light of the guarantee of a review of yardsticks and of cost and, therefore, of rates of interest, it is high time that we worked out an overall rent policy which is fair to everyone—
Order. I do not object to the views which the hon. Gentleman is expressing, but he cannot express them on this Order.
I am not trying to be difficult, although I must admit that I am not very bright—or not as bright as usual. The acquisition of property by local authorities raises the rate of interest charged to a person who buys property, obviously by taking advantage of another good Government scheme, the option mortgage scheme. I am anxious that, in this annual review, we do not get too tied up with complicated formulae, which are obviously difficult for Ministers to understand. I will read this document in the Library.
I welcome the Order, which is an enormous boon to Scottish local authorities and hope that my observations will be borne in mind.10.59 a.m.
Many good speeches have been ruined by looking at a memorandum beforehand, but my hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) would be well advised if he were to go through the excellent document prepared by the Scottish Development Department in conjunction with the Working Party of the Scottish local authorities. I give the assurance that we are anxious to keep the Working Party in being. It does a great deal of work and it will keep this matter under review. Therefore, we readily accede to my hon. Friend's request about periodic reviews. I was glad to hear the comments of the hon. Member for Moran and Nairn (Mr. G. Campbell) about the representative rate and the way in which it has turned out.
I should say to my hon. Friend the Member for Provan that I can give a revised version of the turnout figures, which is the whole point of this exercise, in relation to Scotland. The Exchequer housing subsidy commitment for new housing in Scotland totalled £27·3 million in 1966–67. We estimate that the commitment will rise to about £25·8 million instead of £25 million in 1967·68. I have been asked whether we were getting the benefit of the subsidy which was intended. If we assume a representative rate of 6½ per cent. to 1970–71, our estimate is that we would be paying, not £30·2 million, as I indicated in an earlier debate, but £35·8 million. Clearly, we are going considerably further than we intended when we introduced the Bill. I think that that meets my hon. Friend's point about how the Measure is working. My hon. Friend complained about one rate being down vis-à-vis the English. However, he ignored the fact that another rate is up vis-à-vis the English. But taking them together the fact is that there is this difference in Scotland compared with the position in England, namely, that Scottish local authorities are able to borrow 40 per cent. of their requirements from the Public Works Loans Board at a lower rate while most English authorities are limited to 30 per cent. That is one of the reasons for the lower Scottish rate for 1967–68. Although it seems marginal, it is significant that that is so. The cost of building does not affect the interest rate under this system. Therefore, the point of my hon. Friend the Member for Provan about industrialised building is not well taken. The industrialised building component is rising in the new towns—
In calculating the annual cost of a house, one makes a charge in respect of the Public Works Loan Board and the interest rate paid. This is set against the receipts and payment account in respect of that house. I am therefore unable to understand why my hon. Friend says that it is not reflected in the cost of the house.
I appreciate that point, but my hon. Friend is talking about the representative interest rate, which is the statutory phrase we are discussing in connection with the Order. If my hon. Friend looks at, for example, paragraph 5 of the Memorandum, he will see how the different fractions are made up and the six different methods of borrowing and how the Committee arrived at what it called, and what we call in the Order, the "representative rate of interest". But that is not determined by the cost of building. My hon. Friend will recollect Clauses 2 and 3 of the Bill which referred to subsidy being money on the aggregate cost of the acquisition and development of the land as well as building on the land. That is an entirely different and novel concept from all previous housing subsidies Bills in Scottish local government. That is why the existence of an industrialised building component does not change the determination of the calculations on the representative rate of interest.
I know that I have not explained the matter properly, but I commend the Memorandum to my hon. Friend. It is not easy to read, but it is well worth reading. This will be a continuing debate which we shall probably have each year. I understand the position of housing societies in Scotland. It is right that it should be recorded that they are not terribly happy about the present decision. But we are not binding ourselves in any way. If housing associations require a separate rate of interest, we will consider the matter during the appropriate financial year. It was not doubt, uncertainty or controversy, but a downright mistake that the original Order was tabled quoting a similar date—16th May—in respect of New Towns and the S.S.H.A. It had been forgotten that they have a different financial year from local authorities. Therefore, the Order was withdrawn and the draft Order which we are discussing was put in its stead. This is a discrepancy in Scotland. I do not know whether we shall ever put it right or get into line with the English—I do not know whether we should—but this is why we propose a change. If the housing associations say that they want another financial year—not 1st April or 16th May—to be considered, we shall consider it. I hope that that meets the point that has been raised. We have an open mind about how to deal with the housing associations next year. How we will deal with them in the succeeding Order next year depends on the evidence about borrowing which we obtain.May I raise one point to ensure that I know how far the hon. Gentleman's statement goes? Does it mean that the financial year period for Scotland will start on 16th May unless the bodies have been borrowing from the Exchequer completely?
No. When the Order is applied in August, we will start paying in November in respect of the financial year from 16th May, which is the commencement of the financial year of the local authorities. It is true that in the retrospective section we go back to houses approved on 1st January, 1965, but that is a calculation which we make in respect of the financial year 1964–65. If the hon. Gentleman looks at paragraph 8 of the Memorandum he will see the point which I am trying to make. The retrospective subsidy will amount to about £700,000 a year in Scotland for 60 years. That is the result of the new Clause which we have introduced in the revised version of the Bill.
It is possible to prescribe different rates for different kinds of local authority. I said to the hon. Gentleman that we were not being doctrinaire in saying that there had to be one category. When we discussed the matter with the local authorities, they were absolutely convinced that they did not want that at the present time. England did not want this either. There could be a great deal to be lost as well as gained by having this separation. However, we will look at the matter again to see whether the authorities as a whole would like some sort of division. The essence of the whole housing subsidy structure and the fact that we have succeeded in getting this far with these very ccmplicated orders and obtained the confidence of the local authorities and many ethers involved in the housing drive is that they are able to construct five year programmes. It is incumbent on hon. Members opposite to make it clear that they do not disagree with this system, and that they want to see it continued in some form, and to ensure that if it is changed it will be more generous than ever before. If they make it clear, those concerned need have no fears about the future. The House would be well advised to commend the Order.Question put and agreed to.
Resolved,
That the Housing Subsidies (Representative Rates of Interest) (Scotland) Order, 1967, a draft of which was laid before this House on 14th July, be approved.
Agriculture And Horticulture (Co-Operation Scheme)
11.10 a.m.
I beg to move,
Hon. Members will recall that, under the provisions of Part IV of the Agriculture Act, 1967, the Government plan to encourage the development of co-operation activities in agriculture and horticulture by the establishment of a Central Council for Agricultural and Horticultural Co-operation and by a scheme of grant aid to be administered by the Council. The proposals for grant aid are embodied in the Scheme. The Government do not believe that co-operation is the answer to every agricultural problem, but they do believe that it can make a vital contribution to agriculture and enable producers to obtain the benefits of scale. Turning now to the detail of the Scheme, I should like to outline its provisions and comment very briefly where I think this might be helpful. The Scheme provides, in paragraphs 3(1) and 13(3), power to approve proposals and make payment of grants within the scope prescribed in Section 61(1) and (2) of the Act. Perhaps the most important aspect is that through this Scheme we shall be able to grant aid, for the first time, co-operation in production activities. Paragraph 4 of the Scheme sets out the details together with maximum rates of grant. Paragraphs 6 to 11 relate to the way in which proposals should be dealt with and grant paid. Paragraph 8 in particular provides for the Council to deal with applicants for grant through intermediaries, such as the central co-operative bodies, and to reimburse them appropriately. The remaining paragraphs describe the other functions of the Council in administering the Scheme, such as checking applications for payment, and so on. These provisions are in the customary form. There is one other point to which I should like to refer. Some co-operative organisations have expressed concern that the Scheme will result in the widespread development of small marketing societies to the detriment of existing societies. This is certainly not the Government's intention. We are putting the administration of the Scheme into the hands of an independent Council and giving that Council discretion in its recommendations about grant aid: there is no automatic entitlement to grant. We believe that the Council will act in a responsible manner and in the best interests of cooperation generally. This does not mean that new marketing societies will not get grant aid; but we believe that the Council will keep the whole field of co-operation under review and ensure that the fears which have been expressed will not be realised. I know that the proposals to give further assistance to agricultural co-operation have already received the support of hon. Members on both sides of the House, and I hope that hon. Members will agree that the Scheme, administered by the Central Council, will make an important contribution to the improvement of the efficiency and productivity of the agricultural industry.That the Agricultural and Horticultural Co-operation Scheme, 1967, a draft of which was laid before this House on 28th June, be approved.
11.13 a.m.
It is well known that nearly all those who take part in agriculture debates in the House have a practical relationship with the industry. Nevertheless, when talking about agricultural co-operation, perhaps I should declare at once that for a number of years I have been actively engaged as a member of an agricultural co-operative and also for some time of a horticultural co-operative. I strongly suspect that there may not be any of my hon. Friends who take part in the debate who may not be in a similar position.
Having said that, on behalf of this side of the House I welcome the Scheme. I was delighted to hear the Joint Parliamentary Secretary say that the object was not to increase the small societies at the expense of the larger and not to proliferate co-operative organisations throughout the country. I want, however, to press the hon. Gentleman a little more about that and to ask three further questions. If the hon. Gentleman would kindly refer to the White Paper from which all this stems—Cmnd. 2738, of August 1965 —he will find under the general remarks about the co-operation proposals that one of the things which the Central Council would be charged with doing was supplying "a purposeful direction and co-ordination to what would otherwise be, and has been in the past, no more than a piecemeal approach". In Section 58(2) of the Agriculture Act, 1967, there is nothing about purposeful direction and co-ordination. We simply got down to co-ordinating. In the Scheme, we are only asking the Council to "co-ordinate any form of co-operation". It sets out a number of ways in which it is imagined that co-operation will develop. In passing, perhaps I may ask the hon. Gentleman whether, when the Scheme's approved proposals finally refer merely to "research and other incidental activities", he has considered the ways in which co-operative movements have developed in different countries, such as Canada and Sweden, and whether he feels that it will cover all possible developments which may come in the not too distant future. That is my first point. I would like the hon. Gentleman to explain what has happened to the "purposeful direction". It is something which is needed in the co-operative movement. The idea may be that that is what the Council will provide. If that is so, I hope that the hon. Gentleman may spell it out even more clearly. Paragraph 35 of the same White Paper states that there will beOne of the fears of those engaged in the co-operative movement is that there may well be occasions when the real object the Council tries to achieve will be to establish new co-operatives. It may be that an old established co-operative could do very well the precise job which is proposed for a new co-operative. It may have the experience and the membership, but under the Scheme it may be discriminated against in favour of a new co-operative. That is why I ask the hon. Gentleman to look carefully at the original suggestion about purposeful direction, because many people feel that there may be occasions when a new co-operative may be given a favourable position as against an old co-operative. I do not have to tell the Joint Parliamentary Secretary that in the raising of capital the co-operatives are already in a difficult position. They are not able to say that in five years' time there will be a prospect that their position will have improved and that people will be able to sell their shares at an increased value. All they can do concerning new capital is to say that they will be able to keep some of the profits and put them back into the organisation. That is an entirely different position from somebody who is working in a commercial organisation. If he needs more money, he can go to the banks, the City or elsewhere and obtain it in a much more favourable way. That is one reason for the fear that a new co-operative might be created to get the capital which an old co-operative cannot get and in that way compete with the older organisation. There is a further way in which this may work. An example which has been brought to my attention is of an area in which two schemes were put up to A.M.D.E.C. to deal with both the procurement and the marketing of pig progeny. Both schemes were rejected. One body then gave up the struggle and the other decided to continue to see what it could do. It has been a tremendous success. That is the sort of problem which the Council will have to consider. It seems to me that there is a good deal to be done in the way of the purposeful direction to which I have referred. Co-ordination provides a lot of problems in any circumstances. One of the difficulties is co-ordinating co-operative organisations in the competitive situation in which we live today. Even those with very long experience find that this provides grave problems for the co-operative organisation, and that is something that this Council will have to look at very carefully. The Central Council does not yet have, and cannot have, any great experience in these matters. It will be unable to hold up the applications until that experience is obtained and, in any event, if it did so the experience would probably not be gained. Again, two-thirds of the cash to be provided for these organisations will come from the farmers and members of the co-operatives, and a great deal of the initiative in running them will in any event also have to come from the farmers. If co-ordination is to take place in these circumstances the Council will have to make up its mind on a great number of problems. One of these problems has been clearly pointed out in the recent report of A.M.D.E.C. which states in page 23:"no distinctions among societies, groups, companics or even bodies not formally registered for trading purposes, provided that the body has a definite constitution of a co-operative character."
Anyone who has had experience with a co-operative group knows that lack of discipline is one of the ways in which a group can very easily get into difficulties. Page 25 of the report deals with another aspect of group training and sets out the work that has been done by the Three Rivers Trading Company. We read:"A.M.D.E.C.'s experience in the group marketing field suggests that firm contractual relationships may be the most important of all requirements for the successful operation of a group."
A little later it states:"The effect of these arrangements is to reduce the emphasis previously placed on loyalty to the group …"
I should like the hon. Gentleman to tell us what the Council is expected to do, and how it is hoped it will deal with some of the problems I have outlined. No one connected with co-operative movements will have any doubt at all that we are in a period of great change. Technological developments are taking place which mean that all sorts of decisions will have to be taken in the future which may not be precisely the same decisions that would have been taken a short time ago. One factor that has to be taken into consideration is the possibility of our joining the European Community. I know that we are not debating that subject now, so I shall not develop that aspect save to quote one sentence from the Report of the Select Committee on Agriculture dated 31st May, 1967. In that Report we have the evidence given by the Agricultural Co-operative Association. After referring to the Central Council for Agricultural and Horticultural Co-operation, the Report states:"At first sight these arrangements appear to be the very opposite to the prime objective of orderly marketing, but nevertheless it appears that groups which adopt the method have a great potential and continue to perform their major function of assembling and sorting produce for dispatch to the most remunerative outlets."
Again, perhaps the Parliamentary Secretary will look at paragraph 8 of the Scheme, which states that the work can be carried out by the Council acting through intermediaries. Section 61(3,a) of the 1957 Act is quite blunt and clear in saying that the grant can be payable on"It is difficult to envisage how such a body, conceived for national purposes, could fit into the international setting just described, since relations between the Commissions and E.E.C. Associations are in charge of a special Directorate General for Agriculture …"
Perhaps the Parliamentary Secretary can relate the way in which intermediaries have been introduced in paragraph 8 of the Scheme to the very clear direction in the Act that schemes are approved only by recommendation of the Council. My last point relates to Section 61(3,f) of the Act, which says that the grant may be made subject to any conditions. Paragraph 6 of the Scheme sets out a whole list of conditions, from (a) to (g), so it looks as though specific conditions are being set out in the Scheme that are not envisaged in the Bill. It would be helpful if the hon. Gentleman would look at that matter and explain his position in relation to it. My main point is that there are anxieties that this new Council may be very anxious to achieve results and will therefore want to see that new organisations are set up to do jobs that could perfectly well be done by the developed and older organisations. I want to hear from the Parliamentary Secretary how such a proposal will be linked with the existing organisations. If all that is to happen as a result of setting up the new Council is the creation of a large number of new and, perhaps, smaller schemes which will compete against the older ones and get all the financial benefits given by the new Scheme we are debating, the new schemes will be able to be more successful in their business than the older ones, and that will do no good to co-operation nor to the agricultural industry in general. The Council has to face real and practical difficulties, and we must not expect too much too soon from it. Having said that, I welcome the Scheme on behalf of my hon. and right hon. Friends and I will be interested to hear what the hon. Gentleman has to say about the matters to which I have referred."…proposals which have been submitted to and recommended by the Council and approved by the Ministers …"
11.28 a.m.
I hope that the Parliamentary Secretary will be able to clear up some points that are worrying many of us on this side. The first is in connection with paragraph 4(4). That paragraph, as T understand it, contains the very novel consideration that a 90 per cent. grant can be paid to an agricultural co-operative, including the meeting of that co-operative's trading losses. That is a very novel principle, and it could have the most disastrous effects on the pattern of agricultural marketing that is at present being established in the countryside.
Over the last few years we have seen the most enormous growth in co-operative buying groups, many of which are buying, in particular, fertilisers below the price at which the local merchants themselves can buy, but there has not been such an expansion in the actual marketing groups. That is probably because there is the safeguard that if they want to market cereals they must get a licence from the local cereals committee, and this slows down the growth of the groups. The Parliamentary Secretary and I recently had some correspondence about the dilatoriness with which some licences have been granted by the local wheat committee. The House should bear in mind the part that established merchants play in the agricultural community. Lord Radcliffe, when he looked at the question of credit to the agricultural industry, pointed out the enormous part which the merchants play today. With the treatment that the present Government have given to the farming industry, credits to the merchants and auctioneers is now standing at a record level. Now, when these organisations are carrying such a degree of credit, we are about to pass an Order which will give agricultural co-operatives an unfair advantage over merchants. How can we pass an Order today—if we do pass it today—which allows public funds to be used to subsidise deliberately incurred trading losses? Unless the laws of bankruptcy are changed, I do not think we can allow this to go through today without some very good safeguards being provided. What is to stop an agricultural co-operative going into an area, knocking out the local merchant by unfair trading knowing perfectly well that the co-operative has a guarantee of 90 per cent. of its losses genuinely incurred, and then knocking the merchant for six on all his lines of business? We recently had the Glenrothes scandal. We do not want to see a recurrence of that kind of thing. My hon. Friend the Member for Rye (Mr. Godman Irvine) pointed out that the Central Council has to see that there is not a vast proliferation of these marketing groups beyond what is desirable in an area. I hope that when the Council decides to use its discretion on whether a grant should be payable on the establishment of a new marketing group, it will not only look at the welfare of agricultural co-operatives in the area but also at the welfare of existing merchants and firms of auctioneers in the area. They are just as important, if not more important, than the new co-operatives which will come in and may make life more difficult for merchants and auctioneers. I hope that the Parliamentary Secretary may think this an appropriate moment to pay some tribute to the part which auctioneers and merchants have been playing, and which they will be called upon to play in the next few months to an even greater degree. We have seen in the last few weeks the collapse in agricultural marketing because of the way in which the Government sold us down the river over the Irish trade agreement. Auctioneers will have a substantial burden to carry in the next few months. If the Bank Rate is allowed to go up, auctioneers and merchants will have an even more difficult task. We might be discussing this Order in October because of the way in which our morning business is arranged. If we still have a morning sitting in October on it, I hope that the Parliamentary Secretary will be able to answer some of these questions.11.36 a.m.
I endorse what my hon. Friend the Member for Gainsborough (Mr. Kimball) said about the problems of merchants and of auctioneers. In the experience of most of us directly involved in agriculture, merchants generally look after themselves, but my hon. Friend was right to say what he said about the considerable burden that they are carrying in financing the industry. So also are the machinery firms of all sorts. I see no reason why there should not be extensions of the machinery syndicate concept within the framework of this Order. There might be considerable difficulties in the agricultural engineering sector arising quite unintentionally.
Like my hon. Friend the Member for Rye (Mr. Godman Irvine), I welcome the Order in its generality, but we want a clear explanation on the two points he made about possible difficulties over existing co-operatives and about merchants, and on the point I have made about agricultural engineers. I understand that the Order will come into force 28 days from the time its goes before another place. It will, therefore, come into effect very soon indeed. Assuming that my hon. Friend the Member for Gainsborough is wrong about October, we are likely to have it brought into effect before the harvest. My hon. Friend the Member for Rye was very wise to lay stress two or three times on the lack of experience which the Central Council will have. It is starting with a clean slate. It is unfortunate that the Minister, in a courteous, efficient but very brief speech, did not give us a name for the chairman of the Council, neither did he announce the composition of the Council. There are people of considerable ability and experience—I cannot underline "experience" too much—in co-operation. I hope that we shall have such a man as chairman, supported by a Council of people with real experience, either in straight agriculture, or preferably in horticulture, or possibly in co-operation elsewhere—that it is co-operation of a parallel nature and that we shall not have a man who makes shirts for the C.W.S. or something of that sort thrust upon us. This is one of the dangers of the era in which we live. More and more of these chairmanships of boards are going about. This is a new style of government, a new style of patronage. I hope that when he replies the Parliamentary Secretary will give us an assurance about the calibre and experience of those selected for this job, if they are yet selected. If they are not yet selected, I hope that he will pay close attention to my words.11.38 a.m.
Several of the points which I wanted to make this morning have already been very adequately made, so I shall keep my remarks very short because other hon. Members wish to speak on this Scheme. Although I welcome it, I would have preferred to have a separate council for Scotland, but having read the Act I realise that the interests of Scotland have been well catered for.
I should say in passing that I have some interest in this matter as I am an ordinary member of a butter and meat producers' co-operative society in northeast Scotland. I wish to know what the difficulties of a co-operative might be. A particular example which comes to mind is that of a marketing organisation which is a co-operative in most senses, which is not a limited liability company and which, although it is technically non-profit-making, makes sufficient profit to cover the outgoings of its members. I should like to know where the line is drawn in deciding what are and what are not agricultural co-operatives. I assume from reading paragraph 1 of the Scheme that nothing retrospective can be done under the terms of the Order and nothing undertaken in the way of a co-operative activity previous to 28 days before the passing of the Order will be eligible for assistance. Would he confirm the point, which has been very forcibly and well made by the hon. Member for Rye (Mr. Bryant-Godman Irvine) that the co-operatives which have undertaken this pioneering will not gain any advantage from this Order, whereas any co-operatives set up in future, possibly in competition with existing ones, will stand to benefit? I should like this point about whether any retrospective activities will be eligible under the Order to be answered by the Minister.11.40 a.m.
I, too, welcome this scheme. Most hon. Members know that I have been interested in co-operation perhaps more so than most. I must confess my interest in cooperation, because I am a director of Western Farmers. I hasten to add, as I said in Committee, that I am unpaid, but, even so, it has been a privilege to be a director of agricultural co-operative merchants for some time.
The Central Council will help farmers and encourage them to take a very keen interest in co-operative marketing and co-operative production. These are first-class aims which are vitally important nowadays. It is perhaps wrong of me to mention the Community or the Common Market again, but I believe that co-operatives, whether we are in or out, will take an ever-increasing part in the affairs of the agricultural industry. Co-operative marketing has made great strides in the past, and I hope that the Central Council will encourage this still further. I know from my own practical experience as a member of North Devon Meat the advantages that have been gained. I am pleased to note that the Minister is coming down to open our new factory which has been set up with co-operation from the farmers. It will mean tremendous benefits to the farmers of North and West Devon. I hope that the Central Council will continue to encourage this work. As for co-operative products, which is still in its infancy, I hope that the Central Council will encourage this movement to grow. I am all for pig groups and cow groups and groups for rearing dairy replacements. All this is in its infancy, but, with the stimulation which the Central Council can give, these groups will go ahead to the benefit of the farming community. Fears have been expressed by some hon. Members about the future of private enterprise—merchants and so on—but I do not believe that the two interests cannot work side by side; that is, co-operation can and must work alongside private enterprise and private merchants. The one stimulates the other. I do not think that either side of the fence, so to speak, has anything to fear. I do not want to see only private merchants operating or only co-operative merchants; I want to see them both working side by side and stimulating each other. This is possible. Indeed, the co-operative groups can supply and help the large commercial undertakings and can help the merchants and retailers. It is not just a one way movement; it can be two-way. This is co-operation at its best. The Central Council, if it gets down to business and encourages what I have tried to set out, can particularly help the small farmers. Whether we like it or not, small farmers will be with us for a long time to come and co-operation is one of the means by which they can be helped and can become viable. In the South-West there are many small farmers and I hope that they will take this business of co-operation seriously and, through the Central Council, be encouraged to experiment and to go ahead. All this means discipline. I mentioned this word in the Agricultural Committee. "Discipline" is a word which we do not seem to like these days, but it is essential in agriculture to understand that we need to have discipline amongst ourselves.Order. I must point out that there is nothing about discipline in the Scheme. We are limited to discussing the Scheme and this Order.
With respect, I am seeking to encourage the Council to foster a sense of discipline in production, in marketing, and in the general outlook of farmers. This is shown in the type of animal that we produce, not just the type of animal that we want. This is shown in marketing and in the whole system of contracts. The word "discipline" must come into it and that the Central Council must encourage a certain amount of discipline in the future.
The Central Council must also encourage farmers to be specialists. We cannot forever go on in the haphazard way we have in the past. This is where agricultural co-operation comes in—that certain farmers do certain things for certain people. I hope that the Central Council will stimulate farmers to become specialists in production. I hope that the farming community will take the Central Council and all that that means and this Scheme very seriously. I hope that it will mean in the years to come that the farming community will become more viable through the efforts of the Central Council. There is one word of warning, which has been emphasised already, concerning these grants and the danger of underwriting losses. This is wrong because it would create inefficient agricultural co-operatives. It is also unfair on the private enterprise merchants and so on. I hope, therefore, that the Minister will give a clear answer to this problem. I hope that he will not, as it were, cover over these things, but will show clearly to the private enterprise merchants and those who operate in the private field that it is not being unfair, because, on the face of it, it looks as if it is being unfair. The National Association of Corn Merchants has a very real point here, so I hope that he will answer fearlessly and clearly so that we all understand what this means. Otherwise I welcome the Scheme.11.47 a.m.
I am delighted that this Scheme has come before the House. It would appear that it will receive the unanimous support of the House, and this will certainly give the Scheme a good send-off. If it is generally known throughout the country that all parties welcome this development, as declared here today, the Scheme stands a good chance of getting off on the right foot. However, whatever might be the degree of unanimity within this Chamber, it will take some years to convince, in particular, the small farmers of the need for co-operation.
We all know that there is a reluctance on the part of independent-minded individual farmers to co-operate. All sorts of reasons and excuses are put forward. Nevertheless, in the trend of agriculture today and the trend of the future, there is no doubt that, whatever may be the attitude of individualism within the industry at the moment and in the past, a great deal of change has to come about and a greater measure of co-operation has to be—I was almost going to say "instilled", but perhaps that is too strong a word—but certainly a great deal of educational work has to be done amongst the farming fraternity to show the benefits and advantages which can be accrued by co-operation. I welcome the fact that the Council will have a responsibility for market research, where insufficient work has been done: it will have an exciting time ahead here. Its duties will be widespread and its research can be of tremendous advantage. I do not want to see, however, a rapid mushroom growth of small co-operatives which start on a bad footing with insufficient capital, even with the grants, and in twelve months have a semblance of an organisation which has no chance of getting going. I am sure that the Council will bear this in mind. Perhaps the larger co-operatives have not done all they could to foster co-operation among farmers, or branch out as they might have done, and have therefore encouraged small syndicates or co-operatives. The changing pattern of the use of labour over the next few years will mean much more pooling of labour. As labour costs inevitably rise, small units will be able to command the services of skilled personnel, and labour will have to be spread over a number of units. In the dairy world, relief milkers already operate on a small scale, but this will have to expand. There will have to be co-operation to pool the limited amount of labour. Equally, there is far too much capitalisation on machinery. It is difficult to convince a farmer to use someone else's combine or deep furrow plough, since he feels that he must have his own, even if second-hand, when it often lets him down just when he wants it. He would do better to accept that, with the cost of modern equipment, the only way to make himself efficient is co-operation. I hope that the small syndicates and the pooling of machinery will be urged forward by the formation of new co-operatives or the extension of existing ones. I have one criticism. I said that I did not want to see small co-operatives mushrooming, because that would harm cooperation and the interests of the small people, but occasionally some areas will not be covered by certain co-operatives or not in the desired sphere of activity, in which case a co-operative might start in a small way. The Council might consider a project and decide against it, yet it may prove ultimately valuable in that sphere. Paragraph 6(5) says:This is not enough. For the secretary of a group of farmers or horticulturists who have put forward a scheme in good faith to be informed that it has not received the Council's support is a little unjust and I would prefer some appeal if the Council rejected a scheme in this way. Those with the courage and initiative to try to form a co-operative should have the last word. Anyone concerned with the future of horticulture and agriculture can see that co-operation, whether or not we join the Common Market, is absolutely essential. It is, therefore, pleasant to find unanimous support of these proposals, although we may not all be happy about details."If in any case the Council decide not to recommend a proposal for approval they shall inform the applicant in writing of their decision."
11.57 a.m.
Having been a small horticulturist for about five years, I know that one can be either a grower or a marketeer, but cannot combine the two functions efficiently. There are excellent co-operative marketing societies in north-east Essex, particularly the Land Settlement at Box Ash, and particularly the co-operative schemes of apple growers who have been able to market their apples more efficiently in this way.
There may be unanimity about some of the details of the Scheme, but I hope that the Parliamentary Secretary will tell us whether it will apply to existing organisations. New organisations with a 90 per cent. backing to make good losses from public funds may not be very helpful. Surely the Government should support the existing successful organisations and not proliferate a huge number of new ones which may compete against the existing ones, with the unnecessary aid of public funds. I am anxious about the appointment of the chairman. I hope that he will be a man of great horticultural and agricultural experience. May we be told his name, as this will allay the fears of many merchants in my constituency who see that the Council will make the plans for the industry in the next ten years? A blueprint by the chairman and the Council would help to establish confidence. Will it be a political appointment, or will he be a good, independent man with independent views, with the support of the industry?Order. I do not think that we can discuss the Council's constitution under the Order, which merely relates to the Scheme. The Council is set up under the Act, and we are not discussing the Act or anything which arises under it, but only the Scheme.
I shall certainly abide by your Ruling, Mr. Deputy Speaker.
Finally, I want to ask four questions, and I think that the Minister's replies will probably allay the fears of some of the merchants in my constituency. First, how can payment from public funds to cover losses incurred in a commercial venture ever be justified? Second, what safeguards are there to prevent things like the Glenrothes pig scheme failure? Third, what will the Central Council do about preparing a blueprint for the agricultural industry? Fourth, can an assurance be obtained that it is not the intention to permit it to foster a mass of small marketing groups?12.1 p.m.
When the Parliamentary Secretary said that the agricultural Lobby was descending on the Chamber for the debate, I wonder if he noticed that no fewer than eight Members of the Select Committee on Agriculture had entered. Owing to the clash of business, we have had to change our sitting. Luckily, as we had no important witnesses today, we were able to do so, but it shows our difficulty when there is agricultural business in the House on Wednesday mornings.
The Scheme is important and complex. It is natural that we want to ask many questions of detail, partly because the Scheme is not very tight, as most such Schemes have been in the past. This is to some extent an enabling Scheme. There is a great deal of discretion for the Minister and the Central Council. Paragraph 3 deals with approved proposals. Apparently approval can be given after the work has been carried out. Does paragraph 3(2) imply a change in what has hitherto been the established Treasury rule that grant aid is not usually given retrospectively? Could the Minister suggest what classes of case he has in mind that might obtain retrospective aid? Secondly, paragraph 4, which deals with the amount of grant, fixes limits and not rates. Therefore, it seems that there is nothing automatic about the grant that the Council could recommend. Would the Minister suppose that in the normal course of events it would be usual to give the limit of grant for the different categories? Perhaps more important, would he ensure that the Scheme is administered consistently? I welcome the large grant of 75 per cant. for surveys and research and for training managerial staff, because in agriculture and horticulture—particularly in co-operation—as in most other forms of commercial enterprise, expert management is the key to success. Paragraph 4(4) deals with large grants given for setting up co-operatives to pioneer new aspects of co-operation in agriculture or horticulture. Will the Minister clarify exactly what is meant by "new"? Does it mean a practice that has not hitherto obtained in Britain? I suppose that many new aspects which we might wish to introduce here are not absolutely new but may be adaptations of practice overseas. It is also vital that the Council should realise the possible danger to the public purse. We have not heard what the maximum expenditure authorised under the Scheme could be, and perhaps the Minister will tell us. Much will turn on the membership of the Council. I understand that it is taking over the work of A.M.D.E.C. I am sorry that it is not taking over its chairman as well to enable continuity of direction. What would be the relationship between the Council and the Agricultural Co-operative Association and the Agricultural Central Trading Association? Paragraph 6(3) mentions criteria for the eligibility of proposals. May we have an indication of what criteria the Minister has in mind? It would be helpful if they could be published, and I hope that before they are finalised there will be consultation with the industry. Like the hon. Member for Norfolk, North (Mr. Hazell), I am somewhat concerned with the Council's power simply to refuse in writing an application, without apparently having to give reasons. I hope that it will have to give reasons, and that perhaps an appeal machinery will be added. The Scheme is said to be intended to run for 10 years certain, to May 1977, and there is power to extend by another five years. Therefore, we inevitably ask how far the Minister has considered compatibility with the existing common agricultural policy in the European Economic Community, especially with our application pending. It so happens that the Community comparatively recently published proposed regulations in the same sphere, and it is clear that there are differences of principle and detail. Has consideration been given to whether the Council would be an appropriate body to represent British cooperation in C.O.G.E.C.A., the organisation in Brussels of the cooperative movements of the Community's member countries, if and when the question arises? I do not want to trespass outside the rules of order, but it seems to me that it is doubtful from the nature of its appointment whether it is sufficiently independent of Government. There are difficulties about compatibility which are important. Although the Minister may say that all this can be left to a possible transition period, we are at the moment putting forward an application to join the Treaty of Rome. As evidence of the earnest of our intentions, I would have hoped that we might have taken the opportunity to try to align our practice more with policy in the Community. I have no doubt that the best hope for small producers is to join together in all the processes leading from production to marketing. The key factors are quality products, good presentation and proximity to markets. I wish the Scheme well, but I am bound to express some doubt about the degree of response likely to come until the present uncertainty overhanging the industry is resolved one way or another.12.8 p.m.
I wish to make three points briefly, beginning, with the general point of how the Scheme will work. Like other hon. Members, I feel that the industry is particularly well served by commercial firms and others in the procurement of supplies. Where we want to see expansion of co-operation particularly is in processing and marketing. Looking towards Europe, we in Britain have very little to fear as producers, but when it comes to processing and marketing we really need an improvement if we are to compete successfully.
I wish the Scheme well, particularly in relation to processing and marketing of farm produce. My first specific point follows on from the general point raised by the hon. Member for Aberdeenshire, West (Mr. James Davidson) about cooperatively run auction marts. I should like an assurance that these and other co-operative groups of farmers engaging in slaughtering and processing meat in that way will come within the Scheme. There is a great increase in sending beef to England in carcass form, with the development of the freightliner train, and special containers are accelerating the development. Therefore, I should like an assurance that this is the sort of development which will be encouraged. I am glad that the Joint Under-Secretary of State at the Scottish Office is in the Chamber. I should like to raise a specific point about co-operative societies in Scotland. The hon. Gentleman knows that in Scotland there are many co-operative societies which are not confined to agriculture. In the crofting counties, in particular, they assist in fishing, in minor industrial projects or craft projects of one sort or another. In this respect, co-operative societies in Scotland tend to be different from those in England and Wales. The situation has been catered for by the S.A.O.S., the central organisation in Scotland. Although the Order applies to agricultural matters, I should like an assurance that co-operative societies, particularly in the crofting counties of Scotland, involved in fishing or craft projects and other activities will not be inhibited in the assistance which they are able to get.12.11 p.m.
The Joint Parliamentary Secretary will, I am sure, be glad of the degree of support which the Scheme has had, although he may not be so happy about the length of time during which it has been expressed. I will not take more than a moment or two because we all want to hear the hon. Gentleman's answers to some of the important questions which have been asked.
The degree of interest which has been shown illustrates the importance which hon. Members on this side of the House, in particular, attach to the Scheme and to the setting up of the Council and the duties which it will have to perform. We were all glad of the Parliamentary Secretary's assurance about the intention not to proliferate small co-operatives. That is very important in the effective running of co-operatives in this country. I hope that the hon. Gentleman will be able to give a very clear response to what my hon. Friend the Member for Harwich (Mr. Ridsdale) said about the effect on existing co-operatives, because I think that the hon. Gentleman would agree that it would be quite wrong if they did not share in the same way. My reading of the Scheme is that they will share, but we should like the hon. Gentleman's assurance on that point. My hon. Friends have referred to the composition of the Council and its chairman. I would not wish to impinge on your Ruling, Mr. Deputy Speaker. All that I would say is that I think that this is a genuine indication of our concern that the right people shall be responsible for this very important task. We should recall the work which A.M.D.E.C. has done, and if there can be a continuation of responsibility this will carry the good will of the industry, which is important. It would have been very helpful—I put it no higher—if the Parliamentary Secretary could have told us the composition of the Council. Perhaps he can shed some light on this matter and say whether any decisions have been taken or, if not, when they are likely to be taken, since if the Council is to start operating in 28 days it is important that the names of its members should be announced as soon as possible. It is unfortunate that we have not had them as yet. The point which my hon. Friend the Member for Gainsborough (Mr. Kimball) made so strongly about paragraph 4(4) of the Scheme was important. We all share my hon. Friend's view about the important part which the corn merchants and others play among the agricultural community. No one on this side of the House would wish them to be unfairly prejudiced by the operation of the Scheme. I hope that the Parliamentary Secretary will tell us that he attaches great importance to the words "any approved proposal" which I have underlined in the second and third lines of paragraph 4(4). In giving approval for a proposal, safeguards should be provided for those who have existing and legitimate commercial operations in the area concerned and no proposals should be approved which would bear unfairly on existing traders. I hope that the Parliamentary Secretary can give us some firm information on that point and that care will be taken to ensure that no unreasonable authority is given for the setting up of co-operatives to carry out activities of the type to which my hon. Friend the Member for Gainsborough referred. I hope that it will be clearly stated that there is no question of paying losses in full when any co-operative has acted unreasonably in its commercial operations. An assurance on that matter would go a long way towards diminishing the fears expressed by traders. Perhaps some of the difficulty which arises stems from the fact that we have not been able to debate the two Reports of the Wise Committee dealing with smallholdings. Smallholdings are the very essence of the people who need the co-operative activities. It is very unfortunate that the Government have not been able to find time to debate the proposals of the Wise Committee. It is indicative of the mess which the Leader of the House has got the business into. I asked the right hon. Gentleman several weeks ago to arrange a debate on the Wise Committee's proposals. Had we been able to have such a debate we should have known the Government's views about those proposals before we discussed this Order, and we could have pressed the needs of the smallholders who occupy a very important place in our agricultural community. I hope that the Parliamentary Secretary will tell us that the new Council will take special account of their needs and that we shall have that debate, which is so badly required. There are many other points which I could have raised, but I wish to give the Parliamentary Secretary ample time to respond to the debate. We welcome the setting up of the Council and we wish it well, but we hope that it will be composed of people who understand the needs of agriculture and horticulture and that we shall have the names of its members at a very early date.12.17 p.m.
I should like, first, to deal with the point which has been raised about the names of the members of the Council. The difficulty in a debate like this of giving names when there is a Parliamentary Question down for answer this afternoon is germane to the point made by the hon. Member for Gainsborough (Mr. Kimball). If hon. Members have patience, they will get the information which they require. I am not sure about the rules of order on giving beforehand answers to questions which have been tabled, but I can say that I am sure that when hon. Members see the names of the chairman and the members of the Council their fears about the quality of it will be allayed.
I shall have great difficulty in dealing with all the points which have been raised because there were so many. As the hon. Member for Gainsborough indicated, this shows the importance of the Council. I appreciate the interest which hon. Members have taken in the Council and I thank them for the welcome which they have given to it. The hon. Member for Rye (Mr. Bryant Godman Irvine) suggested that there were many problems which the Council will have to settle. I do not belittle the fact that it will have a big job to do. We hope that we have appointed a Council which will deal with the problems, but I should not like anyone to think that we believe that it will be an easy job. Hon. Members have referred to the possibility of the proliferation of small co-operatives. The job of the Council will be to examine every scheme put forward and to deal with it as it sees fit. I am sure that the Council would not agree to anything that would lead to a proliferation of small co-operatives, which everybody fears. Reference has been made to the difficulty of existing co-operatives in raising capital. The Industrial and Provident Societies Act, 1967, gives them wider powers to raise capital. Several hon. Members raised the question of A.M.D.E.C. The hon. Member for Rye said that one of the greatest difficulties of co-operation was the lack of firm contractual agreement and the lack of discipline. The hon. Member for Torrington (Mr. Peter Mills) stressed that point. I could not agree more. A.M.D.E.C's period of office runs out in March next year and we will be considering its future. Although nothing has been decided, I think that there can be little doubt that some of its work is likely to be taken over by the Council. That, however, is for consideration. I should like, as other hon. Members have done, to pay tribute to the work of A.M.D.E.C. under its Chairman, Lord Nugent. As to the E.E.C., hon. Members will agree that we must carry on with our policy in agriculture. The previous Government's experience of what happened to applications to join E.E.C. should have made them ultra-cautious. To get on with our plans as we at present see them is the best way of proceeding. I would not wish to enter into an argument about joining E.E.C. or anything else. The hon. Member for Rye spoke about approval by the Council. It is true that applications must be approved by the Council, but there is no reason why the preliminary work should not be undertaken by a co-operative organisation acting as agent for the Council under paragraph 8 of the Scheme. The hon. Member said that the Minister could impose conditions. This is merely a provision of the Act in general terms. The Scheme sets out the conditions in more detail. I assure the hon. Member that we have no hidden conditions up our sleeve. The hon. Member made the point that the words "purposeful direction" were omitted from the Statutory Instrument. I would not like to suggest a reason for this except that they were probably words that lawyers do not like in a Statutory Instrument as distinct from a White Paper. We use the word "co-ordination". We want the Council, of course, to give purposeful direction. That is one of its jobs. The hon. Member for Gainsborough wanted assurance that co-operatives would not enjoy an unfair advantage over private merchants. He knows as well as I do that there is room for merchants. I subscribe to what the hon. Member said about the value that merchants have been to the agricultural community. As has been shown in the past, there is room for both. I do not think that merchants have anything to fear. The hon. Member made some remarks, which had nothing to do with the Scheme, about the collapse of the market, which it would not be in order for me to deal with now. The hon. Member for Maidstone (Mr. John Wells) was also worried about the effect on merchants. Again, I suggest that there is room for all these people in the business today. The provision that the Scheme shall come into operation after 28 days is designed simply to give the Council time, after it has been appointed, to get organised. The composition of the Council will be seen from the Answer when it is given later today. The hon. Member for Aberdeenshire, West (Mr. James Davidson) would like a separate scheme for Scotland. At the same time, he was worried about proliferation of schemes. He cannot have it both ways. He asked for a definition of "co-operative". It is defined fairly well in paragraph 2 of the Scheme. There cannot be retrospective payment. There are, of course, existing schemes to help co-operation, but, no doubt, many people are waiting for something better under paragraph (1) of the Scheme. I was asked about the benefits of pioneering. We are all in the position that we would not like to think that somebody had come along a year after we had gone into a scheme and got grant. On the other hand, we cannot make the benefits of pioneering retrospective, either. I thank the hon. Member for Torrington (Mr. Peter Mills) for his unstinted praise concerning the whole concept of the Council. I agree thoroughly with his emphasis on the importance of cooperation, groups and everything else. The hon. Member's only word of warning was about losses. The Scheme provides that any losses could be met in full, but I cannot emphasise too strongly that the use of this power would be exceptional. The Council will be part of the set-up and it will agree to schemes, but it might make mistakes, like everybody else. It could, for example, be that a set of producers might go into cooperation in production; if something wore to break down they might not be able to return to their own original system from which they made their living. I emphasise, however, that payment for losses would be exceptional. Responsible body that it will be, the Council will not allow people to go barging into schemes which it does not think will be successful. My hon. Friend the Member for Norfolk, North (Mr. Hazell) mentioned cooperation in the use of labour. I could not agree more that this could be a tremendous help in agriculture. With the right hon. Member for Grantham (Mr. Godber), my hon. Friend was worried that a scheme might simply be rejected in writing with no reasons given. There would, however, be considerable personal discussion with the bodies concerned before the right to object was exercised. I would be prepared to consider whether there is any reason to have a system of appeal. I have had a lot of discussion with people who have come to see me about co-operatives and in these cases I think that they get a fair idea of any objections before the final objection is put in writing. The hon. Member for Harwich (Mr. Ridsdale) asked whether support could be given to an existing co-operative. Any scheme that an existing co-operative puts forward under the Scheme would receive the same support as any other. Several other hon. Members were worried about this.The hon. Gentleman has made the point about not answering our questions concerning the membership of the Council because a Parliamentary Question is to be answered later today. I have looked at the Order Paper and notice that the Question was put down only last night. It seems an affront to put down the Question in that way and stop us pursuing the matter now.
Apart from that, the constitution of the Council does not arise under the Scheme.
The hon. Member for Norfolk, South (Mr. J. E. B. Hill) mentioned the Select Committee and the arrangement of Parliamentary business. Again, that is outside the Scheme.
The hon. Member mentioned A.M.D.E.C. and asked what was meant by a new system. That is something which the Council must decide, whether something is new in this country or outside it. I do not think that I have any more points to answer on the general picture and I hope that the House will now agree to the Scheme.12.28 p.m.
I have not as yet had an opportunity to intervene in the debate on a Scheme which is of considerable significance both to agriculture and to horticulture.
On a point of order. Would it be in order, Mr. Deputy-Speaker, for me to move, "That the Question be now put"?
No.
As I was saying before I was interrupted, the Scheme is of considerable significance to both the horticultural and the agricultural sides of the industry. We are living at a time when co-operation among all classes of industry and people is of the highest importance. We see it in the international sphere. We see it in the monetary sphere. It covers most spheres of national life. I am particularly glad to be able to speak for only a brief time to say how extremely pleased I am to be able to welcome the Scheme, which extends the sphere of co-operation to the agriculture and the horticulture industries.
One of my hon. Friends raised the important question of marketing and the presentation of produce, as organised by any co-operative association, and I would agree with him that this is probably one of the central—It being half-past Twelve o'clock, the debate stood adjourned.
Debate to be resumed Tommorow.
Television Reception (Galloway)
Motion made, and Questiton proposed, That this House do now adjourn.—[ Mr.Fitch.]
12.30 p.m.
I am sure the House will agree that television has become an important part of present-day life, both for education and entertainment. This is particularly the case in country areas. If one lives in Dairy or New Galloway, there are no picture houses, theatres or football grounds round the corner as in a big city, but with good television reception one can at least participate vicariously in the cultural and sporting activities of the nation. Television, therefore, has a big part to play in the well being of the country areas, where it stems depopulation and the over-concentration of population in the large cities.
My second point is that people living in Scotland want to see Scottish television. They want to see programmes like "White Heather Club" and to hear the Scottish news. News of the activities of the Rev. Ian Paisley coming from Northern Ireland is of limited appeal.Oh?
The B.B.C. has recognised this and has been most assiduous in getting television to most country districts.
Take the Highlands, for example. Orkney has its own 50 kilowatt transmitter and Zetland a powerful booster station at Bressay. Caithness and Sutherland and Ross and Cromarty have main transmitter at Thrumster and Rosemarkie, respectively. Skye and the Outer Hebrides are extremely well served down to a 25 watt relay station for the thousand or so viewers in the small town of Portree. Argyll, which is a comparable area to Galloway, has, or will shortly have, no fewer than seven relay stations at Oban, Campeltown, Kinlochleven, Ballachulish, Lochgilphead, Toward Point, and Port Ellen. Galloway has no transmitting station or relays at all, and none is planned for the next few years. I am told that there are about 10,000 TV sets in Galloway, and obviously they would not have been bought if they got no reception at all. In Stranraer, Ulster TV is quite well received, but no Scottish TV, except through the expense of a piped relay. In Newton Stewart only Ulster TV can be received, at a much lower strength than in Stranraer. In Dairy the signal from Ulster is so weak that reception is subject to every minor interference. No I.T.V. can be received at all. I believe that New Galloway, Carsphairn and Barrhill, just over the border in Ayrshire, are even worse. Along the coast of the Stewartry from Southerness to Kirkcudbright the position is much better as the high-powered transmitter at Sandale in the Cumberland hills can be received, and for the last two years there have been transmissions of Scottish programmes on Channel 6. Sandale is far from being the ideal place for Galloway, and the signal does not reach far inland. I have a letter from a constituent living near Kirkcudbright who writes:This letter sums up very well the lack of provision that the B.B.C. has made for Galloway. This constituent is better off than many others in Galloway, but, of course, in a month or so he will not have the pirates, and, as far as I know, nothing is being put in their place. In answer to a recent Parliamentary Question I was told that only 2·4 per cent. of the population of Scotland cannot receive B.B.C.'s Scottish services. As the population of Scotland is 5 million this represents about 1,20,000 people. The population of Galloway is about half this number and, allowing generously for those who may be able to get Sandale, it seems that about one-third of all the people in Scotland not served yet by the B.B.C. are in Galloway. My constituent is right in saying that this is a disgraceful state of affairs. In my hands at the moment I have reams of papers. Each paper is full of the signatures of residents in Galloway protesting against the bad service. There are many, many hundreds of names, and more to come. The petition is also supported by the local authorities, such as the Wigtownshire County Council and the town councils of Kirkcudbright, Newton Stewart, Stranraer, Gatehouse, Wigtown, and Whithorn. The Western District Council and the Presbytery of the Church of Scotland have also added their voices to the protest. What should be done, for the Government surely cannot ignore all these representations? I am told that there are two alternatives. The first is to put in a moderately-powered booster station round Wigtown to serve the whole of Wigtownshire and the Western District of the Stewartry. As the 12 kilowatt station at Divis in Northern Ireland radiates so well it would not need to be as powerful as this. I estimate that such a station would cost £30,000. There would also need to be a small relay station round Dalry to serve the Glenkens. Something like 50 watts would be sufficient, and would cost about £3,000. These stations would be connected to Sandale. The second alternative would be to move the equipment transmitting Scottish programmes from Sandale and set it up round Gatehouse of Fleet, where an excellent site should be easy to find, to serve all its present viewers and many more. The transmitter was put at Sandale to suit the B.B.C.'s convenience only, as they already had a station there. It has been a great disappointment, particularly when one contrasts its massive 70 kilowatt power to the much more effective 12 kilowatt Divis station. I know that reception can be tricky, but much could be found out if the B.B.C. sent a mobile transmission van to Galloway, carried out some research on the spot, and took an interest in the area. I have had a great deal of correspondence on this subject over the last few years, and I know the B.B.C. is fond of excusing itself by quoting the cost of early high-powered stations as being 1s. per head of population served, compared with low-powered relay stations whose capital cost may be as high as £5 per head, and arguing that this represents a huge measure of subsidy. It entirely forgets that it has been drawing a yearly revenue in licence fees from Galloway of £40,000 for many years, rising recently to £50,000, and only providing a very unsatisfactory service. This revenue from Galloway is being used to subsidise B.B.C. 2 in the industrial areas and colour TV experiments. I know that when colour TV is a reality there will be an extra licence fee to pay for receiving it, but at present, I repeat, it is being subsidised by areas like Galloway, and on present form they have no prospect of ever seeing it. I hope, too, that the Assistant Postmaster-General will not plead the difficulties caused by interference. One of the advantages of setting up stations in areas off the beaten track is that there is so little interference. Why can the pirate radio stations be heard so well there? In any case, one has only to look at a map of England, with relay stations dotted all over it like the spots on a child's face with chickenpox, to see that difficulties of channels and interference are greatly exaggerated. The small area between Brighton and Canterbury is admirably served, and there interference from foreign stations and ships in the Channel must be really formidable. If the B.B.C. can surmount technical difficulties like getting live pictures from countries as far away as Mexico and Japan in the recent programme "Our World" I cannot believe that getting reception to Galloway is so very difficult. I hope the Assistant Postmaster-General will agree, and have something pleasant to tell us in his reply. As I have already explained, the cost would be considerably less than the licence fees paid for one year."The only radio stations we receive perfectly are Radio Caroline and Radio Scotland, both pirates; and on TV our programmes come from Manchester (North) and I.T.V. from Ulster. The only B.B.C. radio news we can receive fairly well is Welsh. What a disgraceful state of affairs in this day and age, especially now we have a Ministry of Technology in addition to the Post Office and the B.B.C."
12.40 p.m.
I support the remarks of the hon. Member for Galloway (Mr. Brewis), who put his case ably, concisely and persuasively. My constituency, certainly in the country areas, adjoins Galloway, and I therefore fully endorse what the hon. Gentleman said about the hardship that is being caused to the agricultural community.
Considerable dissatisfaction and discontent has been expressed by farmers and others living in the Barrhill district because they do not get the advantages that accrue to adjoining districts. Farmers in these outlying areas are cut off from the benefits and amenities of town life. The advent of radio was of great service to these lonely homesteads, particularly in places where, until recently, there was no electricity supply. Now that they have electricity they still find themselves cut off from the educational, political and other benefits of television, which are particularly valuable to people who live far away from town life and who often find it difficult to get newspapers on the day of publication. This applies not only to the inland and farming areas but to seaport villages and places like Ballantrae. I recently received a persuasive request from a retired gentleman who, speaking on behalf of the inhabitants of Ballantrae, asked for something to be done to improve the television service to Ballantrae and to Lendalfoot and Girvan on the South Ayrshire coast. We are often told that we can obtain the benefit of Northern Ireland television, but I am not sure whether that is regarded as a benefit by certain people who live in my constituency. It is difficult for politicians like myself and the hon. Member for Galloway to go to Ulster to address our constituents on television. I appreciate that certain technical difficulties exist, but I hope that the Assis- tant Postmaster-General will give us more sympathy than we have had in the past.12.42 p.m.
The House is indebted to the hon. Member for Galloway (Mr. Brewis) for raising the question of television coverage in his constituency. We are also grateful to my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) for lending his voice to the remarks of the hon. Gentleman. Though their concern is with the question as it affects their constituencies, it must inevitably be part of my reply to set the particular case in the general context of television coverage over the country as a whole.
The task of providing the widest television coverage is an exercise in frequency planning. As hon. Members recognise, planning the use of frequencies—which are no respecters of national, let alone of constituency, boundaries—must be tackled comprehensively. The broad objective must be so to use the frequencies available for television—and they are a very scarce commodity—as to get as many separate services as possible for the country as a whole. Having looked at the broad objective, let us look at the situation in Galloway. The area in question comprises two counties; Kirkcudbrightshire and Wigtownshire. The population is about 58,000. B.B.C. 1 television is brought to some parts of the area by transmissions from Sandale, on two different channels; and to others from Divis in Northern Ireland. Similarly, the service of independent television is broadcast from the transmitter at Caldbeck, and from Black Mountain in Northern Ireland. The hon. Member for Galloway implied that the population coverage of 91 per cent. attained by B.B.C. 1 compared unfavourably with that attained by the service over the country as a whole—that is, 99·5 per cent., and, with that for Scotland, 97·6 per cent. As the hon. Gentleman recognises, the comparisons are not of like with like. The population of Galloway is relatively thinly scattered over a large and hilly area. It is divided, for the most part, into small communities, located in the valleys. This is precisely the most difficult kind of area to serve. The hilly terrain screens the valleys from the signals radiated from the main transmitting stations. The population is not concentrated into one or two big centres, such as could be served by a low-powered station so sited as to pick up the main transmissions and beam them into one or two valleys. Yet, despite the difficulty, the number of people who cannot get B.B.C. 1 number about 5,000. We have to reckon with these circumstances in comparing the coverage attained by the television services in Galloway with that attained generally. B.B.C. 1 is available in the hon. Gentleman's constituency to more than 90 per cent. of the population.Is the hon. Gentleman referring to B.B.C. programmes from Scotland, or is he including in that figure programme reception from stations like Ireland and Wales?
I am referring to B.B.C.1 programmes being transmitted to Scotland. As I was saying, B.B.C.1 is available in the hon. Gentleman's constituency to more than 90 per cent. of the population, and independent television to 60 per cent.
The hon. Gentleman has not, of course, suggested that in every part of the country, no matter how divided up, the percentage coverage must be the same. Such a suggestion would ignore the realities with which the broadcasting organisations are faced—the extreme scarcity of frequencies and the question of cost. I will comment on these realities later. For the moment, I ask the House to note that equality of coverage everywhere would imply, in effect, 100 per cent. coverage. We would all like to see that, if it were possible, but it is not a practical possibility. I ask the House to note, too, that the overall coverage attained by B.B.C.1 and independent televisions stands comparison with that of any other television service anywhere. In France, the first national television network has achieved a population coverage of 97·5 per cent., and in Western Germany, 95 per cent. The hon. Gentleman's main criticism was, however, addressed to another point. The transmitters which broadcast B.B.C.1 in Scotland can, and often do, transmit not the general programme being seen in England, but separate items designed to appeal to the distinctive tastes and interests of the Scots. This "opting-out", as it is called, is done only at transmitting stations serving only Scottish audiences. If a station serves audiences in England and Scotland, the former would lose programmes of general interest and have instead programmes with a specially Scottish appeal. I am not saying that no Scottish programmes can be of general appeal. I have watched some of them on B.B.C.1 in my own home and have been most impressed by them. I am saying that, in this situation, it will normally be the United Kingdom programme, if I can call it that, which will be transmitted. Galloway is not wholly served by a Scottish station. One-quarter of the population is served by the B.B.C.'s station at Sandale, in Cumberland. The transmissions from Sandale on Channel 6 carry the Scottish opt-out programmes. Because of the lie of the land, the transmissions do not reach far west into Galloway. As the hon. Member said, most of the people living in the west get B.B.C.1 from the station in Divis, in Northern Ireland. This station's main function is to serve audiences there, so it will not carry Scottish opt-outs. As the hon. Member pointed out, it carries the opt-outs for Northern Ireland. This is the essential criticism; that people in the west of Galloway get B.B.C.1 from Northern Ireland, and so do not get the Scottish opt-outs. For completeness, may I note in passing that people served from Sandale, and within range of transmissions on Channel 6 and Channel 4, can, of course, choose between them. These people have an extra choice, and one which is not generally available. They can have the opt-out programme, or the general United Kingdom programme. The position with regard to independent television is broadly similar, to the extent that parts of Galloway are served by the I.T.A. transmitter in Ulster. As I have already mentioned, the particular case has to be set in the whole context of frequency planning, and the broad objective must be to use the frequencies available as intensively as possible. One can envisage frequency plans designed to secure literally complete population coverage, and to provide that no one in Scotland would be unable to get the opt-out programmes. But such a deployment would absorb frequencies which, on the basis of our present planning, can be used to provide additional services of wide population coverage. This is the broad balance which has to be drawn. Perhaps I should elaborate on this a little. Because there are only a limited number of frequencies available for television broadcasting, to provide as many services of near-national coverage as possible, any one frequency has to be used more than once. At the same time, the use by more than one station of the same frequency involves the risk that they will interfere with each other, and reception of the transmissions from both will be impaired. It is also necessary for the same reason, to limit the power at which the transmissions are radiated. The hard fact is that the development of television in the very high frequency band in the United Kingdom as a whole has now reached the stage where the frequencies available are being so intensively used that, even if used with low-power transmitters, they cannot be further deployed without the risk of causing interference to existing services. The B.B.C. has already opened 55 low-power relay stations for B.B.C.1 in the United Kingdom, and a further 30 are planned. A total of 30 V.H.F. stations is planned to bring B.B.C.1 to Scotland, and of these 25 are already open. The I.T.A. has already opened eight relay stations in the United Kingdom, and another 13 are planned. Three relay stations are open in Scotland, and another three have been authorised for Scotland. There is also the economic factor. What is true of Galloway is true of other parts of the country which are mountainous and relatively thinly populated. People tend to live in small, widely separated communities, mostly in the valleys. A very large number of low-power relay stations would be required if a broadcast television service were to be provided literally for each and every community. This would make the provision of a television service very expensive in relation to the number of people for whom it was provided. I do not think it is sufficiently realised that the viewer in the remoter areas of the United Kingdom is, in fact, already being sub- sidised heavily by the viewer in the more densely populated districts. The hon. Member has referred to colour television, and complained that it will not be introduced for many years in Scotland, but that the viewer in Scotland will have to pay in his licence fee for the enjoyment of it by viewers in England. I am glad to clear up this misunderstanding. The colour service is due to start on B.B.C. 2 generally at the end of this year, when it will be available to almost half the population of Scotland. I am referring, not to colour transmissions which are being made as and where the opportunity occurs during the countdown period—of some months—before the service starts, but to the service proper. Moreover, as we said in last December's White Paper on Broadcasting, we do not think that the cost of colour programmes, which are likely at the outset to be available only to a small minority of viewers because of the cost of receivers, should fall on viewers in general. Accordingly, a supplementary fee of £5 will be required from those equipped to receive colour programmes. I have tried to set the particular case of Galloway in the context of frequency planning and station provision, considered as a comprehensive whole. In doing so, I have endeavoured to show the House some of the difficulties which face the B.B.C. and the I.T.A. in serving small communities. As I have said, the problem is not confined to Galloway. Similar difficulties are experienced in other parts of Scotland and in Wales, and parts of England, more especially in the north. I recognise that there is, for Galloway, the additional source of complaint that viewers served by the B.B.C. from Divis cannot get the Scottish opt-out programme, but get those for Ulster. In the same way, viewers getting independent television transmissions from Black Mountain will get the programmes of Ulster television. I would ask the hon. Gentleman to recognise that this is part of the general problem of extending coverage as far as is feasible. I have shown that we have already done much better than France, or Germany, and we must, I think, accept the fact that 100 per cent. coverage is not something which we can reasonably expect. We should seek to obtain if it is possible, but the last fraction of one per cent. would require an altogether disproportionate expenditure both of frequencies and of resources. I sincerely hope that because of this debate hon. Members will realise what is being done to get coverage for the greater part of the population of this country, even if it is not possible to achieve a 100 per cent. coverage.The debate having been concluded, Mr. DEPUTY SPEAKER suspended the Sitting until half-past Two o'clock, pursuant to Order.
Sitting resumed at 2.30 p.m.
Private Business
Guildford Corporation Bill
Lords Amendments considered and agreed to.
Kingston Upon Hull Corporation Bill Lords
As amended, considered; to be read the Third time.
Rhymney Valley Sewerage Bill Lords
As amended, considered; to be read the Third time.
Oral Answers To Questions
Board Of Trade
Engineering Industries (American Capital)
5.
asked the President of the Board of Trade what representations have been made to him by the Confederation of Shipbuilding and Engineering Unions on the need to examine the increasing penetration of American capital in the United Kingdom engineering industries; what reply he has sent; and if he will make a statement.
I have received no representations. The Government's policy toward foreign investment in Britain is well-known.
Is my right hon. Friend aware of the great concern relating to the difficulties of trade union representations within these firms; to the brain drain, including loss of British designers, and such problems as the situation arising within the Ford Motor Company, as a result of the proposed integration between Ford Europe and Ford Germany?
As my hon. Friend knows, in many cases of foreign investment in this country where new projects are started new assets are created, and we welcome this. On the other hand, we have powers under the Monopolies and Mergers Act, if necessary, to examine and, in the last resort, to prevent the acquisition of control.
Will the right hon. Gentleman explain to his hon. Friend that this is a direct result of the change in the double taxation arrangement which has made it more economic for an American company than for a British company to invest in this country?
That is another question.
Chipboard (Imports)
6.
asked the President of the Board of Trade what progress has been made in discussions with East European countries on the prices of imports into the United Kingdom of chipboard.
I am not yet in a position to make a statement.
As it is difficult to assess the size of export subsidies from Communist countries, and as it is several weeks since the Government undertook to start discussions with the countries concerned, will the right hon. Gentleman give high priority to this matter, because the present situation is damaging not only to our chipboard industry but also to our forestry industry?
Yes. We are conducting these discussions. I appreciate the importance of the point made by the hon. Gentleman.
94.
asked the President of the Board of Trade whether he has yet opened discussions with Eastern European countries with regard to the possible dumping by them of chipboard supplies into this country with damaging effect to the British chipboard manufacturing industry, and with what result.
I have nothing to add to the Answer given today to the hon. Member for Moray and Nairn (Mr. G. Campbell).
Is the right hon. Gentleman aware that that Answer was very unsatisfactory indeed and that this matter is doing great damage to the forestry industry in Scotland where already large factories have closed down?
As I said, we are discussing this question with some of the exporting countries concerned.
95.
asked the President of the Board of Trade whether he has now completed his investigation into the prices of chipboard imported into this country, and with what result.
The prices of particle board imported from Eastern Europe are particularly low, and we are discussing this with the countries mainly concerned. Although imports from most other sources are cheaper than British chipboard, we have no evidence that they are dumped.
Would the right hon. Gentleman consider making an Order rather than carrying on endless discussions?
We are discussing this, but, as the hon. Gentleman knows, we have to be satisfied about certain facts before we are entitled under the law to make an anti-dumping Order.
Will the right hon. Gentleman treat this with much greater urgency than he has done so far, in view of the important bearing that it has on the Scottish economy?
I realise that there are strong feelings about this and I am giving it all the urgency that it warrants.
Newbattle Industrial Estate
10.
asked the President of the Board of Trade what steps he intends to take to attract new industry to the Newbattle Industrial Estate following the closure of Lingerwood Colliery, Midlothian.
The facilities for new industry at the Newbattle Industrial Estate will be put forward on all suitable occasions to industry seeking sites in Scotland.
I thank my right hon. Friend for his reply, but does he realise that the Newbattle Estate is a very good industrial estate and that when a pit closure occurs in this area jobs are lost? Will my hon. Friend try to assist as much as possible in this matter?
The Newbattle Estate is one of the best in the country and we want to do all we can to see that industrial development goes on there. I am glad to say that the unemployment following the closure of Lingerwood Colliery did not turn out to be as serious as we first imagined it would be.
Advance Factories (Scotland)
11.
asked the President of the Board of Trade how far he took into account the anticipated contraction of coalmining in Midlothian before he announced plans for the latest advance factories in Scotland.
In drawing up the latest programme of advance factories for Scotland, my right hon. Friend took into account all the circumstances of the development areas, including the need to build factories quickly to provide opportunities for employment where these were most needed.
Is my right hon. Friend aware of the announcement made by the Minister of Power last night? Is he further aware that it will have a rather ominous ring for some miners in Midlothian? Was there consultation between his Department and the Ministry of Power on this? Has my right hon. Friend any point to put to the House on the matter?
There was consultation. We have a pretty good idea what the situation will be following the further mine closures coming along, and I can assure my hon. Friend that we will do all that we can to get new industry into the area. He will be aware that the Midlothian Council is itself arranging to build an advance factory on the Newbatile Estate.
Detergents (Prices)
25.
asked the President of the Board of Trade what discussions have taken place with the detergent manufacturers arising from the agreement concluded with them on a low price range of products; and if he will initiate talks with them to clarify their new advertising policy in the light of the Monopolies Commission recommendations to cut the prices of their products by one-fifth.
My Department is in regular touch with the manufacturers about the operation of the agreed arrangements. These leave the manufacturers free to advertise their products as they think fit provided that they make fully available the alternative brands at reduced prices.
Is my right hon. Friend aware that although the agreement which he concluded with the detergent manufacturers after the Monopolies Commission's Report seemed a useful compromise, it now seems that the low-priced powder is not keeping up to the standard which was promised him in those discussions? Will he look into this a little more closely?
My information is that both the companies concerned have put out some powders at a reduced price and I have no evidence to suggest that the quality has been altered in a way inconsistent with the agreements reached.
This is very important. Would the right hon. Gentleman not agree that he must immediately contradict any suggestion by his hon. Friend that these companies are not complying fully with the terms of their agreement with the President of the Board of Trade? Will he do his utmost to correct any misapprehensions which may be caused?
I said that I have no evidence that this is true, and that is all that I can say at the moment.
Association Of British Travel Agents ("Operation Stabiliser")
26.
asked the President of the Board of Trade what talks have taken place with the Chairman of the Association of British Travel Agents following his request for further steps to be taken for the protection of holidaymakers; and what adjustments and additions are required to "Operation Stabiliser" in the light of this request.
I have not asked the Association to take any such further steps, as I informed my hon. Friend on 14th June A.B.T.A. are keeping us informed of its ideas and possible extensions of "Operation Stabiliser".[Vol. 748, c. 77.]
Is my hon. Friend aware that those who deal in other people's holidays are handling a precious commodity? Is he further aware that the Chairman of the Association of British Travel Agents in recent weeks has expressed some disquiet about happenings in the trade, and that, while the Association has done an excellent job in trying to eliminate the bad travel agents, there nevertheless remains quite a big job to be done during the present summer and for the future?
I think that I accept everything which my hon. Friend has said. A.B.T.A. itself is at the moment considering the possible extension of some changes.
Will the hon. Gentleman give every encouragement to the efforts of A.B.T.A. to protect holidaymakers, as several Scottish Members have experience of their constituents with one particular company having to pay twice and being booked to come back home in a plane which was not paid for by the firm?
Yes, I will.
Reverting to my hon. Friend's original Answer, is he satisfied with "Operation Stabiliser"? Does he think that everything possible is being done to protect the holidaymaker up to now?
I could not say that everything possible is being done, which is why the scheme is being looked at again to see what possible extensions can be made, but "Operation Stabiliser" marked a very big advance.
World Commodity Agreements
30.
asked the President of the Board of Trade (1) whether he is aware that world commodity agreements represent one of the most useful forms of aid to developing countries; and what he is doing to press for further negotiations on this matter;
(2) in view of the need to safeguard Commonwealth export markets when Great Britain enters the European Economic Community, what steps Her Majesty's Government have taken since the United Nations Commission for Trade and Development Conference in 1964 to secure world commodity agreements.
I agree that world commodity agreements can, in appropriate cases, be beneficial to developing countries. We are members of all the existing agreements; and we have participated actively in the consultations which we hope will lead to agreements for cocoa and sugar. Our application to join the European Economic Community does not affect our desire to see such agreements concluded.
As Britain has always provided one of the best markets for the developing countries, would the right hon. Gentleman say what proposals he has to make for U.N.C.T.A.D. 2, the conference which starts in February, and, secondly, what preliminary consultations and conferences within the Commonwealth are being held as a preparation for that conference?
We are in consultation with the Commonwealth countries on this matter. The two main proposals which we hope to back at that conference are for what is called supplementary finance on the one hand, and generalised preferences on the other. I hope that we shall get support from the other developed countries.
When can we expect the promised White Paper from the right hon. Gentleman's Department on the effects on our export trade of joining the Common Market? In view of Press reports that the right hon. Gentleman's colleagues have apparently taken exception to his first draft, will he make an early statement?
Those reports are almost entirely without foundation.
Imported American Tobacco Leaf
32.
asked the President of the Board of Trade what steps he takes to ensure that tobacco leaf imported from the United States of America has not in the course of production been subjected to noxious chemical sprays.
None, Sir. I am satisfied that the control exercised by the U.S. Department of Agriculture, together with the vigilance of the representatives in America of the British tobacco manufacturers, affords a sufficient safeguard to consumers in this country.
Does the right hon. Gentleman recollect that when we were im- porting tobacco from Rhodesia we got an assurance that that tobacco leaf had not been subjected to noxious sprays? Cannot we ask our American friends for a similar assurance?
I understand that the sprays to which, I think, the right hon. Gentleman refers tend to lower the value of the leaf to the manufacturer rather than to contaminate it. But these matters are always under supervision, and we are satisfied, for the reasons which I gave, that there is no detriment to the British consumer.
Northumberland And Durham Travel Association
37.
asked the President of the Board of Trade if he will consider making a further contribution to the economic and social prosperity of the Northern region by providing grant aid to the newly-established Northumberland and Durham Travel Association.
The British Travel Association will contribute up to £2,500 towards an overseas promotion campaign to be conducted this year jointly with the Northumberland and Durham Travel Association. Representatives of the two bodies will be meeting shortly to talk about the scope for research that would be of common interest.
While expressing gratitude for that reply, would my hon. Friend agree that the northern region has much to offer the tourist and that the seven planning authorities responsible for the setting up of this organisation are to be congratulated on their initiative? My hon. Friend mentioned £2,500. Why should the Northumberland and Durham Travel Association be at a disadvantage with the Scottish Tourist Board, which received £75,000, and the Welsh Tourist Board, which received £45,000?
I am delighted that this organisation has been set up. I entirely agree with my hon. Friend that this area has a great deal to offer. This is just a start.
Annfield Plain (Employment)
38.
asked the President of the Board of Trade what is being done to bring new employment to the Annfield Plain area of County Durham, where 300 to 400 miners may become redundant consequent upon reorganisation of the Morrison Busty Colliery.
Efforts to bring new industry and employment to the area, which have already achieved considerable success, will be continued.
But is my right hon. Friend aware that two advance factories in this area—one at Hare Law and one approaching completion at Castleside—are untenanted? Will he treat the matter of finding tenants as one of urgency?
We are doing so, and we hope to obtain suitable tenants for the factories before very long.
In view of the unfortunate unemployment among redundant miners, may I ask what has become of the Government's promise of full employment for everybody?
That is precisely what we are trying to achieve. In the area to which my hon. Friend was referring, we must quickly provide about 1,500 jobs. That is the challenge to us, and we shall meet it.
Soviet Motor Car Industry (British Capital Equipment)
41.
asked the President of the Board of Trade what contracts have been gained recently, or are in course of negotiation, to supply British capital equipment to the Soviet motor car industry.
I understand that contracts amounting to nearly £20 million for equipment for the Soviet motor vehicle industry have been placed, or are under negotiation, with British firms.
Is my right hon. Friend aware that the Soviet authorities are planning to quadruple their motor car production by 1970 and that, in this connection, they have placed very large contracts in Italy and France? While welcoming my right hon. Friend's reply, may I ask him if he agrees that there is a great potential here for British exports?
I entirely agree with the importance of this matter. I have spent a lot of time discussing these issues with the Soviet trade authorities and have put their motor vehicle enterprise in touch with both manufacturers of motor vehicles and components in this country. I believe that orders worth £20 million have already been placed or are under negotiation, and this is quite a good start.
Is there any difference in the credit terms which we can offer to the Soviet Union as compared with the terms offered by the French and Italians? Is this making any difference to the number of orders we are getting?
No, Sir. We have made a particularly favourable offer to the Soviet Union and, as the hon. Gentleman probably knows, it allows orders to aggregate in a single total credit, to put it briefly. I believe that our terms are competitive with, if not better than, those of our rivals.
Can my right hon. Friend make any estimate of how long it will be before such orders are placed with firms based in the northern region?
I do not think that the Soviet Union, any more than I, discriminates between the northern and other regions.
Italian Refrigerators (Imports)
47.
asked the President of the Board of Trade if he will take steps to limit the importation of excessive numbers of cheap Italian refrigerators and to encourage British manufacturers to reduce the prices of refrigerators made in this country.
The Board of Trade is in touch with the British refrigerator industry concerning the preparation of an application for action under the Customs Duties (Dumping and Subsidies) Act, 1957. I think that market conditions will, of themselves, ensure that prices are kept to the minimum.
Will my right hon. Friend pursue this matter very energetically in connection with the Anti-Dumping Regulations in the Kennedy Round? Would he care to say what would have happened in similar circumstances had we been in the Common Market? In that event, could not Italian refrigerators and other manufactured goods come in and compete unfairly and interfere with British manufacturers?
If we join the E.E.C. there would be a nil tariff on refrigerators from Italy, but the Anti-Dumping Regulations would remain exactly the same.
Manufactured Imports
48.
asked the President of the Board of Trade what proposals he has for reducing the rising trend of manufactured imports into the United Kingdom; and if he will make a statement.
The Government are pursuing a wide range of policies designed to increase competitive home production in order to save imports and to expand exports.
That is very interesting, but does my right hon. Friend realise that imports in the first six months of this year were 5 per cent. higher than in the first six months of 1966, despite economic stagnation at home? Is he aware that much of these imports were in manufacturing? How long is this to go on? Will not my right hon. Friend take steps now to introduce selective Import controls?
I believe that the figures of imports to date confirm what I have always said; that the effects of the import surcharge were much larger than hon. Gentlemen opposite were willing to admit. As to the present situation, I do not believe that we should place too much emphasis on figures relating to only a few recent months.
Could the right hon. Gentleman say—and perhaps name two or three of them—what are the wide range of measures which he mentioned?
One is the work of the little N.E.D.C.s, of which there are very many —certainly more than two or three. I do not think that I need give the House the whole list.
Is my right hon. Friend aware that while imports of raw materials and machinery in the earlier part of this year went down compared with similar periods in previous years, imports of consumer goods have gone up? Is not this a most dangerous and unsatisfactory trend?
This is, no doubt, due to the fact that there has been some falling off in private investment in the present year, and this affects imports as well as home production.
Can the right hon. Gentleman say which of these many measures has effective application to the Lancashire textile industry?
The most obvious is the survey into productivity and efficiency in the industry which, as the hon. Gentleman presumably knows, is now being conducted by the Textile Council.
Is it not dangerous for the right hon. Gentleman to try to whitewash the effects of the surcharge? Was not one effect in respect of exports to the E.F.T.A. countries, an effect much greater than he is prepared to admit?
No, Sir.
Would my right hon. Friend care to publish the facts and figures showing if any significant progress has been made by the Government in import saving industries?
I will certainly consider that suggestion. This is, of course, determined by the whole progress of the little N.E.D.C.s, the work of the Ministry of Technology, the investment grants and a whole range of other measures.
Manufacturing Investment
54.
asked the President of the Board of Trade what further steps he is taking to stop the decline in manufacturing investment in 1967, following the recent survey by his Department of the investment intentions of private industry.
Since the replies to the recent survey were received I have announced a further acceleration in the payment of investment grants. I am confident that this, together with the other measures the Government have taken, will have a favourable effect on investment plans.
Notwithstanding these improvements, is my right hon. Friend aware that investment in the private sector this year will be almost 10 per cent. down on last year and will be the lowest figure since 1961? Should we not now be taking steps to set up a national investment board and resume economic expansion on the lines suggested in the statement which 70 of his hon. Friends have signed recommending such proposals?
We have already had this year three reductions in Bank Rate, an extension of the rate of investment grant and two decisions to accelerate payments. These have been quite major contributions to sustaining private investment.
Is the right hon. Gentleman aware that there is a close connection between profitability and investment propensity? Has he observed, from reports in the newspapers, that profits are still falling?
Yes, Sir, but if we were simply to expand the home economy at the rate at which it was expanded by the Conservative Government in 1964 we would find ourselves with a very wide balance of payments deficit.
Weights And Measures (Consumer Protection)
61.
asked the President of the Board of Trade whether, in view of the proceedings of the recent conference of the Institute of Weights and Measures, details of which have been sent to him, and especially the statement by the Chief Inspector of Weights and Measures, he will take action to protect the consumer in this particular field.
As my right hon. Friend stated in the Answer he gave on 28th June to the hon. Member for Monmouth (Mr. Anderson), he has already initiated consultations with the manufacturers of detergents on his proposals for requiring these products to be pre-packed only in specified quantities.—[Vol. 749, c. 102.]
Does my right hon. Friend recollect that in his speech to this conference, Mr. Norris, the Chief Inspector, pointed out that the biscuit manufacturers, for instance, had marketed no fewer than 492 different kinds of packages and sizes of biscuit, and that one soap and detergent manufacturer alone had 19 different sizes and weights? Is he aware that it is impossible for a housewife to keep track of these things, and that here lies one of the major causes of the concealed price increases that are making a nonsense of the prices and incomes policy?
Tremendous difficulties ar involved in getting standard packaging for biscuits. I quite agree with my hon. Friend's views, but we have run into another complication. We are seriously considering, when we come to the marketing of quantities—where quantities can be marked—whether they should be marked in metric measurement or in Imperial weights. This is a problem we think can better be solved by marking in metric weights. If customers here accept this it is much easier for us to do so than to have Imperial measures.
Imports (Suez Canal Closure)
63.
asked the President of the Board of Trade what estimates he has made of the effect of the present blockage of the Suez Canal to shipping on the import to this country of essential raw materials apart from oil.
There should be only a temporary interruption to these imports, about one-sixth of which normally come through the Canal.
Is my right hon. Friend aware that several leather firms in my constituency are seriously embarrassed by the delay in getting skins to this country? Is he further aware that almost 100 per cent. of the output of these firms goes to our export business?
If my hon. Friend has particular difficulties of this kind in mind, I would be very glad to help him if he would give me information about them. In general, fortunately, only about one-sixth of these materials come through the Canal.
Can the President of the Board of Trade give any indication on the general effect on prices, apart from oil?
No, Sir. Certainly not without notice.
Grand National
71.
asked the President of the Board of Trade whether he will estimate the benefit to the United Kingdom balance of payments of the Grand National at Aintree.
No, Sir.
Will the right hon. Gentleman take steps to try to form an estimate in this important matter, first, as to income from tourists attending this great steeplechase, and, second, the influence on bloodstock exports, which is dominated by the running of this steeplechase; and of the adverse effect if it were discontinued?
I well understand the hon. Member's interest in the matter, but I think that he will agree, in view of the interest he takes in trying to stop wasteful expenditure, that an exercise of this kind would involve our trying to find out how many foreign visitors go to Aintree, the prize money that might go overseas, as a couterbalancing factor of expenditure, gambling, and the blood-stock sales, when, in the end, the effect on our balance of payments would be very small, indeed.
Would my right hon. Friend draw to the attention of the lady who owns the racecourse and wishes to sell it the view of the hon. Member for Worcestershire, South (Sir G. Nabarro)?
Investment Grant Applications (Scotland)
77.
asked the President of the Board of Trade what was the value and number of applications for investment grants received from firms in Scotland to the latest available date.
A total of 3,081 applications to the value of £45½ million had been received by 7th July, 1967.
Can the Minister of State tell the House how that information compares with the rate of investment grant the Department expected, and with the rate of investment allowances over a similar period while that system was in operation?
It is difficult to give an estimate in reply to the last part of the hon. Member's supplementary question. On the first part, in the first quarter, applications were running below what we estimated and, at the present time, they are running much above what we estimated. We believe that one of the reasons is the smaller firms who make only one application a year to cover a whole range of investments for which they have provided.
Private Manufacturing Investment
78.
asked the President of the Board of Trade if he will publish a three-yearly running average of the level of private manufacturing investment in the United Kingdom for each period of three consecutive years since 1945 at constant 1945 prices.
With permission I will circulate the available information in the OFFICIAL REPORT. The figures show that, taking one year with another, and despite cyclical movements, manufacturing investment has increased fairly steadily since the war, and that the annual average has increased over the period 1948–1966 by some 90 per cent.
Could the President of the Board of Trade confirm that by the end of 1968 we shall probably have experienced the longest and most profound slump in private manufacturing investment since the war? Is this a consequence of the change-over to the system of investment grants, or a consequence of the total failure of Government policies?
The figures show that during the period from 1964 to 1966 the annual average of capital investment was higher than in any similar period since the war.
Following is the information:
Manufacturing industry's capital expenditure* †
| ||
Annual average in £ million, expressed in estimated 1948 prices
| ||
| 1948–50 annual average | … | 388 |
| 1949–51 annual average | … | 430 |
| 1950–52 annual average | … | 451 |
| 1951–53 annual average | … | 449 |
| 1952–54 annual average | … | 448 |
| 1953–55 annual average | … | 470 |
| 1954–56 annual average | … | 518 |
| 1955–57 annual average | … | 568 |
| 1956–58 annual average | … | 590 |
| 1957–59 annual average | … | 579 |
| 1958–60 annual average | … | 587 |
| 1959–61 annual average | … | 644 |
| 1960–62 annual average | … | 691 |
| 1961–63 annual average | … | 680 |
| 1962–64 annual average | … | 659 |
| 1963–65 annual average | … | 681 |
| 1964–66 annual average | … | 731 |
*Includes public as well as private sector investment in manufacturing industry. | ||
| † Figures for 1955 and later years are on a business unit basis (i.e. relating to the whole of the individual manufacturing businesses, and including some non-manufacturing establishments): for earlier years, the figures have been adjusted proportionately from an establishment basis to a business unit basis. | ||
European Economic Community (Textiles)
80.
asked the President of the Board of Trade if he will give an assurance, that in the negotiations for British entry into the European Economic Community, he will ensure that textiles from Common Market countries will not be admitted into the United Kingdom until reciprocal arrangements have been agreed to for the admission of British textiles into the Common Market.
This would follow from the application of the provisions of the Treaty of Rome.
Is the President of the Board of Trade aware that recently the deputy-head of the cotton employers said that this would be the fate of Lancashire exports and that European manufacturers were pressing the same point? Is that correct?
Of course, the tariff arrangements under which one would under normal circumstances enter an agreement with the E.E.C. would be reciprocal and operate in the same way in both directions.
What did the right hon. Gentleman mean in reply to my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) when he said earlier that the reports of his alleged White Paper were almost without foundation? Is there a draft of such a paper in existence and when is it to be published?
I meant exactly what I said. The hon. Member appears to be just as gullible as his hon. Friend.
The Minister is escaping the question. Following on the Question asked by the hon. Member for Salford, East (Mr. Frank Allaun), is a White Paper to be published on the implications of joining the Common Market?
The hon. Member ignores the Answer, and the question he now asks is a different one from that on the Order Paper.
British Exports (German Democratic Republic)
81.
asked the President of the Board of Trade if, in view of the fact that the German Democratic Republic is now Great Britain's fourth largest export market in Eastern Europe, and in view of the recent visit of the German Democratic Republic's Minister of Foreign Trade to West Germany, he will now invite Herr Soelle to visit Great Britain with a view to further improving British export trade to the German Democratic Republic.
75.
asked the President of the Board of Trade whether, in view of the agreement between Her Majesty's Government and the West German Government not to recognise the German Democratic Republic and not to issue entry visas to East Germans, and in view further to the fact that Herr Horst Soelle, the Minister of Foreign Trade for the German Democratic Republic, together with his deputy, Herr Heinz Behrendt, visited the Hanover Fair last May, he will now invite these Ministers to visit Great Britain.
Her Majesty's Government do not recognise the East German régime, and cannot therefore issue invitations to its members to visit this country.
Is not that a silly reply which my right hon. Friend has given, in view of the facts stated in my Question? The fact is that we are increasing our trade with the G.D.R. and I am darned thankful that we are. If the West Germans can invite the Minister of Foreign Trade of the G.D.R., why on earth cannot we? Did not someone say that we should not allow political prejudices to interfere with our trade?
There is a saying that those who do not want to have silly answers should not ask a certain type of question. I assure my hon. Friend that through negotiations between the business organisations in both countries, our trade with East Germany is increasing at a satisfactory rate and is also very satisfactory.
Investment Grants (Yorkshire And Humberside Regions)
85.
asked the President of the Board of Trade what would be the estimated additional cost if investment allowances in the Yorkshire and Humberside Region were increased to half way between grants applying to development areas and to non-development areas as proposed to him by the Yorkshire and Humberside Regional Economic Planning Council.
84.
asked the President of the Board of Trade what would be the estimated additional cost if investment allowances in the Yorkshire and Humberside Region were increased to half way between grants applying to development and non-development areas.
I assume my hon. Friends are referring to investment grants.
A precise estimate is not possible; but at current levels of investment the cost would be of the order of £10 million a year.Is the Minister aware that when he came to Hull we were all delighted to see him in the flesh, but his statement to industrialists and others did not please us? Will he look at this matter again, because in our position we have hard-core unemployment on the North Bank of the Humber compared with the South and the Midlands?
I was glad to meet my hon. Friend in Hull and to listen to all that he had to say.
Industrial Development Certificates (North Humberside)
86.
asked the President of the Board of Trade how many industrial development certificates were applied for, granted and refused in the Hull area of the Yorkshire and Humberside Region for each year from 1955 to 1966.
Between 1956 and 1966 263 industrial development certificates were issued in the North Humberside sub-Division of the Yorkshire and Humberside Region. The figures for the individual years will be circulated in the OFFICIAL REPORT. I regret that figures are not available for 1955. Statistics of the number of applications received and of refusals of I.D.C.s are not published.
Will my right hon. Friend consider that it is not enough to give certificates when they are asked for when firms come to the North Bank of the Humber, when under the conditions there employers say that they are better off on Tyneside and elsewhere because of our lack of incentives?
I can assure my hon. Friend that in administering our I.D.C. policy we take account of all the special needs and special characteristics of the individual areas, including that which he represents.
Is my right hon. Friend aware that I would like to have seen him when he came to Hull? Can he give a further assurance of new job opportunities on Humberside and say how these compare with the number lost through declining industries? Has there been a balance, or is there something on the credit side?
I am glad that there has been an increase in manufacturing employment in recent years. If my hon. Friend puts down a Question on this, I will give him more precise figures.
Following is the information:
| 1956 | … | … | … | 22 |
| 1957 | … | … | … | 17 |
| 1958 | … | … | … | 20 |
| 1959 | … | … | … | 27 |
| 1960 | … | … | … | 34 |
| 1961 | … | … | … | 21 |
| 1962 | … | … | … | 16 |
| 1963 | … | … | … | 16 |
| 1964 | … | … | … | 30 |
| 1965 | … | … | … | 28 |
| 1966 | … | … | … | 32 |
| Total | … | … | … | 263 |
Development Areas (Assistance)
90.
asked the President of the Board of Trade whether, as a further measure of assistance to development areas, he will initiate legislation similar to that of the Industrial Advice and Enterprise Act of Northern Ireland.
Measures to encourage the use of management consultants are among the possibilities referred to in my right hon. Friend's Answer today to the hon. Member for Croydon, North-East (Mr. Weatherill).
Can my right hon. Friend say when this particular kind of assistance will be introduced in this country, since it would make a significant contribution to the regional policies which the Government are now implement?
Yes, I realise the importance of this. On the other hand, we must expect firms to make some contributions to their own costs and not expect every form of expense to be contributed to by the Government in those areas.
Triplex Safety Glass Company Limited And British Indestructo Glass Limited (Merger)
91.
asked the President of the Board of Trade what further consideration he has given to the recent merger of the Triplex Safety Glass Company Limited with British Indestructo Glass Limited which creates a complete monopoly in this industry; and if he will now refer this merger to the Monopolies Commission in order to safeguard the interests of the public.
87.
asked the President of the Board of Trade when he expects to complete his study of the position of the Triplex Safety Glass Company Limited, arising from the closure of British Indestructo Glass Limited; and if he will make a statement.
I have nothing to add to the reply which I gave my hon. Friend, the Member for Shoreditch and Finsbury (Mr. R. W. Brown) on 17th July.—[Vol. 750, c. 200.]
Aviation
British European Airways (Re-Equipment Programme)
7.
asked the President of the Board of Trade what decisions he has now reached about the re-equipment programme of British European Airways; and whether he will make a statement.
17.
asked the President of the Board of Trade whether British European Airways will be in a position to met its forecast requirements for seats during the 1970s with British aircraft.
21.
asked the President of the Board of Trade what is his policy concerning the re-equipment of the fleet of British European Airways.
34.
asked the President of the Board of Trade when he expects to reach a decision on British European Airways' future aircraft requirements.
I must ask hon. Members to be patient a little longer. As I informed the hon. Member for Belfast, East (Mr. McMaster) on 14th June, a complex of questions is involved which I am still discussing with my right hon. Friend the Minister of Technology and others concerned. I am aware of the need for an early decision but I am equally anxious to reach the right one.—[Vol. 748, c. 553.]
I appreciate the difficulties, but is the right hon. Gentleman aware of the bad effect of this long-continued policy indecision on the future of British European Airways? Is he further fully aware of the importance which this decision will have on Britain's capability in airframe design, without which we cannot indefinitely maintain our leadership in aero-engine design?
I am fully aware of the importance of this question, but it is not a case of indecision on our part. Unfortunately, this decision, for reasons which the right hon. Gentleman knows, is linked with decisions concerning both the European airbus and its American counterpart. I am extremely anxious to clear this up as quickly as possible.
On the question of the European airbus, has any decision yet been taken about configuration? Is it to have two engines or three?
No final decision has been taken, but the matter is under very strenuous discussion.
Does the right hon. Gentleman understand that if the European airbus is an aircraft in which the airframe design is conceded to another country it will be of correspondingly less importance to this country? Does he agree that it is of vital importance that men in the aircraft industry should have some certainty about continuity of work? The BAC211 could do much to provide this.
Our objective is to ensure the best result from the point of view of the United Kingdom balance of payments and also the airframe and aero-engine industry of this country.
Will my right hon. Friend also give close attention to the fact that B.E.A. firmly believes that the BAC211 is the aircraft that best suits its needs?
Yes. I discuss this point with British European Airways at least once a fortnight.
Scheduled Services (North Atlantic Route)
8.
asked the President of the Board of Trade what are the reasons for the fall in the British share of air traffic on the North Atlantic route carried on scheduled services; and what action he proposes to reverse this trend.
I would hesitate to assign reasons to relatively small changes in B.O.A.C.s share of this traffic, so much of which orginates in North America. I do not believe that the trend is other than marginal and temporary or that action by the Board of Trade with a view to reversing it, is necessary. B.O.A.C. has the determination, and will have the capacity, to do so itself.
Can the Minister give the House some reason why he believes that this trend is only temporary? This is of great importance. Secondly, does not he agree that if only B.O.A.C. had more adequate capacity today and had not cancelled the super-VC1Os the trend would be different?
One reason for the temporary fall in our share is the difficulty that we experienced with the Boeings which had to be put in for modification, and also the loss of one Boeing. On the question of capacity, B.O.A.C. last month took a new super VC10. Another is coming in in October, three more next year and three the year after, which should provide adequate capacity.
British Airports Authority (Financial Target)
16.
asked the President of the Board of Trade what financial target he is proposing to set for the British Airports Authority.
The financial target to be set for the British Airports Authority is under discussion.
When it is decided, will it be consistent with the annual increase in investment in airports and land- ing and navigational facilities of £20 million per annum, as laid down in the National Plan?
It will certainly be consistent with the investment being carried out by the British Airports Authority in the relevant years.
United Kingdom Air Operators (Performance Review)
19.
asked the President of the Board of Trade if he will make a statement about the special review being carried out concerning the performance of United Kingdom air operators.
35.
asked the President of the Board of Trade when he expects to publish the report of his inquiry into British air safety standards.
42.
asked the President of the Board of Trade by what date he will be able to make public the results of the special review of British airlines, which he has initiated.
46.
asked the President of the Board of Trade whether the special review of the performance of United Kingdom air operators announced on 5th Jun will be made public.
I have nothing to add to the reply given on 28th June to the hon. Member for Woking (Mr. Onslow). I then indicated that I would make the conclusions of the review available to the House. I am concerned that the review should be thorough, and I cannot yet indicate when it will be completed. —[Vol. 749, c. 98.]
Who has been appointed to conduct this review? If the airlines are being operated in a substandard condition, is this not a serious reflection on the capacity—not the ability, but the capacity—of his own Department to carry out the task set for it by various Governments?
The first point arises on a later Question. On the second, I have already made it clear that I would not like it to be assumed from any evidence which is available at present that the operators are not carrying out their obligations properly.
Who will be able to give evidence at this inquiry? Will the right hon. Gentleman particularise this and also accept that there is some suggestion that his own Department is short of staff to carry out its essential functions in regard to air services?
I would not agree with that, but anyone who wishes may put forward evidence for representations to the Director of Aviation Safety.
Would my right hon. Friend not agree that the question which many people want answered is whether or not they are putting their lives at any greater risk by flying on certain charter flights or from certain poorly-equipped continental airports? Surely they can have this answer before they start to make their holiday plans for next summer.
As I have said, I do not wish it to be assumed that any airlines operating in this country are not carrying out their obligations, but I would not like to make any further statements in advance of the conclusions of this review, which is precisely intended to inquire into these matters.
Will the right hon. Gentleman assure us that this will not be a whitewashing exercise for his Department?
Yes, Sir
Would the right hon. Gentleman confirm that, providing the regulations and their enforcement are adequate, all airlines should be equally safe to fly on?
I do not think that this is a world in which anything is ever perfect, and I would therefore not like to comment.
Air Transport Licensing Board (Policy)
20.
asked the President of the Board of Trade if he is satisfied with the licensing policy administered by the Air Transport Licensing Board; and if he will make a statement.
I am satisfied that the A.T.L.B. carry out their responsibilities
according to Section 1(1) of the Civil Aviation (Licensing) Act, 1960. As I told the right hon. Member for Mitcham (Mr. R. Carr) on 15th March, I do not exclude the possibility of change in the light of study and experience.—[Vol. 743, cc. 494–5.]"in such a manner as to further the development of British civil aviation",
Is the right hon. Gentleman really satisfied that the Licensing Board is right to grant licences to firms which admit that they have insufficient capital resources, as happened in a recent case?
We are trying to carry out legislation passed by the previous Government and, as I said, I am not satisfied that this legislation is for the best of all possible worlds, but, as the moment, I am satisfied that the Air Traffic Licensing Board is fulfilling its functions according to its present statutory duties.
Will my right hon. Friend set up an inquiry into the collapse of the Treffield Airline Company, which anyone could have seen was financially unstable at the start and which quickly proved so? Would he not recognise that many fine and reputable travel agencies were seriously affected by this collapse?
That is another question; I will certainly look at it.
British Overseas Airways Corporation (Financial Target)
23.
asked the President of the Board of Trade what financial target he is proposing to set for the British Overseas Airways Corporation.
After consultation with B.O.A.C. and with the approval of the Treasury, the Board of Trade are setting B.O.A.C. a financial objective of an average rate of return of 12½ per cent. on net assets over the four-year period, ending 31st March, 1970.
Is the right hon. Gentleman aware that this target of 12½ per cent. may not be adequate in view of the high rate of interest which equities attract today?
On a balance of all the considerations, both past and prospective, I have concluded, with the agreement of the Treasury, that this is a reasonable figure.
Northern Ireland (International Air Services)
24.
asked the President of the Board of Trade what action he is taking to stimulate international air-traffic directly to and from Northern Ireland.
I welcome the development of international air services from Northern Ireland; but the initiative in seeking and using licences rests with the operators, in the light of their judgment of the traffic potential and subject to foreign traffic rights being available or obtainable on acceptable terms.
Is the right hon. Gentleman aware that we have not an airport in Northern Ireland big enough to take large transatlantic jets? In view of the rapid growth in cross-Atlantic flying, particularly charter flying, in the summer between Northern Ireland and America, will he take steps to provide an airport sufficient to take these larger planes?
As I said in the recent debate on airports policy, we must develop airports roughly in harmony with the development of the traffic, but I shall be glad to discuss this question with the hon. Gentleman.
During the present alterations to the terminal building at Aldergrove, would the right hon. Gentleman consider making the necessary provisions for international passenger and freight traffic?
The hon. and learned Gentleman, I think, has some later Questions on this point this afternoon, but I will certainly consider what he said.
Private Pilot's Licence
27.
asked the President of the Board of Trade why he has increased the number of flying hours required for a private pilot's licence from 30 to 35.
The number of flying hours required is still 40 unless the applicant has satisfactorily undergone a course of approved training; in that case he must now have completed at least 35 hours. The increase from 30 to 35 was made to improve training and flying standards.
Does the hon. Gentleman agree that the modern tricycle undercarriage type of aircraft is very much easier to fly than the older type? Is it not an unreasonable imposition to make pilots pay another £40 to get their licences?
Speaking from personal experience, I have never flown either. However, we consulted the pilots, who agreed to this proposal.
28.
asked the President of the Board of Trade for what reasons the medical examination for a private pilots' licence must in future be carried out by an authorised medical examiner and not by any medical practitioner.
It is desirable that medical certificates that give continuing validity to licences now issued for five years should be given by doctors who are knowledgeable about avaition medicine and the standards to be applied.
Would not the hon. Gentleman agree that some pilots will have to travel long distances to see the authorised medical examiner? Has not he sufficient confidence in general practitioners to let them do this examination?
General practitioners do not necessarily have the experience and training required for the examination of pilots. This is a safety measure, and the amount of inconvenience is very slight.
British Overseas Airways Corporation (American Supersonic Transport Aircraft)
29.
asked the President of the Board of Trade what request he has received from the British Overseas Airways Corporation to be allowed to invest in the development of the American supersonic transport in order to maintain its delivery position for this aircraft.
None, Sir. Like all other airline customers B.O.A.C. is due to pay by 31st October a further 100,000 U.S. dollars per aircraft to maintain its delivery position. Separately, B.O.A.C. has been invited to invest voluntarily 1 million U.S. dollars per aircraft in development costs. B.O.A.C. with Air France, is considering this invitation and I shall be consulted.
Would the right hon. Gentleman give an assurance that, when he is consulted, he will not allow B.O.A.C. to invest this money in an aircraft which will be a rival to the Anglo-French Concord aircraft? When does he reckon that B.O.A.C. will put in a firm order for the Concord aircraft?
I would not answer the second question without notice. On the first question, we must allow B.O.A.C., together with its competitor airlines, to provide for all contingencies.
is my right hon. Friend aware that for cool cheek this American demand takes some beating? Would he consider convening an international conference of airline operators to consider a co-ordinated plan to resist this American blackmail?
It is not unknown in the civil aviation industry for a contribution to be made for a place in the queue for these aircraft.
In view of the crisis in the British industry due to the loss of the A-FVG project, is it not most unwise to permit B.O.A.C. to invest in American research and development of any kind at this juncture?
This is not an unprecedented procedure in the industry. The hon. Gentleman is greatly exaggerating in speaking of a crisis in the British industry apropos the cancellation of one type of aircraft.
Is the right hon. Gentleman aware that the projected American supersonic aircraft is considerably bigger than Concord and, therefore, the supersonic bang will be that much worse? In view of what has happened this week, will he take that seriously into account?
I am sure that the hon. Gentleman is more expert on supersonic bangs than I am, but I would not assume that there was an exact mathematical correlation.
On a point of order. In view of the unsatisfactory nature of the original reply, I beg to give notice that I will raise the matter on the adjournment at the earliest possible moment.
Pilots (Flying Hours)
36.
asked the President of the Board of Trade what steps he is taking towards introducing the new limitations in the flying hours of pilots which he has already proposed.
I have nothing to add to the reply I gave on 11th July to my hon. Friend's Question.—[Vol. 750, c. 66.]
Does my right hon. Friend agree that the duty hours of too many pilots are far too long? Did he not agree on 11th July that the hours should be limited by legal definition? Has he changed his mind merely to offering guidelines relating to the type of air operator's certificate?
No. These issues are under discussion between my Department and both the employees and the management in this industry. This is going on parallel with the inquiries with which my hon. Friend is concerned.
Does not the right hon. Gentleman think that 100 hours a month was a much more acceptable maximum than the one at present in the regulations?
I should not like to prejudice the discussions which are going on, but, if that is the hon. Gentleman's view, I will take note of it.
Aircraft Crash (Stockport)
39.
asked the President of the Board of Trade whether he will hold a full technical investigation into the cause of the aircraft crash at Stockport instead of a public inquiry.
A public inquiry has already been directed, in accordance with Regulation 9 of the Civil Aviation (Investigation of Accidents) Regulations, 1951. The Chief Inspector of Accidents has a duty under these Regulations to render assistance to the inquiry, and I am sure, therefore, that there will be a full technical investigation.
Would my right hon. Friend agree that when inquiries are necessary in future it would be better to hold full technical investigations—attended by experts who have no set interest ether than that of finding out the cause of the accident—instead of public inquiries, where the legal experts tend to defend interests instead of finding out causes?
I believe that it was necessary in this case, in view of the magnitude of this accident, to have a full public inquiry. However, I have no doubt that all the necessary technical investigation will be made and that this evidence will be avaliable at the inquiry.
Will the right hon. Gentleman recognise that there is, nevertheless, genuine concern about whether the present method of inquiry is the most suitable? Will he please undertake to look into the matter for the future?
I will certainly do that, but from the information available to me—which I have examined again in the last few days—I would not at present like to suggest that these inquiries are, in my view, in any way inadequate.
Chartered Flights (Licences)
40.
asked the President of the Board of Trade what criteria and standards have been laid down in the granting of air licences to companies for chartered flights.
The grant of air services licences to air operators, including the operators of charter flights, is the responsibility of the Air Transport Licensing Board. The Board is required to be satisfied, having regard to experience, financial resources, equipment, organisation and staffing, that any applicant for a licence is competent and a fit and proper person to operate that service.
Did the Air Traffic Licensing Board consider the financial stability of the Treffield Airline Company before granting a licence and, in giving this consideration, were the criteria and standards to which I have referred in the Question taken into account?
Yes, Sir. The financial stability of this firm was examined and, at the time, it seemed satisfactory. Sub- sequently further investigations were put in train, just before the company went into liquidation.
Has the hon. Gentleman had a chance to consider the Report of the Air Safety Group on the limitation of hours and work of cabin staff as it affects air safety? When will he be letting the Group have the Department's reply?
That is an entirely different question, but the answer is "Yes, Sir."
British Tourists (Law Commission's Report)
53.
asked the President of the Board of Trade when he expects to consider the report on the Law Commission regarding British tourists stranded abroad while on charter flights; and if he will make a statement.
If my hon. Friend has in mind the inquiry into exclusion clauses now being undertaken by a joint working party of the two Law Commissions, no date can yet be given for their report.
In the light of this report, will my hon. Friend consider taking steps to ensure that agencies which promote these charter flights guarantee the return of tourists, many of whom are stranded abroad owing to the fact that foreign airlines in particular, due to their financial structure, instability and other considerations, are unable to return them?
We must await the conclusions on the report.
Aldergrove Airport
59.
asked the President of the Board of Trade what progress is being made with enlarging the air terminal buildings at Aldergrove in County Antrim; and when he expects the work on the terminal to be completed.
Work on the main public areas is almost finished. The final stage is now well under way and all work on the terminal is expected to be completed by early October.
Will the present enlargement be sufficient to handle the very remarkable increase in growth that has taken place? As always before the increase has been underestimated, does the Minister think that it will be sufficient this time?
It will be sufficient, so I am advised, for the foreseeable future—not, I hope, for all time.
60.
asked the President of the Board of Trade what plans he has for improving landing facilities at Aldergrove Airport in County Antrim so that the larger aircraft of the future may use the civil airport for Ulster.
None at present, but extensions to the main run-was are safeguarded, and the needs of all future types of aircraft likely to operate into Aldergrove are kept continually under review.
Should not some detailed study be given to making the Ulster airport fit for jet traffic from across the Atlantic and, if necessary, should not plans for completing the runways be put in hand?
There are plans in embryo for this increase. The No. 1 runway could be extended to a length of 12,000 ft., which would be entirely adequate for transatlantic traffic, but there is no evidence at the moment that there is need for it.
Is not the Minister of State aware that a lot of intending passengers from Northern Ireland to America have first to use the international airport on this side of the Channel, when planes could fly from Northern Ireland and take a full load to America? Will he not consider further lengthening the runway to 12,000 ft., as some have suggested?
I know that some have, but I very much doubt at the moment whether it is a lot, and it would not justify the expense.
Rearward-Facing Seats
70.
asked the President of the Board of Trade if he is aware that civilian aircraft on charter to the Ministry of Defence have backward-facing seats as a safety precaution and if he will give general directions to the British Overseas Airways Corporation and British European Airways to provide the same safety measure for all civilian passengers.
The Answer to the first part of the Question is, Yes. As regards the second part of the Question, a general direction would be inappropriate, and there is insufficient evidence to justify making rearward-facing seats mandatory on United Kingdom registered aircraft. We are closely watching an extensive research programme in the United States into aircraft crashworthiness. We will consider the implications of the results of this research.
Does not the Minister of State think it somewhat ironical that the Defence Department considers that, for the safety of Service personnel, these backward-facing seats are desirable? Why should there not be the same safety standards for civilian passengers? Is it a question of education? Would it not be better for his Department to do something to educate passengers?
I understand the hon. Member's point. Very extensive experiments are being done in the United States. We are watching them with the deepest interest, and will make up our minds when we have the results.
Will the Minister bear in mind that some passengers may prefer to travel facing forwards, and that it is really their business?
Third London Airport
72.
asked the President of the Board of Trade when he proposes to publish the Report of the Second Interdepartmental Committee on the third London airport.
The work of the Review Committee formed the basis of the Government's White Paper on the third London airport.
Is the President of the Board of Trade aware that I was well aware of that, as I understood everyone else was? As the report of the first inter-departmental committee was published, why should not the report of the second inter-departmental committee be published? Or has the right hon. Gentleman something to hide?
It was published in the form of a White Paper, as the hon. Gentleman says he already knows.
British Overseas Airways Corporation (Advertisements)
82.
asked the President of the Board of Trade if he will give a general direction to the British Overseas Airways Corporation not to publish advertisements containing sexual appeal.
No, Sir. This is essentially a matter of taste and for the Corporation to decide.
Will the Minister of State look at this advertisement which I hold in my hand, which appeared in a Nigerian newspaper? [Interruption.]
Order. We have a lot of Questions on the Order Paper. Sir Cyril Osborne.
This is a great reflection on—[Interruption.]
Order.
It is a great reflection on the honour of air hostesses employed by B.0 A.C. Is the Minister of State aware that the business people in Nigeria who sent this advertisement to me were outraged at the suggestion behind it? Will he use his influence to see that this does not occur again?
I have had a look at the advertisement. I agree that it was a bit "off" and it has now been withdrawn, but I am blessed if I am going to tell anyone to stop putting out advertisements with pretty girls in them.
Could my hon. Friend tell us what is the likely psychological reason why the hon. Member for Louth (Sir C. Osborne) has such an obsession about sex?
Answer.
I think that was a rhetorical question.
On a point of order. In view of the unsatisfactory nature of the reply—
It was a good Answer.
—I beg to give notice that I will raise the matter on the Adjournment.
Shipping
Containers (Investment Grants)
9.
asked the President of the Board of Trade if he will take steps to extend investment grants to firms leasing containers for ships to foreign shipping companies.
No, Sir. It is not the purpose of the Investment Grant Scheme to assist the equipment of foreign ships.
Is the right hon. Gentleman aware that owing to the very high capital costs of these specialised ships there is an increasing tendency to hire containers separately and not buy them at the same time? Could not this be a useful outlet for some of our capacity?
I am aware of that, and our purpose here is to see that investment grants are available only where the resulting earnings will be of benefit to the United Kingdom balance of payments.
Is it not true that as a result of the policy of the Board of Trade when it brought in the Industrial Development Act it has prevented itself from making grants in any case, whether foreign or otherwise, because of the rigid categorisation of industries into manufacturing and service industries?
As the hon. Member knows, we are able to make grants for containers in suitable cases where we think that benefit will accrue to the United Kingdom balance of payments.
Merchant Shipping Delays (Cape Route)
45.
asked the President of the Board of Trade what information he has about the difficulties of British merchant shipping in refuelling on the Cape route; and what action he proposes to take to avoid undesirable delays to shipping.
There were slight delays as a result of the bunching of vessels which followed the closure of the Canal, but the situation has since improved. I am discussing with the Chamber of Shipping ways of overcoming any difficulties which might arise.
Would not the right hon. Gentleman agree that this route has now become of very great importance to British shipping and trade owing to the closing of the Canal? Will he continue to watch the situation most carefully, in conjunction with the South African Government?
I agree that it is important at the present time; and it seems that the arrangements are satisfactory.
Hovercraft Service (Hull And Grimsby)
67.
asked the President of the Board of Trade what representations he has received concerning the establishment of a hovercraft service between Hull and Grimsby; and if he will make a statement.
None, Sir.
Is my hon. Friend aware that there has been a great deal of discussion about the possibility of a hovercraft service from Hull to Grimsby, and if the scheme does not come to fruition can he ensure that that is not used as an excuse to close the railway services between Grimsby and Barton-on-Humber, which many people think would have grave consequences on the economic future of the area?
I am aware of what is contained in the first part of my hon. Friend's supplementary question, but the second part does not come under my purview.
Is the Minister of State aware that we have the biggest deep-sea fishing industry in the world based on the Humber, but that the north bank and the south bank are completely isolated and that until we have the bridge —which, of course, we hope to get in the near future—we have no means except the ferry of getting over the Humber? Will not my hon. Friend think again about this matter?
It is not a question of thinking again. It is not a question of my preventing. There is nothing to stop the establishment of a hovercraft service over the Humber. Such a service has been highly satisfactory over the Solent, and there is no reason why it should not be equally satisfactory over the Humber.
Q4 Liner
74.
asked the President of the Board of Trade if he will make a further statement on the request for additional financial assistance to complete the Q4 contract which he has recently received from the Cunard Company.
I have nothing to add to the reply which I gave to the hon. Member on 14th June.—[Vol. 748, c. 552.]
Is the President of the Board of Trade aware that this is a matter of desperate urgency? How much longer have we to wait? Can he at least give a guarantee that the Government, having committed themselves so far, will ensure that this great ship is completed?
I agree that this is a matter of great importance, and that is why it deserves very serious and careful consideration. I assure the hon. Member that we shall reach a conclusion as soon as possible.
Orders Of The Day
Companies Bill Lords
As amended ( in the Standing Committee), further considered.
I have posted up in the usual way the selection of Amendments. There are minor variations from the selection which I published last week.
We come now to new Clause No. 8.On a point of order, Mr. Speaker. With respect, I recall that a separate Division on new Clause No. 6 was to be allowed.
I am grateful for the reminder. So many things have happened to me since the last debate that I think
Division No. 473.]
| AYES
| [3.30 p.m.
|
| Allason, James (Hemel Hempstead) | Cower, Raymond | Neave, Airey |
| Astor, John | Grant, Anthony | Nicholls, Sir Harmar |
| Baker, W. H. K. | Grant-Ferris, R. | Onslow, Cranley |
| Balniel, Lord | Griffiths, Eldon (Bury St. Edmunds) | Osborne, Sir Cyril (Louth) |
| Barber, Rt. Hn, Anthony | Hall-Davis, A. G. F. | Page, Graham (Crosby) |
| Bell, Ronald | Hamilton, Michael (Salisbury) | Pearson, Sir Frank (Clitheroe) |
| Bennett, Sir Frederic (Torquay) | Harris, Frederic (Croydon, N.W.) | Peel, John |
| Bennett, Dr. Reginald (Cos. & Fhm) | Harrison, Col. Sir Harwood (Eye) | Pounder, Rafton |
| Biffen, John | Harvey, Sir Arthur Vere | Powell, Rt. Hn. J. Enoch |
| Biggs-Davison, John | Hawkins, Paul | Pym, Francis |
| Birch, Rt. Hn. Nigel | Heald, Rt. Hn. Sir Lionel | Ramsden, Rt. Hn. James |
| Brewis, John | Hill, J. E. B. | Ridley, Hn. Nicholas |
| Brinton, Sir Tatton | Hirst, Geoffrey | Ridedale, Julian |
| Bromley-Davenport, Lt.-Col. Sir Walter | Holland, Philip | Robson Brown, Sir William |
| Brown, Sir Edward (Bath) | Hutchison, Michael Clark | Rodgers, Sir John (Sevenoaks) |
| Bruce-Gardyne, J. | Irvine, Bryant Godman (Rye) | Russell, Sir Ronald |
| Buchanan-Smith, Alick(Angus, N&M) | Kimball, Marcus | Shaw, Michael (Sc'b'gh & Whitby) |
| Bulllus, Sir Eric | King, Evelyn (Dorset, S.) | Sinclair, Sir George |
| Campbell, Cordon | Kirk, Peter | Stainton, Keith |
| Carr, Rt. Hn. Robert | Langford-Holt, Sir John | Stoddart-Scott, Col. Sir M. (Ripon) |
| Cary, Sir Robert | Lloyd, Ian (P'tsm'th, Langstone) | Summers, Sir Spencer |
| Clegg, Walter | Lloyd, Rt. Hn. Selwyn (Wirral) | Tapsell, Peter |
| Cooke, Robert | Loveys, W. H. | Taylor,Edward M.(G'gow, Cathcart) |
| Corfield, F. V. | McAdden, Sir Stephen | Taylor, Frank (Moss Side) |
| Costain, A. P. | McMaster, Stanley | Temple, John M. |
| Crosthwaite-Eyre, Sir Oliver | Maginnis, John E. | Turton, Rt. Hn. R. H. |
| Cunningham, Sir Knox | Marten, Neil | Vaughan-Morgan, Rt. Hn. Sir John |
| Currie, G. B. H. | Maude, Angus | Walker, Peter (Worcester) |
| Dalkeith, Earl of | Mawby, Ray | Ward, Dame Irene |
| Dance, James | Maxwell-Hyslop, R. J. | weatherill, Bernard |
| Dean, Paul (Somerset, N.) | Maydon, Lt.-Cmdr. S. L. C. | Whitelaw, Rt. Hn. William |
| Dodds-Parker, Douglas | Mills, Peter (Torrington) | Wills, Sir Gerald (Bridgwater) |
| Elliott, R.W.(N'e'tle-upon-Tyne, N.) | Mitchell, David (Basingstoke) | Wilson, Geoffrey (Truro) |
| Emery, Peter | Monro, Hector | worsley, Marcus |
| Errington, Sir Eric | More, Jasper | Wylie, N. R. |
| Eyre, Reginald | Morrison, Charles (Devizes) | |
| Fortescue, Tim | Munro-Lucas-Tooth, Sir Hugh | TELLERS FOR THE AYES: |
| Glover, Sir Douglas | Nabarro, Sir Gerald | Mr. Timothy Kitson and |
| Mr. Anthony Royle. | ||
NOES
| ||
| Allaun, Frank (Salford, E.) | Atkinson, Norman (Tottenham) | Bennett, James (G'gow, Bridgeton) |
| Alldritt, Walter | Bagier, Gordon A. T. | Bidwell, Sydney |
| Alien, Scholefield | Barnett, Joel | Blackburn, F. |
| Anderson, Donald | Baxter, William | Blenkinsop, Arthur |
| Archer, Peter | Beaney, Alan | Boardman, H. |
| Armstrong, Ernest | Bence, Cyril | Booth, Albert |
| Atkins, Ronald (Preston, N.) | Benn, Rt. Hn. Anthony Wedgwood | Bowden, Rt. Hn. Herbert |
the House will pardon me if I do not always remeber. We will take a decision at once on new Clause No. 6.
New Clause No 6—(Increase In Penalties For Fraud)
The maximum penalty that may be inflicted for frauds by officers of companies under section 330 of the principal Act committed after the passing of this Act shall, instead of being a term of imprisonment not exceeding two years, be a term of imprisonment not exceeding five years, and accordingly section 330 of the principal Act shall be amended by deleting the word 'two' in the expression 'not exceeding two years' and inserting the word 'five' therein.—[ Mr. Corfield.]
Brought up, and read the First time.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 111, Noes 190.
| Boyden, James | Hooley, Frank | Page, Derek (King's Lynn) |
| Braddock, Mrs. E. M. | Hooson, Emiyn | Paget, R. T. |
| Brooks, Edwin | Hoy, James | Parmell, Rt. Hn. Charles |
| Brown, Hugh D. (G'gow, Provan) | Huckfield, L. | Park, Trevor |
| Brown, Bob (N'c'tle-upon-Tyne,W.) | Hughes, Emrye (Ayrshire, S.) | Parkyn, Brian (Bedford) |
| Brown, R. W. (Shoreditch & F'bury) | Hughes, Roy (Newport) | Pavitt, Laurence |
| Buchanan, Richard (G'gow, Sp'burn) | Hunter, Adam | Pearson, Arthur (Pontypridd) |
| Cant, R. B. | Jackson, Colin (B'h'se & Spenb'gh) | Pentland, Norman |
| Carmichael, Neil | Jay, Rt. Hn. Douglas | Perry, Ernest G. (Battersea, S.) |
| Carter-Jones, Lewis | Johnson, Carol (Lewisham, S.) | Perry, George H. (Nottingham, s.) |
| Castle, Rt. Hn. Barbara | Johnson, James (K'ston-on-Hull, W.) | Price, Christopher (Perry Barr) |
| Coleman, Donald | Jones, Dan (Burnley) | Price, Thomas (Westhoughton) |
| Concannon, J, D. | Jones, Rt. Hn. Sir Eiwyn(W.Ham,s.) | Price, Willam (Rugby) |
| Conlan, Bernard | Jones, J. Idwal (Wrexham) | Probert, Arthur |
| Craddock, George (Bradford, S.) | Jones, T. Alec (Rhondda, West) | Rankin, John |
| Crossman, Rt. Hn. Richard | Kelley, Richard | Rees, Merlyn |
| Darling, Rt. Hn. George | Lawson, George | Roberts, Albert (Normanton) |
| Davidson,James(Aberdeenshire,w.) | Lever, L. M. (Ardwick) | Robertson, John (Paisley) |
| Davies, Dr. Ernest (Stretford) | Lewie, Arthur (W. Ham, N.) | Rogers, George (Kensington, N.) |
| Davies, Harold (Leek) | Lipton, Marcus | Rose, Paul |
| Davies, S. O. (Merthyr) | Lomas, Kenneth | Ross, Rt. Hn. William |
| Dell, Edmund | Loughtin, Charles | Rowlands, E. (Cardiff, N.) |
| Dempsey, James | Luard, Evan | Sheldon, Robert |
| Dickens, James | Lubbock, Eric | Shinwell, Rt. Hn. E. |
| Doig, Peter | Mabon, Dr. J. Dickson | Short, Mrs. Renee(W'hampton,N.E.) |
| Driberg, Tom | McBride, Neil | Silkin, Rt. Hn. John (Deptford) |
| Dunn, James A. | MacColl, James | Silverman, Julius (Aston) |
| Durmett, Jack | McGuire, Michael | Slater, Joseph |
| Dumvoody, Dr. John (F'th & C'b'e) | Mackenzie, Gregor (Rutherglen) | Small, William |
| Edwards, Rt. Hn. Ness (Caerphilly) | Mackie, John | Spriggs, Leslie |
| Edwards, Robert (Bilston) | Mackintosh, John P. | Steele, Thomas (Dunbartonshire, W.) |
| Edwards, William (Merioneth) | MacMillan, Malcolm (Western isles) | Strauss, Rt. Hn. G. R. |
| Ellis, John | McMillan, Tom (Glasgow, C.) | Swingler, Stephen |
| English, Michael | McNamara, J. Kevin | Symonds, J. B. |
| Ennals, David | Mahon, Peter (Preston, S.) | Thornton, Ernest |
| Ensor, David | Mallalieu, E. L. (Brigg) | Thorpe, Rt. Hn. Jeremy |
| Evans, loan L. (Birm'n'm, Yaruley) | Mallalieu,J.P.W.(Huddersfierd,E.) | Tinn, James |
| Finch, Harold | ||
| Finch, Alan (Wigan) | Manuel, Archie | Urwin, T. W. |
| Fletcher, Raymond (Ilkeston) | Mapp, Charles | Wainwright, Edwin (Dearne Valley) |
| Ford, Ben | Marquand, David | Wainwright, Richard (Colne Valley) |
| Forrester, John | Mason, Roy | Walden, Brian (All Saints) |
| Fraser, John (Norwood) | Maxwell, Robert | Walker, Harold (Doncaster) |
| Calpern, Sir Myer | Millan, Bruce | Wallace, George |
| Gardner, Tony | Miller, Dr. M. s. | Watkins, Tudor (Brecon & Radnor) |
| Garrett, w. E. | Milne, Edward (Blyth) | Weltbeloved, James |
| Cinsburg, David | Mitchell, R. C. (S'th'pton, Test) | White, Mrs. Elrene |
| Gray, Dr. Hugh (Yarmouth) | Morgan, Elystan (Cardiganshire) | Whitlock, William |
| Grey, Charles (Durham) | Morris, Alfred (Wythenshawe) | Williams, Alan (Swansea, W.) |
| Griffiths, WIN (Exchange) | Morris, Charles R. (Openshaw) | Williams, Clifford (Abertillery) |
| Grimond, Rt. Hn. J. | Moyle, Roland | Willis, George (Edinburgh, E.) |
| Hamilton, William (Fife, W.) | Murray, Albert | Winterbottom, R. E. |
| Harper, Joseph | Newens, Stan | woodburn, Rt. Hn. A. |
| Harrison, Walter (Wakefield) | Noel-Baker, Francis (Swindon) | Woof, Robert |
| Hart, Mrs. Judith | Ogden, Eric | Yates, Victor |
| Haseldine, Norman | Orbach, Maurice | |
| Hazell, Bert | Owen, Dr. David (Plymouth, S'tn) | TELLERS FOR THE NOES: |
| Heffer, Eric 8. | Owen, Will (Morpeth) | Mr. W. Howie and |
| Mr. John McCann. |
New Clause No 8—(Shares With Limited Voting Rights)
(1) Where the share capital of a company includes a class of shares other than preference or preferred shares so described the holders of which are not entitled to vote at general meetings, the descriptive title of the shares shall include the words non voting ' and these words shall appear legibly on any share certificate, prospectus or report issued by the company.
(2) Where the share capital of a company include two or more classes of shares conferring substantially similar rights to share in the distributed profits or the surplus assets in a winding up of a company but which confer voting rights which are not proportionate to the equity interest so conferred, the descriptive title of the class of shares with the lesser rights shall include the words 'restrictive voting', 'reduced voting' or 'limited voting' and these words shall appear legibly on any share certificate, prospectus or report issued by the company.
(3) A class of shares shall not be described as `ordinary shares' or by a description of similar import without the qualification 'restricted voting', 'reduced voting' or limited voting' unless either—
Brought up, and read the First time.
I beg to move, That the Clause be read a second time.
In recent years, the practice has grown of issuing voteless shares described either as A shares or B shares or in some other vague way. In favour of this practice, it is argued that it enables family businesses to retain control within the family while, at the same time, raising fresh equity capital. It is fair to say that many great businesses—perhaps the most notable example is Marks and Spencer—have been able to develop through this means of raising capital. It is argued also that to abolish by Statute the right to issue voteless shares would be an interference with the fundamental freedom of contract. Against this, however, it is argued that holders of voteless shares have no redress, save through ex pensive and difficult court proceedings, in the event of trouble arising in the company. Moreover, it can be argued that the practice perpetuates inefficiency. If a management is inefficient, it will be perpetuated by the system of voteless shares. It is a fundamental belief held by many, certainly by me, that the ownership of companies should carry some responsibility for their control. A further criticism of voteless shares is that it is bad to have ownership severed from control. In recent years, we have seen too often the total indifference of shareholders; so long as they are receiving their dividends, they take no interest in the management of the company, often until it is too late. The worst offenders in this respect are not necessarily the small investors. It is sometimes the big institutional investors which act in that way. The question of voteless shares was fully discussed in the Jenkins Committee, and all the arguments for and against were rehearsed. However, Jenkins did not come down with a positive answer. It said, in effect, that voteless shares were not very desirable but that it would be best to leave the matter to voluntary action. There was, however, a minority Report which came to a different conclusion, saying thatThe matter has been debated in the City among people concerned with shares. Most notably, it has been fully discussed by the Wider Share Ownership Council, which came to the opinion that, as there was such a difference of view on whether it was good or bad to allow voteless shares, one should not statutorily abolish them but one should provide by Statute that they be clearly marked and identified as voteless shares rather than as A or B shares. 3.45 p.m. That line has been followed by the Stock Exchange since 1957, I understand that the Stock Exchange has refused to allow a quotation by companies which do not clearly and accurately describe their voteless shares as such. The matter was fully debated also in the Standing Committee. The Minister of State then expressed considerable sympathy with the view embodied in the new Clause, and he said that it might be considered as a reasonable proposition for inclusion in the Bill on Report. He gave an undertaking that, if he could do it on Report, he would. Nothing has emerged from the Government's thinking on the matter, and this is why we seek now to improve the Bill by the new Clause. The main theme of the Bill, we are always told, is that it is concerned primarily with questions of disclosure. Whenever we try to raise other matters of company law reform, we are told that they are questions which should come within the purview of a later and greater Bill to come some time in the future. In my submission, if anything is a matter exclusively of disclosure within the meaning of the Bill, the clear and proper description of shares which are to be purchased by the public comes within that category. I hope, therefore, that the Government will not dodge the issue by shuffling it off to another Measure but will do something positive now by accepting the new Clause."There should be a prohibition on the granting of a quotation for non-voting and restricted voting equity shares (save in exceptional circumstances and subject to the approval of the Board of Trade) except as regards further issues of such shares for which a quotation had already been granted prior to the publication of our Report."
I support the new Clause. My hon. Friend the Member for Harrow, Central (Mr. Grant) has put the matter absolutely correctly. There are objections to A shares, and I endorse his view that we should discourage the divorce of ownership of companies from control. On the other hand, the abolition of A shares would present problems, particularly for the family controlled company, the company which, perhaps, has been built up under family control and which it is desirable to keep under family control, that form of control giving it the most efficient and dynamic form of leadership. Equally, if non-voting shares were abolished, one would, in effect, give a free bonus to the present holders of non-voting shares.
There are serious objections to the abolition of non-voting shares, but, on the other hand, it is vital that shareholders in public companies should know the exact nature of the shares for which they subscribe. Fond as I am of the Minister of State, I can only describe his reply in Committee as pretty unsatisfactory. He said that he was sympathetic to the object of the new Clause, and he pointed out that the Stock Exchange had for some time maintained a stipulation that, if a company sought quotation for its shares, the fact that certain shares did not carry full voting rights should be clearly disclosed. But the right hon. Gentleman went on to say:As I have said before, I cannot see that the Bill is very strong on philosophy anyway. Its edges are very blurred. There is no conceivable complication about this modest proposal, and to say that it is outside the scope of the Bill is asking the House to accept a nonsense. While the Government might legitimately say that some other suggestions we have put forward raise substantial problems and matters which should be considered in detail with outside interests, I cannot see that that applies to the Clause. It is a perfectly straightforward, sensible and modest proposition. I should not have thought that anybody could object to it on any grounds, and I therefore hope that we shall not hear from the Minister that, having given it further consideration, the Government still think that it is outside the scope of the Bill. I do not believe that they can sustain that thesis."We take the view that the proposal in the new Clause is outside the scope of the present Bill."—[OFFICIAL REPORT, Standing Committee E, 15th June, 1967; c. 1424.]
I have listened to the arguments of the hon. Gentlemen opposite and read again what was said in the Committee. We are not discussing the main question of whether there should be non-voting shares, which is a familiar and important controversy, but merely whether they should be more clearly labelled and made known to the public than at present. I think that in the great majority of cases there is not much doubt at present whether or not shares carry votes, but I agree that the possibility is open to us of going further.
I agree with what my right hon. Friend said in Committee I think that there is no objection in substance or merit to the proposal. There is a very strong case, whatever we do about non-voting shares, for making absolutely explicit whether or not a given equity share carries votes. The reason we did not insert the provision into the Bill is not primarily a matter of merit but merely that we have had to keep the Bill within reasonable bounds. It has already grow from 45 Clauses to, I think, 123. There are urgent reasons, particularly connected with motor insurance and other similar matters, for enacting the Bill. It must return to another place before it receives the Royal Assent, and for this reason we have felt bound in marginal cases to set a limitation upon the extra Clauses we introduce. If we were to make this further move it would have been necessary to hold proper consultations with interested outside bodies, notably the Stock Exchange Council. When we considered the matter after our Committee debate it became clear that there was not time to do that adequately and put down Amendments on Report in time for hon. Members opposite to have a reasonable opportunity of examining them. I thoroughly agree that there is a strong case for such a provision in the next instalment of company legislation. But, as I have said, the limitation both in the scope of the Bill and the time available to us unfortunately sets some bounds to what it is possible to do in the Bill before us.The Clause would be a very moderate reform in company law, but it is very necessary. It is necessary now and not in two, three or four years' time, when a second Bill is introduced. The President of the Board of Trade told the House clearly that he has no objection to it in principle, arid as far as I know no question has been raised about its drafting. It is a very weak reason for refusing to accept it to say that the Bill must be kept within reasonable bounds. The time involved would have been reduced if the Clause had been accepted in Committee and it will be reduced if the Minister accepts it now, because I shall certainly advise my right hon. and hon. Friends to divide unless the Government are prepared to do so.
The Government have introduced a number of new reforms at this stage, and we have no objection. The Clause does not need extensive consultations outside the House. The matter has been debated and debated ever since the Jenkins Report, and even before. I see no reason why the Clause could not be introduced into the Bill at this stage. The basis of our company law is that the equity or risk shareholders have the ultimate control of the company. The Jenkins Report put this clearly in paragraph 126, where the Committee quotes the opponents of voteless shares as saying that:Of course, shareholders with certain preferential rights normally share in that control legitimately together with the ordinary shareholders, but they are sometimes excluded. However, that practice concerning preferential shareholders does not affect the general principle. If shares are held out to be ordinary shares, equity shares, they should certainly carry voting powers, or at least—and this is as far as the Clause goes—if they have no voting powers or limited powers that fact should be stated in their title, so that it is perfectly clear to members of the public that they are buying shares with no or limited voting powers."…as a matter of public policy ownership of interests in companies should carry with it some measure of responsibility for their control, and that voteless shares tend on the contrary to establish de jure the severance of ownership from control which frequently arises de, facto from the indifference of shareholders."
Division No. 474.]
| AYES
| [3.58 p.m.
|
| Allason, James (Hemel Hempstead) | Balniel, Lord | Bennett, Sir Frederic (Torquay) |
| Astor, John | Barber, Rt. Hn. Anthony | Bennett, Dr. Reginald (Cos. & Fhm) |
| Baker, W. H. K. | Bell, Ronald | Bessell, Peter |
Reading the Jenkins Report as a whole, I think that it is true that the Committee disapproved of voteless shares. We have not gone as far as trying to abolish them by law; indeed, Jenkins pointed out the difficulties of doing that. Paragraph 136 of the Report states:
"We have found this question a difficult one, but after careful consideration of the arguments either way we have come to the conclusion that the case for abolition by law of voteless shares has not been made out."
My hon. Friend the Member for Harrow, Central (Mr. Grant) has just said that they may be very useful for family companies.
More unfortunate was that the Committee could not find a solution to the problem of naming the shares as being voteless. Paragraph 137 says:
"In our view, therefore, this is not a matter which could be effectively provided for by legislation providing in advance for all possible types of share and specifying all occasions on which and the manner in which their voteless character should be disclosed. We do, however, feel that a considerable advance could be made by voluntary action on the part of those concerned and we make recommendations below about the form such action might take."
The Report was published in 1962. The matter has been debated, and voluntary effort has been applied and found ineffective. There are still shares which do not carry voting powers, and there is nothing to disclose that in their title. Therefore, it is clear that voluntary effort has failed over the years since the matter has been debated.
The Jenkins Committee could not find a solution. I am conceited enough to say that my hon. Friend the Member for Harrow, Central has found one. No one has complained about the drafting or about the principle, and this seems to be an instance where the Clause could be included in the Bill with no trouble. There is no question of extending the Bill's bounds, and no need for further consultations. I hope that the right hon. Gentleman will say that the Government are now prepared to include the Clause.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 135, Noes, 193.
| Biffen, John | Hawkins, Paul | Page, Graham (Crosby) |
| Birch, Rt. Hn. Nigel | Heald, Rt. Hn. Sir Lionel | Page, John (Harrow, W.) |
| Brinton, Sir Tatton | Hill, J. E. B. | Pearson, Sir Frank (Clitheroe) |
| Bromley-Davenport. Lt.-Col. Sir W alter | Hirst, Geoffrey | Peel, John |
| Brown, Sir Edward (Bath) | Holland, Philip | Pounder, Ration |
| Bruce-Cardyne, J. | Hooson, Emlyn | Powell, Rt. Hn. J. Enoch |
| Bryan, Paul | Hutchison, Michael Clark | Pym, Francis |
| Buchanan-Smith, Alick (Angus,N&M) | Irvine, Bryant Godman (Rye) | Ramsden, Rt. Hn. James |
| Bullus, Sir Eric | Johnston, Russell (Inverness) | Ridley, Hn. Nicholas |
| Burden, F. A. | Kaberry, Sir Donald | Ridsdare, Julian |
| Campbell, Cordon | King, Evelyn (Dorset, s.) | Robson Brown, Sir William |
| Carr, Rt. Hn. Robert | Kirk, Peter | Rodgers, Sir John (Sevenoaks) |
| Cary, Sir Robert | Knight, Mrs. Jill | Rossi, Hugh (Hornsey) |
| Clegg, Waiter | Lancaster, Col. C. G. | Russell, Sir Ronald |
| Cooke, Robert | Langford-Holt, Sir John | Shaw, Michael (Sc'b'gh & Whitby) |
| Corfield, F. V. | Legge-Bourke, Sir Harry | Sinclair, Sir George |
| Costain, A. P. | Lewis, Kenneth (Rutland) | Stanton, Keith |
| Crosthwaite-Eyre, Sir Oliver | Lloyd, Ian (P'tsm'th, Langstone) | Steel, David (Roxburgh) |
| Cunningham, Sir Knox | Lloyd, Rt. Hn. Selwyn (Wirral) | Stoddart-Scott, Col. Sir M. (Ripon) |
| Currie, G. B H. | Loveys, W. H. | Summers, Sir Spencer |
| Dalkeith, Earl of | Lubbock, Eric | Tapsell, Peter |
| Dance, James | McAdden, Sir Stephen | Taylor, Sir Charles (Eastbourne) |
| Davidson, James(Aberdeenshire, W.) | Maclean, Sir Fitzroy | Tavlor, Edward M (G'gow, Cathrart) |
| Dean, Paul (Somerset, N.) | McMaster, Stanley | Taylor, Frank (Moss Side) |
| Deedes, Rt. Hn. W. F. (Ashford) | Maginnis, John E. | Temple, John M. |
| Dodds-Parker, Douglas | Marten, Neil | Thatcher, Mrs. Margaret |
| Elliott, R.W.(N'c'tle-upon-Tyne,N.) | Maude, Angus | Thorpe, Rt. Hn. Jeremy |
| Errington, Sir Eric | Mawby, Ray | Turton, Rt. Hn. R. H. |
| Eyre, Reginald | Maxwell-Hyslop, R. J. | Vaughan-Morgan, Rt. Hn. Sir John |
| Fortescue, Tim | Maydon, Lt.-Cmdr. S. L. C. | Wainwright, Richard (Colne Valley) |
| Foster, Sir John | Mills, Peter (Torrington) | Walker, Peter (Worcester) |
| Gilmour, Sir John (Fife, E.) | Mitchell, David (Basingstoke) | Ward, Dame Irene |
| Glover, Sir Douglas | Monro, Hector | Weatherill, Bernard |
| Gower, Raymond | Montgomery, Fergus | Whitehlaw, Rt. Hn. William |
| Grant, Anthony | More, Jasper | Wills, Sir Gerald (Bridgwater) |
| Grant-Ferris, R. | Morrison, Charles (Devizes) | Wilson, Geoffrey (Truro) |
| Griffiths, Eldon (Bury St. Edmunds) | Munro-Lucas-Tooth, Sir Hugh | Wood, Rt. Hn. Richard |
| Grimond, Rt. Hn. J. | Nabarro, Sir Gerald | Worsley, Marcus |
| Hall-Davis, A. G. F. | Neave, Airey | Wylie, N. R. |
| Hamilton, Michael (Salisbury) | Nicholls, Sir Harmar | Younger, Hn. George |
| Harris, Frederic (Croydon, N.W.) | Nott, John | |
| Harrison, Col. Sir Harwood (Eye) | Onslow, Crarley | TELLERS FOR THE AYES: |
| Harvey, Sir Arthur Vere | Osborne, Sir Cyril (Louth) | Mr. Timothy Kitson and |
| Mr. Anthony Royle. | ||
NOES
| ||
| Allaun, Frank (Sallord, E.) | Darling, Rt. Hn. George | Hart, Mrs. Judith |
| Alldritt, Walter | Davies, Dr. Ernest (Stretford) | Haseldine, Norman |
| Allen, Scholefield | Davies, S. O. (Merthyr) | Hazell, Bert |
| Anderson, Donald | Dell, Edmund | Heifer, Eric S. |
| Archer, Peter | Dempsey, James | Herbison, Rt. Hn. Margaret |
| Armstrong, Ernest | Dickens, James | Hooley, Frank |
| Atkins, Ronald (Preston, N.) | Doig, Peter | Howie, W. |
| Atkinson, Norman (Tottenham) | Driberg, Tom | Hoy, James |
| Barnett, Joel | Dunn, James A. | Huckfield, L. |
| Baxter, William | Dunnett, Jack | Hughes, Emrys (Ayrshire, S.) |
| Beaney, Alan | Dunwoody, Mrs. Gwyneth (Exeter) | Hughes, Hector (Aberdeen, N.) |
| Bence, Cyril | Dunwoody, Dr. John (F'th & C'b'e) | Hughes, Roy (Newport) |
| Benn, Rt. Hn. Anthony Wedgwood | Edwards, Rt. Hn. Ness (Caerphilly) | Hunter, Adam |
| Bennett, James (G'gow, Bridgeton) | Edwards, Robert (Bilston) | Hynd, John |
| Blackburn, F. | Edwards, William (Merioneth) | Jackson, Colin (B'h'se & Spenh'gh) |
| Blenkinsop, Arthur | Ellis, John | Jackson, Peter M. (High Peak) |
| Boardman, H. | English, Michael | Jay, Rt. Hn, Douglas |
| Booth, Albert | Ennals, David | Johnson, Carol (Lewisham, S.) |
| Bottotmley, Rt. Hn. Arthur | Ensor, David | Jones, Dan (Burnley) |
| Bowden, Rt. Hn. Herbert | Evans, loan L. (Birm'h'm, Yardley) | Jones, Rt. Hn. Sir Elwyn (W.Ham,S.) |
| Boyden, James | Finch, Harold | Jones, J. Idwal (Wrexham) |
| Braddock, Mrs. E. M. | Fitch, Alan (Wigan) | Jones, T. Alec (Rhondda, West) |
| Kelley, Richard | ||
| Brooks, Edwin | Fletcher, Raymond (Ilkeston) | Lawson, George |
| Brown, Hugh D. (G'gow, Provan) | Foley, Maurice | Lever, L. M. (Ardwick) |
| Brown, Bob (N'c'tle-upon-Tyne,W.) | Ford, Ben | Lewis, Arthur (W. Ham, N.) |
| Brown, R. W. (Shoreditch & F'bury) | Forrester, John | Upton, Marcus |
| Buchanan, Richard (G'gow, Sp'burn) | Fraser, John (Norwood) | Lomas, Kenneth |
| Cant, R. B. | Galpem, Sir Myer | Loughiin, Charles |
| Carmichael, Neil | Gardner, Tony | Luard, Evan |
| Carter-Jones, Lewis | Garrett, W. E. | Mabon, Dr. J. Dickson |
| Coleman, Donald | Ginsburg, David | McBride, Neil |
| Concannon, J. D. | Gray, Dr. Hugh (Yarmouth) | McCarm, John |
| Craddock, George (Bradford, S.) | Gregory, Arnold | MacColl, James |
| Crosland, Rt. Hn. Anthony | Griffiths, Will (Exchange) | McGuire, Michael |
| Crossman, Rt. Hn. Richard | Hamilton, William (Fife, W.) | Mackenzie, Cregor (Rutherglen) |
| Culien, Mrs. Alice | Harper, Joseph | Mackle, John |
| MacMillan, Malcolm (Western Isles) | Page, Derek (King's Lynn) | Slater, Joseph |
| McMillan, Tom (Glasgow, C.) | Paget, R. T, | Small, William |
| McNamara, J. Kevin | Pannell, Rt. Hn. Charles | Spriggs, Leslie |
| MacPherson, Malcolm | Park, Trevor | Steele, Thomas (Dunbartonshire, w.) |
| Mahon, Peter (Preston, s.) | Parkyn, Brian (Bedford) | Strauss, Rt. Hn. G. R. |
| Mallalieu, E. L. (Brigg) | Pavitt, Laurence | Swingler, Stephen |
| Mallalieu, J. P. W. (Huddersfield, E.) | Pearson, Arthur (Pontypridd) | Symonds, J. B. |
| Manuel, Archie | Peart, Rt. Hn. Fred | Taverne, Dick |
| Mapp, Charles | Pentiand, Norman | Thornton, Ernest |
| Marquand, David | Perry, Ernest G. (Battersea, S.) | Tinn, James |
| Mason, Roy | Perry, George H. (Nottingham, S.) | Tuck, Raphael |
| Maxwell, Robert | Price, Christopher (Perry Bar) | Urwin, T. W. |
| Millan, Bruce | Price, Thomas (Westhoughton) | Wainwright, Edwin (Dearne Valley) |
| Miller, Dr. M. S. | Price, William (Rugby) | Walker, Harold (Doncaster) |
| Milne, Edward (Blyth) | Probert, Arthur | Wallace, George |
| Mitchell, R, C. (S'th'pton, Test) | Rankin, John | Watkins, Tudor (Brecon & Radnor) |
| Morgan, Elystan (Cardiganshire) | fees, Merlyn | Wellbeloved, James |
| Morris, Alfred (Wythenshawe) | Roberts, Albert (Normanton) | White, Mrs. Elrene |
| Morris, Charles R. (Openshaw) | Roberts, Goronwy (Caernarvon) | Whitlock, William |
| Moyle, Roland | Robertson, John (Paisley) | Williams, Alan (Swansea, W.) |
| Murray, Albert | Rogers, George (Kensington, N.) | Willis, George (Edinburgh, E.) |
| Newens, Stan | Rose, Paul | Wilson, William (Coventry, S.) |
| Noel-Baker, Francis (Swindon) | Ross, Rt. Hn. William | Winterbottom, R. E. |
| Norwood, Christopher | Rowlands, E. (Cardiff, N.) | Woodburn, Rt. Hn. A. |
| Ogden, Eric | Sheldon, Robert | Woof, Robert |
| Orbach, Maurice | Shinwell, Rt. Hn. E. | Yates, Victor |
| Orme, Stanley | Short, Mrs. Renée(W'hampton, N.E.) | |
| Owen, Dr. David (Plymouth, S'tn) | Silkin, Rt. Hn. John (Deptford) | TELLERS FOR THE NOES: |
| Owen, Will (Morpeth) | Silverman, Julius (Aston) | Mr. Walter Harrison and |
| Mr. Charles Grey. |
New Clause 9—(Form Of Registers)
A company shall not be in default in complying with its statutory obligations relating to the keeping of registers and to the form and availability for inspection thereof solely by reason of the fact that—
Brought up, and read the First time.
I beg to move, That the Clause be read a Second time.
The purpose of the Clause is to simplify and modernise the keeping of company registers. Paragraph (a) deals with the modern methods of keeping a register. There is no doubt that the draftsmen of the 1948 Companies Act contemplated the register being kept as a book. Section 110 of the Act speaks of the company keeping a register. Section 111 speaks of the index to the register. Section 113 talks about making the register available to the public. If a register is kept in modern form on a computer or even on microfilm it is very difficult to imagine how one presents it for inspection by the public Many large companies have installed computers or use computer time for maintaining their records and are in doubt about whether they can maintain their statutory registers on the same basis. Many other companies use microfilm. Again, as the law stands, they are in doubt whether that is legal for their registers. We must not let the law obstruct the streamlining of administration. The second half of our proposal, which comes in the second half of paragraph (a), is that the basic documents should be retained for inspection. That is to say, if somebody wishes to see the facts on which the register is based, the transfers, letters of allotment and documents on which the register has been compiled should be retained so that when somebody asks to see the register, instead of being presented with a computer and told what button to press or a drawer full of microfilm, the documents on which the register was compiled can be pro-ducted. The company does not, however, want to keep those documents for an excessive time. It seems to us that 12 years is quite long enough to keep the documents available and that after that time the company should be permitted by law to destroy them. There seems to be no need—this was recognised in the Jenkins Report—to keep a record of the membership of persons who have not been members of the company during the last 30 years. It is true that one has frequently to turn back for considerable periods on the register for purposes required by individuals in settlement of their affairs, but there seems to be no reason why a company should maintain for the public a service which will cost it a lot in space to keep records more than 30 years old. There is no doubt that the modern methods of recording were not recognised when the Companies Act, 1948, was drafted. At that time, it was thought that the register should be kept in a book solemnly and laboriously written up. That is reflected in the wording of the Sections to which I have referred. A company is bound by law to keep a register in that form. That is nonsense at a time when so many labour, time and energy-saving devices are in existence and should be clearly authorised by law. A rough calculation which I have made shows that in the cost of the space required under existing law to accommodate records and details of wages and other items in the laborious form in which they have to be kept, we are losing in production as much as £5 million a year when one tots up rent and wages in keeping records in the present out-of-date form. The Government are supposed to have heralded the technological age. I hope that we shall have it from the Minister of State that he can accept the Clause and prove that this go-ahead Government are alive to productive effort.I shall not discuss the merits of the new Clause. On its merits, there are no arguments against it. There are no arguments except in favour of a provision on such lines, if not exactly in the precise wording of the new Clause, going on the Statute Book at the earliest opportunity.
All that I can say to the House is that this is one of many proposals—unfortunately, too many proposals—equally good and equally constructive, that we cannot accommodate in the Bill in the time available to us. The hon. Member for Crosby (Mr. Graham Page) has quoted the Jenkins Report. Paragraph 483, to which he referred, contains 12 or more proposals much on these lines. The hon. Member has picked out two and has put them into the new Clause. All of them should be considered, and we propose to consider them for the second Companies Bill which, I repeat, we undertake to produce and certainly to get on the Statute Book during the present Parliament.4.15 p.m.
The Minister of State's reply is very unsatisfactory, because he underlines the hopeless state into which we have got with the Bill. It is not good enough for the Government to bring forward the Bill—this was raised on numerous occasions in Committee—and say repeatedly that they will insert a new Clause or Amendment of their own and that if anomalies result from it, when the second Bill is introduced they will correct such anomalies as have arisen from their new Clause or Amendment, whereas when my hon. Friends put forward Amendments or new Clauses the Government say that they do not have time to include them in the Bill, however constructive and worth while they may be, but will consider them when their second Companies Bill is introduced.
We fully appreciate that the Government wish to bring forward the Bill urgently to deal with problems which have arisen on motor insurance and certain items in the Moneylenders Act, but why do the Government still insist on bringing forward what they admit to be an incomplete and partially unsatisfactory Bill, because it cannot contain all the items for disclosure which the Government would like and which my hon. Friends would like? Why do they bring forward these companies provisions when it would have been so much more satisfactory if they could have been brought forward in the Government's second Bill? We could then have had one Statute of companies legislation which would have been of the quality of the 1948 Act. The Minister of State admits that the new Clause is constructive. He admitted that the previous new Clause was constructive. What is the object of hastening forward these provisions in the companies section of the Bill on to the Statute Book if we cannot include constructive suggestions at this time? It is thoroughly unsatisfactory for the Government constantly to say that they accept faults and errors in their own new Clauses and Amendments but will give them a tryout and if they happen to be full of errors, many of which are first seen by hon. Members opposite or by my hon. Friends on this side, they will correct them when the second Bill comes along. That is not the way in which legislation should be dealt with and brought before the House.If we lie down under this sort of treatment, we will be allowing the Government to take up a novel attitude. For the second time, we have new Clauses which have abundant merit. Nobody denies it, least of all the Government spokesman. When the Minister of State, for whom I have considerable respect, comes out with the same sort of argument that his right hon. Friend the President of the Board of Trade used a few minutes ago—that these are admirable ideas but for some reason, which is certainly not apparent to me, they cannot be adopted at this stage—the House of Commons is in danger of being treated with contempt.
We are here to represent the country, for better or for worse, and amongst a lot of other things which are going forward we have opportunities of doing something for the better. I do not believe that the Minister of State is at variance with us about the merits of the new Clause. We are seeing what is called the "n.i.h." factor creeping in—the "not invented here" factor, which I have seen in one or two other aspects of national endeavour, whereby the Government say that if they did not think of an idea, it cannot be any good. Here we have a Government apparently condemning things for no better reason than that they did not think of them themselves and put them into the Bill originally. I condemn that unreservedly. I hope the right hon. Gentleman will do something to get himself out of the mess he is in.If I may intervene to put right those hon. Members—I am not saying this in any derogatory way—who did not have the benefit of hearing the discussions in the Standing Committee, I would point out to them that what we have put into the Bill, in this part dealing with disclosure, where this proposal comes in the Bill if it comes in anywhere at all, is based on what are called the disclosure recommendations of the Jenkins Committee.
The disclosure provisions occupy about one-third of the Jenkins recommendations. There are about another 100 or so recommendations still to come in some kind of legislation. What the Opposition have done is to pick out one or two of this large number of propositions still to come and say that those they have selected should be put into the Bill. To be perfectly fair about all this, we should pick out the whole lot. It is not a question of our not having thought about these things. We have thought about them, and are making preparations to see that in one way or another they come into the second Companies Bill, where we decide they should come into the Bill.Mr. Gower.
The right hon. Gentleman was intervening, I thought, in my remarks. Was he not?
I thought the hon. Member had completed his speech.
The right hon. Gentleman did not seem to think so.
If the right hon. Gentleman was intervening the hon. Member may continue.
All I will say is that the arguments very deftly put forward by the right hon. Gentleman are ingenious ways of trying to prevent some harmless —indeed, beneficial—measures going through. Would not half a loaf be better than no bread, in the circumstances? Would it not be better in the circumstances to allow this proposal to go on the Statute Book? It may be years before we have the second Bill. After all, who knows what is going to happen to the present Government? There have been various disruptions and we see further disruptions immediately ahead. Today the Government have an opportunity to accept a Clause which would improve the Bill, and they should take this chance of improving it.
The right hon. Gentleman seemed singularly uncomfortable when he gave his explanation, and nothing he said has in any way explained the Government's refusal to incorporate this new Clause in the Bill. I share the view of my hon. Friend the Member for Gosport and Fareham (Dr. Bennett). We on this side of the House respect the right hon. Gentleman, and we are sorry he had to give such an entirely inadequate answer a few moments ago. I expected him to say that, because this is one of the things which had been apportioned by the Government to the second Bill, it was inconceivable it should not be included in this, but he did not give a single valid argument in favour of the incorporation of this Clause into this Bill: not a single one.
Even at this stage I wonder, cannot this be reconsidered? Is it not absurd that something which is agreed on both sides of the House to be highly beneficial cannot be incorporated in the present Measure? I really cannot understand why the Government cannot even at this stage alter their minds.The Minister said in effect that the Bill is really only half a Companies Bill. One has only to review the Amendments put down on Report to see that it is a half-baked Bill.
This new Clause affects the efficiency and the modernisation of offices. It is a matter of real value. If the Government intend in a later Bill to introduce such a provision, surely even at this stage they could do it now and accept this new Clause. There would be an avantage in doing so. Were the new Clause put into the Bill, when it came to be operated, some small snags might appear. So the Government would have a trial run, and in their second Bill—if they are the Government long enough to produce that second Bill—they would have the opportunity to correct those snags. But, as my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) said, just to turn this down out of hand is just not good enough, and they do that because they did not think of it themselves. No harm could possibly be done by introducing this new Clause here. After all, we want to get modern equipment into offices, and that is one way of saving S.E.T. which the Government say they do not want people to have to have to pay. Accepting this new Clause would be an encouragement to getting new, modern equipment.I really do not understand why the Government have refused to meet the Opposition's request on this new Clause. It is obviously a very sensible one, and the right hon. Gentleman has admitted that it is a sensible one. Why suddenly on Report stage should the Government say that in no circumstances will they accept a new Clause, the proposals in which, they admit, would improve the Bill, just because at some time in the future they may have another Bill? They are apparently defeating the objects of their Bill.
Of course, one would like to know when the next Companies Bill will come out, because a great deal depends upon this. We are told that there will be another one, but not what sort of frame it is intended to have. If they say they will consider these things when the next Companies Bill comes, the second course, obviously they should know what its shape will be, and if we could be told the intended shape of the next Bill—No.
—we should be in a better position—
No. Not on this new Clause.
I am coming to the point, Mr. Speaker—we should be in a better position to judge why the Government so insist upon refusing to accept this new Clause.
I join my hon. Friends in asking that the Minister, even at this stage, reconsider the matter. He has already been twice at that Dispatch Box and said, "No". If on the next occasion he can say "Yes", that will be very helpful. In the past we have had so many promises from the Government that they will do certain things in the future, and it seems to be an extraordinary habit of this Government that they make a promise today which is forgotten very shortly afterwards —or events overcome them and they cannot carry out their promises. The Minister now has an opportunity to put this right. I hope that he will avail himself of it.I am sorry to say that my hon. Friends must really be a little more realistic. How can they expect a Government who were returned to power on a policy, they said, designed for the modernisation of our technical processes and have then done exactly the opposite ever since they were returned to power to accept a new Clause designed to modernise? This is really asking too much. It would really mean that the Government would have carried out one of their promises.
Hardly.
That would be quite startling, and it would mean that the Government were at last doing something to modernise our society.
This is exactly what this new Clause would do. It is asking the Government to show that they accept that we do not nowadays write with quill pens and do not sand the register after signing our names. Yet the whole thinking of the party opposite is exactly in tune with sanding the paper, waiting for the ink to dray, they move so slowly and cautiously towards an advancement in our society. Here they have an opportunity to show they realise that nowadays there are offices where microfilm is used, where there are great technological advances. Of course, that is against all the thinking which is the basis of Socialism and on which Socialism ever came to power. Theirs is a party which is full of Luddites. How can we expect them to accept a Clause like this? It is far too much to expect. There is yet another point which the right hon. Gentleman had better take into account if the Government do not accept this new Clause. The reason is that the Government have run out of steam. If they accept the new Clause, they will have nothing in their legislative programme for next Session. They will have to keep back something, because they have no new ideas. Their so-called programme is completed, and the country is suffering from the stresses and strains resulting from all the ill thought out—
Order. The hon. Gentleman's eloquence is carrying him out of the bounds of order. He must come back.
Therefore, Mr. Speaker, I do not propose getting any further out of order. I am sure that the House would like the Government to accept the new Clause, thinks that they ought to accept it, but knows that they will do no such thing. I hope that my hon. Friend will divide the House.
4.30 p.m.
The Minister of State's first words were that there was no possible reason why the Clause should not be accepted for inclusion in the Statute Book at the earliest possible moment. However, what sort of legislative policy is it when we have a Companies Bill of which the short title makes it clear that the new Clause is precisely the sort of thing which should be in it but when the Government say that this is not the earliest opportunity to put it in the Statute Book?
We know that the law is being honoured in the breach, if at all. I have no doubt that many companies are keeping their registers in this way, and it cannot be in the interests of the country that the law should be honoured in its breach nor, as my hon. Friend the Member for Ormskirk (Sir D. Glover) pointed out, can it make sense even for this Government to reject a Clause which is designed at least to conform to the Labour Party's slogan about the white heat of the technological revolution, however little members of that party themselves conform to any concept that it raises in one's mind. In the previous Amendment, the President of the Board of Trade complained that there had not been time to consult. Heaven knows what consultation was necessary to see whether it was desirable to mark some shares with the true meaning of what they implied. In our earlier discussions last week, at least two new Clauses were introduced by the Government which they admitted they had only thought of in the last two or three days. They made no case for their urgency or for their consistency with any principle which may run through the Bill. In the present case, we are told that in no circumstances can the Clause be accepted because it would be unfair to select one or two matters for which a specially good case is made out when someone else has forgotten to bring forward the others and make an equally good case. What nonsense! We are expected to accept Amendments put down by the Government which relate not to the Companies Bill but to the Exchange Control Act and which merely add other provisions to the Bill which have nothing to do with company law. I suggest to right hon. Gentlemen opposite that this is an inauspicious way to begin the proceedings on the second day of the Report stage. On the first day, at the Government's suggestion, we rose at about 11 o'clock to assist the Leader of the House, if that is not a misnomer in itself, to abuse the
Division No. 475.]
| AYES
| [4.35 p.m.
|
| Allason, James (Hemel Hempstead) | Hamilton, Michael (Salisbury) | Osborne, Sir Cyril (Louth) |
| Astor, John | Harris, Frederic (Croydon, N.W.) | Page, Graham (Crosby) |
| Atkins, Humphrey (M't'n & M'd'n) | Harrison, Col. Sir Harwood (Eye) | Page, John (Harrow, W.) |
| Baker, W. H. K. | Harvey, Sir Arthur Vere | Pearson, Sir Frank (Clitheroe) |
| Balniel, Lord | Hawkins, Paul | Peel, John |
| Barber, Rt. Hn. Anthony | Heald, Rt. Hn. Sir Lionel | Pounder, Rafton |
| Bell, Ronald | Hill, J. E. B. | Powell, Rt. Hn. J. Enoch |
| Bennett, Sir Frederic (Torquay) | Hirst, Geoffrey | Pym, Francis |
| Bennett, Dr. Reginald (Gos. & Fhm) | Holland, Philip | Ramsden, Rt. Hn. James |
| Bessell, Peter | Hooson, Emlyn | Renton, Rt. Hn. Sir David |
| Biffen, John | Hunt, John | Ridley, Hn. Nicholas |
| Birch, Rt. Hn. Nigel | Hutchison, Michael Clark | Ridsdale, Julian |
| Brinton, Sir Tatton | Irvine, Bryant Godman (Rye) | Robson Brown, Sir William |
| Bromley-Davenport, Lt.-Col. Sir Walter | Johnston, Russell (Inverness) | Rodgers, Sir John (Sevenoaks) |
| Brown, Sir Edward (Bath) | Kaberry, Sir Donald | Rossi, Hugh (Hornsey) |
| Bruce-Cardyne, J. | King, Evelyn (Dorset, S.) | Russell, Sir Ronald |
| Bryan, Paul | Kirk, Peter | Shaw, Michael (Sc'b'gh & Whitby) |
| Buchanan-Smith, Alick (Angus, N&M) | Kitson, Timothy | Sinclair, Sir George |
| Bullus, Sir Eric | Knight, Mrs. Jill | Stainton, Keith |
| Burden, F. A. | Lancaster, Col. C. G. | Steel, David (Roxburgh) |
| Campbell, Gordon | Langford-Holt, Sir John | Stoddart-Scott, Col. Sir M. (Ripon) |
| Carr, Rt. Hn. Robert | Legge-Bourke, Sir Harry | Summers, Sir Spencer |
| Cooke, Robert | Lewis, Kenneth (Rutland) | Tapsell, Peter |
| Cordle, John | Lloyd, Ian (P'tsm'th, Langstone) | Taylor, Sir Charles (Eastbourne) |
| Corfield, F. V. | Lloyd, Rt. Hn. Selwyn (Wirral) | Taylor, Edward M. (G'gow, Cathcart) |
| Costain, A. P. | Loveys, W. H. | Taylor, Frank (Moss Side) |
| Cunningham, Sir Knox | Lubbock, Eric | Temple, John M. |
| Currie, G. B H. | McAdden, Sir Stephen | Thatcher, Mrs. Margaret |
| Dalkeith, Earl of | Mac Arthur, Ian | Thorpe, Rt. Hn. Jeremy |
| Dance, James | Maclean, Sir Fitzroy | Turton, Rt. Hn. R. H. |
| Dean, Paul (Somerset, N.) | McMaster, Stanley | |
| Maginnis, John E. | van Straubenzee, W. R. | |
| Dodds-Parker, Douglas | Marten, Neil | Vaughan-Morgan, Rt. Hn. Sir John |
| Elliott, R.W. (N'c'tle-upon-Tyne, N.) | Maude, Angus | Wainwright, Richard (Colne Valley) |
| Emery, Peter | Mawby, Ray | Walker, Peter (Worcester) |
| Errington, Sir Eric | Maxwell-Hyslop, R. J. | Ward, Dame Irene |
| Eyre, Reginald | Maydon, Lt.-Cmdr. S. L. C. | Weatherill, Bernard |
| Fortescue, Tim | Mills, Peter (Torrington) | Whitelaw, Rt. Hn. William |
| Foster, Sir John | Mitchell, David (Basingstoke) | Wills, Sir Gerald (Bridgwater) |
| Giles, Rear-Adm. Morgan | Montgomery, Fergus | Wilson, Geoffrey (Truro) |
| Gilmour, Sir John (Fife, E) | More, Jasper | Wood, Rt. Hn. Richard |
| Glover, Sir Douglas | Morrison, Charles (Devizes) | Worsley, Marcus |
| Gower, Raymond | Munro-Lucas-Tooth, Sir Hugh | Wright, Esmond |
| Grant-Ferris, R. | Nabarro, Sir Gerald | Wylie, N. R. |
| Griffiths, Eldon (Bury St. Edmunds) | Neave, Airey | Younger, Hn. George |
| Grimond, Rt. Hn. J. | Nichollas, Sir Harmar | TELLERS FOR THE AYES: |
| Gurden, Harold | Nott, John | Mr. Anthony Royle and |
| Hall-Davis, A. G. F. | Onslow, Craniey | Mr. Anthony Grant. |
NOES
| ||
| Allaun, Frank (Salford, E.) | Anderson, Donald | Atkinson, Norman (Tottenham) |
| Alldritt, Walter | Archer, Peter | Bagier, Gordon A. T. |
| Alien, Scholefield | Atkins, Ronald (Preston, N.) | Barnett, Joel |
procedure of the House in relation to Private Members' time. Now we are expected to get through the greater part of the Report stage in a single sitting. We start on the basis that even the most sensible Amendments, which are acceptable on their merits and on their drafting, nevertheless are rejected by the Government, whereas at about 4 o'clock in the morning, we shall be discussing new Clauses which they have put down in the last few days. I hope that we shall divide, and I hope that we shall continue to divide throughout the day.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 138, Noes 206.
| Baxter, William | Hamilton, William (Fife, W.) | Orme, Stanley |
| Beaney, Alan | Harrison, Walter (Wakefield) | Owen, Dr. David (Plymouth, S'tn) |
| Bance, Cyril | Haseldine, Norman | Owen, Will (Morpeth) |
| Benn, Rt. Hn. Anthony Wedgwood | Hazell, Bert | Padley, Walter |
| Bennett, James (G'gow, Bridgeton) | Heffer, Eric S. | Page, Derek (King's Lynn) |
| Blackburn, F. | Herbison, Rt. Hn. Margaret | Paget, R. T. |
| Blenkinsop, Arthur | Hooley, Frank | Pannell, Rt. Hn. Charles |
| Boardman, H. | Howie, W. | Parkyn, Brian (Bedford) |
| Booth, Albert | Hoy, James | Pavitt, Laurence |
| Bottomley, Rt. Hn. Arthur | Huckfield, L. | Pearson, Arthur (Pontypridd) |
| Bowden, Rt. Hn, Herbert | Hughes, Emrys (Ayrshire, S.) | Peart, Rt. Hn. Fred |
| Boyden, James | Hughes, Hector (Aberdeen, N.) | Pentland, Norman |
| Braddock, Mrs. E. M. | Hughes, Roy (Newport) | Perry, Ernest G. (Battersea, S.) |
| Bradley, Tom | Hunter, Adam | Perry, George H. (Nottingham, S.) |
| Brooks, Edwin | Jackson, Colin (B'h'se & Spenb'gh) | Price, Christopher (Perry Barr) |
| Brown, Hugh D. (G'gow, Provan) | Jackson, Peter M. (High Peak) | Price, Thomas (Westhoughton) |
| Brown, Bob(N'c'tle-upon-Tyne, W.) | Jay, Rt. Hn. Douglas | Price, William (Rugby) |
| Brown, R. W. (Shoreditch & F'bury) | Johnson, Carol (Lewisham, S.) | Probert, Arthur |
| Buchanan, Richard (G'gow, Sp'burn) | Jones, Dan (Burnley) | Rankin, John |
| Butler, Herbert (Hackney, C.) | Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) | Rees, Merlyn |
| Cant, R. B. | Jones, J. Idwal (Wrexham) | Roberts, Albert (Normanton) |
| Carmichael, Neil | Jones, T. Alec (Rhondda, West) | Roberts, Goronwy (Caernarvon) |
| Carter-Jones, Lewis | Kelley, Richard | Robertson, John (Paisley) |
| Coleman, Donald | Kerr, Russell (Feltham) | Rogers, George (Kensington, N.) |
| Concannon, J. D. | Lawson, George | Rose, Paul |
| Conlan, Bernard | Lestor, Miss Joan | Ross, Rt. Hn. William |
| Craddock, George (Bradford, S.) | Lever, L. M. (Ardwick) | Rowlands, E. (Cardiff, N.) |
| Crosland, Rt. Hn. Anthony | Lewis, Arthur (W. Ham, N.) | Sheldon, Robert |
| Cullen, Mrs. Alice | Lewis, Ron (Carlisle) | Shinwell, Rt. Hn. E. |
| Darling, Rt. Hn. George | Lipton, Marcus | Short, Rt. Hn. Edward (N'c'tle-u-Tyne) |
| Davidson, Arthur (Accrington) | Lomas, Kenneth | Short, Mrs. Renée(W'hampton, N.E.) |
| Davies, Dr. Ernest (Stretford) | Loughlin, Charles | Silverman, Julius (Aston) |
| Davies, S. O. (Merthyr) | Luard, Evan | Slater, Joseph |
| Dell, Edmund | Mabon, Dr. J. Dickson | Small, William |
| Dempsey, James | McBride, Neil | Snow, Julian |
| Dickens, James | McCann, John | Spriggs, Leslie |
| Doig, Peter | MacColl, James | Steele, Thomas (Dunbartonshire, W.) |
| Driberg, Tom | McGuire, Michael | Stonehouse, John |
| Dunnett, Jack | Mackenzie, Gregor (Rutherglen) | Strauss, Rt. Hn. G. R. |
| Dunwoody, Mrs. Gwyneth (Exeter) | Mackie, John | Swingler, Stephen |
| Dunwoody, Dr. John (F'th & C'b'e) | Mackintosh, John P. | Taverne, Dick |
| Edwards, Rt. Hn. Ness (Caerphilly) | MacMillan, Malcolm (Western Isles) | Thomas, George (Cardiff, W.) |
| Edwards, Robert (Bilston) | McMillan, Tom (Glasgow, C.) | Thornton, Ernest |
| Edwards, William (Merioneth) | McNamara, J. Kevin | Tinn, James |
| Ellis, John | MacPherson, Malcolm | Tomney, Frank |
| English, Michael | Mahon, Peter (Preston, S.) | Tuck, Raphael |
| Ennals, David | Mallalieu, E. L. (Brigg) | Urwin, T. W. |
| Ensor, David | Mallalieu, J.P.W. (Huddersfield, E.) | Wainwright, Edwin (Dearne Valley) |
| Evans, Albert (Islington, S.W.) | Manuel, Archie | Walker, Harold (Doncaster) |
| Evans, loan L. (Birm'h'm, Yardley) | Mapp, Charles | Wallace, George |
| Finch, Harold | Marquand, David | Watkins, Tudor (Brecon & Radnor) |
| Fitch, Alan (Wigan) | Marsh, Rt. Hn. Richard | Wellbeloved, James |
| Fletcher, Raymond (Ilkeston) | Mason, Roy | White, Mrs. Eirene |
| Foley, Maurice | Maxwell, Robert | Whitlock, William |
| Ford, Ben | Millan, Bruce | Williams, Alan (Swansea, W.) |
| Forrester, John | Miller, Dr. M. S. | Williams, Clifford (Abertillery) |
| Fraser, John (Norwood) | Milne, Edward (Blyth) | Willis, George (Edinburgh, E.) |
| Galpern, Sir Myer | Mitchell, R. C. (S'th'pton, Test) | Wilson, William (Coventry, S.) |
| Gardner, Tony | Morgan, Elystan (Cardiganshire) | Winterbottom, R. E. |
| Garrett, W. E. | Morris, Alfred (Wythenshawe) | Woodburn, Rt. Hn. A. |
| Ginsburg, David | Morris, Charles R. (Openshaw) | Woof, Robert |
| Gourlay, Harry | Moyle, Roland | Yates, Victor |
| Gray, Dr. Hugh (Yarmouth) | Murray, Albert | |
| Gregory, Arnold | Newens, Stan | TELLERS FOR THE NOES: |
| Grey, Charles (Durham) | Noel-Baker, Francis (Swindon) | |
| Griffiths, Wilt (Exchange) | Norwood, Christopher | Mr. Joseph Harper and |
| Hamilton, James (Bothwell) | Ogden, Eric | Mr. Ernest Armstrong. |
| Orbach, Maurice |
New Clause No 10—{Rectification Of Register)
(1) The provisions of the principal Act and of the Stock Transfer Act 1963 concerning the registration of transfers of shares and debentures, the registers of members and debenture holders, the issue of share certificates and debentures and all matters relating thereto shall be modified to the following extent, namely, that it shall not be unlawful for a company to rectify the register of its members or of its debenture holders in accordance with and in order to give effect to a request to which this section applies and to issue share certificates and debentures accordingly.
(2) This section applies to a request which is made to the company in writing (accompanied by the share certificates or the debentures to which the request relates) by the person who lodged with the company the transfer to which the request relates, after the said transfer has been registered by the company, and which contains a statement of the rectification required and an assurance that the request arises from an error in or an unintentional, omission from the said transfer.
(3) A request made in pursuance of this section shall be an 'other document' within the meaning of section 483 of the principal Act (penalty for false statements) and accordingly a reference to this section shall be added to the provisions specified in Schedule 15 of the principal Act.—[ Graham Page.]
Brought up, and read the First time.
I beg to move, That the Clause be read a Second time.
This, again, is a very modest reform in company law, but it is an urgent one, because in some respects it has the same type of urgency as the last Clause, in that the law in this case is being observed partly in the breach, and unless the Clause is accepted commercial transactions will be obstructed by the law. The right hon. Gentleman will perhaps be justified in blaming me personally for causing this obstruction, because it arises out of the Stock Transfer Act, 1963, which I am proud to have been responsible for geting through the House. This Act has saved an enormous amount of time in the transfer of shares and stock, and this is an important element in our commercial system, and in the financing of industry. It is very important that share transactions are completed expeditiously, and that we should not burden our productive effort with unnecessary administration and administrative costs in the transfer of shares. This is perhaps only one part of the problem of production, but it is a very important part, and can, if it is wrongly administered, be very obstructive. 4.45 p.m. The Stock Transfer Act of 1963 has worked very satisfactorily, but it has had some small teething troubles. In the typical spirit of those who administer our commercial affairs—perhaps we can call them "The City" as a general name—the teething troubles have to some extent been relieved, or solved, or remedied, or whatever one does with teething troubles, but to some extent with a disregard of the law. The transfer of shares does not now need the signature of the transferee, with the result that the transferee to whom the shares are transferred seldom sees the transfer. It goes through the brokers to the company for the registration of the shares in the transferee's name, and the issue of a certificate to him. It may hap- pen that in the course of the transfer being prepared, and the transferee himself not even seeing the document, some error occurs in his name. He is called "John Brown" instead of "James Brown", or his address is wrong, or some fairly minor point of that kind arises. What happens at the moment is that the lodging brokers are informed of this error. They tell the company, and if the registrar of the company is satisfied that it is not a substantial alteration in the transfer, although he has entered the original transfer particulars in his register, he alters the register. This places registrars in grave difficulty. I do not think that they do anything wrong if it is an insubstantial alteration, but it is for them to judge, and it puts them in a difficult position about whether they are doing right or wrong. If there is an error in the name between "John" and "James", it may mean that the share transfer has been registered in the name of the wrong member of the family, and if there is a family squabble, this is perhaps the most bitter squabble that ever occurs in litigation, and it is quite likely that some barrack room lawyer will take up this point, and the registrar may find himself prosecuted for breach of the law. He has to judge whether he is making a substantial alteration in the registration. If he likes to be difficult over it, he can tell the transferee and the lodging broker that there is a provision in the Companies Act, 1948 for rectification of the register—"You apply to the court and have it rectified in that way". But if that were done on simple transactions of this sort there would be great obstruction to the transfer of shares. The Clause sets out a reasonable way of getting over this difficulty. It says that if there is to be a rectification of this sort, the lodging broker, or whoever lodges the share transfer, can explain the position by letter, by notice in writing, that it is an error, and ask for it to be corrected in the register. He can explain that it is an unintentional omission, or an error, and that it is right that it should be corrected. There is the possibility that some unscrupulous person might take advantage of that and endeavour to effect a sub-sale of the shares by a minor rectification of this sort, and therefore subsection (3) of the Clause imposes the sanction that any notice of this sort, any request to correct a register, shall be one of the documents which attract penalties under Section 483 of the principal Act. This is a modest reform, but it would relieve a registrar of a company of great anxiety when he wants to help a person who has made an error or an unintentional omission, and it would not burden the courts with litigation or obstruct normal commercial transactions in the transfer of shares.The House will be pleased to know that my arguments for not accepting the new Clause are slightly different from those which I advanced earlier. As the hon. Member for Crosby (Mr. Graham Page) has said before, this is a modest proposal. In Committee, as today, he argued that there is a certain element of urgency about it. I have been advised that very few cases—probably for the reasons given by the hon. Member—come before the courts asking for registers to be rectified under the existing procedure for rectification, and that very few are likely to come forward. In any case, my legal advisers have shaken their heads over the drafting of the new Clause, and ask that they should have a little more time to think about any proposal for the rectification of registers in this manner.
I therefore suggest—and this is where I come to the same answer that I gave before—that we are quite willing to meet the hon. Member and do everything possible to help him get this provision knocked into shape and put into the Companies Bill that I promise will come before Parliament and be placed on the Statute Book during the lifetime of this Parliament.The right hon. Gentleman has made a very strange reply. I agree that it was a different rejection from the one we have heard before, but why could not he have put down an Amendment in the correct legal form? He objects to the wording of the new Clause. If he accepts the reasonable nature of its subject matter and agrees that it is modest and useful, surely the Government could have prepared a new Clause to the same effect, in the correct terminology.
I cannot feel that its rejection in the terms we have heard has any real merit. The truth is that the present position of registrars of companies is an invidious one. They should not be put into this position when they are confronted with a request for the amendment of a register where it is a question purely of a very slight error. It is wrong of the Government to continue to impose upon registrars this obligation to make a decision without giving them the sanction that my hon. Friends require. Although the right hon. Gentleman put forward a different reason for not accepting the new Clause in this case, it was just as disappointing a reason.I do not find the ingenuity of the right hon. Gentleman in trying to find a different way of saying the same thing any more attractive than I found his previous arguments. This question was raised by my hon. Friend in Committee, since when we have had about 34 days—which is plenty of time—for the Government to consider the drafting and put something down themselves. These 34 days have been occupied by the Government in adding 20 new Clauses, many of which were no more urgent and in many respects no better drafted than those which we are now discussing.
There was one new Clause in respect of which we had considerable discussion about the drafting, and it was clear that we could have made every bit as strong a case on misdrafting as the right hon. Gentleman has made about the drafting of this new Clause. It seems an absolute abuse of the time of the House, when we are discussing a Bill like the Companies Bill, not to be able to rectify a matter of this sort. The Government have had plenty of time to consider the question. I believe that at the back of the right hon. Gentleman's mind is the fear that somebody else will say, "Why should not you accept an Amendment put forward by the T.U.C.?" This is not what the House is for, and I hope that my hon. Friends will accept my advice and divide.
Question put, That the Clause be read a Second time:—
Division No. 476.]
| AYES
| [4.56 p.m.
|
| Alison, Michael (Barkston Ash) | Griffiths, Eldon (Bury St. Edmunds) | Nott, John |
| Allason, James (Hemel Hempstead) | Grimond, Rt. Hn. J. | Onslow, Cranley |
| Astor, John | Gurden, Harold | Osborne, Sir Cyril (Louth) |
| Atkins, Humphrey (M't'n & M'd'n) | Hall-Davis, A. G. F. | Page, Graham (Crosby) |
| Baker, w. H. K. | Hamilton, Michael (Salisbury) | Page, John (Harrow, W.) |
| Balniel, Lord | Harris, Frederic (Croydon, N.W.) | Pearson, Sir Frank (Clitheroe) |
| Barber, Rt. Hn. Anthony | Harrison, Col. Sir Harwood (Eye) | Peel, John |
| Bell, Ronald | Harvey, Sir Arthur Vere | Pounder, Rafton |
| Bennett, Sir Frederic (Torquay) | Hawkins, Paul | Powell, Rt. Hn. J. Enoch |
| Bennett, Dr. Reginald (Gos. & Fhm) | Heald, Rt. Hn. Sir Lionel | Pym, Francis |
| Bessell, Peter | Hill, J. E. B. | Ramsden, Rt. Hn. James |
| Biffen, John | Hirst, Geoffrey | Renton, Rt. Hn. Sir David |
| Birch, Rt. Hn. Nigel | Holland, Philip | Ridley, Hn. Nicholas |
| Brinton, Sir Tatton | Hooson, Emlyn | Ridsdale, Julian |
| Bromley-Davenport, Lt.-Col. Sir Walter | Hunt, John | Robson Brown, Sir William |
| Brown, Sir Edward (Bath) | Hutchison, Michael Clark | Rodgers, Sir John (Sevenoaks) |
| Bruce-Gardyne, J. | Irvine, Bryant Godman (Rye) | Rossi, Hugh (Hornsey) |
| Bryan, Paul | Johnston, Russell (Inverness) | Russell, Sir Ronald |
| Buchanan-Smith, Alick (Angus, N&M) | Kaberry, Sir Donald | Shaw, Michael (Sc'b'gh & Whitby) |
| Bullus, Sir Eric | Kimball, Marcus | Sinclair, Sir George |
| Burden, F. A. | King, Evelyn (Dorset, S.) | Stainton, Keith |
| Campbell, Gordon | Kirk, Peter | Stoddart-Scott, Col. Sir M. (Ripon) |
| Carr, Rt. Hn. Robert | Knight, Mrs. Jill | Summers, Sir Spencer |
| Cary, Sir Robert | Lancaster, Col. C. G. | Tapsell, Peter |
| Cooke, Robert | Langford-Holt, Sir John | Taylor, Sir Charles (Eastbourne) |
| Cordle, John | Lewis, Kenneth (Rutland) | Taylor, Edward M. (G'gow, Cathcart) |
| Corfield, F. V. | Lloyd, Ian (P'tsm'th, Langstone) | Taylor, Frank (Moss Side) |
| Costain, A. P. | Lloyd, Rt. Hn. Selwyn (Wirral) | Temple, John M. |
| Crosthwaite-Eyre, 8ir Oliver | Loveys, W. H. | Thatcher, Mrs. Margaret |
| Cunningham Sir Knox | Lubbock, Eric | Thorpe, Rt. Hn. Jeremy |
| Currie, G.B H. | McAdden, Sir Stephen | Turton, Rt. Hn. R. H. |
| Dalkaith, Earl of | MacArthur, Ian | van Straubenzee, W. R. |
| Maclean, Sir Fitzroy | Vaughan-Morgan, Rt. Hn. Sir John | |
| Dance, James | McMaster, Stanley | |
| Davidson, James (Aberdeenshire, W.) | Maginnis, John E. | Wainwright, Richard (Colne Valley) |
| Dean, Paul (Somerset, N.) | Marten, Neil | Walker, Peter (Worcester) |
| Dodds-Parker, Douglas | Maude, Angus | Ward, Dame Irene |
| Elliott, R.W. (N'c'tle-upon-Tyne, N.) | Mawby, Ray | Weatherill, Bernard |
| Emery, Peter | Maxwell-Hyslop, R. J. | Whitelaw, Rt. Hn. William |
| Errington, Sir Eric | Maydon, Lt.-Cmdr. S. L. C. | Wills, Sir Gerald (Bridgwater) |
| Eyre, Reginald | Mills, Peter (Torrington) | Wilson, Geoffrey (Truro) |
| Fortescue, Tim | Mitchell, David (Basingstoke) | Wood, Rt. Hn. Richard |
| Foster, Sir John | Montgomery, Fergus | Worsley, Marcus |
| Giles, Rear-Adm, Morgan | More, Jasper | Wright, Esmond |
| Gilmour, Sir John (Fife, E.) | Morrison, Charles (Devizes) | Wylie, N. R. |
| Glover, Sir Douglas | Munro-Lucas-Tooth, Sir Hugh | Younger, Hn. George |
| Gower, Raymond | Nabarro, Sir Gerald | |
| Grant, Anthony | Neave, Airey | TELLERS FOR THE AYES: |
| Grant-Ferris, R. | Nicholls, Sir Harmar | Mr. Timothy Kitson and |
| Mr. Anthony Royle. | ||
NOES
| ||
| Allaun, Frank (Salford, E.) | Brown, Bob (N'c'tle-upon-Tyne, W.) | Dunwoody, Mrs. Gwyneth (Exeter) |
| Alldritt, Walter | Brown, R. W. (Shoreditch & F'bury) | Dunwoody, Dr. John (F'th & C'b'e) |
| Allen, Scholefield | Buchan, Norman | Edwards, Rt. Hn. Ness (Caerphilly) |
| Anderson, Donald | Buchanan, Richard (G'gow, Sp'burn) | Edwards, Robert (Bilston) |
| Archer, Peter | Butler, Herbert (Hackney, C.) | Edwards, William (Merioneth) |
| Armstrong, Ernest | Cant, R. B. | Ellis, John |
| Atkins, Ronald (Preston, N.) | Carmichael, Neil | English, Michael |
| Atkinson, Norman (Tottenham) | Carter-Jones, Lewis | Ensor, David |
| Bagier, Gordon A. T. | Coleman, Donald | Evans, Albert (Islington, S.W.) |
| Barnett, Joel | Concannon, J. D. | Evans, Iona L. (Birm'h'm, Yardley) |
| Beaney, Alan | Conlan, Bernard | Finch, Harold |
| Bence, Cyril | Craddock, George (Bradford, S.) | Fitch, Alan (Wigan) |
| Benn, Rt. Hn. Anthony Wedgwood | Crosland, Rt. Hn. Anthony | Fletcher, Raymond (Ilkeston) |
| Bennett, James (G'gow, Bridgeton) | Crossman, Rt. Hn. Richard | Ford, Ben |
| Blackburn, F. | Cullen, Mrs. Alice | Forrester, John |
| Blenkinsop, Arthur | Darling, Rt. Hn. George | Fraser, John (Norwood) |
| Boardman, H. | Davidson, Arthur (Accrington) | Galpern, Sir Myer |
| Booth, Albert | Davies, Dr. Ernest (Stretford) | Gardner, Tony |
| Bottomley, Rt. Hn. Arthur | Davies, S. O. (Merthyr) | Garrett, W. E. |
| Bowden, Rt. Hn. Herbert | Dell, Edmund | Ginsburg, David |
| Boyden, James | Dempsey, Jamea | Gourlay, Harry |
| Braddock, Mrs. E. M. | Dickens, James | Gray, Dr. Hugh (Yarmouth) |
| Bradley, Tom | Doig, Peter | Gregory, Arnold |
| Brooks, Edwin | Driberg, Tom | Grey, Charles (Durham) |
| Brown, Hugh D. (G'gow, Provan) | Dunnett, Jack | Griffiths, Will (Exchange) |
The House divided: Ayes 142, Noes 203.
| Hamilton, James (Bothwell) | McNamara, J. Kevin | Roberts, Albert (Normanton) |
| Hamilton, William (Fife, w.) | MacPherson, Malcolm | Roberts, Goronwy (Caernarvon) |
| Harrison, Walter (Wakefield) | Mahon, Peter (Preston, S.) | Robertson, John (Paisley) |
| Haseldine, Norman | Mallalieu, E. L. (Brigg) | Rogers, George (Kensington, N.) |
| Heffer, Eric S. | Mallaiieu, J.P.W. (Huddersfield, E.) | Rose, Paul |
| Hooley, Frank | Manuel, Archie | Ross, Rt. Hn. William |
| Horner, John | Mapp, Charles | Rowlands, E. (Cardiff, N.) |
| Howie, W. | Marquand, David | Sheldon, Robert |
| Hoy, James | Marsh, Rt. Hn. Richard | Shinwell, Rt. Hn. E. |
| Huckfield, L. | Mason, Roy | Short, Rt. Hn. Eclward (N'c'tle-u-Tyne) |
| Hughes, Emrys (Ayrshire, S.) | Maxwell, Robert | Short, Mrs. Renée (W'hampton, N.E.) |
| Hughes, Hector (Aberdeen, N.) | Millan, Bruce | Silkin, Rt. Hn. John (Deptford) |
| Hughes, Roy (Newport) | Miller, Dr. M. S. | Silverman, Julius (Aston) |
| Hunter, Adam | Mitchell, R. C. (S'th'pton, Test) | Slater, Joseph |
| Jackson, Colin (B'h'se & Spenb'gh) | Morgan, Elystan (Cardiganshire) | Small, William |
| Jackson, Peter M. (High Peak) | Morris, Alfred (Wythenshawe) | Spriggs, Leslie |
| Jay, Rt. Hn. Douglas | Morris, Charles R. (Openshaw) | Steele, Thomas (Dunbartonshire, W.) |
| Johnson, Carol (Lewisham, s.) | Moyle, Roland | Storehouse, John |
| Jones, Dan (Burnley) | Murray, Albert | Strauss, Rt. Hn. G. R. |
| Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) | Newens, Stan | Taverne, Dick |
| Jones, J. Idwal (Wrexham) | Noel-Baker, Francis (Swindon) | Thornton, Ernest |
| Jones, T. Alec (Rhondda, West) | Norwood, Christopher | Tinn, James |
| Kelley, Richard | Ogden, Eric | Tomney, Frank |
| Kerr, Dr. David (W'worth, Central) | Orbach, Maurice | Tuck, Raphael |
| Kerr, Russell (Feltham) | Orme, Stanley | Urwin, T. W. |
| Lawson, George | Owen, Dr. David (Plymouth, S'tn) | Wainwright, Edwin (Dearne Valley) |
| Lee, Rt. Hn. Frederick (Newton) | Owen, Will (Morpeth) | Wallace, George |
| Lestor, Miss Joan | Padley, Walter | Watkins, Tudor (Brecon & Radnor) |
| Lever, Harold (Cheetham) | Page, Derek (King's Lynn) | Wellbeloved, James |
| Lever, L. M. (Ardwick) | Paget, R. T. | White, Mrs. Eirene |
| Lewis, Arthur (W. Ham, N) | Pannell, Rt. Hn. Charles | Whitlock, William |
| Lewis, Ron (Carlisle) | Park, Trevor | Williams, Alan (Swansea, W.) |
| Lipton, Marcus | Parkyn, Brian (Bedford) | Williams, Clifford (Abertillery) |
| Lomas Kenneth | Pavitt, Laurence | Willis, George (Edinburgh, E.) |
| Loughlin, Charles | Pearson, Arthur (Pontypridd) | Wilson, William (Coventry, S.) |
| Luard, Evan | Pentland, Norman | Winterbottom, R. E. |
| Mabon, Dr. J. Dickson | Perry, Ernest G. (Battersea, 8.) | Woodburn, Rt. Hn. A. |
| McBride, Neil | Perry, George H. (Nottingham, S.) | Woof, Robert |
| McCann, John | Price, Christopher (Perry Barr) | Yates, Victor |
| MacColl, James | Price, Thomas (Westhoughton) | |
| McGuire, Michael | ||
| Mackenzie, Gregor (Rutherglen) | Price, William (Rugby) | TELLERS FOR THE NOES: |
| Mackintosh, John P. | Probert, Arthur | Mr. Joseph Harper and |
| MacMillan, Malcolm (Western Isles) | Rankin, John | Mr. Harold Walker. |
| McMillan, Tom (Glasgow, C.) | Rees, Merlyn |
New Clause No 21—(Extension Of Section 25 To Spouses And Children)
(1) Section 25 of this Act shall apply so Mat a director of a company shall be guilty of an offence under subsection (1) thereof who procures that his or her wife husband infant son or infant daughter not being a director of that company shall do any act which if done by the director himself would be an offence under that subsection.
(2) In this section, 'son' includes step-son and adopted son, 'daughter' includes stepdaughter and adopted daughter and 'parent' shall be construed accordingly, 'infant' means in relation to Scotland, pupil or minor, and a person deemed for the purposes of the said section 25 to be a director of a company shall be deemed also for the purposes of this section to be a director of the company.—[ Mr. Grant.]
Brought up, and read the First time.
I beg to move, That the Clause be now read a Second time.
The Clause seeks to rectify an absurdity and inequity created by Clauses 25 to 30. Clause 25 is designed to prevent a director dealing in options of the company of which he may have inside information. This is commendable, because a director should not have an unfair advantage because of confidential information, but we should not be dogmatic about it, because there are many honest and honourable dealings in options in a company and they are desirable incentives to directors. Heavy penalties, of two years imprison-or a fine or both, can be imposed for the offence. Of course, unprincipled directors would seek to evade this by dealing through other people, such as members of their families. This is the reason for Clause 30, but it is a hamfisted and thoroughly unfair provision, and that is why we have put down the new Clause. I can best illustrate the absurdity by an example. Let us assume that a director of a company has a wife, two sons aged 21 and 20 and two daughters aged 15 and 10. He acquires inside information in the company, and thus, under Clause 25, he should not purchase an option based on that information, but looking at Clause 30 he sees that, if his son aged 21 took up the shares, no offence would be committed. On the other hand, if his son aged 20 did so, the son—not the director—would commit a criminal offence and could be imprisoned or fined or both. Even more absurd would be the case if his 15-year-old daughter bought the shares: she would become a criminal and could be hauled before the majesty of the law and fined or sent to prison. On the other hand, if he got his 10-year-old daughter or a trustee acting for her to do so, since she is below the age of criminal responsibility she could purchase the options and the Clause would have no effect. This illustrates how absurd it is. Clause 30 provides a defence, but it is totally inadequate—that the spouse or infant child did not know that daddy was a director, but the one piece of inside or outside information of members of a family is that daddy is a director, so this is a thoroughly useless defence. To return to my example, the man might get his wife to buy the options. She might be separated from her husband. What if there has been a divorce? She might not have the faintest idea of the company's activities and know only that her husband is a director. Thus, why should she be penalised for honestly and openly buying options in the company? As a matter of law and justice, it is wrong and unprecedented to saddle someone with a criminal liability for an act which in itself is unobjectionable. It is unfair and wrong to penalise spouses and children as a result of an act which is unobjectionable by virtue of a technical provision of which they have never heard. It is even more absurd if daddy is merely a director of a subsidiary company. He is caught and so are his infant children, provided that they are over the age of criminal responsibility and are under 21. Rarely have directors of subsidiaries more inside information than the senior executives. An infant can be made liable to a criminal offence in which he inadvertently engages even though as a matter of civil law he can repudiate the contract to purchase when he is 21. The new Clause seeks to rectify the worst lunacies of the Bill by putting the liability precisely where it belongs, namely, on the director who procures rather than on the innocent spouse or child subject to the procurement. This is a sensible attempt to get a little common sense into a ridiculous situation. It is no argument to suggest, as I believe the Minister of State hinted at in Committee, rather laughingly, that only a small number of children deal in options in a company. I do not necessarily accept that. I do not care whether there is only a few. We do not pass criminal laws on the basis that only a few people will break them. The Bill is a whacking big clumsy sledgehammer designed to crack a peanut. It is so ill-adjusted that it is liable to miss the peanut and to come whacking down on the innocent and probably youthful bystander. The new Clause should be passed so as to bring sanity and common sense into the situation.Both Clause 30 and our new Clause, I am sorry to say, deal in a framework of nonsense. Ours is a little better than the Government's proposal. As my hon. Friend the Member for Harrow, Central (Mr. Grant) said, the Bill throws the crime on somebody who may be innocent and somebody other than a director while we make the director liable for procuring the people in the special relationship to buy options. Whenever relationships are brought into a sphere which has nothing to do with the criminal law, bastardy tests, blood tests, and so on, situations are bound to arise which remind one of a Shakespearean comedy.
Suppose that under Clause 30 the public prosecutor accuses a son of buying options. The son may say, "But daddy does not know. I am not his son. I have had a secret blood test and I am no relation to him." He would get off. What the Bill should provide, and what our new Clause should provide, is that if the director procures anybody to do such a thing he is guilty of a criminal offence. 5.15 p.m. The matter does not end there. Suppose that a wife is prosecuted under the Bill or under our new Clause and the director is accused of procuring his wife. He may say, "We were careful to go to the Argentine and to pretend to get married but to save on Income Tax we are not really married and we have separate assessments. So she is not my wife." In those circumstances, everybody gets off. The wife may say, "I am not married because at the time I married my husband he was domiciled in Greece. The personal law of Greece applies to the capacity to marry. There was no Greek pope present". On the decided cases, a Greek marriage is invalid, wherever it takes place, if there is not a Greek pope present. An adopted person may say, "The adoption is invalid. It is illegal. I am riot an adopted son." The director may say, "He is not my adopted son, although we have pretended that he is." Take the case of someone who may be the common law wife of a director. In the State of New York, the nice question arises in a criminal court as to whether a person is a common law wife and therefore a wife for the purposes of our discussion. These questions arise in disputes about trusts. The point may be raised as to whether a person is a stepson, a son or a wife. But to bring them into the company law is the height of absurdity. We are reforming an absurdity in the right direction. We seek to provide that the onus shall fall on the director and that it is not left to a wife who is accused to say, "We were validly divorced". The public prosecutor may say, "Your divorce in Reno was not valid. Therefore, you are still the wife of the director and you should not have bought any options." Nice questions will arise about whether, when they were divorced in Reno, the husband was domiciled in the State of New York, in which case the Reno divorce was valid, or whether he was domiciled in the United Kingdom, in which case the Reno divorce was invalid. One can imagine the contempt into which the criminal law can be brought by reason of these absurdities. A son accused of buying options may say, "But I am not the son. I was brought into the family because the person posing as my mother could not have children and I was brought in on the day that her child was stillborn in order to pretend to the world that she had had a child". All sorts of combinations of this kind can be imagined. If a person is accused of a crime which carries a penalty of two years' imprisonment, one can imagine that the lawyers will explore every avenue in deciding what the relationship is. The latest legitimacy Act provides that if A and B appear to have a child, if it is an adulterous child, it is a child of another marriage. The first question which a defending lawyer will ask is: "Is there any doubt about the relationship with the director? Are we sure that the mother did not have a lover who might be the father?" It is undesirable that intimate, personal questions of this sort should be ventilated in a Companies Bill. Both Clauses are unwise. Ours is slightly wiser. The Government's Clause should be scrapped. The Bill should provide that if a director procures anybody to commit this offence he will be liable.Careful note must be taken of what my hon. and learned Friend the Member for Northwich (Sir J. Foster) has been saying. The Clause as it stands, and which is in substitution of the original Clause, is a nonsense and can be amended by making it less of a nonsense. We are arguing that Clause 30 should be deleted altogether and one of the Amendments in this group is designed to achieve that objective.
It is clear that the Government have a good case for enacting the provisions in Clause 25 in relation to insider knowledge in dealings in options and shares, but, as my hon. and learned Friend pointed out, when one comes to extend Clause 25 by Clause 30, one is really making a purely superficial improvement to the basic Clause 25—superficial because there are dozens of other people who may have the same insider knowledge which is not covered. There are, perhaps, hundreds of people who may be in a special relationship with the director in a sense that enables him to have some sort of undue influence over them, and it does not matter whether they are blood relations in this respect. The Government should take a leaf out of their own book and give the same answer to this Clause as they have been giving to some much better thought-out proposals this afternoon. They should say that this wants thinking out again and that it will be introduced in the next Bill about which we have heard so much. Accordingly, they should withdraw Clause 30. If the Government are not prepared to do that, then our redraft is a much better one than the Clause at present in the Bill. We are all concerned with the action of the director—there is no difference between the two sides about this—and the evil to which we should be directing our attention is an act by the director by which he takes advantage of his insider knowledge and gains an advantage over other shareholders or, possibly, members of the public. To put other people in court because they have been used as instruments by the director for the commission of an offence cannot be right on any moral or legal code to which we in this country are accustomed. It does not make the matter appreciably better to provide a statutory defence which, in effect, says, "In any case the onus of proof is on you, the infant child, to prove that you did not have knowledge"—because knowledge here is the crux of the crime. Thus, one is, in effect, putting a third person in the dock—somebody over whom, by the nature of the offence, the director has a great deal of influence—and is saying, "Now you must prove your innocence". This cannot make sense. Even if the Government will not admit that Clause 30 was thoroughly ill-conceived, no doubt with the best of intentions—superficially it seems a good idea and we are past expecting this Government to be other than superficial—I hope that they will accept our proposal to delete Clause 30 as it stands and leave it until we get the next Bill about which we have heard so much. To put an innocent third party in the dock and say "You must prove your innocence" is intolerable. Remember that there will be many close relationships which, in this context, will make the Bill even more of a nonsense than it is. One will have common law wives, illegitimate children and the children of broken marriages whose custody is entirely with other parties who know nothing whatever about daddy's business—whether or not he is a director or what other sort of business he does. Perhaps even grandmothers, aunts, nephews, neices and cousins—to mention but a few—will be affected by this legislation in circumstances in which a man may have every bit as much influence, if not more, over them as over his own children by his own blood. I beg the Government to accept our proposal and to remove this nonsense from the Bill. After all, we have been told many times that they are anxious to reduce the Measure's length. Let them take out Clause 30 and let us get on with the debate.I remind the House that when we introduced the Measure which was, so to speak, the parent of this Bill, we were pressed to include provisions which would have led to the recording of inside share dealings and the buying of options by directors. We did that in response to criticism of the Bill as it stood. The criticism seemed well founded. But no sooner had we done that than we were advised by hon. Gentlemen opposite that the provisions would be hopelessly ineffective unless we included a provision covering spouses and the young children of directors.
It is impossible to deny that there was some force in that criticism. The hon. Member for Gloucestershire, South (Mr. Corfield) accuses us of tabling Amendments too late in the day when we accept some of the suggestions of hon. Gentlemen opposite and bring forward proposals. Then, when we do not accept their suggestions, we are told that we are being deaf to reasonable criticism. It is difficult to please the hon. Gentleman both ways.Would the right hon. Gentleman point to the Amendments to which I objected on the ground that they were late in being tabled—Amendments which have been debated before we got to this stage? I am objecting to Amendments which are concerned with completely new points.
The hon. Gentleman was sweeping in his protests when we last debated this matter and when we were discussing his Amendments.
The hon. and learned Member for Northwich (Sir J. Foster) declared that the whole of this provision was set in a framework of nonsense. If so, it is a framework of nonsense into which we have been led by suggestions made by hon. Gentlemen opposite. I bow to the hon. and learned Gentleman's legal expertise. Although he is skilful in defending people accused of various offences in the courts, I felt that he was leading us into a framework of nonsense. I suggest that if there is this extraordinary difficulty raised by these provisions— about how one proves who is one's real wife or real children—that is not unique in this aspect of the law. If the hon. and learned Gentleman were to claim an Income Tax allowance on behalf of his wife, who somebody else alleged was not his wife, all sorts of difficulties would arise and no doubt there would be an expedition to Reno, with all the complications about which he spoke. I agree with him that if one tries to close loopholes of this kind one gets into difficulties. We must stop our definitions at some point. However, it seems to us that, having gone as far as this, it would be unreasonable to go further and to include grandmothers, brothers-in-law and all the other relations who have been referred to. If we examine the provision as it stands, we see that, to begin with, it is a defence for the wife or child, as the case may be, to prove that she or he bad no reason to believe that her husband, or his father, was a director of the company in question. That is the safeguard. I am sure that under these provisions if a director were to give an order for the purchase of an option in the name of his wife or child without any authority either from that wife or child, and without her knowledge, the wife or child would not be guilty of an offence and the director would have committed an offence. This is the sort of case which most of us have in mind. If, on the other hand, authority had been obtained from the wife or child but he or she had given authority but had not fully understood what it entailed—if, in effect, the whole operation had clearly been instigated and prompted by the director—the courts would find that the responsibility rested with the director and not with the spouse or child. I therefore do not think that these provisions are so unreasonable or oppressive as has been suggested. Nor is this the only aspect of the law where such a situation could arise, and where someone would be formally guilty of an offence although he might have been partially, or more or less, ignorant of the nature of the law when he committed the offence. That would be taken into account to a due degree by the courts when dealing with the case.5.30 p.m.
The difference between the Income Tax aspect and this is that these questions do arise in Income Tax where people are de facto separated—wives and the like—but I do not think that, in other branches of the criminal law, criminality depends on relationship.
Nevertheless, I think that the hon. and learned Gentleman will agree that persistent Income Tax claims based on a misrepresentation of facts presumably—and here I speak subject to his knowledge—lead at some stage to criminal proceedings.
I recognise that the proposal made by hon. and right hon. Gentlemen opposite is a real attempt to deal with a real difficulty, but it fails, because if we say that the offence consisted of a director procuring the relative to buy an option, the prosecution would then be in the difficulty of having to prove that there had been actual procurement by the director, but if the relative merely says that the director knew nothing about it, and that he or she had acted off his or her own bat, no offence would be committed. This would be a loophole almost as wide as the original provisions of the Clause would have left. For that reason I think that when we examine this matter it is necssary to have some protection against this loophole. I do not think that the provision in the Bill as it stands is unreasonable, and although I recognise, as I say, that hon. Members opposite have been trying to find a better way of meeting the difficulty, I do not think that they have succeeded, because the difficulty put upon the prosecution is too great.Before the President of the Board of Trade sits down, can he say why it is a criminal offence for the option to be purchased by a son or daughter under 21 years of age—say, 20—and an offence for which the person can be sent to prison, but that, immediately after the age of 21, the person can do it without going to court?
The presumption has to be that there is a certain stage in growing up and going out into the world when the children of the director become independent characters forming their own judgment and not subject to his orders or influence. I agree that in these circumstances it is always difficult to draw a hard and fast line, but we have to draw the line somewhere.
Before the right hon. Gentleman sits down, will he, at any rate, return to a consideration of Amendment No. 77, which goes some way to making the Clause more acceptable in that it switches the onus of proof and makes it the duty of the prosecution to prove knowledge? If that duty is not accepted, we are saying to someone, "You must prove yourself innocent."
I suggest that the right hon. Gentleman not only withdraws his own Clause but does not accept ours, because I do not think that we have got the matter right either. My hon. and learned Friend the Member for Northwich (Sir J. Foster) led us along very interesting paths, but it struck me that some unfortunate people who are now in mental hospitals because they think that they are the Emperor of India are probably, under his premise, justified in so thinking. At the same time, my hon. and learned Friend showed the very slippery slope we get on when we bring in the question of relationship.
The Government have not got the matter right in Clause 30, nor have we got it right in our new Clause. What we ought to say is, that any effort to procure anyone to buy an option when there is prior knowledge is an offence. If I am a director and do that, I am the guilty person, and it does not seem to me to make the slightest difference whether I get my wife to buy the option, or my bank manager to buy it in my name as a nominee, or a friend, or anyone else. It is my guilty knowledge, and it is my pressure that I bring to bear on the person buying the option, and it does not matter one hoot what the relationship between us is. It is wrong to bring in relationship, pure and simple. There are enormous numbers of people with a close relation to a person whose financial advice they automatically accept without any argument when they have any investment at all to make. They would not query it if he told them on the 'phone to sell their shares and buy an option, and told them to do the opposite the next day. Such a person is the related family adviser, and to put those people in a criminal position because they are presumed to have guilty knowledge will lead to many cases of harsh injustice. We have all so far shown that we do not understand the personal relationships that exist in a very great number of families, where people would never think of querying the financial advice they got from a person. I would not think that they had in any way entered into an illegal or evil transaction just because they never questioned these matters, and to open things up in this way would put in danger of criminal proceedings a great many people who should not be put in that position. What we have to get right is the real responsibility. We have to ensure that the person with the knowledge can be prosecuted for using that knowledge to procure the purchasing of an option, either on his own, or through relatives or anyone else. As it is, we have not got the provision right, and I am rather glad that the Government think of bringing in another Bill, because I hope they will withdraw their Clause 30 and have a go at this subject in the next Bill.I ask the President of the Board of Trade to consider one aspect that he may not have considered at as great length as he has other parts. The present wording is even more objectionable than has as yet been suggested. Let us take the example of a father who is a director of a company and who, on the 21st birthday of his son, suggests that he will give the son something, and the son, in effect, obtains an option. I hope the right hon. Gentleman will recognise that in many families such a son would merely feel a sense of gratitude to his father, and would not question the nature of the gift. The fact is that under the present wording in the Bill he would be guilty of a very serious offence.
I am sure that my hon. Friend the Member for Harrow, Central (Mr. Grant) will recognise that, because of the difficulties of amending what is already not merely an imperfect but a very imperfect Clause, he has contrived to produce something that is also somewhat imperfect. I agree with my hon. Friend the Member for Ormskirk (Sir D. Glover) that neither the Clause nor the proposed new Clause is entirely satisfactory, but I certainly hope that the right hon. Gentleman and the Government recognise that the Bill as it stands is not merely objectionable but really—Outrageous.
Ridiculous.
One of my hon. Friends says that it is ridiculous and the other that it is outrageous, but it is neither. It is contrary to all the principles that we believe to be principles of British law and, in the case of a minor, a dependent in a family, it is highly objectionable.
We are all obliged to my hon. Friend the Member for Harrow, Central (Mr. Grant) for putting forward this new Clause because it raises our very serious doubts about Clause 30. I was interested in his exposition of the varying liabilities of a person at various ages. It seemed a new interpretation of the three ages of man, showing when he could and when he could not be allowed to accept options in a company of which his father happened to be a director.
The discussions we have had have disclosed a great deal of disquiet about the rightness of Clause 30. The more I listened to my hon. and learned Friend the Member for Northwich (Sir J. Foster) the most confused I got as to the possibilities and ramifications which could be disclosed when inquiries were made under this part of the Bill. The point which has been raised by my hon. Friend the Member for Ormskirk (Sir D. Glover) occurred to me. It concerns the increasing habit of transferring one's affairs in stocks and shares into the hands of trained management, such as merchant bankers. I know from experience how very often this is done. When a family company sells out, goes public, and is bought by a big combine, the proceeds are distributed among the family. It is usual to advise them to put their affairs in the hands of trained experts to look after their stocks and shares. It is perfectly clear that the companies which look after those affairs will not in every case inquire of the child whether or not the options they may recommend should be purchased, options in a famous name which happens to have as one of its subsidiaries a company of which the father happens to be a director. All this is unrealistic. As the Clause stands, quite unwittingly, children can be put into an impossible and entirely unwarrantable position. My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) has the right answer. We certainly intend to press this Clause. We admit that there are deficiencies, but coupled with the new Clause are two Amendments, both of which we strongly support. Amendment No. 77 seeks to transfer the onus of proof. Clause 30 says that many of these childrenTherefore they are assumed to have exactly that knowledge. It seems that the proof should be the other way round. In our Amendment No. 77, which we are discussing with this new Clause, we point out that it shall"shall be deemed also for the purposes of this section to be a director of the company."
Unless the prosecution can prove as a fact that this information was known, the prosecution should not be successful in bringing its case. In our discussions we have proved, I believe beyond doubt, that there is dissatisfaction all round. The right hon. Gentleman is dissatisfied with our Amendment. We certainly are dissatisfied with the Clause as it stands. The right way would be for us to allow Clause 30 to be taken away and considered for the next Bill which we have been repeatedly assured will come forward during the lifetime of this Parliament. If the right hon. Gentleman were prepared to do this, our confidence in the statement that he seriously intends to bring forward another companies Bill in the lifetime of this Parliament would be greatly enhanced. So far it seems that when new ideas or fresh thoughts on this Bill have been thought up by the right hon. Gentleman, the proceedings on the Bill have had to be delayed until the drafting has been done in order to bring forward the necessary Amendments, but when we have thought of useful and constructive ideas the answer has been, "There is too much in the Bill already and there is no time to draft these ideas in the way the Ministry wants." This is a very one-sided affair. If the right hon. Gentleman is not prepared to take back the Clause,'rest with the prosecution to prove that any person charged, by virtue of this subsection, with an offence under section 25 of this Act, had reason to know and did in fact know'.
Division No. 477.]
| AYES
| [5.45 p.m.
|
| Alison, Michael (Barkston Ash) | Griffiths, Eldon (Bury St. Edmunds) | Osborne, Sir Cyril (Louth) |
| Allason, James (Hemel Hempstead) | Grimond, Rt. Hn. J. | Page, Graham (Crosby) |
| Astor, John | Gurden, Harold | Page, John (Harrow, W.) |
| Atkins, Humphrey (M't'n & M'd'n) | Hall-Davis, A. G. F. | Pearson, Sir Frank (Clitheroe) |
| Baker, W. H. K. | Hamilton, Michael (Salisbury) | Peel, John |
| Balniel, Lord | Harris, Frederic (Croydon, N.W.) | Pounder, Rafton |
| Barber, Rt. Hn. Anthony | Harrison, Col. Sir Harwood (Eye) | Powell, Rt. Hn. J. Enoch |
| Bell, Ronald | Harvey, Sir Arthur Vere | Pym, Francis |
| Bennett, Sir Frederic (Torquay) | Hawkins, Paul | Ramsden, Rt. Hn. James |
| Bennett, Dr. Reginald (Got. & Fhm) | Heald, Rt. Hn. Sir Lionel | Renton, Rt. Hn. Sir David |
| Bessell, Peter | Hill, J. E. B. | Ridley, Hn. Nicholas |
| Biffen, John | Hirst, Geoffrey | Ridsdale, Julian |
| Birch, Rt. Hn. Nigel | Holland, Philip | Robson Brown, Sir William |
| Brinton, Sir Tatton | Hooson, Emlyn | Rodgers, Sir John (Sevenoaks) |
| Bromley-Davenport, Lt.-Col. Sir Walter | Hunt, John | Rossi, Hugh (Hornsey) |
| Brown, Sir Edward (Bath) | Hutchison, Michael Clark | Royle, Anthony |
| Bruce-Gardyne, J. | Irvine, Bryant Godman (Rye) | Russell, Sir Ronald |
| Bryan, Paul | Johnston, Russell (Inverness) | Shaw, Michael (Sc'b'gh & Whitby) |
| Buchanan-Smith, Alick (Angus, N&M) | Kaberry, Sir Donald | Smith, John |
| Bullus, Sir Eric | Kimball, Marcus | Stainton, Keith |
| Burden, F. A. | Kirk, Peter | Steel, David (Roxburgh) |
| Campbell, Gordon | Kitson, Timothy | Stoddart-Scott, Col. Sir M. (Ripon) |
| Cary, Sir Robert | Knight, Mrs. Jill | Summers, Sir Spencer |
| Cooke, Robert | Lancaster, Col. C. G. | Tapsell, Peter |
| Cordle, John | Langford-Holt, Sir John | Taylor, Edward M. (G'gow, Cathcart) |
| corfield, F. v. | Legge-Bourke, Sir Harry | Taylor, Frank (Moss Side) |
| Costain, A. P. | Lloyd, Ian (P'tsm'th, Langstone) | Temple, John M. |
| Crosthwaite-Eyre, Sir Oliver | Loveys, W. H. | Thatcher, Mrs. Margaret |
| Cunningham, Sir Knox | Lubbock, Eric | Thorpe, Rt. Hn. Jeremy |
| Currie, G. B. H. | McAdden, Sir Stephen | Turton, Rt. Hn. R. H. |
| Dalkeith, Earl of | Maclean, Sir Fitzroy | Vaughan-Morgan, Rt. Hn. Sir John |
| Dance, James | McMaster, Stanley | Wainwright, Richard (Colne Valley) |
| Davidson, James (Aberdeenshire, W.) | Maginnis, John E. | Walker, Peter (Worcester) |
| Dean, Paul (Somerset, N.) | Maude, Angus | Ward, Dame Irene |
| Dodds-Parker, Douglas | Mawby, Ray | Weatherill, Bernard |
| Elliott, R.W. (N'c'tle-upon-Tyne, N.) | Maxwell-Hyslop, R. J. | Whitelaw, Rt. Hn. William |
| Emery, Peter | Maydon, Lt.-Cmdr. S. L. C. | Wills, Sir Gerald (Bridgwater) |
| Errington, Sir Eric | Mills, Peter (Torrington) | Wilson, Geoffrey (Truro) |
| Fortescue, Tim | Mitchell, David (Basingstoke) | Winstanley, Dr. M. P. |
| Foster, Sir John | Montgomery, Fergus | Wood, Rt. Hn. Richard |
| Giles, Rear-Adm. Morgan | Morrison, Charles (Devizes) | Worsley, Marcus |
| Gilmour, Sir John (Fife, E.) | Munro-Lucas-Tooth, Sir Hugh | Wright, Esmond |
| Glover, Sir Douglas | Nabarro, Sir Gerald | Wylie, N. R. |
| Cower, Raymond | Neave, Airey | Younger, Hn. George |
| Grant Anthony | Nicholls, Sir Harmar | |
| Grant-Ferris, R. | Nott, John | TELLERS FOR THE AYES: |
| Gresham Cooke, R. | Onslow, Cranley | Mr. Jasper More and |
| Mr. Reginald Eyre. | ||
NOES
| ||
| Allaun Frank (Salford, E.) | Bottomley, Rt. Hn. Arthur | Craddock, George (Bradford, S.) |
| Alldritt Walter | Bowden, Rt. Hn. Herbert | Crosland, Rt. Hn. Anthony |
| Allen Scholefield | Braddock, Mrs. E. M. | Crossman, Rt. Hn. Richard |
| Anderson, Donald | Bradley, Tom | Cullen, Mrs. Alice |
| Archer, Peter | Brooks, Edwin | Darling, Rt. Hn. George |
| Armstrong, Ernest | Broughton, Dr. A. D. D. | Davidson, Arthur (Accrington) |
| Atkins, Ronald (Preston, N.) | Brown, Rt. Hn. George (Belper) | Davies, Dr. Ernest (Stretford) |
| Atkinson, Norman (Tottenham) | Brown, Hugh D. (G'gow, Provan) | Davies, S. O. (Merthyr) |
| Bagier, Gorden A.T. | Brown, Bob (N 'c'tle-upont-Tyne, W.) | Dell, Edmund |
| Barnett, Joel | Brown, R. W. (Shoreditch & F'bury) | Dempsey, James |
| Baxter, William | Buchan, Norman | Dickens, James |
| Beaney, Alan | Buchanan, Richard (G'gow, Sp'burn) | Doig, Peter |
| Bence, Cryil | Butler, Herbert (Hackney, C.) | Driberg, Tom |
| Benn, Rt. Hn. Anthony Wedgwood | Cant, R. B | Dunnett, Jack |
| Bennett, James (G'gow, Brigeton) | Carmichael, Neil | Dunwoody, Mrs. Gwyneth (Exeter) |
| Blackburn, F. | Carter-Jones, Lewis | Dunwoody, Dr. John (F'th & C'b'e) |
| Blenkinsop, Arthur | Coleman, Donald | Edwards, Rt. Hn. Ness (Caerphilly) |
| Boardman, H. | Concannon, J. D, | Edwards, Robert (Bilston) |
| Booth, Albert | Conlan, Bernard | Edwards, William (Merioneth) |
we should show our feelings on this matter by voting for the new Clause.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 139, Noes 210.
| Ellis, John | Lever, L. M. (Ardwick) | Pentland, Norman |
| English, Michael | Lewis, Arthur (W. Ham, N.) | Perry, Ernest G. (Battersea, S.) |
| Ennals, David | Lewis, Ron (Carlisle) | Perry, George H. (Nottingham, S.) |
| Ensor, David | Lipton, Marcus | Price, Christopher (Perry Barr) |
| Evans, Albert (Islington, S.W.) | Lomas, Kenneth | Price, Thomas (Westhoughton) |
| Evans, Ioan L. (Birm'h'm, Yardley) | Loughlin, Charles | Price, William (Rugby) |
| Finch, Harold | Luard, Evan | Probert, Arthur |
| Fitch, Alan (Wigan) | Lyon, Alexander W. (York) | Rankin, John |
| Fletcher, Raymond (Ilkeston) | Mabon, Dr. J. Dickson | Roberts, Albert (Normanton) |
| Foley, Maurice | McBride, Neil | Roberts, Goronwy (Caernarvon) |
| Ford, Ben | McCann, John | Robertson, John (Paisley) |
| Forrester, John | MacColl, James | Rogers, George (Kensington, N.) |
| Fraser, John (Norwood) | McGuire, Michael | Rose, Paul |
| Galpern, Sir Myer | Mackenzie, Gregor (Rutherglen) | Ross, Rt. Hn. William |
| Gardner, Tony | Mackie, John | Rowlands, E. (Cardiff, N.) |
| Garrett, W. E. | Mackintosh, John P. | Sheldon, Robert |
| Ginsburg, David | MacMillan, Malcolm (Western Isles) | Short, Rt. Hn. Edward (N'c'tle-u-Tyne) |
| Gourlay, Harry | McMillan, Tom (Glasgow, C.) | Short, Mrs. Renée (W'hampton, N.E.) |
| Gray, Dr. Hugh (Yarmouth) | McNamara, J. Kevin | Silkin, Rt. Hn. John (Deptford) |
| Gregory, Arnold | MacPherson, Malcolm | Silverman, Julius (Aston) |
| Grey, Charles (Durham) | Mahon, Peter (Preston, S.) | Slater, Joseph |
| Griffiths, Will (Exchange) | Mallalieu, E. L. (Brigg) | Small, William |
| Hamilton, James (Bothwell) | Mallalieu, J.P. W. (Huddersfield, E.) | Snow, Julian |
| Hamilton, William (Fife, W.) | Manuel, Archie | Spriggs, Leslie |
| Harrison, Walter (Wakefield) | Mapp, Charles | Steele, Thomas (Dunbartonshire, W.) |
| Hart, Mrs. Judith | Marquand, David | Stonehouse, John |
| Haseldine, Norman | Marsh, Rt. Hn. Richard | Strauss, Rt. Hn. G. R. |
| Heffer, Eric S. | Mason, Roy | Swingler, Stephen |
| Herbison, Rt. Hn. Margaret | Maxwell, Robert | Taverne, Dick |
| Hooley, Frank | Millan, Bruce | Thomas, George (Cardiff, W.) |
| Horner, John | Miller, Dr. M. S. | |
| Mitchell, R. C. (S'th'pton, Test) | Thornton, Ernest | |
| Howie, W. | Morgan, Elystan (Cardiganshire) | Tinn, James |
| Hoy, James | Morris, Alfred (Wythenshawe) | Tomney, Frank |
| Huckfield, L. | Morris, Charles R. (Openshaw) | Tuck, Raphael |
| Hughes, Emrys (Ayrshire, S.) | Moyle, Roland | Urwin, T. W. |
| Hughes, Hector (Aberdeen, N.) | Murray, Albert | Wainwrlght, Edwin (Dearne Valley) |
| Hughes, Roy (Newport) | ||
| Hunter, Adam | Newens, Stan | Wallace, George |
| Hynd, John | Noel-Baker, Francis (Swindon) | Watkins, Tudor (Brecon & Radnor) |
| Jackson, Colin (B'h'se & Spenb'gh) | Norwood, Christopher | Wellbeloved, James |
| Jackson, Peter M. (High Peak) | Ogden, Eric | White, Mrs. Eirene |
| Jay, Rt. Hn. Douglas | Orbach, Maurice | Whitlock, William |
| Jones, Dan (Burnley) | Orme, Stanley | Williams, Alan (Swansea, W.) |
| Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) | Owen, Dr. David (Plymouth, S'tn) | Willis, George (Edinburgh, E.) |
| Jones, J. Idwal (Wrexham) | Owen, Will (Morpeth) | Wilson, William (Coventry, S.) |
| Jones, T. Alec (Rhondda, West) | Padley, Walter | Winterbottom, R. E. |
| Kelley, Richard | Page, Derek (King's Lynn) | Woof, Robert |
| Kenyon, Clifford | Paget, R. T. | Yates, Victor |
| Kerr, Dr. David (W'worth, Central) | Pannell, Rt. Hn. Charles | |
| Kerr, Russell (Feltham) | Park, Trevor | TELLERS FOR THE NOES: |
| Lawson, George | Parkyn, Brian (Bedford) | Mr. Harold Walker and |
| Lestor, Miss Joan | Pavitt, Laurence | Mr. Joseph Harper. |
| Lever, Harold (Cheetham) | Pearson, Arthur (Pontypridd) |
New Clause 22—(Extension Of Section (Obligation Of A Director Of A Company To Notify It Of Interests Of His In Shares In, Or Debentures Of, The Company Or Associated Companies) To Spouses And Child Ren)
(1) For the purposes of section (Obligation of a director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies) of this Act an interest or her or his right to subscribe therefor of the wife or husband of a director of a company (not being herself or himself a director thereof) in shares or debentures shall be treated as being the director's interest or right, and so shall an interest or right of an infant son or infant daughter of a director of a company (not being himself or herself a director thereof) in shares or debentures.
(2) A director of a company shall be under obligation to notify the company in writing of the occurrence, while he or she is director, of any event in consequence of whose occurrence his or her wife or husband infant son or infant daughter (not being a director of that company) becomes or ceases to be interested in or entitled to subscribe for shares or debentures of that company; stating the number or amount, and class, of shares involved; and an obligation imposed by this subsection on a director must be fulfilled by him before the expiration of the period of twenty-one days beginning with the day next following that on which the occurrence of the event that gives rise to it comes to his knowledge.
(3) A person who fails to fulfil, within the proper period, an obligation to which he is subject by virtue of the last foregoing subsection, or who, in purported fulfilment of an obligation to which he is so subject, makes to a company a statement which he knows to be false or recklessly makes to a company a statement which is false, shall be guilty of an offence and liable?—
(4) The rules set out in section (References to persons having an interest in shares or debentures of this Act shall have effect for the interpretation of, and otherwise in relation to subsection (1) of this section, and subsections (9) to (13) of section (Obligation of a director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies) of this Act shall, with any requisite modification, have effect for the purposes of this section as they have effect for the purposes of that section.
(5) In this section, "son" includes stepson and adopted son and "daughter" includes step-daughter and adopted daughter, an "infant" means, in relation to Scotland, pupil or minor.
(6) For the purposes of section (Provisions for securing that information furnished under section (Obligation of a director of a company to notify it of interests of his in shares in. or debentures of, the company or assocated companies), and certain other information about directors' interests, is recorded and made available) of this Act, an obligation imposed on a director by this section shall be treated as if imposed by section (Obligation of a director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies) of this Act.—[ Mr. Corfield.]
Brought up, and read the First time.
I beg to move, That the Clause be read a Second time.
With this new Clause it will be convenient to discuss new Clause No. 23—
and also the Amendment to subsection (11) of that new Clause, to leave out "seven" and insert "twenty-one", and also new Clause No. 24—"Obligation of director of a company to notify it of interests of his in shares in, or debentures of, the company or associated companies",
New Clause No. 25—"References to persons having an interest in shares or debentures".
New Clause No. 26—"Provisions for securing that information furnished under section (Obligation of a director of a company to notify it of interests of his in shares in, and debentures of, the company or associated companies), and certain other information about directors' interests, is recorded and made available".
New Clause No. 27—"Provisions for securing disclosure of substantial individual interests in share capital carrying unrestricted voting rights".
and also Amendments Nos. 308, 309, 310, 307, 78, 311 and 312."Provision for securing that information furnished under section (Provisions for securing disclosure of substantial individual interests in share capital carrying unrestricted voting rights) is recorded and made available",
These new Clauses are put forward in substitution of corresponding Clauses in the Bill. It is fairly clear which corresponds to which. New Clause No. 22 corresponds to Clause 31, new Clause No. 23 corresponds to Clause 27, new Clause No. 24 corresponds to Clause 28, new Clause No. 25 corresponds to Clause 29, new Clause No. 26 corresponds to Clause 33 and new Clause No. 27 corresponds to Clause 34.
The new Clauses which we put forward in substitution of the Clauses in the Bill form a more or less coherent series which it is convenient, at any rate in the context of the points raised by them, to consider together. Indeed, it is essential to do so. The crucial Clause is Clause 28, or new Clause No. 24 under the alternative proposals. It is first necessary, however, to refer briefly to Clause 27 of the Bill, the object of which is to ensure that directors' dealings in the shares or debentures of their own company are made known to the company itself and then, in accordance with Clause 29, with which new Clause No. 25 corresponds, are kept in a register available to the shareholders. We all agree that this is a desirable reform. Indeed, we on this side of the House would go further, as was indicated when we were discussing new Clause No. 3, in an endeavour to make this information which is to find its way into the register not only available to those who ask to see it, but, in the case of the 10 percenters under subsequent Clauses, to the Board of Trade and thence to the public. Clause 33 is a somewhat similar Clause, though with an entirely different purpose, namely, to provide for disclosure of substantial shareholdings which the Government have defined as 10 per cent. For convenience we can refer to these people as the "10 percenters". Unlike Clause 27, it applies only to quoted companies. This is a reform which we would all welcome, because this information is important for two very obvious reasons. First, the control of a company, or a large shareholding indicating a very close association with a company, by a person of high repute in these matters is of considerable importance both to existing shareholders and to potential investors. If it appears that such a man's shareholdings are rapidly dwindling, this can be a very important fact which people who invested on the strength of his name ought to know about. Conversely, any substantial change in a large shareholding indicating, as it may well do, a pending take-over or something of that sort is of equal importance no matter who the individual may be. As I say, we would all accept that this is a desirable reform, but the great difficulty arises from the approach adopted in Clause 28—to which new Clause 24 corresponds—which defines for both these purposes what amounts to an interest in the shares or debentures for the purposes of registration. This is obviously the crucial factor, because what is clearly of interest and importance to shareholders in the case of Clause 27, or to members of the public in the case of Clause 33, are the shareholdings or changes in shareholdings which are likely to affect control of the company. Obviously, a remote interest such as a reversionary beneficial interest under a trust is of far less importance—it may have no relevance at all—than, for example, a direct purchase by a director, in the first case, or a member of the public, in the other case, with an absolute interest in his own name and for his own benefit. 6.0 p.m. Our objection to the series of Clauses in the Bill which we are discussing is that Clause 28 fails to draw that distinction. I cannot do better than remind the House at this stage how wide the terms of Clause 28 are. Subsection (1) provides:Subsection (2) provides:"References to a person's being interested in shares in, or debentures of, a company shall, subject to the following rules, be construed so as not to exclude an interest on the ground of its remoteness or the manner in which it arises or by reason of the fact that the exercise of a right conferred by ownership thereof is, or is capable of being made, in any way subject to restraint or restriction."
Subsection (4,c) provides that a person shall be deemed to be interested in shares in or debentures of a company if"A person who has an interest under a trust whereof the property comprises shares or debentures (other than a discretionary interest) shall be deemed to be interested in the shares or debentures."
It is noteworthy that subsection (4) covers further types of interest but does not carry the corollary that interests which are outside subsection (4) are not registrable. On Second Reading, and again in Committee, several of my hon. Friends and I gave examples of remote interests in this connection which, as a result of Clause 28 as drafted, will have to be notified and registered. I do not want to be repetitive, but it is important again to give examples. It would mean that everyone having an interest in a pension fund for employees would have an interest which might be notifiable. Again, on the death of a person intestate, each of the next of kin would immediately acquire an interest in all the shares in the estate, which similarly might be notifiable. So would every annuitant and life tenant, however small his interest, under a will or other trust. Yet, on the other hand, a person who may have a far bigger interest, including a director, will be privileged from disclosing it under either of the Clauses if such interest takes the form of an interest, however substantial, under a discretionary trust, or where there is an absolute sole reversion to a fund of which the only life tenant may be a very aged person. So one can go on. All creditors under a trust to pay debts would have a registrable interest. So would all sureties under guarantees in regard to shares given as security for the guaranteed debt by the principal debtor. So would the Public Trustee, in fact, although there is a Government Amendment down designed to cure that one. So will the donee of, or the settlor reserving, a power of revocation or general power of appointment. It is clear that interests of the kind which I have been discussing have no relevance in judging whether control of a company is changing, in the case of Clause 33, or whether a director is dealing in shares, with inside knowledge, to his own benefit. What is important here is that it should be clear from the register that the dealings there entered indicate something of value. There are obvious disadvantages in cluttering up the register with entries which would be meaningless in relation to the object of the Clauses, namely, interests which do not indicate any change of control or impending change of control simply because they are interests which do not themselves give control to the people who own them and have to register them. There is the danger that too much information of this sort will obscure the really significant information which we all want to see clearly disclosed. Because there may be a great number of entries of remote interests, there is always the danger that the significant entries of absolute interests may be missed. Another problem arises from the fact that these matters are inevitably somewhat complex, and, understandably, will in many cases be wholly beyond the lay shareholder or lay investor. It cannot always be taken for granted that they are within the competence of financial journalists either, and, as a result, entirely misleading conclusions may be drawn from the registers because of the sheer complexity and multiplicity of the entries required. We have, therefore, tried to redraft the relevant Clauses, starting with the new Clause corresponding to Clause 28, drafting them in such a way that the interests which have to be registered are clearly classified according to the likelihood of their conferring control of the company. We have begun in new Clause 24 with three categories of interest. Class A is the absolute beneficial interest wherever the legal title to the shares may reside. Class B is the fiduciary interest of a trustee or settlor of settled property. Class C is the remoter interest under a trust, subject to the qualifications set out in subsections (7), (8) and (9) of the new Clause. In our submission, this is a far more suitable and sensible approach than the one adopted by the Government. With the redrafting of Clause 28 in the form of new Clause 24, the remaining new Clauses are, in broad terms, merely a redrafting of the other corresponding Clauses in the Bill in order to absorb within them the consequential amendments. I say "in broad terms" because there are one or two minor amendments as well, but at this stage at least, in order to reduce this somewhat complex matter to a simple compass, it seems wise to confine oneself to the main issue. At an earlier stage, when I put down some notes on these new Clauses, I noted that I thought it impossible to imagine that the Government were still attached to their own approach and, as they had not put down Amendments of their own I assumed that they would accept ours. I no longer feel that confidence. But, however that may be, realising that logic is not the strong point of the party opposite, I can only hope that the Government will accept that, if one is to carry out this exercise properly and have disclosed in the registers information which will be not only meaningful to people who understand it—which is doubtful under the Government's Clauses but meaningful to the ordinary person who is not an expert on trusts and such matters, our approach is by far the most logical and sensible. I commend the new Clauses to the Government, with the assurance that they have been drafted not by me but by someone with great professional knowledge, just as much knowledge as the draftsmen available to the Ministry, and in the confidence that they will serve the country far better than the Government's effort."not being a registered holder thereof, he is entitled to exercise any right conferred by the holding thereof or is entitled to control the exercise of any right so conferred."
I think that we all seek to achieve the same objective. The only difference between us is about the method by which we shall get there. I entirely accept the statement of the hon. Member for Gloucestershire, South (Mr. Corfield) that the Clauses have been drafted with professional skill, though I would not agree that they would have been any less skilfully drafted if he had drafted them himself. Nevertheless, having carefully examined the Clauses, into which a great deal of effort has been put, we still believe that we shall achieve our object better by the Bill as it stands.
We are dealing with both types of register—that of directors' share dealings, on the one hand, and that of persons with a substantial interest in the shares of a quoted company, on the other—the 10 per centers, as the hon. Gentleman said. I gather that one of the main anxieties felt by the Opposition about the Bill's present provisions is that the registers will be liable to be cluttered up with an excessive number of entries, recording all sorts of items of information which may not be of great interest, and that the hon. Member wishes to limit the interests which will be involved. To do that, he and his draftsmen have sought to divide the interests into three classes—A, B and C—and to limit the entries to the more important types of information. On examining the matter, we consider that the hon. Gentleman's fears about the cluttering up of the register are probably exaggerated, judging by the information and evidence on this point. The register of directors' interests to be kept under Clause 29 will be concerned only with the directors of the company, and only with their inerests in the shares and debentures of that company or of other bodies corporate in the group to which it belongs. There is, therefore, a substantial resemblance to the register which must at present be kept under Section 195 of the 1949 Act and the evidence of that does not lead us to believe that an unmanageable volume of information would be forthcoming and have to be recorded on the register. As to the 10 per centers, the register of those with a 10 per cent. interest, it is not really very probable that there will be a very large number of individuals who personally hold more than a 10 per cent. interest of the shares of a class of capital of a quoted company. I think that there is already a considerable natural limitation there which will cut down the amount of information involved. The other main difference between us is that the hon. Gentleman wants to limit the definition of "a person's being interested in shares". He wants to limit its meaning for the purpose of the register of 10 per cent. interests, which he would do by excluding the class C interests, as he calls them. However, examination of the Bill as it stands shows that quite a large number of these interests would be disregarded under our proposals. To give some examples: the rule in Clause 28(7) disregards for the purpose of the 10 per cent. register the interests of a remainder man under a trust. Clause 33(4,a) disregards, again for the purpose of the 10 per cent. register, a life interest in an irrevocable settlement in which the settlor has no beneficial interest. The effect of these provisions would be that in the majority of the ordinary family trusts and settlements, I am advised, the only interests to be taken into account for the purpose of the 10 per cent. register are those of the trustees. Again, the Board of Trade intends to use its power under Clause 33(4,e) to disregard the interests of the trustee when the trustee is a bank or insurance company, as it often is. 6.15 p.m. Therefore, taking those examples alone, we see that many of the class C interests which the Opposition, with reason, wish to see disregarded, would be disregarded anyway under the Bill as it stands. Those are some of our grounds for thinking that these entries will not really be as seriously likely to clutter up the register as has been feared. First, we believe that it is unlikely that a very large number of entries will be on the register. Secondly, the Clauses already in the Bill disregard for the purpose of the 10 per cent. register many of what the hon. Gentleman has defined as the class C interests. Therefore, although I think that our objective is entirely the same—to ensure that the information is made public as efficiently and intelligibly as possible—it seems to us for these reasons that that is more likely to be achieved by our provisions than those which the hon. Gentleman and his advisers have very ingeniously drafted.I shall detain the House for only a few moments. There is obviously very little difference between the Government view in this matter and the views expressed by my hon. Friend the Member for Gloucestershire, South (Mr. Corfield). I naturally support his views in as much as the Clause would limit the amount of disclosures, make them more definite, and mean less detail and cluttering up of the intended register.
I say this with some feeling, because I suppose that almost every time one speaks on the Bill one has to disclose an interest if one is in business. Although we have had assurances from the Government on this, I am very concerned that business people may genuinely slip up through lack of information. During the debates on the Bill, Ministers have reassured business people that there will not be any witch-hunting, but nevertheless there is a worry. On the new Clauses and Amendments, I want to put this point. One can clearly see a situation in which a businessman who has built up a business from nothing, and he and his family have become substantial shareholders in the company, must part with some of their interest. This is often necessary to pay tax, perhaps Surtax. Estate Duty might also be involved, and money must be realised. What worries me is that in the disclosures which the directors will have to make an impression will undoubtedly sometimes be given which is entirely erroneous and will cause a great deal of embarrassment. I support the Bill basically, but I am very worried about the tremendous amount of detail which must be provided and which, in many respects, could be very misleading and harmful to the individuals concerned, such as directors, who may be managing directors or chairmen of companies, and the 10 percentres, the shareholders who may have retired but still have a big holding and, perhaps for taxation purposes, must dispose of a considerable part of a shareholding and disclose this in the register. We appreciate that it is fair to other shareholders that they should know what is happening to the control of the companies in which they are also interested. But I find this very disturbing, and wish that the President of the Board of Trade could give some reassurance on this point. I know that the details must be put on the register, but is there any way of making quite clear the reasons for which a person must disclose a sale of shares of this kind through the register in a way that will not bring harm to him? However, I can see that it will, and I find it extremely worrying. In so far as the Clauses in the name of my hon. Friend the Member for Gloucestershire, South, complicated as they are, seem to restrict the amount of detail to be provided, I very much support the views expressed by my hon. Friend.The Clauses drafted by the Opposition have been based upon the Securities and Exchange Commission in America. The problem has been very much to the forefront in the consideration in America of insider dealings, directors' holdings and persons getting control of a company. It is a pity that the Government—in Committee we were assured that they had considered the procedure adopted by the Securities and Exchange Commission—did not proceed from that basis.
As to the advantages of the Opposition Clauses, first, they restrict the disclosures of certain interests which are unimportant. I gather that in one instance the Government have adopted our criticism of their Clause by enabling banks which are in the position of being trustees of many settlements resulting from business transactions not to have to disclose in each case that they may hold through their various branches 10 per cent. in some company. But it is a pity that the Government did not recast all the Clauses as the result of the debates in Committee. So the first point is that we exclude certain interests which need not be disclosed if one has in mind the objects of the Clauses, which are directors' holdings and 10 percenters. Another aspect of the Opposition Clause is that it is wider in certain respects than the Government Clause. I think I am right in saying that under the Government Clause the object of a discretionary trust does not have to disclose the fact, because it is of no interest. In other words, that is where one has a discretionary trust where the other objects of the discretion are of no importance. One often has this in a trust. For tax or Estate Duty purposes one has items (a), (b), (c) and (d), and one deals with the director, and then one has (e) and (f), and (f) is usually a charity to act as a long stop. The only important object of the discretionary trust is the director. The point was brought out in Committee, but I am not sure that we ever thrashed it out. However, I do not think that the object of a discretionary trust has to disclose his holding as a director or that he is personally interested in 10 per cent. In this case the disclosure may well fall on the trustees. So this gap, if it is a gap, is more evident in relation to the director's holdings. In our Clause there is a form of words saying that the object of a discretionary trust is a disclosable interest under class (c), so that we cure the matter there. It is important in respect of all these Clauses to recall the argument of my hon. Friend the Member for Crosby (Mr. Graham Page), that if it is more efficient it saves time, and it reduces the coefficient of friction on production because it enables people to get on with their main job instead of having to make unnecessary disclosures or worry their heads about some difficult legal point. If a director is the object of certain trusts and the trustee in other circumstances and also the mortgagee of certain shares he will have a hard enough time deciding which have to be disclosed and which do not. His task will be immeasurably helped if he has the divisions (a), (b) and (c). He may have certain difficult questions to answer, but in the great majority of cases it will be much easier for him to put it on the appropriate register. It will also be much easier for the person who is reading the register, the person who wants to obtain information because he is interested in acquiring shares in the company and wants to know to what extent the director has an interest in the shares of the company. That information may affect his judgment as to what the director's policy in the company is. Inevitably, owing to the taxation system sometimes the interests of a large shareholder are very different from those of a small shareholder. With the best will in the world, and the most honest motives, a person may well be unconsciously influenced by the fact that if he has an interest in a large number of shares as a director his policy, depending on his age, may be to keep the value of the shares down for death duty purposes. That is why when one is investing in a company in which the family holds a preponderant share one has to gauge what the policy of the company may be, whether it is looking a long way forward in building up the resources of the company, perhaps looking 10 or 20 years ahead, which may suit the family, certainly if the present holders are old, or whether it is a company in which the directors, as in many of our big companies, are in the position of managers who have no great interest in the number of shares and whose interest may, therefore, be in building up the immediate income of the company. It is very necessary to study the register from that point of view. It is obviously also necessary to study the register to ascertain whether directors who may quite properly have interests in cognate businesses elsewhere are likely to want to amalgamate or merge the interests of the two companies. Again, the amount of holdings that they have and where they are acquired from are necessary items of information to the person who is considering making the investment. Contrary to what a large number of hon. Members on the other side of the House believe, the investing public play a very important part in the financial and monetary life of the country. Good investment in unit trusts and investment trusts by individuals is very necessary in order to induce risk capital into further productive works. This is the reason why the Government have introduced their type of Clause. They hold, I imagine, rightly, that the public must be protected against losing money through shares being sold at the wrong moment and against being caught perhaps on some false financial path by the owners of a large proportion of the shares taking a particular view. Also, it is necessary for the raising of new money for the persons who are asked to deal with a bonus issue or a rights issue to give financial advice and to provide market facilities. It is also necessary for them to be able to test the bona fides of those who are asking them to provide this extra money. 6.30 p.m. It is, therefore, desirable that the persons interested in the company, either as directors or as 10 percenters, should appear clearly so that the merchant bank, the joint stock bank or the stockbrokers who are assisting the company may have some kind of check on the representations that have been made to them about the need for the extra money and the general policy of the company. That was why the Jenkins Committee took all this into account and made recommendations. I entirely agree with the President of the Board of Trade that we both want the same thing, but it seems a pity that a rather deeper study was not given to it after the various Amendments were put forward in Committee. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) put forward an Amendment which was founded more directly on the S.E.C. It contained all the arguments which are being put forward by my hon. Friends and myself about the desirability of making the matter more efficient, easier to understand and likely to lead to greater efficiency in the attitude and the dealing with companies from the financial and monetary point of view. I therefore ask the Government to abandon their Clauses and to accept ours on the ground purely of efficiency, which we need so badly today in the economy, a principle which has been rejected in the Government's new Clauses.I am not a company lawyer or an accountant or anything else and, therefore, I hesitate to intervene in the debate. I was very impressed by what my hon. and learned Friend the Member for Northwich (Sir J. Foster) has said. My general approach to this sort of legislation is that in the House of Commons over recent years we have tended to become rather hag ridden with tax, company organisation and the like and with getting something that is foolproof, whereas in human relationships one will never get anything that is completely foolproof.
We have to begin to take notice of whether what we produce is reasonably practical, covers 95 to 97 per cent. of the cases and is understandable by the bulk of the people who deal with these matters, accepting that some high-powered disreputable person will probably find a way round the regulations. It is, however, a little disturbing that, for instance, in commercial activities companies are sold not on a commercial basis, but because we in the House of Commons have produced taxation or regulations that make it in their interest to dispose of their interest. That cannot be a good thing for the commercial activities of the nation. While accepting that it is a complicated lot of Clauses, it seems to me that ours—I will not say that they are simple; that would be carrying it a little too far—are a little clearer and a little more narrow than the Government's. Holding the philosophy that I do, I think that we have already probably gone too far in the direction of regimentation and control. I hope that the Government will find it possible to accept the new Clauses which have been put forward from this side of the House.I intervene, and I hope that I may wind up the debate because I remember that in Committee I said that the best way to deal with the series of Amendments from the Opposition on this matter was to spell them out into the Clauses, put them side by side with the Clauses in the Bill and see which appeared best likely to fulfil the purpose that the hon. Member for Ormskirk (Sir D. Glover) has put forward.
I sincerely congratulate whoever was responsible in the Opposition for the drafting of the new Clauses on responding to what I thought was at the time a completely hypothetical question. I did not realise that it would be done. Having seen the two sets of Clauses side by side, however, and having gone through them with my right hon. Friend and our advisers, I am confident that the Government Clauses will serve the purpose better. At first sight, it would appear that the Government Clauses proposed that nearly every kind of interest should be recorded, whereas the Opposition propose that only what are referred to in various of the Clauses as class A and class B should be recorded. That is very much an oversimplification and ignores the many interests which, for the purposes, for instance, of the 10 per cent. register, would be disregarded under the Government Clauses. I do not want to go into detail, but I have to say that there are differences of drafting and that even if we accepted the new Clauses put down by the Opposition, we would be in grave difficulty because, without spelling out the reasons—it is an unfair argument to use when discussing matters of principle—there are defects of drafting that we would have to take into consideration. The answer to the hon. Member for Croydon; North-West (Mr. Frederic Harris) is that under the Government and Opposition Clauses the situation which he has raised would not be very much different. The main shareholder in a family business who for one reason or another has to sell his shares would be compelled to disclose both under the Opposition Clauses and under our own. That is a problem which we might consider. I am not sure to what extent it would cause hardship, but it is something at which we can, perhaps, look.I thank the right hon. Gentleman for his assurance that he will reconsider the matter. My point basically is that there is a world of difference between a director who dabbles in his company's shares and another who has to dispose of them, as so often happens, for tax purposes.
That was the point which I had in mind to see whether any kind of hardship could arise in the case of the person who has to disclose the shares, even as a result of having to sell them as the hon. Member suggests, for tax purposes.
For the reasons given, however, by my right hon. Friend in his intervention and the reasons which I have just given, I very much regret that we cannot accept the incredibly good job of work which has been done by those who drafted the Opposition's new Clauses.The Minister of State said that he hoped he was winding Jp the debate, but his last few words were so disappointing to us, although complimentary to my hon. Friends on the drafting of their Clauses, that we ought to out one or two points on record.
The right hon. Gentleman's last speech reminded me of a popular song of about 20 years ago which had a title like this:That, I am sure, is the attitude of the right hon. Gentleman throughout. We have produced some extremely good Clauses, but he prefers his own Bill. So be it. On previous new Clauses and Amendments we have discussed registers and the work entailed in keeping them. There is no doubt that the Clauses impose new burdens on company administration. It is essential that we should see that those burdens are not imposed for nothing and that there is purpose, and a practical purpose, in this reform. We are talking about two registers, the directors' share dealings and the register of those who have a substantial interest and to whom my hon. and learned Friend the Member for Northwich (Sir J. Foster) referred as 10 per centers. As to the first, the register already does this, although not quite in the form that either the Bill or the new Clauses propose. Let us face it, however, that that register is not generally well kept unless it is kept professionally by registrars. Very frequently it is incomplete and unintelligible. The way one needed to tackle a reform of it was to take the really practical view of what interests really are of interest—if I may double the use of the word in that way—to those concerned. We do not feel that the Government have tackled it from that practical point of view in the Clauses in the Bill. We have tried to deal with it in that way in the new Clauses. As to the second lot, what is called the register for the 10 percenters, surely in the new Clause is a formula tidily setting out the classification of those interests which are of interest to other people—what I would call an anti-cluter formula and, therefore, a pro-clarity formula. I believe that we have put forward the right way to do it here. In some respects there is a restriction on important disclosures in the formula in the new Clauses. I was interested to hear that the Government intend by regulation to remove the obligation on corporate trustees to disclose. I am a little doubtful about this because in my own profession —I must declare an interest—we always dislike corporate trustees, as against an accountant or solicitor or other professional trustee; but I think that it is right in this case; they should be relieved. We think that our Clauses go a little further in making certain what interests should be disclosed, such as in the discretionary trusts. I may sum it up in this way. We look on the Clauses in the Bill as more theoretical than practical. We have tried to tackle the matter from the practical point of view, and to see what is required by way of reform in the practice of keeping registers and disclosing interests. We believe that our Clauses will work and are a great practical advantage, and on that score we should like to record that fact in the Division Lobby."I don't know why I love him, but he's just my Bill."
Division No. 478.]
| AYES
| [6.44 p.m.
|
| Allason, James (Hemel Hempstead) | Hall-Davis, A. G. F. | Pearson, Sir Frank (Clitheroe) |
| Astor, John | Hamilton, Michael (Salisbury) | Peel, John |
| Atkins, Humphrey (M't'n & M'd'n) | Harris, Frederic (Croydon, N.W.) | Pounder, Rafton |
| Baker, W. H. K. | Harrison, Col. Sir Harwood (Eye) | Powell, Rt. Hn. J. Enoch |
| Balniel, Lord | Harvey, Sir Arthur Vere | Pym, Francis |
| Barber, Rt. Hn. Anthony | Hawkins, Paul | Ramsden, Rt. Hn. James |
| Bell, Ronald | Hill, J. E. B. | Ronton, Rt. Hn. Sir David |
| Bennett, Or. Reginald (Gos. & Fhm) | Holland, Philip | Ridsdale, Julian |
| Bessell, Peter | Hooson, Emlyn | Robson Brown, Sir William |
| Biffen, John | Hunt, John | Rodgers, Sir John (Sevenoaks) |
| Bromley-Davenport, Lt.-Col.SirWalter | Hutchison, Michael Clark | Rossi, Hugh (Hornsey) |
| Brown, Sir Edward (Bath) | Irvine, Bryant Godman (Rye) | Royle, Anthony |
| Bruce-Gardyne, J. | Johnston, Russell (Inverness) | Russell, Sir Ronald |
| Bryan, Paul | Kaberry, Sir Donald | Shaw, Michael (Sc'b'gh & Whitby) |
| Buchanan-Smith, Alick(Angus,N&M) | Kimball, Marcus | Stainton, Keith |
| Buck, Antony (Colchester) | Kirk, Peter | Steel, David (Roxburgh) |
| Bullus, Sir Erie | Kltson, Timothy | Stoddart-Scott, Col. Sir M. (Rlpon) |
| Campbell, Gordon | Knight, Mrs. Jill | Summers, Sir Spencer |
| Cary, Sir Robert | Lancaster, Col. C. G. | Taylor, Sir Charles (Eastbourne) |
| Cooke, Robert | Legge-Bourke, Sir Harry | Taylor, Edward M,(G'gow, Cathcart) |
| Corfield, F. V. | Lewis, Kenneth (Rutland) | Taylor, Frank (Moss Side) |
| Costain, A. P. | Lloyd, Ian (P'tsm'th, Langstone) | Temple, John M. |
| Craddock, Sir Beresford (Spelthprne) | Loveys, W. H. | Thatcher, Mrs. Margaret |
| Crosthwaite-Eyre, Sir Oliver | Lubbock, Eric | Thorpe, Rt. Hn. Jeremy |
| Cunningham, Sir Knox | McAdden, Sir Stephen | Turton Rt. Hn. R H. |
| Currie, G. B H. | Maclean, Sir Fitzroy | Vaughan-Morgan, Rt. Hn. Sir John |
| Dalkeith, Earl of | McMaster, Stanley | Wainwright, Richard (Colne Valley) |
| Dance, James | Maginnis, John E. | Walker, Peter (Worcester) |
| Davidson, James (Aberdeenshire, W.) | Maude, Angus | Ward, Dame Irene |
| Dean, Paul (Somerset, N.) | Mawby, Ray | Weatherill, Bernard |
| Deedes, Rt. Hn. W. F. (Ashford) | Mills, Peter (Torrington) | Webster, David |
| Dodds-Parker, Douglas | Montgomery, Fergus | Whitelaw, Rt. Hn. William |
| Emery, Peter | More, Jasper | Wills, Sir Gerald (Bridgwater) |
| Errington, Sir Eric | Morrison, Charles (Devizes) | Wilson, Geoffrey (Truro) |
| Fortescue, Tim | Munro-Lucas-Tooth, Sir Hugh | Winstanley, Dr. M. P. |
| Foster, Sir John | Nabarro, Sir Gerald | Worsley, Marcus |
| Giles, Rear-Adm. Morgan | Neave, Airey | Wright, Esmond |
| Gilmour, Sir John (Fife, E.) | Nicholls, Sir Harmar | Wylie, N. R. |
| Glover, Sir Douglas | Nott, John | Younger, Hn. George |
| Cower, Raymond | Onslow, Cranley | |
| Gresham Cooke, R. | Osborne, Sir Cyril (Louth) | TELLERS FOR THE AYES: |
| Griffiths, Eldon (Bury St. Edmunds) | Page, Graham (Crosby) | Mr. R. W. Elliott and |
| Grimond, Rt. Hn. J. | Page, John (Harrow, W.) | Mr. Anthony Grant. |
| Gurden, Harold | ||
NOES
| ||
| Abse, Leo | Brown, Bob (N 'c'tle-upon-Tyne, W.) | Edwards, Rt. Hn. Ness (Caerphilly) |
| Allaun, Frank (Salford, E.) | Brown, R. W. (Shoreditch & F'bury) | Edwards, Robert (Bilston) |
| Allen, Scholefield | Buchan, Norman | Edwards, William (Merioneth) |
| Anderson, Donald | Buchanan, Richard (G'gow, Sp'burn) | Ellis, John |
| Archer, Peter | Butler, Herbert (Hackney, C.) | English, Michael |
| Armstrong, Ernest | Cant, R. B. | Ennals, David |
| Atkins, Ronald (Preston, N.) | Carmichael, Neil | Ensor, David |
| Atkinson, Norman (Tottenham) | Carter-Jones, Lewis | Evans, Albert (Islington, S.W.) |
| Bagier, Gordon A. T. | Coleman, Donald | Evans, Ioan L. (Birm'h'm, Yardley) |
| Barnett, Joel | Concannon, J. D. | Faulds, Andrew |
| Baxter, William | Corbet, Mrs. Freda | Finch, Harold |
| Beaney, Alan | Craddock, George (Bradford, S.) | Fletcher, Raymond (Ilkeston) |
| Bencs, Cyril | Crosland, Rt. Hn. Anthony | Foley, Maurice |
| Benn, Rt. Hn. Anthony Wedgwood | Grossman, Rt. Hn. Richard | Ford, Ben |
| Bennett, James (G'gow, Bridgeton) | Cullen, Mrs. Alice | Forrester, John |
| Blackburn, F. | Darling, Rt. Hn. George | Fraser, John (Norwood) |
| Blenkinsop, Arthur | Davidson, Arthur (Accrington) | Galpern, Sir Myer |
| Boardman, H. | Davles, Dr. Ernest (Stretford) | Gardner, Tony |
| Booth, Albert | Davies, Harold (Leek) | Garrett, W. E. |
| Bowden, Rt. Hn. Herbert | Davies, S. O. (Merthyr) | Gourlay, Harry |
| Boyden, James | Dell, Edmund | Gray, Dr. Hugh (Yarmouth) |
| Braddock, Mrs. E. M. | Dempsey, James | Gregory, Arnold |
| Bradley, Tom | Doig, Peter | Grey, Charles (Durham) |
| Brooks, Edwin | Driberg, Tom | Griffiths, Will (Exchange) |
| Broughton, Dr. A. D. D. | Dunnett, Jack | Hamilton, William (Fife, W.) |
| Brown, Rt. Hn. George (Belper) | Dunwoody, Mrs. Gwyneth (Exeter) | Hamling, William |
| Brown, Hugh D. (G'gow, Provan) | Dunwoody, Dr. John (F'th & C'b'e) | Harper, Joseph |
Question put, That the Clause be read a Second time:—
The House divided: Ayes 126, Noes 200.
| Hart, Mrs. Judith | Mallalieu, J.P.W. (Huddersfield, E.) | Robertson, John (Paisley) |
| Haseldine, Norman | Manuel, Archie | Rogers, George (Kensington, N.) |
| Herblton, Rt. Hn. Margaret | Mapp, Charles | Rose, Paul |
| Hooley, Frank | Marquand, David | Ross, Rt. Hn. William |
| Howarth, Harry (Wellingborough) | Mason, Roy | Rowlands, E. (Cardiff, N.) |
| Howie, W. | Maxwell, Robert | Sheldon, Robert |
| Hoy, James | Mendelson, J. J. | Short, Rt. Hn. Edward (N'C tle-u-Tyne) |
| Huckfield, L. | Millan, Bruce | short, Mrs. Renée (W'hampton, N.E.) |
| Hughes, Emrys (Ayrshire, S.) | Miller, Dr. M. S. | Silkin, Rt. Hn John (Deptford) |
| Hughes, Hector (Aberdeen, N.) | Milne, Edward (Blyth) | Silverman, Julius (Aston) |
| Hughes, Roy (Newport) | Mitchell, R. C. (S'th'pton, Test) | |
| Hunter, Adam | Morgan, Elystan (Cardiganshire) | Slater, Joseph |
| Hynd, John | Morris, Alfred (Wythenshawe) | Small, William |
| Irvine, A. J. (Edge Hill) | Morris, Charles R. (Openshaw) | Spriggs, Leslie |
| Jackson, Peter M. (High Peak) | Moyle, Roland | Steele, Thomas (Dunbartonshire, W.) |
| Jay, Rt. Hn. Douglas | Murray, Albert | Swingler, Stephen |
| Jones, Dan (Burnley) | Newens, Stan | Taverne, Dick |
| Jones, J. Idwal (Wrexham) | Noel-Baker, Francis (Swindon) | Thomas, George (Cardiff, W.) |
| Jones, T. Alec (Rhondda, West) | Norwood, Christopher | Thornton, Ernest |
| Kenyon, Clifford | Ogden, Eric | Tinn, James |
| Kerr, Dr. David (W'worth, Central) | Orbach, Maurice | Tomney, Frank |
| Kerr, Russell (Feltham) | Orme, Stanley | Tuck, Raphael |
| Lawson, George | Owen, Dr. David (Plymouth, S'tn) | Urwin, T. W. |
| Lestor, Miss Joan | Owen, Will (Morpeth) | Walnwright, Edwin (Dearne Valley) |
| Lever, L. M. (Ardwick) | Padley, Walter | Walker, Harold (Doncaster) |
| Lewis, Arthur (W. Ham, N.) | Page, Derek (King's Lynn) | Wallaco, George |
| Lewis, Ron (Carlisle) | Pannell, Rt. Hn. Charles | Watkins, Tudor (Brecon & Radnor) |
| Lomas, Kenneth | Park, Trevor | Wellbeloved, James |
| Loughlin, Charles | Parkyn, Brian (Bedford) | Whitlock, William |
| Luard, Evan | Pavitt, Laurence | Williams, Alan (Swansea, W.) |
| Lyon, Alexander W. (York) | Pearson, Arthur (Pontypridd) | Williams, Clifford (Abertillery) |
| McBride Neil | Pentland, Norman | Willis, George (Edinburgh, E.) |
| McCann, John | Perry, Ernest G. (Battersea, S.) | Wilson, William (Coventry, S.) |
| MacColl, James | Perry, George H. (Nottingham, S.) | Winterbottom, R. E. |
| McCuire, Michael | Prioe, Christopher (Perry Barr) | Woodburn, Rt. Hn. R. A. |
| Mackenzie, Gregor (Rutherglen) | Price, Thomas (Westhoughton) | Woof, Robert |
| Mackle, John | Price, William (Rugby) | Yates, Victor |
| Mackintosh, John P. | Probert, Arthur | |
| MacMillan, Malcolm (Western Isles) | Rankin, John | TELLERS FOR THE NOES |
| McMillan, Tom (Glasgow, C.) | Roberts, Albert (Normanton) | Mr. Alan Fitch and |
| McNamara, J. Kevin | Roberts, GOronwy (Caernarvon) | Mr. Walter Harrison. |
| MacPherson, Malcolm | ||
| Mahon, Peter (Preston, S.) |
New Clause No 29—(Penalties For Discriminating Against Companies On Basis Of Political Contributions)
(1) No local authority or body corporate or unincorporated association shall discriminate in the placing of business or of contracts against any corporate body on the ground that such body has or has not made contributions for political purposes within the meaning of section 19 of this Act or of section 3 of the Trade Unions Act 1913.
(2) Any person who is party to such discrimination shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £500.
(3) This section shall not apply to any political party or any branch thereof or any association or body corporate or incorporate formed to carry on or principally carrying on political activities.—[ Sir J. Foster.]
Brought up, and read the First time.
I beg to move, That the Clause be read a Second time.
With the new Clause, we are discussing Amendment No. 47, in page 20, line 23, at end insert:
(6) If on the ground that a company has or has not given money for political purposes any local authority or other body corporate or unincorporated association (other than a partnership) shall discriminate against such company whether by declining to contract with or to permit tenders from such company or otherwise howsoever, any member of such local authority or of the board of directors, council of management or other governing body of such body of persons who is party to such discrimination shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £200 or to imprisonment for a period not exceeding six months or to both such fine and imprisonment.
(7) The last preceding subsection shall not apply where the body or association discriminating in the manner in that subsection mentioned is a political party in the United Kingdom or is carrying on or proposing to carry on such activities as are mentioned in paragraph (b) of subsection (3) of this section.
(8) For the avoidance of doubt it is hereby declared that any dispute between a company and its employees arising in consequence (either alone or together with other matters) of that company's giving or not giving money for political purposes is not within the meaning of the Trades Disputes Act 1906 a trade dispute.
The new Clause and the Amendment arise out of Clause 19, which provides that, in the directors' report, contributions for political and charitable purposes shall be disclosed. The object of the new Clause and the Amendment, doing it in slightly different ways, is to prevent discrimination. The discrimination which we have in mind is where a local authority, company, unincorporated association, or, in Amendment No. 47, a trade union, brings pressure on a company by refusing to contract with it and do business on the ground that it has made a political contribution to a particular party.
I assume that on both sides of the House that would be considered wrong. I assume that hon. Gentlemen opposite, just as much as my right hon. and hon. Friends, disapprove of discrimination against a company, whether it has contributed to the Labour Party or to the Conservative Party, and consider that it would be wrong for a local authority or company to refuse to allow that company to tender, or to select a tender at a higher price on the ground that the company had made a certain political contribution. During the last 50 years of this century, we have been made much more aware of the evils of discrimination. We have an Act which provides against racial discrimination. Public sentiment disapproves of discrimination on the ground of religion against Catholics and Methodists in the matter of business, and people disapprove if a person is discriminated against on the ground of his Jewish faith. There have been instances where discrimination has been practised in the sense that pressure has been brought to bear on companies because political contributions have been made in the interests of the Conservative Party. There have been instances of trade unionists on a building site threatening to strike and not fulfil their contracts because their employer has made contributions to organisations suspected of being in support of the Conservative Party. There have been instances, too, of local authorities indicating that they would not deal with companies which made contributions for political purposes. Two or three years ago, there was a spate of inquiries from local authorities to the directors of certain big companies asking what political contributions they made. The only possible reason for the inquiries was that the local authorities in those circumstances would not have dealt with those companies in a business way, and that they felt that, if the companies subscribed to the Conservative Party, they could not do business with them. Another argument which they put forward was that if not all the shareholders were Conservatives, it was wrong that a company should subscribe to the Conservative Party, when it might be that a substantial proportion of the shareholders were Labour supporters. The answer to that is that, as long as private enterprise subsists, it is in the interests of a company to subscribe to the Conservative Party or to organisations which further private enterprise, because the ideology of the Socialist Party is in favour of Socialism and nationalisation. A few years ago, we had the case of Mr. Cube, where it was held that it was directly in the interests of the company to mount a campaign against the nationalisation of the sugar industry and that it was in the interests of Tate and Lyle to resist the principle put forward by the Socialist Party for nationalisation. If a Socialist supporter is a shareholder in a private enterprise company, he must expect the company to defend itself against the principles of the Labour Party by subscribing directly to the Conservative Party or to organisations which exist to promote private enterprise. He is entering the private enterprise side of the economic sector, and he must expect the company to defend itself and promote its interests in that way. It is wrong, in my submission, to seek to bring pressure on a company by refusing to deal with it in a business way. When the Minister of State replies to this debate, I hope that he will accept that principle as being a right one, and that he will say that he disapproves of local authorities, companies, unincorporated associations and trade unions bringing pressure on companies by refusing to do business with them with the intention of making them discontinue their political contributions. If he accepts that principle, the next question which arises is whether he is prepared to do anything to stop it. The existing law, save in a rather unsatisfactory Section of the Trade Disputes Act and, I think, the Act of 1875, does nothing to prevent it A local authority can refuse to accept the offer to enter into a contract with company A and deal instead with company B, putting in its minutes that it does not want to deal with company A because it is a Tory—or Liberal or Socialist, as the case may be—company which has subscribed to the political party which it supports. 7.0 p.m. If that is so, and if the Minister does not intend to accept the Clause or the Amendment, I would like him to tell us why he proposes not to do so. In Committee, it was said that it was difficult to prove, but this is not a reason for not accepting the Clause. This is always the objection raised by persons who oppose a legal provision. They say that the dividing line is difficult to draw. In nearly all legal provisions it is accepted that this is so, but this is not a reason for guarding against a manifest evil. A distinction has to be made in law between men and women, but it is difficult to say whether a hermaphrodite is a man or a woman. A distinction has to be drawn between night and day, but at dawn and dusk it is difficult to say whether it is night or day. If there is a clear case of discrimination, does the Minister disapprove of it? Is he prepared to adopt legislation which snakes it an offence for this discrimination to take place? It would be wrong for the right hon. Gentleman to say, "This is really a question of expanding the Race Relations Act". It is not in the same category at all. This is discrimination in business, of which there have been signs in various quarters during the last few years, and which will be more likely to come forward if the list of political contributions is shown in the directors' report. One can imagine that people who do not think clearly will take the view that it is a legitimate form of political warfare for a corporation, be it a local authority, or a company, or a semi-Government organisation, to try to bring pressure on private enterprise companies to prevent them from subscribing to political parties or to organisations whose aims are the furtherance of private enterprise. I submit that the Clause should commend itself to the House, and I urge the right hon. Gentleman to deal with the two aspects of it which I have raised. First, does he think that discrimination on this ground is wrong? Secondly, if he does, is he prepared to make it an offence for such discrimination to take place?I make no apology for rising to address the House on this Clause. What worries me about the way our political thinking is going is that it is thought necessary for a Clause of this kind to be brought into a Bill of this sort in the House of Commons.
I have an enormous admiration for the battle which the party opposite has fought for many years to achieve its aims. I have not particularly supported some of its activities, but I think that this is democracy at work. It is only 67 years since the first Member of the party opposite came into the House, and now hon. Gentlemen opposite are in Parliament with a large majority. This is something which everybody who believes in democracy should want to see happen when people have a view which they want to express. Until recently it had always been the view that whatever political view one held it had no injurious effect on one's social and economic activities. It is the provision in the Bill about the disclosure of political contributions which has made my hon. and learned Friend the Member for Northwich (Sir J. Foster) put down this Clause, because there is a real fear that discrimination will take place as a result of this disclosure. I think that it is the negation of the whole working of democracy to say that because a firm with a strong chairman—perhaps the hon. Member for Ormskirk —who holds his views passionately, wants to subscribe to the furtherance of the cause in which it believes so strongly, in the same way as trade unions want to achieve their objectives, it should be discriminated against. In a democracy, where the' whole basis of progress is hammered out by argument between the two sides, it would be a complete negation of our democratic society if there was even a suspicion that people were being discriminated against in their commercial activities because of their political allegiances. Let us be honest. Hon. Gentlemen opposite have made speeches on this subject on a number of occasions. There is a growing feeling that a person can use his political power to coerce people into doing something which they should not do in a democracy. It seems to me that the whole basis of democracy itself is at risk. I therefore ask the right hon. Gentleman to realise that in this Clause we are bringing in something which will make it clear beyond a peradventure that the Government of the day, and the party opposite, although they are asking for disclosure, are not in any way suggesting that that disclosure should be used as a political weapon in the commercial activities of a company. If this were to happen—and I say this with great feeling to hon. Gentlemen opposite—we would do a lot to ruin the whole basis of our commercial and industrial life as it has been carried on for the last 50 to 60 years. Nobody can force a person to alter his political views. It may be possible to coerce him into not supporting them, but he cannot be forced to alter them, and if there was a feeling in the country that a person's political views were acting against his economic and commercial interests, we would eventually build up a very bitter form of society. If it has started, it is quite easy to stop it, because it is in its early stages. If there is any evidence of it, it is not extravagant, but because of the other Clauses in the Bill about the disclosure of contributions to political parties it is vital that Parliament should make it clear that, while it may be justifiable, in the interests of the shareholders—not in the interests of political parties—to know what the directors are doing with the money which they have earned, and, therefore, the shareholders might legitimately object if the money is being given to the Labour, Liberal, or Conservative Parties, it would be appalling if people began to think that they were going to lose not in respect of their lack of commercial ability or their inability to produce the best contract for building houses or to build a road, but purely because of their political allegiance. If it became clear that that was happening we should have gone a long way down the road to ruining and breaking up the whole democratic society on which we have prided ourselves for so long. I hope, therefore, that the right hon. Gentleman will accept the new Clause. It would be a disaster if it had to be voted against, but if the Government will not agree that since disclosure will be a necessary part of a company's activities it must also be written into the law that no discrimination shall be made against a firm because of its political views, and made quite clear that to use this as a political weapon will be outwith the law we shall have to divide. I hope that the right hon. Gentleman and his hon. Friends, in the interests of our democracy, will find it possible to accept the Clause.rose—
rose—
I congratulate my hon. and learned Friend the Member for Northwich (Sir J. Foster) for the way in which he moved the new Clause. At the same time, feeling charitable, I will come to the rescue of the Minister of State. He made his position and the position of the Government quite clear in Committee. He said that he was against discrimination of all kinds, and went on:
I hope that when I rose to speak the Minister was trying to catch the eye of the Chair to say that he would accept the new Clause. He has a great responsibility, and I know that he feels that some safeguard of this nature should be written into the Bill. In my opinion the Clause provides a reasonable safeguard. A point which was mentioned in Committee, but should be mentioned again—because several Members here today did not have the privilege of serving on the Committee during its 27 sittings—was that a list might be made of firms subscribing to a political party and it might become known that this list was available. Company directors or members of local authorities, or any corporate body, might know that certain firms who were tendering were subscribing to certain political parties. In the case of a local authority it is customary for the clerk, at a certain juncture, to warn those who are about to select a certain firm for a tender that if anyone has a personal interest in that firm he should not take any part in voting or selecting. If there were a statutory provision in the Bill drawing attention to the fact that there should not be discrimination against a firm if it openly subscribed to a political party the company secretary, or the clerk to an authority, could point out to those concerned that at the moment when they were making their decision they would he acting contrary to the law if they had regard to the fact that a certain firm was supposed to have a political bias. It would be advantageous to have some kind of safeguard in the Bill. Leaving aside that aspect of the question, there is another point which should not be disregarded, namely, the case of a foreign company which has an interest in this country. As far as I know, there is no provision in the Bill which says that a foreign company with a subsidiary in this country must disclose the fact that it makes a contribution to a political party here—neither is there any obligation upon a British company to disclose the fact that it is subscribing to a political party abroad. I know that many international companies, so that they can have an influence in certain parts of the world, by custom make contributions to political parties. It may be that on occasions they subscribe to two or three political parties in he same country for this purpose. It would be a little unwise not to have a safeguard written into our own legislation against discrimination when subscriptions of the kind we are concerned with may be made by international companies elsewhere or by foreign companies operating n this country."The difficulty arises in finding suitable words to express this aim."—[OFFICIAL REPORT, Standing Committee E, 18th April, 1967, c. 609.]
7.15 p.m.
I shall be brief, not because I think that the Clause is unimportant but because it deaf with such a wide matter of principle that there ought to be no difference between us. I support the Clause not because I believe that there is any appreciable danger of discrimination being practised on a wide scale; indeed, one of the most satisfying features that I have always found in my political activities in this country is how rare the application of political discrimination is in other aspects of our national life. It is an entirely desirable characteristic, and one which we should at every opportunity seek to preserve and foster.
The Bill is largely concerned with the question of standards of behaviour. We are seeking to lay down these standards for companies and company directors on a more extensive scale than has been done previously. My hon. and learned Friend the Member for Northwich (Sir J. Foster) mentioned the Race Relations Act in passing. Perhaps it has a closer parallel with this Bill than at first sight appears. Many people wondered whether the codification of law governing race relations would serve any useful purpose. There is no doubt, looking back, that it has served a useful purpose. It has sought to create a situation in which there is a clear definition of what is right and what is wrong. The main benefit that would accrue from the inclusion of this Clause in the Bill is that in our public life we should have a clear definition of what was right and what was wrong in respect of the disclosure of political activities. It would not be a desirable consequence if, as a result of the greater disclosure of political support, there should be one or two cases—I do not think that there would be more—where unwise and bigoted people sought to take advantage of or react to information which they did not have before. Without such a Clause, we shall have to wait for the pressure of public opinion, Questions in the House and possibly future legislation and the matter would be blown up far beyond the scale which one or two incidents could justify. The Clause would round off certain other aspects of the Bill and would help to preserve a right and proper and sweet atmosphere in the conduct of our political debate and we should be smoothing the way for action which would be in proportion to the effects if some people were tempted by information made available to them by the Bill to act undemocratically and undesirably.The hon. and learned Member for Northwich (Sir John Foster) asked me categorically to say whether we share his condemnation of political discrimination. I can give him that assurance immediately. The Bill makes companies disclose their political contributions and we think it desirable in company law that any company should be able to make any political contributions without further consequences. We say only that the fact of those contributions should be disclosed to the shareholders. I am sure that hon. Members opposite agree.
There seems to be a fear that, if companies disclosed political contributions, this would leave them open to the risk of political intimidation. We utterly oppose such discrimination, but this is not something new for us. Many of my hon. Friends have had personal and painful experiences of what we would prefer to call political victimisation and many of our parents and grandparents suffered sometimes savage and brutal victimisation for their political beliefs. This is not a new problem, but has been with us for years and has frequently been raised in the House. But no party or Government over the last 100 years, since this issue has been raised, has legislated to stamp out discrimination by making it a criminal offence. I will not say that previous Governments or Parliaments were indifferent, for they were not, or that they did not care about the treatment of people whose beliefs offended what one might call the tyrants in authority. However, even if they were not indifferent, they failed to legislate. I would refer to the lesson which can be learned from occurrences in my part of the country, next door to the constituency of the hon. and learned Member for Northwich, which were known, in capital letters, as "THE GREAT INTIMIDATION SCANDAL". It provides a solution, I think. Perhaps I should declare a slight interest, as my grandfather was one of the victims, which is why I am very interested in it. The incidents happened in Crewe, which was a railway company town, owned and run severely by the London and North Western Railway Company. It owned most of the town, the gas works, the water supply, even the Anglican churches, for which it appointed the parsons. When the town was incorporated, it resorted to every possible device, including savage intimidation, to keep the town council in the hands of the councillors whom it had nominated and financed and who were promoted by the local Conservative association. The situation became so bad that Mr. Gladstone had to intervene. One or two men who had lost their jobs committed suicide and about 100 workmen were sacked at one go, of whom only one was a Tory—the Conservative secretary of one of the ward committees—and he was quickly reinstated. Through their trade unions, and so on, the workmen made representations to the directors about all these evils. When the Press got the facts, the story circulated and questions were asked in the House. Mr. Gladstone intervened in a letter to the Press, in which he said:He ended:"The case at Crewe…is so scandalously bad that you must forgive me for saying that I am compelled to suspend my belief until I know what any such among the officers of the London and North Western Railway Company as are included in the charge have to say upon it. They, the paid servants of a great commercial company, which is not, I apprehend, a Primrose League, are accused of allowing their own political opinions to weigh, and to weigh penally, in the employment and promotion of workmen; which IF IT BE TRUE, IS NEITHER MORE NOR LESS THAN A SHAMEFUL MALVERSATION IN A PUBLIC TRUST."
The result of Mr. Gladstone's intervention—there are still many Gladstones among us for this kind of thing—was that the directors had to admit that, in Glad-stone's own words, their managers at Crewe were in this matter"Therefore as I have said, I suspend my opinion until these very grave and quite sufficiently particular allegations have been answered."
Then they put a stop to political intimidation. It was public opinion and Mr. Glad-stone's God-like wrath which drove the intimidation out and brought tolerance in. I am convinced that this is still at least part of the solution. If practical legislation were possible, I would legislate immediately, but the new Clause shows how difficult it is to legislate—"…IN THE LAST DEGREE SHAMEFUL AND UNWORTHY."
I am very interested in and greatly sympathetic to the right hon. Gentleman's story, but he is losing sight of the fact that it is much easier to arouse public sympathy for people than for amorphous companies.
I am not sure that I would agree with the hon. Gentleman, but he has a point. In a company town of the kind which I have mentioned, victimisation went much further than men being thrown out of their homes and losing their jobs. Yes, I would agree with him, but public opinion now is more quickly, if not more easily, roused on all kinds of issues. Television and radio discussions were unknown then and, although doing their job, the newspapers cid not have the coverage and the ability to rouse public indignation in the same way.
But this is only a partial solution. I have to be concerned with the proposal before us, new Clause No. 29. Whatever its virtues, I have to stick to the argument which I gave in Committee, that it will be almost impossible ever to prove under the Clause that a contract had been rejected on political grounds. 7.30 p.m. I can give an example from my constituency. We have had a housing scheme built by a private contractor. There are technical defects in the houses, or they were shoddily built with wrong materials and possibly bad labour. There is agitation going on in which my political party in the constituency is very interested, to the effect that the local authority must never give a contract again to this firm. If that happens—I am not saying whether it should happen; I am expressing no opinion—and if this Clause is on the Statute Book, even though it might be justified in not giving a contract to that firm because of its record of bad workmanship, the fact that a political party had taken part in the agitation would be taken by the firm to try to show that it was political discrimination which made the local council take its decision. I do not think that that will happen. I merely give it as an example of the difficulty of ever being able to say that any contract or business arrangement was cancelled for political reasons. If it is possible to legislate against not only political discrimination, but against religious and racial discrimination, we should do it, and I hope that that legislation will be introduced, but I do not think that we can do it on the basis of the new Clause. I turn to what seems to me an alternative to the new Clause—the latter part of Amendment No. 47, which proposes an addition to Clause 19, on which, as the hon. and learned Member for Northwich said, the question of trade disputes arises. It is true that political contributions could be hypothetically one of the reasons for a trade dispute. I cannot see any group of workmen, or any trade union officially, ever causing a trade dispute on the ground of political contributions alone. But we must bear in mind that we are here taking a trade dispute out of its appropriate legislation. A trade dispute is defined for the purposes of the various Acts in which trade disputes are covered—the Conspiracy and Protection of Property Act, 1875, the Trade Disputes Act, 1906, and the Trade Disputes Act, 1965—asA dispute between workmen and employers arising from the employers' making political contributions would not seem to come within this definition of a trade dispute. The purpose of the Amendment is to dispel any doubt which there might be about that matter. It would bring a dispute on the basis of political contributions into the definition of a trade dispute. But, because it relates to a dispute arising in consequence either of the making of the contributions or of the making of those contributions together with other matters, it would also have the effect of taking a genuine trade dispute out of the Acts when the making of political contributions was alleged to be one of the matters giving rise to it. This is not appropriate for a Companies Bill in which we are essentially dealing with other matters and are not concerned with trade disputes. As I say, if it were possible to legislate in a wider sense to ensure that throughout our social and economic life there shall be no political, religious or racial discrimination, I would support that legislation to the hilt. But I do not think that the new Clause or the Amendment would achieve the purpose which the hon. and learned Member for Northwich has in mind which I wish very sincerely to support."any dispute between employers and workmen or between workmen and workmen which is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person".
My hon. Friend the Member for Ormskirk (Sir D. Glover) said that it would be a disaster if we had to divide on this proposal. I would endorse that remark. I am sure that the Minister of State is entirely with us in spirit if not in the wording of the Clause.
I accept that in the past there has been a good deal of discrimination, or, to take it much further, savage discrimination or victimisation, but I think that most people would agree that we have eliminated it from our society. The recent instances which my hon. and learned Friend the Member for Northwich (Sir J. Foster) gave as examples of local authorities' inquiring of these matters of companies with which they intended to contract and of trade unions inquiring of companies about whether they were making political contributions were a throw-back to the past, although we should be on our guard against reproducing something which in my view, has been stamped out by the force of public opinion. The main function of Parliament, despite what the Press may say, is to lead public opinion. What we say may not have the same effect as it had in the past, but it still has some effect and it should be our aim to ensure that it has a greater effect as a leader of public opinion. Although the Minister of State is absolutely sincere, the fact is that there are Ministers in the present Government who are on record as stating that one of the objects of including the necessity to disclose in the Bill is to ensure that companies are brought to account and are discriminated against in this connection. I therefore hope that we shall not miss the opportunity of making it clear that we strongly disapprove of these things. One of the difficulties which we face is that we have to think of a different situation as between Government Departments, on the one hand, and local authorities and other bodies, on the other. Government Departments remain responsible, through their Ministers, to Parliament. I am not one of those who think that the concept of Ministerial responsibility has been entirely whittled away. I know from my experience on the back benches and as a member of the former Conservative Government that when a Member of Parliament makes a strong case that something has gone wrong and can persuade the Department that there is a prima facie case that injustice has been done, the Civil Service tradition is such that it will literally, to use an old cliché, leave no stone unturned to find out what has gone wrong and to put it right if it can. However, how many of us can put our hand on our heart and say that we have never tabled a Question to a Minister about something which has happened in a local authority or some other public body only to be told, correctly, that the Minister has no responsibility? The net result is that nobody has responsibility. The only responsibility is to say to the electors, "You had better have a new council next time". There is no immediate safeguard whatever. All such bodies, whether they be public bodies of the nationalised industry type or local authorities, are using public money and it is particularly important that they should be seen not to discriminate and it should be brought home to them that this is something of which Parliament and the nation disapproves. We have included in our Amendment all other corporate bodies. The question of individuals raises much greater difficulties. It is sometimes even legitimate to discriminate in the sense that we say, "There is a young man who is doing very well. I should like to help him if he came my way". In a sense, one is discriminating if one gives a degree of favouritism to that man. One may be influenced by happening to go to the same church or attending the same political meetings as that man, although I see nothing evil in that. When it comes to the larger contract, and particularly when public money is involved, the standards of public life could be involved and this is a subject on which Parliament should make it clear that we do not approve and are not prepared to sanction such actions. I doubt the Minister's suggestion that our proposal, if accepted, would result in a legitimate trade dispute being taken out of the purview of the Trade Disputes Act. When a similar Opposition proposal was moved in Committee it contained the words:At that stage the right hon. Gentleman pointed out that those words could easily be interpreted as saying, "If one man says, 'I do not like this firm because it is Conservative in its politics', even though everybody may know that the firm cannot be relied on for good workmanship and everyone would agree that the firm should not be employed again "—then, this would bring the decision within the new Clause and an offence would have been committed. But we have removed what the Minister considered to be offending words."…on this ground whether alone or among any other ground…"
The Opposition's proposal still contains the words
It is still too wide."…it is hereby declared that any dispute between a company and its employees arising in consequence (either alone or together with other matters) of that company's giving or not giving money for political purposes is not within the meaning of the Trades Disputes Act 1906 a trade dispute."
I was referring to new Clause No. 29 and not to Amendment No. 47. As the Clause stands, discrimination must be on the ground of political contributions. If there are perfectly legitimate other grounds, I cannot see why our proposal can be read as saying that this amounts to an offence, merely because somebody happens to dislike the political colour of the company.
I agree with the right hon. Gentleman that, in the proposed new subsection (8) from which he quoted, the words in brackets were not removed and I also agree that there might be some doubt that what he suggests may be the result, may indeed be the result. But the object is a simple one, namely, that it should not be right or proper for a trade union, having made inquiries about whether or not a firm may intend to make political contributions to a party of which that union disapproves, then to regard that as a ground for strike action. Similarly, we would agree that it would be wrong for any firm to take lock-out action on the ground that a trade union made political contributions, or that individuals made contributions to, say, the Communist Party—and probably most of us would feel somewhat against that. This should not be the basis of discrimination in matters of a man's livelihood or business. I hope that the right hon. Gentleman will accept our proposal, remembering that these words were used by the present Minister of Technology:There are a number of other quotations that I could make, but I will not delay the House. The mere fact that that was said makes it important that the Government should make it clear that they disapprove and that their principles are firmly those which we have set out."Just as Government contractors are disqualified from election to Parliament, they should also be prohibited from making direct or indirect political contributions to any party fund".
7.45 p.m.
Having sat through 72 hours of the Standing Committee proceedings, I feel qualified to take up 30 seconds of hon. Members' time, particularly since I feel provoked by the attack that has been made on local authorities or members of local authorities.
The hon. Member for Gloucestershire, South (Mr. Corfield) and the hon. Member for the City of Chester (Mr. Temple) were uncharacteristically naive in their comments about local authorities and contracts. Having sat for about 15 years as a member of a city council and having been present at the opening of literally hundreds of contracts, I cannot believe that what hon. Gentlemen opposite are saying or implying could possibly happen. If one had a situation in which the clerk to the authority read out lists of tenders from a number of firms and announced, "This is the lowest tender", and some politically motivated person on the committee said, "But this firm makes a contribution to the Conservative Party", or whatever it might be, and urged that the tender be not accepted, the consequences would be numerous. To begin with, the clerk would remind the members of the committee that somebody at central government level—if not the district auditor—would have something to say if they did not accept the lowest tender.I am sure that this argument is valid in cases of open tendering. However, with selective tendering—a system which is common—that argument would not apply.
That is true, but the ultimate sanction is an obvious one. These committees are comprised of members of the Labour, Conservative and Liberal Parties. I am sure that the Conservative local press would make considerable political capital out of the fact that members of the committee, perhaps in the ruling party, had allowed such a thing to sway them in making their decision.
Would the hon. Gentleman deal with the case where the lowest tender is obviously unsatisfactory? There may be something against the firm. The lowest tender is not always accepted in local government, even with full competitive tendering. Surely the real reasons could be hidden from political motivation.
If the lowest tender is not acceptable, a strong case must be put forward before one goes on to the next tender on the list. To suggest that, in some way, one could insinuate political motivation into a decision to select a particular tender is naive. The reasons must be good and they must be stated explicitly if the lowest tender is not acceptable.
The hon. Member for Stoke-on-Trent, Central (Mr. Cant) is being naive. The point of discrimination is more in the realm of a different type of case. The hon. Gentleman envisages a situation in which, because a firm has made a political contribution, the selective tender is not accepted. However, it does not operate that way. It is intended to prevent the company from making any further political contributions. The firm is told, "We do not see why the profits you make out of, say, this Labour-controlled authority should go partly to the Conservative Party. If you go on making political contributions we do not see how you will be able to get any more tenders". That is the way in which this discrimination is exercised.
Is it the Conservative Party's case that we should have general legislation against discrimination, including racial discrimination, or just on this specific point of political discrimination?
At this point in this Measure we are considering a narrow question Of discrimination. We are concerned here to prevent discrimination against companies on the ground that they have made a political contribution. The issue is as narrow as that. I am sure that we all share a dislike of discrimination in other spheres.
Let us take one thing at a time. Let us take the Amendment as being aimed at a particular kind of discrimination. What is behind a lot of discrimination is the preventing of further political contributions; the attempt to prevent a particular party from getting the sinews of war from companies. That is the area in which discrimination works much more largely than is represented by councillors saying that a particular tender is not to be accepted: "If you think that you are going to build houses for this local authority you are very much mistaken, because you are subscribing to the XYZ organisation", which is thought by hon. Members opposite to be a front for the Conservative Party when its real objects are to preserve private enterprise. That sort of thing is objected to. As I say, trade union members on a building site have said to a firm, "We are not going to work if you continue to subscribe to this organisation". That is clear discrimination. One has to examine with a great deal of care the right hon. Gentleman's line of argument. First, he gave us a very interesting historical account of the great discrimination practised by the London and North-Western Railway Company at Crewe because people there were voting Liberal. Political feeling ran high, and public opinion stopped that discrimination. The right hon. Gentleman then said that part of the solution was public opinion. I do not believe that it is easy to whip up general public opinion throughout the country on the ground that a local authority has warned a company through councillors speaking unofficially that it is not likely to get any more tenders if it continues to subscribe to the Conservative Party—or to the Liberal Party, or the Communist Party or the Labour Party. Public opinion is not there. The Minister then said that the discrimination would be awfully difficult to prove; that with a lot of legislation which creates offences or makes things illegal it is very difficult to prove the act that is in contravention of the legislation. That, however, is not a good argument against the legislation, because a lot of legislation is educative. It is meant lo warn people. If people know that something is wrong and that legislation has made it illegal, they are much more careful about not acting in that way, and a lot of people who have muddled thinking see where right and wrong is. I am sure we all remember the lady who said, "Of course I know the difference between right and wrong, but I can never remember which is which". People who do not think very clearly may believe that in a tough fight it is, perhaps, legitimate to go for firms subscribing to the Conservative Party. They think, "That will teach them to do it. We are a Labour council and we do not see why the profits on our tenders should go to the pockets of the Conservative Party." They may think that quite innocently, but it helps people to realise what is right and wrong when they see it provided for in legislation. Again, if there is a blatant piece of discrimination we all look rather foolish if we have to say that there is no law to prevent it. I would therefore meet the right hon. Gentleman's objection that it is difficult to prove—The right hon. and learned Gentleman is pursuing a most interesting argument. Is he now telling us that it is the genuine view of the party opposite that, because it is educative, it does not matter that a piece of legislation is difficult to prove? That argument, taken to its logical conclusion, would have some most interesting effects on our future legislative programmes.
I do not think that I quite understand the hon. Gentleman, but let me give him an instance. In most civilised countries it is a road traffic offence to block an intersection. We have all suffered the annoyance of a bus or lorry drawing across us when the traffic lights are in its favour and preventing us from getting across when our traffic lights are green. All Ministers of Transport, Conservative and Labour, have raised the objection against me that it is no use legislating, because the legislation is difficult to enforce. But I am sure we would all agree that if that were made an offence it would prevent, or very much reduce, the practice, because then, the moment someone blocks an intersection, people hoot their horns, shake their fists, and ask "What do you mean by doing that?". There is the force of opinion in the surrounding traffic. That is what happens in France and America. They do not prosecute everyone who blocks an intersection in New York, but such is public opinion that, the moment a man does it, he backs out again. How many people do we see backing in that way in this country? We have to say, "Do this" and "Do that". People do not practise it naturally.
The same thing applies in this case. If discrimination were made an offence, people who now innocently think it a fair fight and a tough thing to do would see that it was wrong, and those who knew that it was wrong would be careful not to continue the practice—On that basis, would the hon. and learned Gentleman consider that our anti-litter laws are so successful?
It is better to have a not-so-successful anti-litter law than not to have one at all. That is the point. The law is difficult to enforce, there is a lot of litter about but, gradually, the law is educative. The hon. Gentleman is by his question recommending that we should abolish the anti-litter law and that rather proves my point because, with respect to him, it seems to me to be an absurd conclusion.
The right hon. Gentleman, having told us that discrimination is difficult to prove, gave us an illustration. He said that a firm might have built badly and that there were objections to it on that ground, but that if some councillors said that there were a lot of Conservative, Communist or Labour people in the firm, it could bring that forward. He said that that was difficult to prove, but he then added that, because of the legislation, it would be easy for the company to allege against the corporation something that the Minister agreed was difficult to prove. He switched his argument 180 degrees. The company would not be able to prove discrimination there, because the corporation would be able to reply that the building work had been slipshod. It is disappointing that the Minister of State should oppose the narrow reform we seek. There are many instances of discrimination against which it may be difficult to legislate, but it has been possible to legislate against it in the United States. It is for the courts to say what is or what is not discrimination. I am sorry to say that it is the refuge of the diehard, of the ultra-Conservative, of whom I disapprove, to say that it is difficult to legislate against something because it is difficult to prove the act. That
Division No. 479.]
| AYES
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|
| Alison, Michael (Barkston Ash) | Grimond, Rt. Hn. J. | Page, John (Harrow, W.) |
| Atkins, Humphrey (M't'n & M'd'n) | Gurden, Harold | Pearson, Sir Frank (Clitheroe) |
| Baker, W. H. K. | Hall-Davis, A. G. F. | Peel, John |
| Balniel, Lord | Harris, Frederic (Croydon, N.W.) | Pounder, Rafton |
| Bell, Ronald | Harrison, Col. Sir Harwood (Eye) | Powell, Rt. Hn. J. Enoch |
| Bennett, Dr. Reginald (Gos. & Fhm) | Hawkins, Paul | Pym, Francis |
| Bessell, Peter | Hill, J. E. B. | Ramsden, Rt. Hn. James |
| Brinton, Sir Tatton | Holland, Philip | Renton, Rt. Hn. Sir David |
| Brown, Sir Edward (Bath) | Hunt, John | Ridley, Hn. Nicholas |
| Bryan, Paul | Hutchison, Michael Clark | Robson Brown, Sir William |
| Buchanan-Smith, A lick(Angus, N&M) | Irvine, Bryant Godman (Rye) | Rodgers, Sir John (Sevenoaks) |
| Buck, Antony (Colchester) | Johnston, Russell (Inverness) | Rossi, Hugh (Hornsey) |
| Bullus, Sir Eric | Kaberry, Sir Donald | Royle, Anthony |
| Campbell, Gordon | King, Evelyn (Dorset, S.) | Russell, Sir Ronald |
| Cary, Sir Robert | Kirk, Peter | Shaw, Michael (Sc'b'gh & Whitby) |
| Cooke, Robert | Knight, Mrs. Jill | Stainton, Keith |
| Cooper-Key, Sir Neill | Lancaster, Col. C. G. | Stoddart-Scott, Col. Sir M. (Ripon) |
| Corfield, F. V. | Langford-Holt, Sir John | Taylor, Sir Charles (Eastbourne) |
| Costain, A. P. | Legge-Bourke, Sir Harry | Taylor, Frank (Moss Side) |
| Craddock, Sir Beresford (Spelthorne) | Lewis, Kenneth (Rutland) | Temple, John M. |
| Croethwaite-Eyre, Sir Oliver | Lloyd, Ian (P'tsm'th, Langstone) | Thatcher, Mrs. Margaret |
| Currie, G. B. H. | Loveys, W. H. | Thorpe, Rt. Hn. Jeremy |
| Dalkeith, Earl of | Lubbock, Eric | Turton, Rt. Hn. R. H. |
| Dance, James | McAdden, Sir Stephen | van Straubenzee, w. R. |
| Davidson, James (Aberdeenshire, W.) | MacArthur, Ian | Vaughan-Morgan, Rt. Hn. Sir John |
| Dean, Paul (Somerset, N.) | Maclean, Sir Fitzroy | Walker, Peter (Worcester) |
| Deedes, Rt. Hn. W. F. (Aahford) | McMaster, Stanley | Ward, Dame Irene |
| Elliott, R.W. (N'c'tle-upon-Tyne, N.) | Maginnis, John E. | Weatherill, Bernard |
| Emery, Peter | Maxwell-Hyslop, R. J. | Webster, David |
| Errington, Sir Eric | Maydon, Lt.-Cmdr. S. L. C. | Whitelaw, Rt. Hn. William |
| Fortescue, Tim | Mills, Peter (Torrington) | Wills, Sir Cerald (Bridgwater) |
| Foster, Sir John | Montgomery, Fergus | Worsley, Marcus |
| Gibson-Watt, David | Munro-Lucas-Tooth, Sir Hugh | Wright, Esmond |
| Giles, Rear-Adm. Morgan | Nabarro, Sir Gerald | Wylie, N. R. |
| Gilmour, Sir John (Fife, E.) | Neave, Alrey | Younger, Hn. George |
| Glover, Sir Douglas | Noble, Rt. Hn. Michael | |
| Gower, Raymond | Nott, John | TELLERS FOR THE AYES: |
| Grant, Anthony | Onslow, Cranley | Mr. Jasper More and |
| Grant-Ferris, R. | Osborne, Sir Cyrll (Louth) | Mr. Timothy Kitson. |
| Griffiths, Eldon (Bury St. Edmunds) | Page, Graham (Crosby) | |
NOES
| ||
| Abse, Leo | Bowden, Rt. Hn. Herbert | Cullen, Mrs. Alice |
| Allaun, Frank (Salford, E.) | Boyden, James | Darling, Rt. Hn. George |
| Alldritt, Walter | Braddock, Mrs. E. M. | Davidson, Arthur (Accrington) |
| Allen, Scholefield | Bradley, Tom | Davies, Dr. Ernest (Stretford) |
| Anderson, Donald | Brooks, Edwin | Davies, Harold (Leek) |
| Archer, Peter | Broughton, Dr. A. D. D. | Davies, S. O. (Merthyr) |
| Atkins, Ronald (Preston, N.) | Brown, Hugh D. (G'gow, Provan) | Dell, Edmund |
| Atkinson, Norman (Tottenham) | Buchan, Norman | Dempsey, James |
| Bagler, Gordon A. T. | Buchanan, Richard (G'gow, Sp'burn) | Doig, Peter |
| Barnett, Joel | Butler, Herbert (Hackney, C.) | Dunnett, Jack |
| Baxter, William | Cant, R. B. | Dunwoody, Mrs. Gwyneth (Exeter) |
| Beaney, Alan | Carmichael, Neil | Dunwoody, Dr. John (F'th & C'b'e) |
| Banco, Cyril | Coleman, Donald | Edwards, Rt. Hn. Ness (Caerphilly) |
| Benn, Rt. Hn. Anthony Wedgwood | Corlan, Bernard | Edwards, Robert (Bllston) |
| Bennett, James (G'gow, Bridgeton) | Corbet, Mrs. Freda | Edwards, William (Merioneth) |
| Blackburn, F. | Craddock, George (Bradford, S.) | Ellis, John |
| Boardman, H. | Crosland, Rt. Hn. Anthony | English, Michael |
| Booth, Albert | Crossman, Rt. Hn. Richard | Ennals, David |
has been the objection to many worthwhile reforms. I am really sorry that the right hon. Gentleman, who has a liberal heart, so that I often join with him in needed reforms, should on this occasion have put this ultra-diehard view that, because it is impossible to prove the discrimination, he is against any legislation about it at all.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 115, Noes 189.
| Ensor, David | Kerr, Dr. David (W'worth, Central) | Pearson, Arthur (Pontypridd) |
| Evans, Albert (Islington, S.W.) | Lawson, George | Pentland, Norman |
| Evana, Ioan L. (Birm'h'm, Yardley) | Lestor, Miss Joan | Perry, Ernest G. (Battersea, S.) |
| Faulds, Andrew | Lever, L. M. (Ardwick) | Perry, George H. (Nottingham, s.) |
| Fernyhough, E. | Lewis, Arthur (W. Ham, N.) | Price, Thomas (Westhoughton) |
| Finch, Harold | Lewis, Ron (Carlisle) | Price, William (Rugby) |
| Fitch, Alan (Wigan) | Lomas, Kenneth | Probert, Arthur |
| Fletcher, Raymond (Ilkeston) | Loughlin, Charles | Rankin, John |
| Foley, Maurice | Lyon, Alexander W. (York) | Roberts, Albert (Normanton) |
| Ford, Ben | McBride, Nell | Roberts, Goronwy (Caernarvon) |
| Forrester, John | McCann, John | Robertson, John (Palsley) |
| Fraser, John (Norwood) | MacColl, James | Rose, Paul |
| Galpern, Sir Myer | Mackintosh, John P. | Ross, Rt. Hn. William |
| Carrett, W. E. | MacMillan, Malcolm (Western Isles) | Rowlands, E. (Cardiff, N.) |
| Gourlay, Harry | McMillan, Tom (Glasgow, C.) | Sheldon, Robert |
| Gray, Dr. Hugh (Yarmouth) | McNamara, J. Kevin | Short, Rt. Hn. Edward (N'c'tle-u-Tyne) |
| Gregory, Arnold | MacPherson, Malcolm | Silkin, Rt. Hn. John (Deptford) |
| Grey, Charles (Durham) | Mahon, Peter (Preston, S.) | Silverman, Julius (Aston) |
| Griffiths, Will (Exchange) | Mallalleu, J.P.w. (Huddersfiletd, E.) | Slater, Joseph |
| Hamilton, James (Bothwell) | Manuel, Archie | Small, William |
| Hamilton, William (Fife, W.) | Mapp, Charles | Snow, Julian |
| Manning, William | Marquand, David | Spriggs, Leslie |
| Harper, Joseph | Mendelson, J. J. | Steele, Thomas (Dunbartonshire, W.) |
| Harrison, Walter (Wakefield) | Millan, Bruce | Swingler, Stephen |
| Hart, Mrs. Judith | Miller, Dr. M. S. | Thornton, Ernest |
| Haseldine, Norman | Milne, Edward (Blyth) | Tinn, James |
| Heffer, Eric S. | Mitchell, R. C. (S'th'pton, Test) | Tomney, Frank |
| Herbison, Rt. Hn. Margaret | Molloy, William | Urwin, T. W. |
| Horner, John | Morgan, Elystan (Cardiganshire) | Wainwright, Edwin (Dearne Valley) |
| Howarth, Harry (Wellingborough) | Morris, Charles R. (Openshaw) | Walden, Brian (All Saints) |
| Howie, W. | Moyle, Roland | Wallace, George |
| Hoy, James | Murray, Albert | |
| Huckfield, L. | Newens, Stan | Wellbeloved, James |
| Hughes, Emrys (Ayrshire, S.) | Noel-Baker, Francis (Swindon) | White, Mrs. Eirene |
| Hughes, Hector (Aberdeen, N.) | Noel-Baker, Rt. Hn. Philip (Derby,S.) | Whitlock, William |
| Hughes, Roy (Newport) | Norwood, Christopher | Williams, Alan (Swansea, W.) |
| Hunter, Adam | Ogden, Eric | Williams, Clifford (Abertillery) |
| Hynd, John | Orbach, Maurice | Willis, George (Edinburgh, E.) |
| Irvine, A. J. (Edge Hill) | Orme, Stanley | Wilson, William (Coventry, S.) |
| Jackson, Colin (B'h'se & Spenb'gh) | Oswald, Thomas | Wmterbottom, R. E. |
| Jay, Rt. Hn. Douglas | Owen, Dr. David (Plymouth, S'tn) | Woodburn, Rt. Hn. A. |
| Jones, Dan (Burnley) | Owen, Will (Morpeth) | Woof, Robert |
| Jones, J. Idwal (Wrexham) | Padley, Walter | |
| Jones, T. Alec (Rhondda, West) | Page, Derek (King's Lynn) | TELLERS FOR THE NOES: |
| Kelley, Richard | Pannell, Rt. Hn. Charles | Mr. Ernest Armstrong and |
| Kenyon, Clifford | Park, Trevor | Mr. Harold Walker. |
| Kerr, Mrs. Anne (R'ter & Chatham) | Parkyn, Brian (Bedford) |
New Clause No 30—(Amendment Of Companies (Floating Charges) (Scotland) Act 1961)
Schedule 2 to the Companies (Floating Charges) (Scotland) Act, 1961 shall be amended by adding to section 106A(9) the words and in the event of the charge being used as security for such further indebtedness, it shall be competent to reregister the charge, and for this purpose the date when the additional security is conferred on the Company's property or undertaking shall he deemed to be the date of the creation of the charge'.—[ Mr. Wylie.]
Brought up, and read the First time.
I beg to move, That the Clause be read a Second time.
This Clause is to fill a gap in the legislation passed in 1961 which introduced floating charges as a security in Scotland. The Clause is a highly technical Amendment, but an important one. The Companies (Floating Charges) (Scotland) Act, 1961, amended the provisions of the 1948 Companies Act by making it possible in a variety of ways to constitute security in Scotland by means of floating charges. One of the requirements of the Act was that when the charge has been created it is by Statute required to be registered with the Registrar of Companies within a period of 21 days. In Section 106A(1) of the Second Schedule to that Act there is set out a series of ways in which a floating charge can be effected. One way is by means of a form of security well known to Scottish law as ex facie absolute disposition. One of the features of the ex facie absolute disposition is that it can be used as security not only for existing but for future indebtedness, and the drafters of the 1961 Act intended that it would be so used. Subsection (9) of Section 106A makes this clear, because it says:that is the requirement for intimation within 21 days—"For avoidance of doubt it is hereby declared that, in the case of a charge created by way of an ex facie absolute disposition or assignation qualified by a back letter, the compliance with subsection (1) of this section"—
Clearly the intention of that subsection was that security effected in this way could be used to cover future indebtedness. The matter came before the Scottish Court of Appeal last November in an application by a company which sought authority to raise a further loan on a security constituted under this Section. About £250,000 had been raised by means of a floating charge effected by an ex facie absolute disposition, and, in terms of the deed entered into with the insurance company, there was an arrangement that, if required, the company would be able to raise a further £250,000. This is an example of the way in which this matter affects commerce in Scotland. Clearly, it could be important. When the matter came to be considered, it became clear that, because the ex facie absolute disposition had been registered in the Register of Sassines, and because there was no machinery in the legislation for re-registration, it was impossible to use this security as security for the further obligation which it was sought to incur, notwithstanding that it was Parliament's intention that it should be so covered. The judgment of the Lord President of the Court of Session puts the point very shortly. After narrating that the original deed had been registered on the land register, the Lord President went on to say:"shall not of itself render the charge unavailable as security for indebtedness incurred after the date of the compliance."
He ended his judgment by saying:"The plain fact of the matter is that the statutory provisions are incomplete and provide no machinery for re-registering a charge such as an ex facie absolute disposition which can be used as security for future as well as existing advances or loans."
Then he said that, with reluctance, he had to refuse the petition. Each of the other two judges in that application pointed out that there was a technical omission in the 1961 legislation which Parliament alone could remedy. Lord Guthrie at the end of his judgment said:"The present case discloses a clear deficiency in the statutory provisions which can only be remedied by an amendment of the Act."
Lord Cameron, the other judge in the application, said somewhat the same. He said:"It would appear that the Act as amended is not well adapted to deal with the Scottish method of creating a security for future as well as existing debts by an ex facie absolute disposition, but the remedy for this state of the law is to be sought in Parliament and not in this court."
That is the short point. This is not a policy matter, or a political issue. It is a case of providing machinery in the existing legislation for the reregistering of a charge so that the purpose of the legislation can be achieved. The essential words in the new Clause are those which appear in the middle of the third line:"If there is a gap in the legislation, as I think there is, then it is for the legislature, if it thinks proper, but not for the court, to fill it."
Because there is no machinery in the existing legislation for re-registering the charge, this difficulty has arisen. Accordingly, I hope that the Minister of State will accept the new Clause. I readily accept that there are other features of Section 106A of the Second Schedule to the 1961 Act which are not very satisfactory. The whole of that Section needs looking at, but I have confined the new Clause to something which has already been the subject of a decision by the Court of Appeal in Scotland. This is the adequate opportunity to correct that. It would not take a great deal of time, it would take very little space, and I hope, therefore, that the right hon. Gentleman will accept the Clause."…it shall be competent to re-register the charge…
8.15 p.m.
I have a great deal of sympathy with the hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie). If I may say so, there has been a breakdown in communications, because the Board of Trade has known for some time that there were certain provisions in the Companies (Floating Charges) (Scotland) Act, 1961, that might require amendment. In some of the cases that have come my way about trying to help companies that were getting into difficulties in some of the development areas, officials have said that at some time we should have to put right the Floating Charges Act. So, in January this year, we asked the Scottish Law Commission to look into the appropriate provisions in the Companies (Floating Charges) (Scotland) Act, 1961, and to make such recommendations as it thought fit, in order, I suppose, to get rid of some of the difficulties and anomalies to which the hon. and learned Gentleman has referred and to make suggestions for further improvements.
Until the hon. and learned Gentleman's new Clause appeared on the Notice Paper neither I nor Board of Trade officials generally had any intimation that the matter was so urgent as he has now made out. We can hardly ask the Law Commission to survey the wider provisions here that may need amendment and then suddenly take out one provision and amend it ourselves. It was our intention all the time that the Commission's recommendations, if it brought forward any, should be enacted in the next Companies Bill which, of course, will be dealt with during the life of this Parliament. As we have asked the Scottish Law Commission to deal with this matter, the only thing we can do is to wait for its report and recommendations. I am sorry about this, but, if there had been a sense of urgency about it which had been conveyed to us earlier, we might have been able to pass that sense of urgency on to the Scottish Law Commission.I must tell the right hon. Gentleman that I am very disappointed with his reply. He questions the need for urgency. The reason surely for moving this new Clause tonight is that we now have an opportunity to correct what is clearly a mistake in the law, a mistake to which the highest court of Scotland has called the attention of the nation.
The right hon. Gentleman maintains that there has been a failure of communication. That is all too clear, but the failure is not on the part of my hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Wylie), but on the part of the Government. The right hon. Gentleman has constantly declared the Government's concern for the development areas and thus for Scotland. Indeed, he illustrated that just now by reminding the House that the Scottish Law Commission had been invited to study any weaknesses that there might be in the 1961 Act. I am glad to know that. If he has this concern, why is the situation not watched more closely? Why does the Lord Advocate not advise the right hon. Gentleman and the Board of Trade about pronouncements made in courts of this kind? After all, we cannot simply brush aside the judgment by the Lord President of the Court of Session and the two learned judges, Lord Cameron and Lord Guthrie, in the highest court of Scotland in November and pretend that we knew nothing about it, although it happened at a time when we were wondering if there was some weakness about the Act to which their lordships referred. With respect, that simply will not do. I ask the right hon. Gentleman now and in the future to make certain that the Board of Trade and other Government Departments pay attention to the advice given by the courts of Scotland on weaknesses in the Scottish law, particularly when those weaknesses affect commercial developments which all of us wish to see. The failure of communication is entirely within the Government, contributed to, of course, by the Government's inability to find a place in the House for one of their Law Officers. Perhaps I may recall that well known phrase, "Where is the Lord Advocate?" The right hon. Gentleman will remember the many occasions when that cry went up in days gone by. Where is the Lord Advocate, indeed, and where is the advice which he should be giving to the Government? How comes it that the Board of Trade had no knowledge, until my hon. and learned Friend put down his new Clause, that there was this weakness in the 1961 Act? My hon. and learned Friend has explained that an ex facie absolute disposition can act as a two, three, or four-stage floating charge for a loan and repetition of loan. As I understand the matter, that disposition must be registered within 21 days, and it thus provides a floating charge against which a loan can be made. My hon. and learned Friend will, no doubt, interrupt me if I begin to tread troubled water in trying to swim through the technicalities of floating charges. Clearly, it was Parliament's clear intention under the 1961 Act that a second loan should be possible on the original floating charge. In English terms, I understand that this might be equivalent to obtaining a second mortgage on property already mortgaged. But, because of a defect in the 1961 Act, that facility does not exist. It is not possible under the Scottish law at present to register a second loan against the original floating charge, and, because such a second loan cannot be made, people who for good reasons wish to borrow money are caused much concern and disappointment. Not only is there a weakness in the law which works against our commercial interest, but we are flying in the face of the clear intention of Parliament in 1961. If I remember aright, the 1961 Act was originally a Private Member's Bill introduced by one of my hon. Friends at that time, and, through error—these things do happen—a gap in his Bill was overlooked. We now have an opportunity to put it right. The need to do so is amply proved. There is a commercial weakness here which affects small businesses particularly in Scotland, and the small private family business, I understand—I shall be corrected if I am wrong—represents a greater proportion of the total business scene in Scotland than it does in England. The need to raise new capital at this stage of our commercial development in Scotland is pressing in many cases. There must be many occasions when there is great need for a second loan against an original floating charge. In the case to which my hon. and learned Friend referred, the Lord President of the Court of Session and the two learned judges sitting with him, all leaders in the Scottish law and sitting in the most senior and authoritative court, pronounced their opinion with great reluctance, regretting that there was a defect and calling on Parliament to remedy it. The matter is urgent. Here is the opportunity to put it right, an opportunity which will not present itself again for a long time, perhaps for years. I urge the right hon. Gentleman to take it.I should like to clear up my references to the lack of com- munication. I do not think that hon. Members quite understood what I had in mind. If there was great urgency in the matter, the new Clause ought not to have appeared on the Notice Paper a week ago. That is what I had in mind. As regards the Lord Advocate, it was, of course, on the advice of, and in consultation with, the Lord Advocate that we made certain submissions to the Scottish Law Commission.
We can attach no weight to arguments about starred Amendments and new Clauses. In the light of what has been happening during the past week or so, it is clear that the pace at which the Bill has gone through the House has at all stages been dictated entirely by the speed at which the Government could produce their own Amendments to it.
It is significant that the Minister of State, almost for the first time today, has not on this occasion said that he is no lawyer. He has not even said that he is not a Scottish lawyer. A very powerful case has been put to the House by my hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Wylie), who is a Scottish lawyer, and it is a pity that we could not have a Scottish Law Officer present on the Government benches. However, in the face of the expert advice we have had from my hon. and learned Friend and the overwhelming case he has made, I hope that not only my right hon. and hon. Friends but Scottish hon. Members opposite will go into the Lobby in support of the new Clause.I am sorry that the Minister of State has adopted this attitude. I cannot accept that, until one can do everything, one should do nothing. That seems to be the import of his reply, that there are other things wrong with Section 106, it has been sent to the Law Commissioners, until we hear from them we can do nothing, and we shall have to wait for another Companies Bill in the course of this Parliament. That is no answer to the case which we have put. There is an obvious defect in the law. The Court of Appeal in Scotland has pronounced on it and called for a remedy. Here is the opportunity to remedy it.
What is the relevance of submitting the matter to the Scottish Law Commission when it has already been pronounced upon by the Scottish courts? What on earth can the Scottish Law Commission do? This is one of the confusions regarding the functions of that body that one was tempted to foresee when the Law Commissions Act was going through. I should have thought that it was a duty of the Lord Advocate to advise the Government on a matter of this nature, on which unequivocal views were expressed by the Scottish courts as recently as last November. I am sorry that the Government have adopted this attitude. I regard this point as important, as Scottish business people do. The only reason why the Clause was not put down in Committee is that I was not a member of the Committee, and did not think it fair to expect some of
Division No. 480.]
| AYES
| [8.30 p.m.
|
| Alison, Michael (Barkston Ash) | Grant-Ferris, R. | Page, John (Harrow, W.) |
| Atkins, Humphrey (M't'n & M'd'n) | Griffiths, Eldon (Bury St. Edmunds) | Pearson, Sir Frank (Clitheroe) |
| Baker, W. H. K. | Grimond, Rt. Hn. J. | Peel, John |
| Balniel, Lord | Gurden, Harold | Powell, Rt. Hn. J. Enoch |
| Bell, Ronald | Harris, Frederic (Croydon, N.W.) | Pym, Francis |
| Bennett, Dr. Reginald (Gos. & Fhm) | Harrison, Col. Sir Harwood (Eye) | Ramsden, Rt. Hn. James |
| Bessell, Peter | Hawkins, Paul | Ronton, Rt. Hn. Sir David |
| Brinton, Sir Tatton | Hill, J. E. B. | Ridley, Hn. Nicholas |
| Brown, Sir Edward (Bath) | Holland, Philip | Ridsdale, Julian |
| Bruce-Gardyne, J. | Hooson, Emlyn | Robson Brown, Sir William |
| Bryan, Paul | Hunt, John | Rodgers, Sir John (Sevenoaks) |
| Buchanan-Smith, Alick(Angus,N&M) | Hutchison, Michael Clark | Rossi, Hugh (Hornsey) |
| Buck, Antony (Coichester) | Irvine, Bryant Godman (Rye) | Royle, Anthony |
| Bullus, Sir Eric | Johnston, Russell (Inverness) | Russell, Sir Ronald |
| Burden, F. A. | Kaberry, Sir Donald | Shaw, Michael (Sc'b'gh & Whitby) |
| Campbell, Gordon | King, Evelyn (Dorset, S.) | Stainton, Keith |
| Cary, Sir Robert | Kirk, Peter | Steel, David (Roxburgh) |
| Cooke, Robert | Knight, Mrs. Jill | Stoddart-Scott, Col. Sir M. (Ripon) |
| Cooper-Key, Sir Neill | Lancaster, Col. C. G. | Taylor, Sir Charles (Eastbourne) |
| Cordle, John | Langford-Holt, Sir John | Taylor, Frank (Moss Side) |
| Corfield, F, V. | Legge-Bourke, Sir Harry | Temple, John M. |
| Costain, A. P. | Lewis, Kenneth (Rutland) | Thatcher, Mrs. Margaret |
| Craddock, Sir Beresford (Spelthorne) | Lloyd, Ian (P'tsm'th, Langstone) | Thorpe, Rt. Hn. Jeremy |
| Crosthwaite-Eyre, Sir Oliver | Loveys, W. H. | Turton, Rt. Hn. R. H. |
| Currie, G. B H. | Lubbock, Eric | van Straubenzee, W. R. |
| Dalkeith, Earl of | MacArthur, Ian | Vaughan-Morgan, Rt. Hn. Sir John |
| Dance, James | Maclean, Sir Fitzroy | Walker, Peter (Worcester) |
| Davidson, James (Aberdeenshire, W.) | McMaster, Stanley | Ward, Dame Irene |
| Dean, Paul (Somerset, N.) | Maginnis, John E. | Weatherill, Bernard |
| Deedes, Rt. Hn. W. F. (Ashford) | Maxwell-Hyslop, R. J. | Webster, David |
| Dodds-Parker, Douglas | Maydon, Lt.-Cmdr. S. L. C. | Whitelaw, Rt. Hn. William |
| Elliott,R.w.'N'c'tle-upon-Tyne.N.) | Mills, Peter (Torrington) | Wills, Sir Gerald (Bridgwater) |
| Emery, Peter | Montgomery. Fergus | Wilson, Geoffrey (Truro) |
| Errington, Sir Eric | Munro-Lucas-Tooth, Sir Hugh | Worsley, Marcus |
| Fortescue, Tim | Nabarro, Sir Gerald | Wright, Esmond |
| Foster, Sir John | Neave, Alrey | Wylle, N. R. |
| Gibson-Watt, David | Nicholls, Sir Harmar | Younger, Hn. George |
| Giles, Rear-Adm. Morgan | Noble, Rt. Hn. Michael | |
| Gilmour, Sir John (Fife, E) | Nott, John | TELLERS FOR THE AYES: |
| Glover, Sir Douglas | Onslow, Cranley | Mr. Jasper More and |
| Gower, Raymond | Osborne, Sir Cyril (Louth) | Mr. Timothy Kitson. |
| Grant, Anthony | Page, Graham (Crosby) | |
NOES
| ||
| Abse, Leo | Bagier, Gordon A. T. | Booth, Albert |
| Allaun, Frank (Salford, E.) | Barnett, Joel | Bowden, Rt. Hn. Herbert |
| Alldritt, Walter | Baxter, William | Boyden, James |
| Allen, Scholefield | Beaney, Alan | Braddock, Mrs. E. M. |
| Anderson, Donald | Bence, Cyril | Bradley, Tom |
| Archer, Peter | Bennett, James (G'gow, Bridgeton) | Brooks, Edwin |
| Atkins, Ronald (Preston, N.) | Blackburn, F. | Broughton, Dr. A. D. D, |
| Atkinson, Norman (Tottenham) | Boardman, H. | Brown, Hugh D. (G'gow, Provan) |
my hon. Friends who are not qualified in the law of Scotland to put it forward, especially in the absence of a Scottish Law Officer. The only way matters of this kind can be brought to the notice of the House is to keep them to the Report stage and argue them myself. If the arguments had been put up in Committee and rejected, as no doubt they would have been, it would not have been possible for me to say anything now. I hope that the Government have second thoughts, but, if not, I must advise my right hon. and hon. Friends to divide.
Question put, That the Clause be read a Second time:—
The House divided: Ayes 121, Noes 190.
| Buchan, Norman | Howarth, Harry (Wellingborough) | Padley, Walter |
| Buchanan, Richard (G'gow, Sp'burn) | Howie, W. | Page, Derek (King's Lynn) |
| Butler, Herbert (Hackney, C.) | Hoy, James | Paget, R. T. |
| Cant, R. B. | Huckfield, L. | Pannell, Rt. Hn. Charles |
| Carmichael, Neil | Hughes, Emrys (Ayrshire, S.) | Park, Trevor |
| Coleman, Donald | Hughes, Roy (Newport) | Parkyn, Brian (Bedford) |
| Conlan, Bernard | Hunter, Adam | Pearson, Arthur (Pontypridd) |
| Corbet, Mrs. Freda | Hynd, John | Peart, Rt. Hn. Fred |
| Craddock, George (Bradford, S.) | Irvine, A. J. (Edge Hill) | Pentland, Norman |
| Crosland, Rt. Hn. Anthony | Jackson, Peter M. (High Peak) | Perry, Ernest G. (Battersea, S.) |
| Cullen, Mrs. Alice | Jay, Rt. Hn. Douglas | Perry, George H. (Nottingham, S.) |
| Darling, Rt. Hn. George | Jones, Dan (Burnley) | Price, Christopher (Perry Barr) |
| Davidson, Arthur (Accrington) | Jones, J. Idwal (Wrexham) | Price, Thomas (Westhoughton) |
| Davies, Dr. Ernest (Stretford) | Jones, T. Alec (Rhondda, West) | Price, William (Rugby) |
| Davies, Harold (Leek) | Kelley, Richard | Probert, Arthur |
| Davies, S. 0. (Merthyr) | Kenyon, Clifford | Rankin, John |
| Dell, Edmund | Kerr, Mrs. Anne (R'ter & Chatham) | Roberts, Albert (Normanton) |
| Dempsey, James | Kerr, Dr. David (W'worth, Central) | Roberts, Goronwy (Caernarvon) |
| Doig, Peter | Lawson, George | Robertson, John (Paisley) |
| Dunnett, Jack | Lestor, Miss Joan | Rose, Paul |
| Dunwoody, Mrs. Gwyneth (Exeter) | Lever, L. M. (Ardwick) | Ross, Rt. Hn. William |
| Dunwoody, Dr. John (F'th & C'b'e) | Lewis, Arthur (W. Ham, N.) | Rowlands, E. (Cardiff, N.) |
| Edwards, Rt. Hn. Ness (Caerphilly) | Lewis, Ron (Carlisle) | Sheldon, Robert |
| Edwards, Robert (Bilston) | Lomas, Kenneth | Short, Rt. Hn. Edward(N'c'tle-u-Tyne) |
| Edwards, William (Merioneth) | Loughlin, Charles | Short, Mrs. Renée(W'hampton,N.E.) |
| Ellis, John | Lyon, Alexander W. (York) | Silkin, Rt. Hn. John (Deptford) |
| English, Michael | McBride, Neil | Silverman, Julius (Aston) |
| Ennals, David | McCann, John | Slater, Joseph |
| Ensor, David | MacColl, James | Small, William |
| Evans, Albert (Islington, S.W) | Mackintosh, John P. | Snow, Julian |
| Evans, loan L. (Birm'h'm, Yardley) | MacMillan, Malcolm (Western Isles) | Spriggs, Leslie |
| Faulds, Andrew | McMillan, Tom (Glasgow, C.) | Steele, Thomas (Dunbartonshire, W.) |
| Fernyhough, E. | McNamara, J. Kevin | Swingler, Stephen |
| Finch, Harold | MacPherson, Malcolm | Thomas, George (Cardiff, W.) |
| Fletcher, Raymond (Ilkeston) | Mahon, Peter (Preston, s.) | Thornton, Ernest |
| Foley, Maurice | Mallalieu, J.P.W.(Huddersfield,E.) | Tinn, James |
| Ford, Ben | Manuel, Archie | Tomney, Frank |
| Forrester, John | Mapp, Charles | Urwin, T. W. |
| Fraser, John (Norwood) | Marquand, David | Wainwright, Edwin (Dearne Valley) |
| Galpern, Sir Myer | Mendelson, J. J. | Walden, Brian (All Saints) |
| Garrett, W. E. | Millan, Bruce | Walker, Harold (Doncaster) |
| Gourlay, Harry | Miller, Dr. M. S. | Wallace, George |
| Gray, Dr. Hugh (Yarmouth) | Milne, Edward (Blyth) | Wellbeloved, James |
| Gregory, Arnold | Mitchell, R. C. (S'th'pton, Test) | White, Mrs. Eirene |
| Grey, Charles (Durham) | Molloy, William | Whitlock, William |
| Griffiths, Will (Exchange) | Morgan, Elystan (Cardiganshire) | Williams, Alan (Swansea, W.) |
| Hamilton, James (Bothwell) | Morris, Charles R. (Openshaw) | Williams, Clifford (Abertillery) |
| Hamilton, William (Fife, W.) | Murray, Albert | Willis, George (Edinburgh, E.) |
| Hamling, William | Newens, Stan | Wilson, William (Coventry, S.) |
| Harper, Joseph | Noel-Baker, Francis (Swindon) | Winterbottom, R. E. |
| Harrison. Walter (Wakefield) | Norwood, Christopher | Woodburn, Rt. Hn. A. |
| Hart, Mrs. Judith | Ogden, Eric | Woof, Robert |
| Haseldine, Norman | Orbach, Maurice | |
| Heffer, Eric S. | Orme, Stanley | TELLERS FOR THE NOES: |
| Herbison, Rt. Hn. Margaret | Oswald, Thomas | Mr. Ernest Armstrong and |
| Hooley, Frank | Owen, Dr. David (Plymouth, S'tn) | Mr. Alan Fitch. |
| Horner, John | Owen, Will (Morpeth) |
Clause 2—(Abolition Of Status Of "Exempt Private Company")
On a point of order, Mr. Deputy Speaker. In Mr. Speaker's selection of Amendments for last week, Amendment No. 1 was taken with a group debated last week, but it was marked with an asterisk so that we could have a separate Division. However, Amendment No. 1 does not appear on the Notice Paper for today or in the selection for today. That Amendment relates to small family businesses. The same considerations apply to Amendment No. 109, which, also, does not appear.
I ask, Mr. Deputy Speaker, that you allow a Division on Amendment No. 1 even though it does not appear on the Notice Paper. I gave notice to the Clerks that I should raise this point of order, and I understand that a Division would be in order now, it having originally been allowed for.The hon. Member for Harrow, Central (Mr. Grant) is right. When the matter was before the House on 12th July Amendment No. 1 appeared on the Notice Paper, grouped with others. I understand that since then the hon. Member for Gloucestershire, South (Mr. Corfield) and others have arranged for certain Amendments to be removed from today's Notice Paper in order to simplify our proceedings.
However, in view of the undertaking given on the last occasion I propose to put to the House Amendment No. 1, which appeared previously on the Notice Paper in the names of the hon. Member for Gloucestershire, South and other hon. Members.Amendment proposed: No. 1, in page 2, line 25, at end insert:
Division No. 481.]
| AYES
| [8.42 p.m.
|
| Alison, Michael (Barkston Ash) | Griffiths, Eldon (Bury St. Edmunds) | Page, John (Harrow, W.) |
| Atkins, Humphrey (M't'n & M'd'n) | Gurden, Harold | Pearson, Sir Frank (Clitheroe) |
| Baker, W. H. K. | Harris, Frederic (Croydon, N.W.) | Peel, John |
| Balniel, Lord | Harrison, Col. Sir Harwood (Eye) | Powell, Rt. Hn. J. Enooh |
| Bell, Ronald | Hawkins, Paul | Pym, Francis |
| Bennett, Dr. Reginald (Gos. & Fhm) | Hill, J. E. B. | Ramsden, Rt. Hn. James |
| Brinton, Sir Tatton | Holland, Philip | Renton, Rt. Hn. Sir David |
| Brown, Sir Edward (Bath) | Hooson, Emlyn | Ridley, Hn. Nicholas |
| Bryan, Paul | Hunt, John | Ridsdale, Julian |
| Buchanan-Smith, Alick(Argus,N&M) | Hutchison, Michael Clark | Robson Brown, Sir William |
| Buck, Antony (Colchester) | Irvine, Bryant Godman (Rye) | Rodgers, Sir John (Sevenoaks) |
| Bullus, Sir Eric | Kaberry, Sir Donald | Rossi, Hugh (Hornsey) |
| Burden, F. A. | King, Evelyn (Dorset, S.) | Royle, Anthony |
| Campbell, Gordon | Kirk, Peter | Russell, Sir Ronald |
| Cary, Sir Robert | Kitson, Timothy | Shaw, Michael (Sc'b'gh & Whitby) |
| Cooke, Robert | Knight, Mrs. Jill | Stainton, Keith |
| Cooper-Key, Sir Neill | Lancaster, Col. C. G. | Stoddart-Scott, Col. Sir M. (Ripon) |
| Cordle, John | Langford-Holt, Sir John | Taylor, Sir Charles (Eastbourne) |
| Corfield, F. V. | Legge-Bourke, Sir Harry | Taylor, Frank (Moss Side) |
| Costain,, A. P. | Lewis, Kenneth (Rutland) | Temple, John M. |
| Craddock, Sir Beresford (Spelthorne) | Lloyd, Ian (P'tsm'th, Langstone) | Thatcher, Mrs. Margaret |
| Croethwaite-Eyre, Sir Oliver | Loveys, W. H. | Turton, Rt. Hn. R. H. |
| Currie, G. B. H. | MacArthur, Ian | van Straubenzee, W. R. |
| Dalkeith, Earl of | Maclean, Sir Fitzroy | Vaughan-Morgan, Rt. Hn. Sir John |
| Dance, James | McMaster, Stanley | Walker, Peter (Worcester) |
| Dean, Paul (Somerset, N.) | Maginnis, John E. | Ward, Dame Irene |
| Deedes, Rt. Hn. W. F. (Ashford) | Maxwell-Hyslop, R. J. | Weatherill, Bernard |
| Dodds-Parker, Douglas | Maydon, Lt.-Cmdr. S. L. C. | Webster, David |
| Elliott, R.W.(N'c'tle-upon-Tyne, N.) | Mills, Peter (Torrington) | Whitelaw, Rt. Hn. William |
| Emery, Peter | Montgomery, Fergus | Wills, Sir Gerald (Bridgwater) |
| Errington, Sir Eric | Munro-Lucas-Tooth, Sir Hugh | Wilson, Geoffrey (Truro) |
| Fortescue, Tim | Nabarro, Sir Gerald | Worsley, Marcus |
| Foster, Sir John | Neave, Alrey | Wright, Esmond |
| Gibson-Watt, David | Nicholls, Sir Harmar | Wylie, N. R. |
| Giles, Rear-Adm. Morgan | Noble, Rt. Hn. Michael | Younger, Hn. George |
| Gilmour, Sir John (Fife, E.) | Nott, John | |
| Glover, Sir Douglas | Onslow, Cranley | TELLERS FOR THE AYES: |
| Gower, Raymond | Osborne, Sir Cyril (Louth) | Mr. Jasper More and |
| Grant-Ferris, R. | Page, Graham (Crosby) | Mr. Anthony Grant. |
NOES
| ||
| Abse, Leo | Brown, Hugh D. (G'gow, Provan) | Edwards, Rt. Hn. Ness (Caerphilly) |
| Allaun, Frank (Salford, E.) | Buchan, Norman | Edwards, Robert (Bilston) |
| Alldritt, Walter | Buchanan, Richard (G'gow, Sp'bum) | Edwards, William (Merioneth) |
| Allen, Scholefield | Butler, Herbert (Hackney, C.) | Ellis, John |
| Anderson, Donald | Cant, R. B, | English, Michael |
| Archer, Peter | Carmichael, Neil | Ennals, David |
| Atkins, Ronald (Preston, N.) | Coleman, Donald | Ensor, David |
| Atkinson, Norman (Tottenham) | Conlan, Bernard | Evans, Albert (Islington, S.W.) |
| Bagier, Gordon A. T. | Corbet, Mrs. Freda | Evans, loan L. (Birm'h'm, Yardley) |
| Barnett, Joel | Craddock, George (Bradford, S.) | Faulds, Andrew |
| Baxter, William | Crosland, Rt. Hn. Anthony | Fernyhough, E. |
| Beaney, Alan | Cullen, Mrs. Alice | Finch, Harold |
| Bence, Cyril | Darling, Rt. Hn. George | Fitch, Alan (Wigan) |
| Bennett, James (G'gow, Bridgeton) | Davidson, Arthur (Accrington) | Fletcher, Raymond (Ilkeston) |
| Bessell, Peter | Davidson, James(Aberdeenshire, W.) | Foley, Maurice |
| Blackburn, F. | Davies, Dr. Ernest (Stretford) | Ford, Ben |
| Boardman, H. | Davies, Harold (Leek) | Forrester, John |
| Booth, Albert | Davies, S. O. (Merthyr) | Fraser, John (Norwood) |
| Bowden, Rt. Hn. Herbert | Dell, Edmund | Galpern, Sir Myer |
| Boyden, James | Dempsey, James | Garrett, W. E. |
| Braddock, Mrs. E. M. | Doig, Peter | Gray, Dr. Hugh (Yarmouth) |
| Bradley, Tom | Dunnett, Jack | Gregory, Arnold |
| Brooks, Edwin | Dunwoody, Mrs. Gwyneth (Exeter) | Grey, Charles (Durham) |
| Broughton, Dr. A. D. D. | Dunwoody, Dr. John (F'th & C'b'e) | Griffiths, Will (Exchange) |
"(2) The provisions of the foregoing subsections shall not apply to a family company as defined in Schedule (Family Companies) to this Act."—[ Mr. Grant.]
Question put, That those words be there inserted in the Bill:—
The House divided: Ayes 113, Noes 195.
| Grimond, Rt. Hn. J. | McMillan, Tom (Glasgow, C.) | Roberts, Albert (Normanton) |
| Hamilton, James (Bothwell) | McNamara, J. Kevin | Roberts, Goronwy (Caernarvon) |
| Hamilton, William (Fife, W.) | MacPherson, Malcolm | Robertson, John (Paisley) |
| Hamling, William | Mahon, Peter (Preston, S.) | Rose, Paul |
| Harper, Joseph | Mallalieu, J.P.W.(Huddersfield,E.) | Ross, Rt. Hn. William |
| Harrison, Walter (Wakefield) | Manuel, Archie | Rowlands, E. (Cardiff, N.) |
| Hart, Mrs. Judith | Mapp, Charles | Sheldon, Robert |
| Haseldine, Norman | Marquand, David | Short, Rt. Hn. Edward (N'c'tle-u-Tyne) |
| Heffer, Eric S. | Maxwell, Robert | Short, Mrs. Renée(W'hampton,N.E.) |
| Herbison, Rt. Hn. Margaret | Mendelson, J. J. | Silkin, Rt. Hn. John (Deptford) |
| Hooley, Frank | Millan, Bruce | Silverman, Julius (Aston) |
| Hooson, Emlyn | Miller, Dr. M. S. | Slater, Joseph |
| Horner, John | Milne, Edward (Blyth) | Small, William |
| Howarth, Harry (Wellingborough) | Mitchell, R. C. (S'th'pton, Test) | Snow, Julian |
| Howie, W. | Molloy, William | |
| Hoy James | Morgan, Elyetan (Cardiganshire) | Spriggs, Leslie |
| Huckfield, L. | Morris, Charles R. (Openshaw) | Steel, David (Roxburgh) |
| Hughes, Emrys (Ayrshire, S.) | Murray, Albert | Steele, Thomas (Dunbartonshire, W.) |
| Hughes. Roy (Newport) | Newens, Stan | Swingler, Stephen |
| Hunter, Adam | Noel-Baker, Francis (Swindon) | Thomas, George (Cardiff, W.) |
| Hynd, John | Norwood, Christopher | Thornton, Ernest |
| Irvine, A. J. (Edge Hill) | Ogden, Eric | Tinn, James |
| Jay, Rt. Hn. Douglas | Orbach, Maurice | Tomney, Frank |
| Johnston, Russell (Inverness) | Orme, Stanley | Urwin, T. W. |
| Jones, Dan (Burnley) | Oswald, Thomas | Wainwright, Edwin (Dearne Valley) |
| Jones, J. Idwal (Wrexham) | Owen, Dr. David (Plymouth, S'tn) | Walden, Brian (All Saints) |
| Jones, T. Alec (Rhondda, West) | Owen, Will (Morpeth) | Walker, Harold (Doncaster) |
| Kenyon, Clifford | Padley, Walter | Wallace, George |
| Kerr, Dr. David (W'worth, Central) | Page, Derek (King's Lynn) | Wellbeloved, James |
| Lawson, George | Paget, R. T. | White, Mrs. Eirene |
| Lestor, Miss Joan | Pannell, Rt. Hn. Charles | Whitlock, William |
| Lever, L. M. (Ardwick) | Park, Trevor | Williams, Alan (Swansea, W.) |
| Lewis, Arthur (W. Ham, N.) | Parkyn, Brian (Bedford) | Williams, Clifford (Abertillery) |
| Lewis, Ron (Carlisle) | Pearson, Arthur (Pontypridd) | Willis, George (Edinburgh, E.) |
| Lomas, Kenneth | Peart, Rt. Hn. Fred | Wilson, William (Coventry, S.) |
| Loughlin, Charles | Pentland, Norman | Winterbottom, R. E. |
| Lubbock, Eric | Perry, Ernest G. (Battersea, S.) | Woodburn, Rt. Hn. A. |
| Lyon, Alexander W. (York) | Perry, George H. (Nottingham, S.) | Woof, Robert |
| McBride, Neil | Price, Christopher (Perry Barr) | |
| McCann, John | Price, Thomas (Westhoughton) | TELLERS FOR THE NOES: |
| MacColl, James | Price, William (Rugby) | Mr. Ernest Armstrong and |
| Mackintosh, John P. | Probert, Arthur | Mr. Harry Gourlay. |
| MacMillan, Malcolm (Western Isles) | Rankin, John |
Clause 3—(Statement In Holding Com Pany's Accounts Of Identities And Places Of Incorporation Of Sub Sidiaries, And Particulars Of Shareholdings Therein)
I beg to move Amendment No. 144, in page 2, line 33, Clause 3, to leave out paragraph (b) and to insert:
I think that it may be convenient if you, Mr. Deputy Speaker, and the House agree to take Government Amendments Nos. 147 and 148 to Clause 4 with this Amendment.(b) if it be incorporated in Great Britain and it be registered in England and the company be registered in Scotland (or vice versa), the country in which it is registered, and if it be incorporated outside Great Britain, the country in which it is incorporated; and.
If the House agrees, so be it.
Thank you, Mr. Deputy Speaker.
These Amendments are to carry out an undertaking which was given in Committee to the hon. Member for South Angus (Mr. Bruce-Gardyne), who made the point that the accounts of companies should show whether a subsidiary incorporated in Great Britain was registered in England or in Scotland. This Amendment provides for that. If the reporting company is registered in England it has to say nothing about the place of incorporation or registration of a subsidiary which is registered in England. But it will have to state, if it has a subsidiary registered in Scotland, that it is registered in Scotland. Similarly, a reporting company registered in Scotland will have to state in respect of a subsidiary registered in England that it is registered in England. Section 2(1,b) of the principal Act requires the memorandum of a company to state whether its registered office is to be situated in England or Scotland. Section 12 requires that the memorandum and articles of a company should be delivered to the Registrar of Companies for England or the Registrar of Companies for Scotland in accordance with whether the registered office is in England or Scotland. I hope that I shall be able to get away with my next statement, which is that, for the purposes of this legislation, England includes Wales.Shame!
As hon. Gentlemen will see, the second and third Amendments make similar alterations to Clause 4.
I want to thank the right hon. Gentleman on behalf of my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). He regrets that he is not with us at the moment, but I can assure the right hon. Gentleman that he will be for the evening shift.
Amendment agreed to.
I beg to move Amendment No. 2, in page 2, line 35, after 'shares', to insert 'or options over shares'.
I think that it would be for the convenience of the House if, at the same time, we discuss Amendment No. 3, after 'class', insert 'or loan stock'.
I shall be very brief in mentioning this point, which was discussed in Committee. The Clause concerns the disclosure of shareholdings in a company's accounts, and the Amendment proposes that options over shares should also be disclosed. In Committee, The Minister of State suggested that he might look at the point again, and I shall be interested to hear what new arguments he has against accepting this Amendment.
Options over shares may be a very much more relevant factor than the holdings of shares themselves. One can envisage a situation where a subsidiary company has £1,000 worth of shares and perhaps holds £1 million worth of options over shares. Clearly, it would be very much more relevant that the options should be disclosed in such a case. Likewise, it is possible to envisage a company holding £1 million worth of convertible debentures in its subsidiary company. That also would be clearly relevant. Under the terms of Clause 3, convertible debentures do not have to be disclosed. As the President of the Board of Trade said in Committee, on conversion of convertible debentures or when options are taken up, the shares have to be disclosed. That is perfectly true. But if disclosure means anything at all, it should mean, surely, the disclosure of rights over assets as well as the disclosure of the assets themselves.I do not think the hon. Member for St. Ives (Mr. Nott) will accept my arguments for not accepting the Amendments as at all convincing. As he knows, not only in regard to these two Amendments, but also with regard to the succession of provisions which have gone into the Clauses in the Bill, we are following the recommendations of the Jenkins Committee. While, in certain circumstances, it may be true that it would be useful to have information about holdings on options or loan stock in a subsidiary, it did not seem to us, or to the Jenkins Committee, to be necessary to require such information to be disclosed about all subsidiaries, which would be the case if we accepted the Amendments.
Representations were made to us—and I am surprised to see the name of the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) to these Amendments—that from the point of view of the accountants we were in danger of cluttering up the accounts with an excess of detail. For these reasons we thought that the best thing to do at this stage in company legislation was not to accept the hon. Gentleman's well-reasoned, and I think in other circumstances quite useful, Amendments.I fully accept that the Government are in serious danger of cluttering up the accounts with a lot of what we regard as unnecessary information. We fully accept that much of the information required by the Bill is necessary, and we go along with the right hon. Gentleman in the proposals that he has made. As he knows, however, there are certain important features which we regard as unnecessary, and which in some cases could be harmful.
I support the views put forward by my hon. Friend the Member for St. Ives (Mr. Nott), particularly with regard to Amendment No. 2. I do not feel nearly so strongly about Amendment No. 3, because there is no question of control coming into loan stock, but I believe that unless the words "or options over shares" are included in the Clause in certain circumstances a very misleading picture will be given to whoever is reading the document. Unless the picture that is presented by the information disclosed is accurate and certain in its meaning, the information might, in certain circumstances, do more harm than good. Everyone must know that it can be relied on as complete. I support the Amendment so ably moved by my hon. Friend, but I do not know whether he wants to go as far as taking the matter to a Division. Perhaps he will tell us what he intends to do.I do not find the right hon. Gentleman's answer very satisfactory, but we have made our point and I hope that he will consider it when the famous second Bill, about which we have heard more than enough, comes along. I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 145, in page 3, line 16, to leave out 'shall' and to insert 'need'.
I think that it might be convenient if, with this Amendment, we take Amendments Nos. 149 and 151.
If the House agrees, so be it.We are back to Fowler. We had a discussion about these words in Clauses 3, 4 and 5, and I quoted Fowler, as I thought to the satisfaction of the Committee, but I was told that Fowler was now old-fashioned, and that we must have a new grammatical approach to these matters. I am willing to respond whenever possible to the wishes of the Opposition in such matters as this, and, therefore, we have tabled these Amendments to write the Bill in the form in which the Opposition want it to be written.
9.0 p.m.
This, again, is something that we welcome. I hope that later in the night's proceedings we shall be able to get rid of the expression, "property of its". I have never known a possessive preposition to come before a possessive pronoun in this way—but perhaps it does. I am glad that we have improved the Bill to this extent and I congratulate the right hon. Gentleman on the broadmindedness with which he has thrown aside the advice with which he is normally regaled.
Amendment agreed to.
Further Amendment made: No. 146, in page 3, line 36, leave out 'advantage's being' and insert:
'the fact that advantage is'.—[Mr. Darling.]
Clause 4—(Statement In Company's Accounts Of Identities And Places Of Incorporation Of Companies Not Subsidiaries Whose Shares It Holds, And Particulars Of Those Shares)
Amendments made: No. 147, in page 4, line 7, leave out from 'meeting' to end of line 9 and insert:
( a) the name of that other body corporate and—
No. 148, in line 26, leave out from 'and' to end of line 28 and insert:
No. 149, in line 40, leave out 'consent to the information's not being disclosed' and insert:
'agree that the information need not be disclosed'.
No. 150, in page 5, line 12, leave out 'advantage's being' and insert:
`the fact that advantage is'.—[Mr. Darling.]
Clause 5—(Statement In Subsidiary Company's Accounts Of Name And Place Of Incorporation Of Its Ulti Mate Holding Company)
I beg to move Amendment No. 4, in page 5, line 33, after 'name', insert 'if known to them'.
With this Amendment we can take Amendment No. 5, in page 5, line 33, leave out from 'of' to second 'the' in line 34.
Amendment No. 6, in line 35, leave out 'if known to them'.
Amendment No. 7, in line 35, at end insert:
Provided that where the ultimate holding company is not known to the directors of the subsidiary company that fact shall be stated, together with a statement indicating the names of such intermediate holding companies and the countries in which they are respectively incorporated as are known to the directors of the subsidiary company.
Amendment No. 135, in line 38, leave out from 'to' to 'its' in line 39.
Amendment No. 10, in line 39, at end insert:
'or with respect to any of the said intermediate holding companies'.
Amendment No. 9, in line 40, after 'opinion', insert:
'or in the opinion of the directors of that ultimate holding company or of the directors of any of the said intermediate holding companies'.
Amendment No. 11, in line 41, after first 'company', insert:
'or of any of the said intermediate holding companies'.
Yes, Mr. Deputy Speaker.
It is fair to say that the object of the Clause is to disclose who owns whom. En this regard it has one or two serious defects. The first is emphasised by the words in lines 33 and 34, which refer to the name ofFirst, what does the word "regarded" mean? Does it mean that the directors merely think that a certain company is the ultimate holding company but do not have to go to any great trouble to find out, or does it mean that they have solid grounds for believing that a certain company is the ultimate holding company? If so, it is surely necessary that they should indicate the grounds on which their belief is based. The whole implication of the Clause is that in certain circumstances the directors may not know which is the ultimate holding company. This supposition is supported by the words, "if known to them" in line 35, in relation to the country of incorporation. On the face of it one would have thought that if a director knew the name of a company—whether it was the ultimate holding company or anything else—it should not be an insuperable problem to discover the country in which it is incorporated. We feel that the Clause is defective. If the directors do not know which is the ultimate holding company it is very much better that they should say so clearly. One of the effects of the Amendments, therefore, is that directors will be required to state the name of the ultimate holding company, with the proviso that if they do not know they should say so, in which case they should then proceed to give such details of the company's parentage —if that is the right word—as are known to them. It is important that the other links in the chain should be disclosed, especially where the ultimate holding company cannot be stated with certainty. This is much more useful and satisfactory than merely the name of a company which may or may not be the ultimate holding company If it is not, a great many misleading deductions may be drawn. If we are to have the concept of a company "regarded by the directors" as the ultimate holding company, we ought to know the evidence for that opinion. It is odd that the Clause makes it the responsibility of the directors of the subsidiary to form an opinion about whether the holding company's interests will be harmed by disclosure, particularly if, under subsection (1), they refer to a company which they merely "regard" as the holding company. We suggest that, under subsection (1), they should disclose the names and countries of incorporation of the intermediate companies, if any—at any rate giving the immediate parentage—and that, in subsection (2), it should be in the opinion of the directors of the company which is likely to be harmed that it is harmed and not in that of the directors of some other company, so that at least the directors who claim that the interests of their company will be harmed will have a right to approach the Board of Trade for consent that the information need not be given. This is much more logical and is greatly to be preferred in the company's interests and even more in regard to disclosing valuable information to the public, rather than leaving the Clause as it is and, in certain circumstances, producing information which is not only valueless but completely wrong and misleading."the body corporate regarded by the directors as being the company's ultimate holding company …"
Amendment No. 4 is unnecessary, as the Bill has substantially the same effect, providing that a subsidiary company must give in its accounts the name of the company which the directors regard as being the ultimate holding company. If we added these words, they would have no substantial effect. If the directors do not know the ultimate holding company, they will not regard any company as such. They will be able to give information only about the company next in the chain, which appears to them, on the information which they have, to be the holding company. Therefore, if they are not even aware that they are a subsidiary, they will not regard any company as being their holding company and will give no information. Therefore, no change is necessary. There is no serious disagreement about objectives here.
On the other Amendments, the Jenkins Committee recommended that every subsidary company should disclose in its accounts the name and the country of incorporation of its ultimate holding company, so far as possible, and that, if a subsidiary could not get this information, it should be required to say so and to give the name and country of incorporation of the most senior company in the chain. The Clause gives effect to the Jenkins recommendation by requiring disclosure of the name of the body corporate regarded by the directors as being the company's ultimate holding company. Both the proposed new version of the Clause and the existing Clause would permit an exemption for a subsidiary carrying on business outside the United Kingdom if the disclosure would be harmful and the Board of Trade agreed. For these reasons, there would be very little advantage in making the change which the Opposition suggest. We have provided in the Bill that the directors shall give all the information which it is possible for them to give. We do not think that the situation would be improved by incorporating the Amendment in the Bill.Suppose that there is the possibility of a take-over bid being made which could alter the ownership of the holding company between the drawing-up of the balance sheet and its publication. Is the company expected to show the position as at the end of the year or when the balance sheet is issued?
The Clause requires a subsidiary company to give in its account the name of the company which the directors regard as being the ultimate holding company. I take it, therefore, that they would give the name of the company which, when the accounts were made up, they regarded as being the holding company. Therefore, it would depend on whether the take-over operation to which the hon. Gentleman refers had been consummated, to put it in that way, when the accounts were made up.
I cannot accept the explanation of the President of the Board of Trade. The position is unsatisfactory.
In Clause 5(1), ignoring the Government Amendment which we have just passed, there is a clear obligation that thereSuppose that it knows perfectly well that it is a subsidiary company and that it knows which company holds its shares. But suppose that it also knows that that company is under the control of another company. It is therefore clear that the company which holds its shares cannot be regarded by the directors as being the company's ultimate holding company. In those circumstances, it would be wrong of them to put that company's name in the account as being the ultimate holding company because it is known that that company is a subsidiary of another. However, the subsection insists that there shall appear in the accounts or annexed thereto" shall be … annexed to, the company's accounts laid before it in general meeting the name of the body corporate regarded by the directors as being the company's ultimate holding company …"
What happens if it does not know it? No matter how one explains this, it does not seem to me that we can get round this difficulty unless we accept the Amendment. It is not a complete answer to say that the Government have inserted Amendment No. 151 in the Bill to the effect that the Board of Trade might agree that the information need not be disclosed. The Board of Trade may want to know the name of the ultimate holding company, but it may be decided not to give consent for that name to be given. What will be the position then? 9.15 p.m. Here we have a company that is bound by law to give the name of its ultimate holding company, and if it does not give that name the Board of Trade can say, "We are interested in your ultimate holding company and unless we know it we will not give you consent". On the one hand, we have the Board of Trade refusing to give consent, while, on the other, we have the ultimate holding company refusing to disclose itself. The directors of the ultimate holding company will have to decide whether to take their punishment like men or resign from the board. There is an unresolved problem in the Clause which will, sooner or later, have to be faced by the Government. Unless our proposal is accepted I do not see how the matter can be resolved."the name of the … ultimate holding company".
If the circumstances were that the company in question knew that it was a subsidiary of another company, but did not know of what company it was a subsidiary it would be bound by the wording of the Measure to give any information about the company it had recorded as being its holding company because it would regard such a company in these circumstances as being the ultimate holding company. The same thing would apply if the Amendment were accepted. It contains the phrase "if known to them". The situation would be that the ultimate holding company would not be known to the company in question. Even if we accepted the Amendment there would not be any substantial difference in the meaning of the provision.
The right hon. Gentleman has not got the point. "If known to them" is merely a paving Amendment to what follows. The object is to make it clear that the company in question shall state its ultimate holding company. If that is not stated, then, combined with Amendment No. 7, the company in question must state the links in the chain.
There can, therefore, be no question of a company which is a subsidiary either stating that the immediate holding company is its ultimate holding company, although there may be holding companies further back in the chain. Moreover, there would be something definite on which the Board of Trade, the Registrar of Companies or whoever else might be involved in this matter can bite. "Regarded" is a curious word to use in this context. I cannot think of a Statute in which this word is used in this sense. It could mean anything from a vague impression to virtual certainty. Almost any charge could be countered by saying, "We regarded this as our holding company". As my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) said, if a holding company or one of the intermediate companies in the chain is in the process of being taken over, it requires a degree of care to obtain accurate information. I do not understand why the right hon. Gentleman said that acceptance of our proposal would not improve the Clause. We are out to obtain full information about the parentage of the company in question. If the holding company is not known, then under the Bill as drafted one will not get disclosed the immediate parentage of the company that is known. This is important. When I was in the Conservative Government, some years ago, and we had all the fuss about Rachmanism, one of the great problems was to try to trace the connection between the various companies that grew up. In many cases, it would have been no good at all knowing what the ultimate holding company was. We wanted to know the intermediate links, which were much more important. I cannot understand the right hon. Gentleman not accepting the Amendment with open arms as something which clearly improves the Bill from the point of view he has presented it to us, namely, that the public should have information which is of interest to it. In this respect, I should have thought that it was clearly of public interest in the wide sense of the term. It is not even confined to the interests of shareholders or creditors, but rather something that in company law is becoming more and more apparent as being in the public interest to know the tie-up of the firms. We seem to be falling over backwards to help the right hon. Gentleman to improve his Bill, at which, I must frankly say, he has not made a good shot so far. But we are still doing our best. It is still not too late. I hope that the right hon. Gentleman will reconsider the position.Amendment negatived.
Amendment made: No. 151, in page 5, line 43, leave out 'consent to the information's not being disclosed' and insert:
'agree that the information need not be disclosed'.—[Mr. Jay.]
I beg to move Amendment No 12, in page 5, line 44, at the end to insert:
This is a probing Amendment. We discussed the matter to a certain extent in Committee. Clause 5 requires a statement in a subsidiary company's accounts of the name and place of corporation of its ultimate holding company. Subsection (2) gives a relief in certain circumstances, one of which being the consent of the Board of Trade. As the consent of the Board of Trade is necessary, it becomes important for us to have a complete understanding of what the words relating to the potential relief mean. Subsection (2) says:(3) For the purposes of this and the previous two sections 'carries on business' means 'either sells directly or indirectly goods or services, or manufactures'.
Our Amendment seeks to define "carries on business". The right hon. Gentleman may argue that he would prefer not to have too close a definition so as to give him and the Department wider discretion to give relief where necessary. To a certain extent I would be prepared to accept that argument provided I were satisfied that the relief is in fact going to be given as widely as possible. The purpose of putting down this Amendment lies in some words spoken by the right hon. Gentleman the Minister of State during our deliberations in Committee. The right hon. Gentleman said:"The foregoing subsection shall not require the disclosure by a company which carries on business outside the United Kingdom of information …".
If the Board of Trade is to interpret its concept, or the basis of its concept, along those lines, I believe it will interpret it on far too narrow a basis. My hon. Friend the Member for Gloucestershire, South tried to probe along these lines and said:"It is not our intention to go as wide as the hon. Member has suggested might be possible—salesmen overseas, and so on. We were thinking in terms of a company operating outside the United Kingdom in a fairly big way, with practically all its operations taking place outside the United Kingdom."
Then the Minister of State spoke the words I have quoted and my hon. Friend said:"What I do not quite follow is what precisely he has in mind when he describes a company as carrying on business outside the United Kingdom."
That is why we put down this Amendment to get that expression, if we could, from the Minister. One of the remarkable things about our export trade is its variety of products and the variety of methods under which industry operates. We should do everything we can to preserve the variety of products and the variety of methods by which we export to other countries. I am not talking only of companies which set up companies abroad and market their goods abroad or manufacture and sell abroad but also of companies which manufacture in this country and sell abroad, and those which manufacture in this country and sell to others in this country who then export goods which are identifiable as to which factory they have come from. I give a theoretical example. It might well be that a company manufactures an identifiable product, a branded product perhaps, which is widely sold in different parts of the world by another company which buys the products in this country and then exports them to another country. If it were known for a surety in certain countries that the particular company known to be manufacturing these products was in fact a subsidiary of another company, then the sale of those products could easily dry up in that country abroad. Yet by no stretch of the imagination, although it is an important export market indirectly to the company manufacturing those products, could that company be regarded as one"From our point of view, we should like to leave this as wide as possible."—[OFFICIAL REPORT, Standing Committee E, 7th March, 1967; c. 206–7.]
It would be detrimental to the interests of this country if manufacturers of that company were selling directly abroad and if its products which are identifiable with it were sold by other companies in foreign markets and the manufacturing company had to disclose its ultimate holding company. It could be very detrimental to our trade in that country with those particular products. Anything which might narrow the field of advantage which we might hold in markets abroad should be frowned upon. 9.30 p.m. If disclosure would make it more difficult to sell our products in markets abroad the discretion of the Board of Trade should be exercised in favour of the company so that it does not need to disclose its ultimate holding company. The purpose of the Amendment is to find out exactly what the Board of Trade intends. It is of interest to the whole country and certainly to all companies that export to know clearly what are the criteria that will be used by the Board of Trade in giving its consent to companies and what its interpretation will be of the words "carries on business". There are several ways that business can be carried on: manufacturing abroad, manufacturing in this country and selling directly abroad, or manufacturing in this country and selling to another company which then does the exporting. If the ultimate holding company becomes known, in certain cases it might mean the closing of a market abroad."with practically all its operations taking place outside the United Kingdom."
I support my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) in his remarks. Not having had the inestimable privilege of taking part in the proceedings upstairs on the Bill I do not myself find that the Clause makes nearly clear enough the mechanism by which this exemption has to be sought. The Amendment at least gives some hope of finding out how this should be done and what are the standards by which an exemption should be obtained.
The purpose is unmistakable enough, but after the rather formidable first subsection of Clause 5 there is this exempting second subsection. To a dispassionate observer a company's accounts, unless given specific exemption, will have attached to them somewhere the name of the ultimate company owning it. In some parts of the world, such as the Middle East, where we have these very dangerous and yet very puerile acti- vities going on most of the time, especially in the commercial world, disclosure could be very damaging. But I have yet to find from the terms of the Clause how a company can know in advance that it will not have to attach to its documents statements about its ultimate ownership, which might be on the wrong side of one of the many schisms which have crevassed the Middle East for as long as I can remember. The Amendment gives some hope of particularising that a company may be dealing only indirectly with this market. The word "indirectly" is the operative word. If the ingenuity of the Board of Trade could make clear (a) that an indirect activity is as valid as direct salesmanship or commercial activity in one of these foreign countries which are so unstable and, (b) what is to be done to obtain this exemption, many companies —I can think of some in my own personal circumstances—would be greatly relieved to be given the information which the Clause only very cloudily adumbrates.I approach the Amendment from a rather different standpoint. The validity and purpose of it turns on the question of the criteria and attitude to be adopted by the Board of Trade in giving exemptions under subsection (2) of the Clause. I do not detract from the argument put by my hon. Friends in terms of legitimate business activity overseas, but, at the other end of the argument, unless the words "carries on business" are defined more objectively, perhaps on the lines of the Amendment, United Kingdom companies could put themselves in the position of evading the, whole purport of Clause 5 by demonstrating to the Board of Trade in very loose terms that they carried on business overseas simply by having some form of company registered for trading in Geneva, Lisbon or somewhere else.
One point not mentioned so far is that we are dealing with the definition for the purposes of Clauses 3 and 4 as well as Clause 5. On Clause 5, we are considering a disclosing company which, by the nature of things, will be a company incorporated in Britain. We are, therefore, concerned mainly with harm to a British holding company. It is not that we do not mind what happens to foreign companies, but we are principally concerned with what happens to British companies. It is a depressing feature of modern conditions that, as my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) said, a company with a good trading outlet in the Arab States might lose that outlet if it was known to be a subsidiary of a Jewish-controlled company.
I turn now to the similar provisions in subsection (3) of both Clauses 3 and 4. This is the reverse situation in which the disclosing company is the parent. We are dealing with disclosure of the affairs of a subsidiary or associated company, which might be either a British or a foreign company. Here it is even more important to know what constitutes trading or carrying on business overseas. It is curious that the Board of Trade has gone to the trouble of providing in these three Clauses for consent to be given to non-disclosure where it thinks that to be in the interests of the company, yet on Clause 20 it has been very sticky about even admitting the national interest as an excuse for a similar exemption. However, be that as it may, it is essential on these three Clauses that companies should know what the Board of Trade has in mind.The answer to the question raised by the hon. Member for Sudbury and Woodbridge (Mr. Stainton) about a possible loophole in the Bill for firms unreasonably withholding disclosure is that one of the conditions is Board of Trade consent to the information not being disclosed. It would not automatically follow, because a company was carrying on business outside the United Kingdom, that it would enjoy the privilege of non-disclosure. Both conditions have to be satisfied.
It is agreed that the purpose of the Clause is to ensure that disclosure of this kind is not prejudicial to exports, to the overseas earnings of a British company, or to the United Kingdom balance of payments in the widest sense. That is the purpose of the Amendment. In our view this is most likely to be secured if the words in the Act are not too precisely defined, and if we adhere to the words "carries on business", which have a wide but not a precisely defined meaning. The criterion by which the Board of Trade would operate the power of granting consent or not would be whether the disclosure of the information was prejudicial to exports or earnings overseas. We believe that it would be more effective if it were conducted in that way, and nothing would be gained by trying to define the words more exactly, since at present they are sufficiently wide to cover all those cases in which we should be likely to agree to non-disclosure on the ground that disclosure would result in harm to our overseas trade. I believe that if we adopted the definition in the Amendment, which is very broad—although I understand its purpose, it would go too far. It would enable many companies which had very remote overseas trading connections to qualify for non-disclosure when no serious damage would be likely to occur to our exports or overseas earnings. It is not our intention that the Clause should be operated as widely, and therefore I think that we shall secure the objectives which we all have in mind by adhering to the words in the Bill.Will the President of the Board of Trade say how he contemplates the exemption is to be obtained? I have no reason to understand this from the Bill as it stands. Is it to be obtained beforehand? Must the information be collected by a company and passed to the Board of Trade, which then says that it need not go any further, or what will happen?
The consent of the Board of Trade must be obtained, and therefore the company will clearly have to make application to it and state its reasons for believing that disclosure of the information would be prejudicial to the national interest.
Before compiling its accounts?
Before it makes or does not make the disclosure required by the Act.
Amendment negatived.
Clause 6—(Particulars In Accounts Of Directors' Emoluments)
I beg to move Amendment No. 152, in page 6, line 3, to leave out 'be shown'.
I think that it would be convenient to consider with it the following Amendments: No. 153, and the two Amendments thereto, and Amendment No. 14, and Amendments Nos. 154; 155; 156; 16; 304: 158; 160; 20; 21; 22; and 187. This is another case where we have introduced an Amendment to meet points made during our discussions. The Bill as at present drafted, substantially for the reasons which we have just discussed, does not require information to be given about emoluments of an employee who, during the year to which the accounts relate, works wholly or mainly outside the United Kingdom. This exclusion was introduced in another place in response to arguments that salaries outside the United Kingdom may be very different from those paid here, and that it would be unreasonable to expect them to be disclosed in all cases. However, it was represented in the later stages of discussion that if we provided for the exclusion in the case of employees it is reasonable to make the same change in the case of the directors or the chairman of a company. If they also discharge their duties wholly or mainly outside the United Kingdom the situation would appear to be substantially the same as if they were not directors but were employees of the company. That is the purpose of the Amendments, and I hope that it will be felt to be reasonable.9.45 p.m.
Is not the President of the Board of Trade going to make some reference to the series of linked Amendments taken with this Amendment concerning the leaving out of the reference to pension contribution? He seems to have overlooked that part of his brief.
If we are taking the debate on those Amendments at the same time, Mr. Speaker, I shall be very glad to do so.
It has been represented—I think that this is substantially true—that, though it is possible, as under the present Companies Act, to give the total pension contributions which a company pays to all its board of directors, there are nevertheless substantial technical and financial difficulties in splitting these total contributions as between individual directors. That argument seems to us to have force. Therefore, we are providing that pension contributions for the purpose of disclosure of information about individual bands of directors shall be excluded. I think that that will probably command the assent of the House.I felt a little hurt that the President of the Board of Trade had not made reference earlier to the fact that there had been Government acceptance of a suggestion that I made in Standing Committee. I took three-quarters of an hour to make it in order to impress upon the Government the error of their proposals.
There was no lack of recognition of the hon. Gentleman's efforts on my part. I was not sure whether the House wished to debate these slightly different items simultaneously.
But Mr. Speaker ruled that the Amendments would be taken together. The President of the Board of Trade should keep his ears open rather more in future. Otherwise, with these big groups of Amendments we may slide over certain debates.
I thought that the right hon. Gentleman was a trifle ungenerous to the Opposition. Not only did he accept the proposals put forward by the Opposition in Committee but he added his own name to certain of our Amendments, which is almost unprecedented. His right hon. Friend the Minister of State said in Committee that he would have to look into the drafting of my Amendment. Now we find that the very words that I propose have been incorporated in Clause 8 in order that directors and senior salaried employees shall not have their individual pension contributions referred to. We on this side are very pleased to have achieved this success. It only goes to show that without the constant vigilance of the Opposition this Government Bill would have been even greater nonsense than it is at present in certain respects. Certain of my hon. Friends take the view that it is not our job to improve Government legislation. I take a slightly contrary view. I think that where it is clear that the Government are erring in the suggestions that they put forward in these complicated matters it is our duty to point this out. I took a good deal of time in Standing Committee. I think that the Minister of State remembers certain aspects of my speech because it was very long and detailed, but it was on a very long, detailed and complicated matter. I have one little warning for the right hon. Gentleman. We shall come later to another pension matter which is equally as long and complicated as the matter which we have just dealt with. The President of the Board of Trade has put a sensible proposal not to show these pension contributions in detail. He is extraordinarily fortunate in not having here tonight his hon. Friend the Member for Westhoughton (Mr. J. T. Price), who, in Committee, took violent objection to my Amendments. Therefore, had he been present tonight, he would have taken violent objection to his right hon. Friend's proposals. We are glad that the right hon. Gentleman has introduced them, we welcome them and we will continue to do our best to improve the Bill.The President of the Board of Trade has not mentioned the two starred Amendments in the name of my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) both of which would leave out "chairman" and insert "director" in Government Amendment No. 153. This raises once again the question of isolating the chairman.
Surely, it would be much better if the chairman's position as a director was described rather than simply his position as chairman, which would segregate him quite unnecessarily. In these circumstances, will the right hon. Gentleman consider this and tell us what he thinks about my hon. Friend's Amendments? One would think that some people are anxious to know how much the chairman of a big company is paid but, as we have pointed out earlier, it could be misleading if his position as chairman was mentioned as distinct from his position as a director of the company. The President of the Board of Trade said in Committee:"It is a matter of general interest to the whole company, to the employees and others, what the chairman is paid."—[OFFICIAL REPORT, Standing Committee E, 7th March, 1967; c. 212.]
A glaring example is where the chairman is also the managing director. Presumably, the fact that he was also the managing director would not be made clear. There is an idea in many people's minds that the chairman is more or less a figurehead. His emoluments would be given on the basis of his position as chairman and not as managing director.
I thank my hon. Friend for his intervention. That is why my hon. Friend's two Amendments are so important. Throughout industry, only 10 per cent. of chairmen are managing directors. We discussed in Committee that there were several different types of chairmen. Some might come from outside and be given functions and be paid fees for their special advice and activity in the company. If the chairman's salary was disclosed in his position as a director, nobody on this side could have any objection, but if he were to be segregated and shown solely as chairman, we would regard this is highly misleading.
My hon. Friend has correctly said that many people regard the chairman as the boss, but in 90 per cent. of companies the chief executive or managing director is the boss and the chairman is a fellow director. One of the dangers is that the public and the shareholders could be misled about this. It is not fair to chairmen to present them in that light. They have received a good deal of criticism of various sorts for the size of their salaries. As by isolating chairmen in the manner proposed the President of the Board of Trade will give a misleading picture, he should accept the two starred Amendments of my hon. Friend the Member for Gloucestershire, South.The two main groups of Amendments which we are discussing have slightly different themes. In any event, the Clause is muddled, as my hon. Friends have said. For reasons which I explained in Committee, the reason for that is that it has been built up in stages. Quite frankly, I think that the whole meat of the Clause is obtained quite fully in the necessity to disclose the number of directors in each £2,500 bracket all the way up. There are not going to be many directors in the company earning £30,000 a year. I think they will be pretty easily identifiable. So I think that really the question of the chairman and the question of the top director if not the chairman is really superfluous to the Clause as it stands.
I should like to congratulate my hon. Friend the Member for the City of Chester (Mr. Temple) on his persistence, I might say brilliant persistence, which has been so successful in getting the approval of the Minister, if not in words then, even better, in action. Usually it is the other way round, alas: we get kind words but little response by way of action. I should like to concentrate on the Government Amendment No. 153 and the two Amendments which were put down yesterday to that Amendment. I am sorry I did not spot it earlier, but I believe that there is a shortcoming in the Government Amendment, and it arises thus. It has now been decided by the right hon. Gentleman that disclosure of the chairman's remuneration shall be put, he said, on an equal footing with the disclosure of remuneration by the top executives, and he has visualised that in certain circumstances it could be very embarrassing to disclose the director's remuneration where that director is a foreign director, or, at any rate, spends most of his time abroad. There are various reasons; we discussed this in Committee and I will not rehearse the arguments again. The point I want to make on Amendment No. 153 is about the situation of the chairman. As I see it, the right hon. Gentleman has put down an Amendment whereby if a airman, throughout the financial year, has spent most of his time abroad, and if his duties—not, be it noted, as a director but as chairman—are mainly carried out abroad rather than at home, then the emoluments need not be disclosed. It seems to me that the position is this, that if someone as a director of a company is largely employed abroad, then, under the terms of this series of Amendments, his emoluments need not be disclosed. If the chairman retires and the company look for a new director and they choose as chairman a director who is abroad, then immediately, because the board meetings and the annual meeting take place in this country, that is, his duties as chairman take place in this country, it seems to me that, although his main work is done abroad, he will have to disclose his remuneration, because his duties as chair- man, not as director, take place in this country and not abroad. As I see it the question hinges on the duties, the duties as a director or the duties as chairman. If the duties as a director, which are his main duties throughout the year, are carried on outside this country, then I believe exemption should still apply to him as to other directors in a similar position. I should be grateful if, in replying, the right hon. Gentleman would deal with that point.I feel almost tempted to put out once again in reply to the hon. Member for the City of Chester (Mr. Temple) that when we refrained from accepting suggestions put forward by the Opposition we are blamed for not listening to them, but when, as on this occasion, we accept one, and, indeed, put our own names to it, he brings that forward as a grievance, none the less, against the Government. The hon. Gentleman has now left the Chamber, no doubt to consult with my hon. Friend the Member for Westhoughton (Mr. J. T. Price) in some other part of the building. I will not refer to him any further.
On the two Amendments put down by the Opposition to Government Amendment No. 153—It being Ten o'clock, the debate stood adjourned.
Ordered,
That the Proceedings on the Companies Bill [Lords] may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Charles R. Morris.]
Question again proposed, That the words "be shown" stand part of the Bill.
We have now provided that, in the case of any employee whose duties were wholly or mainly carried out outside the United Kingdom, disclosure would not be necessary. We have provided the same for a director, and we have provided the same for the chairman.
Hon. Gentleman opposite are still arguing, I gather, that if the chairman was merely exempted for performing the duties of chairman outside the United Kingdom and not the duties of a director, it might not be sufficient for him to qualify for non-disclosure. In our view, this point has not any great substance because, in the great majority of cases, in any event, even though the board meetings which the chairman had to attend might be held in the United Kingdom, nevertheless, where a chairman served a company both at board meetings and in the intervals between them, which I should have thought would be true in the normal case, he could be regarded as being chairman and carrying out his duties as chairman in the intervals when, ex hypothesi, he would be wholly or mainly discharging those duties abroad as well as at board meetings in the United Kingdom. That is what I am advised would be the effect of the Clause, and I think, therefore, that we have met the substantial point which hon. Gentlemen opposite have in mind.Using hypotheses again, let us suppose that there is a company with its headquarters in the United Kingdom which has an extraordinarily good director in charge of sales in America, where it has a very substantial business. Suppose, further, that because a great deal of its sales are conducted in the United States, the director in charge of the American company is brought over to become chairman of the English company, attending board meetings but, perforce, having to spend most of his time carrying out his duties connected with the company in America where he is domiciled for most of the year, only coming back to attend board meetings. I take it that, in such a case, he is subject to disclosure.
If that is the case, an entirely false impression is created. If my view is right, the costs of living and carrying out his duties mainly in America are such that he might quite properly have a salary there substantially in excess of that which he would enjoy as chairman of the company domiciled for the whole time in England. That is a situation which may well arise and, in my view, disclosure in such a case would be quite improper.We have met the point which the hon. Gentleman has in mind by our Amendment. The emoluments of a chairman do not have to be shown if he discharges his duties wholly or mainly outside the United Kingdom. In the case advanced by the hon. Gentleman, although he attended board meetings in the United Kingdom, he would discharge his duties as chairman mainly outside the United Kingdom and, in that case, would be exempted.
I am rather puzzled by the immense trouble to which the Board of Trade is going to ensure that everybody discloses his bits and pieces. We have here a rather complicated bit of nonsense. We have to take account of the fact that a chairman may serve half the financial year and then be replaced, but later there is a provision that if one of the directors gets paid more than the chairman he has to disclose.
Perhaps the right hon. Gentleman will be good enough to look at Amendment No. 158. Here again we have a splendid bit of English and one begins to wonder whether the office boy and the draftsmen have changed places in the Board of Trade. The Amendment reads:"Page 7, line 12 [Clause 6], at end insert 'and (b) the relevant amount'—
and then we go back and read:(i) if one person has been chairman throughout the year, means the amount of his emoluments"
Where are we getting to in the use of the English language? One should start by saying that the relevant amount means, and go on from there, but here we have to read the whole of paragraph (i) before paragraph (ii) means anything, which is not the usual way of drafting definition Clauses. I am beginning to think that one of the easiest ways of earning a living is to be a draftsman at the Board of Trade."the relevant amount … if not, means …"
Amendment agreed to.
Further Amendments made: No. 153, in page 6, line 6, leave out paragraph ( a) and insert:
(a) if one person has been chairman throughout the financial year, be shown his emoluments (unless his duties as chairman were wholly or mainly discharged outside the United Kingdom), and if not, be shown with respect to each person who has been chairman during the year, his emoluments so far as attributable to the period during which he was chairman (unless his duties as chairman were wholly or mainly so discharged).
No. 14, in page 6, line 6, after 'emoluments', insert:
'(other than emoluments consisting of a contribution paid in respect of the person under any pension scheme)'.
No. 154, in page 6, line 10, leave out 'of all the directors' and insert:
'with respect to all the directors (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), be shown'.
No. 155, in line 18, leave out subsection (2) and insert:
(2) If, of the directors of a company (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), the emoluments of one only (so far as ascertainable from information contained in the company's books and papers or obtainable by right by the company from him) exceed the relevant amount, his emoluments (so far as so ascertainable) shall also be shown in the said accounts or in a statement annexed thereto; and if, of the directors of a company (other than any who discharged their duties as such wholly or mainly outside the United Kingdom), the emoluments (so far as so ascertainable) of each of two or more exceed the relevant amount, the emoluments (so far as so ascertainable) of him (or them, in the case of equality) who had the greater or, as the case may be, the greatest shall also be shown in the said accounts or in a statement annexed thereto.
No. 156, in line 36, at end insert:
'(other than contributions paid in respect of him under any pension scheme)'.
No. 157, in page 7, line 5 at end insert:
(5A) A company which is neither a holding company nor a subsidiary of another body corporate shall not be subject to the require- ments of this section as respects a financial year in the case of which the amount shown in its accounts under section 196(1)(a) of the principal Act does not exceed £7,500.
No. 304, in page 7, line 6, after 'section' insert:
"(a)".
No. 158, in line 12, at end insert:
'and
(b) "the relevant amount"—(i) if one person has been chairman throughout the year, means the amount of his emoluments; (ii) if not, means an amount equal to the aggregate of the emoluments, so far as attributable to the period during which he was chairman, of each person who has been chairman during the year'.
Clause 7—(Particulars In Accounts Of Directors' Emoluments The Rights To Receive Which Have Been Waived)
Amendment made: No. 159, in page 7, line 32, leave out 'and (5)' and insert '(5) and (5A)'.
Clause 8—(Particulars In Accounts Of Salaries Of Employees Receiving More Than £10,000 A Year)
Amendments made: No. 160, in page 8, line 20, after 'subsidiaries)', insert 'and'.
No. 20, in line 23, leave out from 'tax' to 'and' in line 24.
No. 21, in line 26, leave out from 'cash' to end of line 28.—[ Mr. Jay.]
I beg to move Amendment No. 23, in page 9, line 18, at the end to insert:
This is a very important Amendment, and I should be glad if the President of the Board of Trade would listen to me. The reason for moving it is the utterly unclear answer which the right hon. Gentleman gave to my hon. Friend when the point was raised on 16th March, in Committee. The Clause relates to the need to give particulars of all employees earning over £10,000 a year. It is necessary that shareholders of a group of companies with subsidiaries should get the information as required under the Bill about the higher-paid executives employed by their company. It is necessary for the purpose of clarification that the words "in the company's employment" should clearly indicate that it means "in the employment of any subsidiary or subsidiaries". By what is the person employed in the case of subsidiaries? If a person earns £12,000 a year and is employed partly by the parent company and partly by the subsidiary, his total remuneration brings him within the scope of the Clause, but as my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) pointed out in Committee, if the parent company is a holding company and the employee in question is employed only by the subsidiary it is not clear whether he comes within the Clause or not. Apparently he does not. He might also be employed by several subsidiaries at different amounts aggregating £10,000 a year and, as we understand it, those sums would not be aggregated. We are trying to help the Government make sense of the Bill, and I hope that in this case I am performing a constructive function in moving the Amendment. When asked about this by my hon. Friend the right hon. Gentleman said that it was desirable that shareholders should know these things about subsidiaries and should be able to look at the reports. How are they to be able to look at the reports on a big group of companies with a number of subsidiaries? It was stated that they might have to look at the subsidiaries of the Shell group of companies, of which there are 485. This demonstrates that there is a gap in the Bill, and there is considerable doubt whether it would be logical to make the disclosure as provided in the Clause. It depends whether the information we are talking about appears in the group accounts. I should like to know whether it does. As my hon. Friend pointed out, a person could be employed only by the subsidiaries of a holding company and could earn £3,500 in each subsidiary, which would bring him over the limit. I suppose that it would be possible for him to be employed by 10 subsidiaries at £1,000 a year each, in which case the whole thing would be quite illogical. If we are to have the disclosure of information concerning persons employed at over £10,000 by a holding company it must be logical to include all persons employed by subsidiaries.(6) For the purposes of this section 'in the company's employment' shall be deemed, in the case of group accounts, to include 'in the employment of any subsidiary or subsidiaries.'
10.15 p.m.
I support my hon. Friend the Member for Abingdon (Mr. Neave). In many instances, accounts of the parent company do not go into great detail about the emoluments of the directors of subsidiaries. If it is desirable for the public to know—[Interruption]—
Order. It is difficult for an hon. Gentleman to address the House against a background of private debate.
I was wondering what was going on, Mr. Speaker. The mutterings surprised me.
Proper disclosure is essential, but many particularised accounts of subsidiaries are not shown in those of group companies, particularly the salaries of directors. A director of three or four subsidiaries could be drawing a total of £10,000 a year from them, although he need not be a director of the parent company, and his salary would therefore not have to be disclosed. Suppose that a company acquired another, which became a subsidiary, and the managing director was under a contract which had to be honoured by the group which acquired the company. The contract might be for a salary of £10,000 a year for five years. As soon as the company was acquired by another, the salary of £10,000 would not be disclosed, but if it remained independent, it would be. The right hon. Gentleman will agree that this is an anomaly which should be put right and I hope that he will therefore accept the Amendment.When we discussed this matter in Committee the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) mentioned a loophole which he said should be blocked in the interests of proper disclosure. I intervene now because I want to quote the hon. Member for Ormskirk (Sir D. Glover) before he speaks. A little while ago, he said that company law should not be absolutely perfect but should be reasonable. He said that 95 per cent. perfection would be acceptable if it were reasonable and practical, and this is what we are doing in this; case. There is an anomaly here, which we accept, but to do what is suggested would mean another 12 Amendments to the Bill. Frankly, we do not think that it is worth it.
Before the right hon. Gentleman sits down. We have already been through about 12 Amendments to bring a previous Clause into perspective. If it was possible there, why not in this case?
The issue is not merely that these are anomalies. If we tried to achieve 100 per cent. perfection with no loopholes, this legislation would be so complicated that no one would understand it. I doubt whether they will anyway, but we do our best. This type of anomaly is similar to that which arises from the Government's refusal to face the problem of defining a family company. The ceilings of turnover and directors' emoluments are direct incentives to anybody who does not want to disclose to set up bogus parallel companies.
This is something which we should discourage. Our legislation should be so framed that this is not an advantage. Instead, for the sake of saving 12 Amendments—and they would not have been drafted to a very high standard judging by the rest of the Bill—we go on with an anomaly which encourages what we should be discouraging.I regret that in Committee, speaking almost off the cuff, I gave an interpretation, which, on reflection, I realise was wrong. I gave the impression that if a subsidiary company employed somebody at over £10,000 a year, when it came to grouping the accounts all the £10,000 people in all the subsidiaries would have to be grouped in the group accounts. That was wrong, because all that has to be grouped in the accounts is the requirements of Schedule 8 to the principal Act. [Interruption.]
Order. We cannot have private debates.
I am sorry that the Secretary of State for Scotland was not present earlier, because we had an interesting debate on a matter of Scottish law when we could have done with his advice.
If an employee is not employed by the parent company and is employed only by subsidiaries, then, no matter what his total remuneration may be, it will not be disclosed in the holding company's accounts.It will be disclosed in the subsidiary's accounts.
Yes.
That is the point.
It is not the point, with respect.
If we are to have disclosure, it should be meaningful disclosure. This is not a trivial matter. In Committee, I called this a loophole. If it is left, the information provided by various companies could be very much less meaningful than it should be.Would it help if the Minister of State moved an Amendment to make it incumbent on companies to produce in the consolidated account the emoluments of directors in subsidiaries whose income from those companies went beyond a certain point?
The only way to do it is the way which we have suggested.
The whole purpose of group accounts is to treat all the companies contained in the group as though they were one company. All the information should be amalgamated so that, whatever curious set-ups there may be in the group, at the end of the day there is presented to the shareholders a consolidated picture. If the job is done properly, it does not matter whether there are 50 subsidiary companies, one subsidiary company or no subsidiary companies, the disclosure should amount to the same in the end. As the Bill is drafted, this information will not be given. If it is to have any meaning, this alteration should be made. We have the same problem over the question of directors. Some hon. Members argued that it might be possible to show subsidiary directors in the figures that must be disclosed. That is obviously wrong because they are, from the point of view of the group, just executives of the group. Only the holding, company directors should be shown as directors because, from the point of view of the group, they are in the management position of the group as a whole. In the same way, if we are dealing with group accounts, we should show any information as group information and not as a hotch-potch of partial information that could be misleading, in exactly the way as the Clause, as drafted, is misleading.I understood the Minister to cite me in support of his argument. I cannot accept that. Under this provision it would seem in order for me so to organise my business activities into a group of companies that I could ask somebody else to be the chairman of the main board while I could
Division No. 482.]
| AYES
| [10.30 p.m.
|
| Alison, Michael (Barkston Ash) | Crosthwaite-Eyre, Sir Oliver | Hall-Davis, A. G. F. |
| Astor, John | Currie, G. B. H. | Harris, Frederic (Croydon, N.W.) |
| Atkins, Humphrey (M't'n & M'd'n) | Dalkeith, Earl of | Harrison, Col. Sir Harwood (Eye) |
| Baker, W. H. K. | Dance, James | Hawkins, Paul |
| Bennett, Dr. Reginald (Gos. & Fhm) | Davidson , James (Aberdeenshire, W.) | Hill, J. E. B. |
| Bessell, Peter | Dean, Paid (Somerset, N.) | Holland, Philip |
| Brinton, Sir Tatton | Deedes, Rt. Hn. W. F. (Ashford) | Hunt, John |
| Brown, Sir Edward (Bath) | Dodds-Parker, Douglas | Irvine, Bryant Godman (Rye) |
| Bruce-Gardyne, J. | Emery, Peter | Kaberry, Sir Donald |
| Bryan, Paul | Errington, Sir Eric | King, Evelyn (Dorset, S.) |
| Buchanan-Smith, Alick(Angus,N&M) | Fortescue, Tim | Kirk, Peter |
| Buck, Antony (Colchester) | Foster, Sir John | Kitson, Timothy |
| Bullus, Sir Eric | Gibson-Watt, David | Knight, Mrs. Jill |
| Burden, F. A. | Gilmour, Sir John (Fife, E.) | Langford-Holt, Sir John |
| Cooke, Robert | Glover, Sir Douglas | Legge-Bourke, Sir Harry |
| Cooper-Key, Sir Neill | Gower, Raymond | Lewis, Kenneth (Rutland) |
| Cordle, John | Grant-Ferris, R. | Maclean, Sir Fitzroy |
| Corfield, F. V. | Greeham Cooke, R. | Maginnis, John E. |
| Costain, A. P. | Griffiths, Eldon (Bury St. Edmunds) | Maxwell-Hyslop, R. J. |
become a director of all the subsidiary companies, and my hefty remuneration need never appear in the balance sheet.
This state of affairs cannot make sense. I would be just a shareholder, but also the controlling activist of the group. Because I have so organised my affairs, having asked someone else to be the chairman of the company, my name does not appear on the board of the main company and I just draw my fat salary from the subsidiaries. This being so, the right hon. Gentleman cannot cite me in support of his case.
Does my hon. Friend realise that he could be given the sack by the board of the parent company?
Order. The hon. Gentleman must resist any further attempt to corrupt his hon. Friend.
Like Robespierre, I am incorruptible.
The hon. Member for Ormskirk (Sir D. Glover) is mistaken because if he employed himself in a number of subsidiary companies and if his salary was more than £10,000 a year, the relevant facts would have to be disclosed.
I could still draw £9,000 a year. My salary would depend on the size of the organisation. In any event, I have shown that one can organise one's affairs without necessarily being the chairman of the main board.
Question put, That those words be there inserted in the Bill:—
The House divided: Ayes 100. Noes 173.
| Maydon, Lt.-Cmdr. S. L. C. | Pym, Francis | van Straubenzee, W. R. |
| Mills, Peter (Torrington) | Ramsden, Rt. Hn. James | Walker, Peter (Worcester) |
| Montgomery, Fergus | Renton, Rt. Hn. Sir David | Ward, Dame Irene |
| More, Jasper | Ridley, Hn. Nicholas | Weatherill, Bernard |
| Munro-Lucas-Tooth, Sir Hugh | Rodgers, Sir John (Sevenoaks) | Webster, David |
| Nabarro, Sir Gerald | Rossi, Hugh (Hornsey) | Whitelaw, Rt. Hn. William |
| Neave, Airey | Royle, Anthony | Wills, Sir Gerald (Bridgwater) |
| Nicholls, Sir Harmar | Russell, Sir Ronald | Wilson, Geoffrey (Truro) |
| Noble, Rt. Hn. Michael | Shaw, Michael (Sc'b'gh & Whitby) | Worsley, Marcus |
| Nott, John | Smith, John | Wright, Esmond |
| Onslow, Cranley | Stainton, Keith | Younger, Hn. George |
| Osborne, Sir Cyril (Louth) | Steel, David (Roxburgh) | |
| Page, Graham (Crosby) | Taylor, Sir Charles (Eastbourne) | TELLERS FOR THE AYES: |
| Page, John (Harrow, W.) | Taylor, Frank (Moss Side) | Mr. Anthony Grant and |
| Peel, John | Temple, John M. | Mr. R. W. Elliott. |
| Powell, Rt. Hn. J. Enoch | Turton, Rt. Hn. R. H. | |
NOES
| ||
| Abse, Leo | Galpern, Sir Myer | Newens, Stan |
| Allaun, Frank (Salford, E.) | Garrett, W. E. | Noel-Baker, Rt. Hn. Philip(Derby, S.) |
| Alldritt, Walter | Gray, Dr. Hugh (Yarmouth) | Norwood, Christopher |
| Allen, Scholefield | Gregory, Arnold | Ogden, Eric |
| Anderson, Donald | Grey, Charles (Durham) | Orbach, Maurice |
| Archer, Peter | Griffiths, Will (Exchange) | Orme, Stanley |
| Armstrong, Ernest | Hamling, William | Oswald, Thomas |
| Atkins, Ronald (Preston, N.) | Harper, Joseph | Owen, Dr. David (Plymouth, S'tn) |
| Atkinson, Norman (Tottenham) | Harrison, Walter (Wakefield) | Owen, Will (Morpeth) |
| Barnett, Joel | Haseldine, Norman | Padley, Walter |
| Baxter, William | Heffer, Eric S. | Page, Derek (King's Lynn) |
| Beaney, Alan | Herbison, Rt. Hn. Margaret | Park, Trevor |
| Bence, Cyril | Hooley, Frank | Parkyn, Brian (Bedford) |
| Bennett, James (G'gow, Bridgeton) | Horner, John | Pearson, Arthur (Pontypridd) |
| Blackburn, F. | Howarth, Harry (Wellingborough) | Peart, Rt. Hn. Fred |
| Boardman, H. | Howie, W. | Pentland, Norman |
| Booth, Albert | Hoy, James | Perry, Ernest G. (Battersea, S.) |
| Boyden, James | Huckfield, L. | Perry, George H. (Nottingham, S.) |
| Braddock. Mrs. E. M. | Hughes, Emrys (Ayrshire, S.) | Price, Christopher (Perry Barr) |
| Bradley, Tom | Hughes, Roy (Newport) | Price, Thomas (Westhoughton) |
| Brooks, Edwin | Hynd, John | Price, William (Rugby) |
| Broughton, Dr A. D. D. | Irvine, A. J. (Edge Hill) | Probert, Arthur |
| Brown, R. W. (Shoreditch & F'bury) | Jackson, Peter M. (High Peak) | Robertson, John (Paisley) |
| Buchan, Norman | Jay, Rt. Hn. Douglas | Rose, Paul |
| Buchanan, Richard (G'gow, Sp'burn) | Jones, Dan (Burnley) | Ross, Rt. Hn. William |
| Cant, R, B. | Jones, T. Alec (Rhondda, West) | Rowlands, E. (Cardiff, N.) |
| Carmichael, Neil | Kelley, Richard | Sheldon, Robert |
| Coleman, Donald | Kerr, Mrs. Anne (R'ter & Chatham) | Short, Rt. Hn. Edward(N'c'tle-u-Tyne) |
| Conlan, Bernard | Short, Mrs. Renée(W'hampton,N.E.) | |
| Corbet, Mrs. Freda | Kerr, Dr. David (W'worth, Central) | Silkin, Rt. Hn. John (Deptford) |
| Craddock, George (Bradford, S.) | Kerr, Russell (Fettham) | Silverman, Julius (Aston) |
| Crosland, Rt. Hn. Anthony | Lawson, George | Slater, Joseph |
| Cullen, Mrs. Alice | Lestor, Miss Joan | Small, William |
| Darling, Rt. Hn. George | Lever, L. M. (Ardwick) | Spriggs, Leslie |
| Davidson, Arthur (Accrington) | Lewis, Ron (Carlisle) | Steele, Thomas (Dunbartonshire, W.) |
| Davies, Dr. Ernest (Stretford) | Lomas, Kenneth | Swingler, Stephen |
| Davies, Harold (Leek) | Loughlin, Charles | Thomas, George (Cardiff, W.) |
| Davies, S. O. (Merthyr) | Lyon, Alexander W. (York) | Tinn, James |
| Dell, Edmund | McBride, Neil | Tomney, Frank |
| Dempsey, James | McCann, John | Urwin, T. W. |
| Doig, Peter | MacColl, James | Wainwright, Edwin (Dearne Valley) |
| Dunnett, Jack | Mackie, John | Walden, Brian (All Saints) |
| Dunwoody, Dr, John (F'th & C'b'e) | Mackintosh, John P. | Walker, Harold (Doncaster) |
| Edwards, Rt. Hn. Ness (Caerphilly) | MacMillan, Malcolm (Western Isles) | Wallace, George |
| Edwards, Robert (Bilston) | McMillan, Tom (Glasgow, C.) | Watkins, Tudor (Brecon A Radnor) |
| Edwards, William (Merioneth) | McNamara, J. Kevin | Wellbeloved, James |
| Ellis, John | MacPherson, Malcolm | White, Mrs. Elrene |
| English, Michael | Mahon, Peter (Preston, S.) | Whittock, William |
| Ennals, David | Mallalleu,J.P.W.(Huddersfield,E.) | Williams, Alan (Swansea, W.) |
| Manuel, Archie | ||
| Ensor, David | Mapp, Charles | Williams, Clifford (Abertillery) |
| Evans, Albert (Islington, S.W.) | Marquand, David | Willis, George (Edinburgh, E.) |
| Maxwell, Robert | ||
| Faulds, Andrew | Mendelson, J. J. | Winterbottom, R. E. |
| Fernyhough, E. | Millan, Bruce | Woodburn, Rt. Hn. A. |
| Finch, Harold | Miller, Dr. M. S. | Woof, Robert |
| Fletcher, Raymond (Ilkeston) | Mitchell, R. C. (S'th'pton, Test) | |
| Foley, Maurice | Molloy, William | TELLERS FOR THE NOES: |
| Ford, Ben | Morris, Alfred (Wythenshawe) | Mt Charles R. Morris and |
| Forrester, John | Moyle, Roland | Mr. Ioan L. Evans. |
| Fraser, John (Norwood) | Murray, Albert | |
Clause 12—(Power Of Board Of Trade To Revoke, In Part Or In Whole, Exceptions From Schedule 8 To The Principal Act For Banking And Discount Companies)
I beg to move Amendment No. 28, in page 11, line 4, after 'made' to insert:
The purpose of the Amendment is to urge the Government to get a move on. We are now discussing the right of the banks and discount houses to enjoy exemption from certain provisions of the accounting procedures under the principal Act. When we discussed this in Committee, several of my hon. Friends suggested that the time had come to put an end to these exemptions. The Minister of State, in his usual condition of sweet reasonableness, expressed great sympathy with the proposition, but suggested that there was need for further consultation and consideration. He said:'within twelve months of the passage of this Act'.
The Jenkins Committee's majority recommendation was that, on balance, the case for continuation of the exemption was made out. But there was a strong Minority Report which suggested that the accounting exemption should be removed. Since we discussed these matters in Committee, we have had the very wide-ranging report of the Prices and Incomes Board on banking charges. I should be the last to suggest that the Prices and Incomes Board is on this matter or any other the ultimate repository of wisdom. It is only fair to say that, in this case, it employed a group of Dutch consultants. One wonders a little what the Dutch banking houses would think if they had a supposedly serious study of their charges and accounting procedures presented to them, under Government aegis, by a group of British consultants. They might treat it with some contempt. It is understandable that this particular effusion of the Jones Board has been treated in some quarters with a certain amount of contempt. Nevertheless, on the point we are here considering, the question of the desirability of the banks enjoying exemption from disclosure of their transfers to reserves and their other exemptions under the principal Act, there is a considerable weight of opinion in support of the view of the Prices and Incomes Board that such exemption should come to an end. The Minister of State said that there was a strong and, perhaps, growing case for the ending of the exemption, but he asked for more time for consultation, implying that the Government would be making their own proposals when they had completed their consultations in the not too distant future. The purpose of the Amendment is to put a guillotine over the Government to require them to bring forward their proposals, if they intend to do so, within 12 months. I hope that it will act as a spur in their flank to make them complete their consultations with the banks and discount houses as soon as possible and produce their own proposals."The real answer to all this discussion is that since the publication of the Jenkins Report there has been far more public controversy about the extent to which not only banking companies but all other companies should disclose information and if the Jenkins Committee were appointed now, with the same people, I question very much whether it would come down in the way it did in the majority report on this issue."—[OFFICIAL, REPORT, Standing Committee E, 21st March, 1967; c. 385.]
The Report of the Prices and Incomes Board, No. 34, made a number of foolish recommendations, but one of the good recommendations was that the banks should disclose their earnings. I suppose that that recommendation is too radical for the Government. Although they applauded the Report and members of the Government said how excellent it would be if the winds of competition could blow through the banking world, when they came to the crunch and had an opporunity of requiring the banks to disclose their earnings, they have done nothing. They have merely resorted to the old device of giving the Board of Trade discretion to decide whether a particular banking house should disclose or not.
I have heard no argument advanced—certainly, there were none in Mr. Aubrey Jones's Report—in favour of perpetuating the anomaly under which banking houses continue to be able to hide part of their earnings. When banking houses draw on their undisclosed reserves, everyone knows about it. When one of the clearing banks a few years ago lost a great deal of money on gilt-edged securities, it was evident to the well-informed that that clearing bank had drawn on its reserves. Likewise, it is argued that discount houses should not disclose their profits because they vary so widely according to the Bank Rate. 10.45 p.m. Shareholders are well aware that discount house profits vary widely with Bank Rate. It would be much more preferable if shareholders in banks and discount houses were shown the true position and were able to judge it, as any other shareholder can judge the performance of his company, when they disclose their profits at the end of the year. In my view, which is not shared by all my hon. Friends, it is undesirable that the Board of Trade should be given a discretion to go on deciding whether banks should take advantage of the Eighth Schedule to the Companies Act, 1948. I am disappointed that the Board of Trade has not said that on this occasion it will force banks to disclose their earnings. If the Government applaud Report No. 34 of the Prices and Incomes Board on bank charges, surely they should agree with one of its principal recommendations. I support my hon. Friend's Amendment as second best to the full disclosure of bank profits. It would set a time limit on the decision-making process of the Board of Trade. Although I would rather see the banks disclose altogether—this is a Bill about disclosure, so we have been told—my hon. Friend's Amendment is at least an improvement on the Bill as it stands.As the hon. Member for St. Ives (Mr. Nott) has said, there is not unanimity of opinion even on this side of the House concerning disclosure by banks. I assure both hon. Members who have spoken that we will complete our examination, consultations and discussions as quickly as possible and that the Regulations will be introduced.
The difficulty about the Amendment is that having decided, I think rightly, the degree of disclosure or the classes of banks which shall make disclosure and the form in which it will be required, we think it right that this should be done by regulation and not written into an Act of Parliament, this part of which will probably be unamended for a considerable time. By making these arrangements by Statutory Instrument, we are giving to the Board of Trade the flexibility which, I am convinced, is required. The hon. Member for South Angus (Mr. Bruce-Gardyne) said that if we accept the Amendment, which would mean that at the end of 12 months there has to be full disclosure, and the power of the Board of Trade to make regulations has gone, we would be saying that the Board of Trade should not have a continuing power to make arrangements for disclosure or make changes in disclosure. Circumstances may make it reasonable, some time after a year, to withdraw exemptions, for instance, which may be given or to make exemptions apply to a smaller number of banks. This flexibility is necessary. We agree with the principle of disclosure, but we must take into account that not only do some right hon. and hon. Members opposite feel that in some respects there should be a limitation to the disclosure by banks of their reserves, activities and the rest, but that that view is held strongly in certain other quarters also. The extent to which, in following the majority Report of the Jenkins Committee, we need to take these factors into consideration is a matter which we have had under discussion for some time. When the Bill is on the Statute Book, as it will be shortly, we will come forward with the Regulations about banks' disclosure.The right hon. Gentleman speaks of the conversations being concluded as rapidly as possible. Can he put a date to it?
Not in the sense of bringing forward the Regulations. We will bring them forward as quickly as possible. The discussions are almost completed, I think. The Board of Trade, as the hon. Member will appreciate, is not the only Government Department involved here, but the discussions are, I think, almost completed, and we will bring forward Regulations as quickly as possible.
Amendment negatived.
I beg to move, Amendment No. 29, in page 11, line 6, to leave out 'or'.
We are, I understand, taking with it my following Amendments: No. 30, in page 11, line 6, after 'companies' insert 'or any specified company'; No. 31, in page 11, line 9, leave out 'any circumstances whatsoever and' and insert 'the status of such companies'; No. 32, in page 11, line 10, leave out paragraph (b) and insert:No. 314, in page 11, line 10, leave out paragraph (b) and insert:(3) For the purpose of this section the status of a company shall be either that of a private company or public company: 'private company' shall have the meaning ascribed thereto by section 455(1) of the principal Act, and 'public company' means a company in the case of which there has, in respects the whole or any proportion of its share capital, been granted a quotation on a recognised stock exchange.
No. 33, in page 11, line 21, at end insert:(3) For the purpose of this section the status of a company shall be either that of a private company or public company; 'private company' shall have the meaning ascribed thereto by section 28(1) of the principal Act, and 'public company' means any company other than a private company.
Clause 12 embodies a principle which is about as repugnant to the whole basis of our constitutional and common law as it is possible to find, and I hope that hon. Gentlemen, before they chatter about it, will turn to subsection (2), which makes it clear that the Board of Trade has power to make Regulations and, if in difficulties in describing what the Board is attempting to define, can define a class of companies by reference to "any circumstances whatsoever"; and by paragraph (b) it can be judge and jury in its own case:(4) Notwithstanding the provisions of section 454 of the principal Act and the foregoing provisions of this section, any statutory instrument containing by virtue of subsection (2) of this section regulations with respect to any class of companies or any specified company shall be subject to special parliamentary procedure under the Statutory Orders (Special Procedure) Acts, 1945 and 1965 with the substitution of the words 'an inquiry' for the words 'a local inquiry' in paragraph 3 of the First Schedule of the Statutory Orders (Special Procedure) Act, 1945.
This is a principle which, in my view, is wholly unacceptable. Even if one were less rigid than I happen to be in these matters, the onus, I think, should be strongly on the Board of Trade to give a much better reason for incorporating this sort of principle in the Bill than the Board has done to date. The difficulty which has led the Board into this appalling bit of law, if that be what it is to be called, arises from the failure to see clearly at what the Board is directing the Clause, because the Clause is objectionable in two ways: in the first place, because the powers given to the Board are unacceptable for the reason I have indicated, but because also it does not carry out effectively what the Board of Trade wants to do. Let me take the second point first. The Board of Trade wants to have power to amend paragraph 23 of the Eighth Schedule to the principal Act. Paragraph 23, as my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has been saying, allows certain exemptions for banking or discount companies from the requirements of Part I of the Schedule, and Part I sets out certain matters specifically to be included in the accounts of the company. The point which has to be borne in mind is that that exemption arises where a particular company satisfies the Board of Trade that it ought to be treated for the purposes of the Schedule as a banking company, or as a discount company, or as a banking and discount company, as the case may be. It is important to stress the fact that the singular is used throughout. Of course I know that by the Interpretation Act the singular includes the plural, but in this case it is quite clear that one can only get exemption as a result of an individual application. Therefore, the situation is that the companies which are or which can be exempt are exempted one by one as a result of specific applications put in by them. One would have thought the corollary to this would have been that the Board of Trade, taking power in the Clause to remove this exemption by Regulations, would have taken power to do it in relation to an individual company, and this is what the Amendment sets out to do, to add to the power to unexempt—if that is the right word—the power to do so in relation to a particular company. I agree there is a difficulty that one is getting into a hybrid Statutory Instrument, getting a situation in which one may have to have a special Parliamentary procedure, but let us look at the alternative if we do not do something of this sort. We are going to be in the position where the Board of Trade brings forward Regulations defining a class, because they can only make Regulations under this Clause generally, or in relation to a class of company. So they take away the exemption completely and make Regulations for every single company, or they partially take away the exemption in relation to a class of company. Then they come to the final class by reference to "any circumstances whatsoever". It could well be that the Regulations would be in such a form that it would be almost impossible for the House to decide at what type of discount house or bank the Regulations were aimed. Of course, for the Board of Trade it would not matter because the Board could say, "Oh, we mean this to mean you; you are in, no matter how the Regulations are worded". This seems to us to be a thoroughly unsatisfactory state of affairs and we accept, realising the Board of Trade's difficulty in regard to definition, the form of words which will add the power to legislate, or to bring in Regulations, in relation to a particular, named, company because then we know exactly what the Board of Trade is aiming at. The Board has no difficulty, and everybody knows what has happened. We admit that there may be the problem of the special Parliamentary procedure, but this is better than that we should introduce something whereby the Board of Trade makes these Regulations and then becomes its own judge as to what is meant. This power to define a class should be altered so as to enable the Board of Trade to define the status of companies. I have put in private or public companies, but in the principal Act, there are listed the variety of companies—the variety of definitions—one can take. If this approach appeals to the Board of Trade, which I regret to think it does not seem to have done, it could alter the definition of "status". Even if the whole approach which we have put down cannot be accepted, I hope that the Board of Trade would consider regulating by reference to an individual company because this is the sensible way of "unexempting" a company. It gets over the problem of the Board of Trade ever being faced with the awful drafting in the Bill likely to be produced if it tries to define a class of companies by any reference whatever if, in fact, it wants to make Regulations for a number of companies. It should not try to draw an artificial class around us and one which has no clear relation to banks and discount houses or to anything else. I hope that the Minister of State will come forward in his usually sympathetic mood but in his less than usually determined mood to do something about this Clause because, at present, it is something which we should not accept for the constitutional principles of this country for one moment at all. If we make Regulations and then decide who is within them, and say that this is final, then it will be a most awful admission of defeat."if a question arises whether a company does or does not fall within a class specified in regulations so made, it shall be decided by the Board of Trade whose decision shall be final."
11.0 p.m.
My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) was concerned that there might be some indecent exposure of blushing maidens, if I can put it that way, as a result of the drafting of the Clause. To change the metaphor, I am slightly concerned that the convoy may have to travel at the speed of the slowest ship.
We discussed this matter briefly in Committee. As the Clause is drafted, there seems to be a danger that the withdrawal of exemptions in the case of public companies, which I believe to be desirable for banking and discount houses as soon as possible, might be held up because of a very strong case being made by one of them. The Minister of State's answer on this point in Committee left some doubt. He said:"… if the Board of Trade issued regulations to say that a class—whatever class out of the list that I gave—should have certain privileges which they now enjoy withdrawn, then the withdrawing of the privileges would apply to all the companies in that class. Individual companies might say, 'This is going to be harmful to us.' We would look at that case at the time that the regulations were being drawn up and being mooted around.
The Minister of State may be right about that, but there seems to be a danger that the process for publicly quoted banking and discount houses, where the exemption should be withdrawn and withdrawn rapidly, might be held up because of an individual case within the class. I therefore strongly support the Amendment, although from possibly a slightly different standpoint from my hon. Friend's. The arguments which my hon. Friend advanced were totally valid, but, in a sense, both sides of the case are equally valid and the Amendment can be supported from both. The case seems to be strengthened by Amendment No. 32 which suggests that a distinction should be drawn between quoted and unquoted companies, and by now the Minister of State knows that that is where I believe that the distinction should be drawn in virtually every case. There is a case for supporting the Amendment from both my hon. Friend's viewpoint and from the other side of the fence. Both lead in the same direction and, I hope, to the same conclusion.I ought not to say this, because of cases that I know, but I question at the moment whether such a case for an individual company within a class could be made out in the way that the hon. Member suggests."—[OFFICIAL REPORT, Standing Committee E, 21st March, 1967; c. 382.]
I do not know in which direction the hon. Member for South Angus (Mr. Bruce-Gardyne) wants to travel, because the proposals of his hon. Friend the Member for Gloucestershire, South (Mr. Corfield) would allow every bank in the country to take action against the provisions for disclosure, and no bank would ever be called upon to disclose anything. The two hon. Gentlemen ought to get together and find out in which direction they are travelling.
But the right hon. Gentleman is still left with power to make Regulations with respect to banks and discount houses generally.
This is where the confusion arises. We are not proposing to make Orders in respect of any individual company. We shall impose the requirements for disclosure on the classes of banks. The banks have to be classified and there are not so many banks that we shall have any great difficulty about classifying them. We want to make sure that where there is uncertainty about whether an individual bank falls within one class or another, there is power in the regulations to say that it comes within a certain category, a certain class of banks. I am sure that the procedure we have laid down to proceed by Statutory Instrument will ensure that no bank will be harshly treated in the ways the hon. Member for Gloucestershire, South thought possible.
I know that the hon. Gentleman will not be upset if I say that there are drafting problems with the Amendments. There would be a restriction that a class of companies"Status" concerns whether the companies are private or quoted. It is necessary to find out what "may" means. If it means "must", we cannot have the restriction written into the Bill to apply to only two classes of banks. As the hon. Member for Gloucestershire, South said, the question of status must cover a much wider area, and we must pick things up from the definition Clauses and insert them here. If "may" means "may", there is little point in mentioning only two ways in which the class may be defined. If the matter is left wide open, "may" is a very acceptable way of saying that we shall proceed in a commonsense and reasonable way to come to a definition of class of banks, and the definitions will appear in any Orders we may produce. Hon. Members opposite are making too much of this. All that we suggest is that in the Regulations the Board of Trade shall have power to define the classes of banks and indicate the kind of disclosure that will apply to each class. That is very reasonable, and I cannot understand any objection."… may be framed by reference to the status of such companies, …"
I am not sure that the Minister has grasped the point. He says that in defining the class there will be great care to see that there is no hardship to an individual company, but if the Board of Trade's concern is to ensure that, surely the whole class will be held up? If, alternatively, the Board of Trade is determined to define the class and get it past the hurdle of exemption, there might be hardship to one company. This is where my hon. Friend and I are on the same ground.
I do not agree. I do not think that there will be any trouble. But if it is possibly right that hardship could be done on the fringe of classification, so to speak, the hon. Gentleman must not proceed on the basis of the Amendment. He must produce something better.
We can see clearly from this side of the House what the right hon. Gentleman wants to do. He has not appreciated that he has taken excessive powers to do it, and this is what we are trying to prevent.
Reading through the Clause, one can see that the whole point in extending the powers in subsection (1) is that the Board of Trade shall have the right to interpret its own enactments. The objectionable part of the Clause is that it gives power to make Statutory Instruments, Regulations and Orders relating to a class of bank, and then say, "You, chum, are in this class" or, "You are not"—to interpret retrospectively its own legislation excludes the rule of law and the jurisdiction of the courts. Not even the Emergency Regulations in war time did this—not even the Rhodesia Orders and not even the Prices and Incomes Orders, which were had enough. I have an office in Victoria Street, but I do not subscribe to the maxim that the gentleman in Victoria Street knows best.
Division No. 483.]
| AYES
| [11.10 p.m.
|
| Abse, Leo | Craddock, George (Bradford, S.) | Garrett, W. E. |
| Allaun, Frank (Salford, E.) | Cullen, Mrs. Alice | Gray, Dr. Hugh (Yarmouth) |
| Alldritt, Walter | Darling, Rt. Hn. George | Gregory, Arnold |
| Allen, Scholefield | Davidson, Arthur (Accrington) | Griffiths, Will (Exchange) |
| Anderson, Donald | Davidson, James(Aberdeenshire, W.) | Harrison, Walter (Wakefield) |
| Archer, Peter | Davies, Dr. Ernest (Stretford) | Haseldine, Norman |
| Armstrong, Ernest | Davies, Harold (Leek) | Heffer, Eric S. |
| Atkins, Ronald (Preston, N.) | Davies, S. O. (Merthyr) | Herbison, Rt. Hn. Margaret |
| Atkinson, Norman (Tottenham) | Dell, Edmund | Hooley, Frank |
| Barnett, Joel | Dempsey, James | Horner, John |
| Baxter, William | Doig, Peter | Howarth, Harry (Wellingborough) |
| Beaney, Alan | Dunnett, Jack | Howie, W. |
| Bence, Cyril | Dunwoody, Dr. John (F'th & C'b'e) | Hoy, James |
| Bennett, James (G'gow, Bridgeton) | Edwards, Robert (Bileton) | Huckfield, L. |
| Bessell, Peter | Edwards, William (Merioneth) | Hughes, Emrys (Ayrshire, S.) |
| Blackburn, F. | Ellis, John | Hughes, Roy (Newport) |
| Boardman, H. | English, Michael | Hynd, John |
| Booth, Albert | Ennals, David | Irvine, A. J. (Edge Hill) |
| Boyden, James | Ensor, David | Jackson, Peter M. (High Peak) |
| Bradley, Tom | Evans, Ioan L. (Birm'h'm, Yardley) | Jay, Rt. Hn. Douglas |
| Brooks, Edwin | Faulds, Andrew | Jones, Dan (Burnley) |
| Brown, R. W. (Shoreditch & F'bury) | Fernyhough, E. | Jones, T. Alec (Rhondda, West) |
| Buchan, Norman | Finch, Harold | Kerr, Mrs. Anne (R'ter & Chatham) |
| Buchanan, Richard (G'gow, Sp'burn) | Fletcher, Raymond (Ilkeston) | Kerr, Dr. David (W'worth, Central) |
| Cant, R. B. | Foley, Maurice | Kerr, Russell (Feltham) |
| Carmichael, Neil | Ford, Ben | Lawson, George |
| Coleman, Donald | Forrester, John | Lestor, Miss Joan |
| Conlan, Bernard | Fraser, John (Norwood) | Lever, L. M. (Ardwick) |
| Corbet, Mrs. Freda | Galpern, Sir Myer | Lewis, Ron (Carlisle) |
This cannot stand. The amending Regulations should be general or between private and public company or applied to an individual company, and then everybody would know what they are.
indicated dissent.
The right hon. Gentleman shakes his head, but he would. If the Order is general, that is all right. If it refers to a company by its status, that is all right—a distinction between private and public company. If it refers to an individual company, that individual company is specified in the Order and there can be no interpretation by the Board of Trade as to what is meant. In the last Amendment of the group we are discussing, the individual company would have the right to make proper representations by petition or public inquiry.
As it stands, this is the most arrogant Clause in the Bill. It is an attack on the rule of law, and it is a pity that the Law Officers are not present to advise the right hon. Gentleman. It is arrogance to no purpose. Our Amendments save the President of the Board of Trade and the Minister of State from their own conceit in trying to usurp the functions of the court. I hope that hon. Members will support us in the Lobby.Question put, That "or" stand part of the Bill:—
The House divided: Ayes 167, Noes 93.
| Lomas, Kenneth | Noel-Baker, Rt. Hn. Philip(Derby, S.) | Silverman, Julius (Aston) |
| Loughlin, Charles | Norwood, Christopher | Slater, Joseph |
| Lyon, Alexander W. (York) | Ogden, Eric | Small, William |
| McBride, Neil | Orbach, Maurice | Spriggs, Leslie |
| McCann, John | Orme, Stanley | Steel, David (Roxburgh) |
| MacColl, James | Oswald, Thomas | Swingler, Stephen |
| Mackie, John | Owen, Dr. David (Plymouth, S'tn) | Thomas, George (Cardiff, W.) |
| Mackintosh, John P. | Owen, Will (Morpeth) | Tinn, James |
| MacMillan, Malcolm (Western Isles) | Padley, Walter | Tomney, Frank |
| McMillan, Tom (Glasgow, C.) | Page, Derek (King's Lynn) | Urwin, T. W. |
| McNamara, J. Kevin | Paget, R. T. | Wainwright, Edwin (Dearne Valley) |
| MacPherson, Malcolm | Park, Trevor | Wainwright, Richard (Colne Valley) |
| Mahon, Peter (Preston, S.) | Parkyn, Brian (Bedford) | Walden, Brian (AH Saints) |
| Mallalieu, J.P.W.(Huddersfield, E.) | Pavitt, Laurence | Walker, Harold (Doncaster) |
| Manuel, Archie | Peart, Rt. Hn. Fred | Wallace, George |
| Mapp, Charles | Pentland, Norman | Watkins, Tudor (Brecon & Radnor) |
| Marquand, David | Perry, Ernest G. (Battersea, S.) | White, Mrs. Elrene |
| Mendelson, J. J. | Perry, George H. (Nottingham, S.) | Whitlock, William |
| Millan, Bruce | Price, Christopher (Perry Barr) | Williams, Alan (Swansea, W.) |
| Miller, Dr. M. S. | Price, William (Rugby) | Williams, Clifford (Abertillery) |
| Mitchell, R. C. (S'th'pton, Test) | Robertson, John (Paisley) | Willis, George (Edinburgh, E.) |
| Molloy, William | Rose, Paul | Winstanley, Dr. M. P. |
| Morris, Alfred (Wythenshawe) | Ross, Rt. Hn. William | Winterbottom, R. E. |
| Morris, Charles R. (Openshaw) | Rowlands, E. (Cardiff, N.) | Woof, Robert |
| Moyle, Roland | Sheldon, Robert | |
| Murray, Albert | Short, Rt. Hn. Edward (N'c'tle-u-Tyne) | TELLERS FOR THE AYES: |
| Newens, Stan | Short, Mrs. Renée(W'hampton,N.E.) | Mr. Joseph Harper and |
| Noel-Baker, Francis (Swindon) | Silkin, Rt. Hn. John (Deptford) | Mr. Charles Grey. |
NOES
| ||
| Alison, Michael (Barkston Ash) | Gower, Raymond | Page, Graham (Crosby) |
| Astor, John | Grant-Ferris, R. | Page, John (Harrow, W.) |
| Atkins, Humphrey (M't'n & M'd'n) | Gresham Cooke, R. | Peel, John |
| Baker, W. H. K. | Griffiths, Eldon (Bury St. Edmunds) | Pounder, Rafton |
| Bennett, Sir Frederic (Torquay) | Hall-Davis, A. G. F. | Powell, Rt. Hn. J. Enoch |
| Bennett, Dr. Reginald (Gos. & Fhm) | Harris, Frederic (Croydon, N.W.) | Pym, Francis |
| Brinton, Sir Tatton | Harrison, Col. Sir Harwood (Eye) | Renton, Rt. Hn. Sir David |
| Brown, Sir Edward (Bath) | Hawkins, Paul | Rodgers, Sir John (Sevenoaks) |
| Bruce-Gardyne, J. | Hill, J. E. B. | Rossi, Hugh (Hornsey) |
| Bryan, Paul | Holland, Philip | Royle, Anthony |
| Buchanan-Smith, Alick(Angus, N&M) | Hunt, John | Russell, Sir Ronald |
| Buck, Antony (Colchester) | Kaberry, Sir Donald | Shaw, Michael (Sc'b'gh & Whitby) |
| Cooke, Robert | King, Evelyn (Dorset, S.) | Smith, John |
| Cooper-Key, Sir Neill | Kirk, Peter | Stainton, Keith |
| Cordle, John | Kitson, Timothy | Taylor, Sir Charles (Eastbourne) |
| Corfield, F. V. | Knight, Mrs. Jill | Taylor, Frank (Moss Side) |
| Costain, A. P. | Langford-Holt, Sir John | Temple, John M. |
| Crosthwaite-Eyre, Sir Oliver | Legge-Bourke, Sir Harry | Turton, Rt. Hn. R. H. |
| Currie, G. B. H. | Lewis, Kenneth (Rutland) | van Straubenzee, W. R. |
| Dalkeith, Earl of | Maclean, Sir Fitzroy | Ward, Dame Irene |
| Dance, James | Maginnis, John E. | Weatherill, Bernard |
| Dean, Paul (Somerset, N.) | Maxwell-Hyslop, R. J. | Webster, David |
| Deedes, Rt. Hn. W. F. (Ashford) | Maydon, Lt.-Cmdr. S. L. C. | Whitelaw, Rt. Hn. William |
| Dodds-Parker, Douglas | Mills, Peter (Torrington) | Wilson, Geoffrey (Truro) |
| Emery, Peter | Mitchell, David (Basingstoke) | Worsley, Marcus |
| Errington, Sir Eric | Montgomery, Fergus | Wright, Esmond |
| Eyre, Reginald | More, Jasper | Younger, Hn. George |
| Fortescue, Tim | Munro-Lucas-Tooth, Sir Hugh | |
| Foster, Sir John | Nabarro, Sir Gerald | TELLERS FOR THE NOES: |
| Gibson-Watt, David | Neave, Airey | Mr. R. W. Elliott and |
| Giles, Rear-Adm. Morgan | Noble, Rt. Hn. Michael | Mr. Anthony Grant. |
| Gilmour, Sir John (Fife, E.) | Nott, John | |
| Glover, Sir Douglas | Onslow, Cranley | |
Clause 13—(Qualification For Appointment As Auditor)
I beg to move, Amendment No. 161, in page 12, line 6, to leave out 'section 161(2)(b)' and to insert:
'subsection (2)(b) or (3) of section 161'.
With this Amendment we can also discuss Amendments Nos. 162, 163, 164, 166, 178, 179, 222, 223 and 224.
The Clause as drafted would achieve the purpose which is clearly expressed in the Clause when the company is not a member of a group of companies. We are dealing with auditors of what were private companies, and so long as the auditor is a director of a company, in certain circumstances he could carry on with the auditing. This is all right provided the company he is working for is not a member of a group of companies.
When the company is a member of a group then we have discovered that we get into a number of difficulties. I am sure that the hon. Gentleman the Member for Scarborough and Whitby (Mr. Michael Shaw) is well aware of that. We would, in certain circumstances, disqualify accountants altogether, merely because the company that one may be working for happens to be a member of a group of companies. I am sure that the hon. Member for Scarborough and Whitby would not wish me to explain all the combinations of different groups of companies that would upset the auditing arrangements we have in mind—I have a list of them here, all kinds of hypothetical groupings. What we are doing is making sure we do not put an unnecessary embargo upon the continuation of the auditing arrangements that would otherwise be provided for in this Clause, if the company concerned was not a member of a group of companies.I entirely agree with everything the right hon. Gentleman has said, and to show my entire approbation I will merely thank him for spotting this anomaly. It would have been awkward had it not been spotted in time.
I welcome the Amendments to Clause 13, which expand and amplify its meaning. Rising to speak at this time I feel rather like a Trappist monk coming out of a close order and breaking his vows, but, after all, this House is, I suppose, a monastic institution in some respects.
I do not propose to detain the House very long. I have not submitted any Amendments on this point. The hon. Member for City of Chester (Mr. Temple) was fortunate enough to secure some Amendments by the Government. It seems almost as though one's victory is in relation to the length of time one takes in Committee, which perhaps is a lesson to be learned for a future date. The purpose of the Clause, as amended, taken in conjunction with Clause 2, is that it could cause some accountants who are not members of organised bodies to be excluded from the practice of accountancy, although one recognises that certain safeguards, at least of a temporary nature, have been put into the Bill. There is a provision for extending individual authorisation of accountants in the Clause. I must stress again the point that this will extend quite considerably the number of accountants practising who are not subject to any disciplinary control or required to act under professional ethics or etiquette. I hope that, with the measures that are being taken at the moment, my right hon. Friend will act as quickly as possible to amend this state of affairs. We have heard many references in Committee and on Report to the dearth of accountants. If my right hon. Friend will hasten his actions concerning authorisation, or recognition by the Board of Trade of certain of the non-recognised bodies, I am hopeful that this will help out in all departments of commerce and industry. I have two specific questions to put to him. First, in relation to non-recognised bodies of accountants, in Committee we mentioned the positon of students now, as it were, in the pipeline. My right hon. Friend told the Committee:Is he bearing this in mind? I hope that some measures will be taken to help these people along. Secondly, with regard to Clause 13(1), one of the conditions of the issue of an authorisation is that the person so applying must be the auditor of an exempt private company at 3rd November, 1966. If the Clause is enacted in its present form, what is the position of a partner of a firm of practising accountants where the firm is the auditor of an exempt private company as defined under the principal Act? Is it to be accepted that, where the firm is the auditor, partners who are not members of a body of accountants recognised for the time being under Section 161 should be entitled to receive an authorisation? It may be that my right hon. Friend is not in a position to give me an answer tonight, but no doubt he will enlighten me in due course. I welcome the Amendment."However, I should like to say that in the case of students there is a problem which we recognise."—[OFFICIAL REPORT, Standing Committee E, 21st March, 1967; c. 415.]
Amendment agreed to.
Further Amendments made: No. 162, in page 12, line 10, leave out 'immediately before his appointment' and insert', on that day,'.
No. 163, in page 12, line 11, leave out 'and'.
No. 164, in page 12, line 12, at end insert:
'at the time of his appointment and, if this Act had not passed, the said subsection (3) would not operate to disqualify him for appointment'.—[Mr. Darling.]
Clause 15—(Meaning Of "The Direc- Tors' Report" For Purposes Of Sections 16, 17 And 19 To 24)
I beg to move Amendment No. 165, in page 14, line 31, to leave out 'sections 16, 17 and 19 to 24 of this Act' and to insert:
This and consequential Amendments are made necessary by the fact that Clause 18, which provides for information about the number of employees and their wages to be disclosed, was added to the Bill in Committee after the Clauses, now numbered 15 to 17 and 19 to 24, concerned with the directors' report, had been considered. Amendment No. 165 makes the meaning of "directors' report" apply to Clause 18 as it does to the other Clauses. In effect, we have already taken the substantive decision to add information about the number of employees and their wages to the report, and this Amendment is consequential on that.'the nine next following sections'.
Amendment agreed to.
Clause 16—(Additional Matters Of General Nature To Be Dealt With In Directors' Report)
Amendment made: No. 166, in page 16, line 38, leave out 'except section 18'.—[ Mr. Jay.]
11.30 p.m.
I beg to move Amendment No. 167, in page 17, line 6, to leave out from 'body' to 'to' in line 7 and to insert:
The Amendment relates to a slightly different point. Its purpose is to ensure that an interest in shares or debentures of a spouse or child which, by Clause 31, is treated as an interest of a director for the purpose of Clause 27 is so treated for the purpose of this requirement to give information about directors' share interests in the directors' report. In effect, this also is consequential on the basic decision we took that the interests of spouses and children should also be included.(4) An interest in shares or debentures which, under the provisions of this Part of this Act referred to in paragraph (e) of subsection (1) above, falls to be treated as being the interest of a director shall be so treated for the purposes of that paragraph, and the references in that paragraph.
I agree that the Amendment is largely consequential. An interesting point here is that it is the shareholdings at the beginning of the year and at the end of the year which have to be disclosed, although it is more than conceivable that in certain cases there will be a considerable movement in shares during the year which is of material interest to those who are looking for these things.
Amendment agreed to.
Clause 17—(Directors' Report To State, Where Business Of Certain Different Classes Carried On, Attribution Of Turnover To, And Profitability (Or Otherwise) Of, Business Of Each Class)
Amendments made: No. 168, in page 17, line 11, after 'company (', insert:
'being one subject to the requirements of paragraph 13A of Schedule 8 to the principal Act but'.
No. 169, in line 16, leave out from first 'of' to 'that' in line 17 and insert:
'sub-paragraph (2) of that paragraph'—[Mr. Jay.]
Clause 18—(Directors' Report To State Average Number, By The Week, Of Employees And The Amount, By The Year, Of Their Wages)
I beg to move Amendment No. 34, in page 18, line 13, to leave out Clause 18.
With this Amendment the House may also discuss Amendment No. 35, in page 18, line 16, after 'employed', insert 'over 21 hours per week'.
Amendment No. 36, in page 19, line 5, leave out from 'not)' to end of line 6.
Amendment No. 37, in page 19, line 6, at end insert:
'but shall exclude remuneration paid in respect of overtime'.
Amendment No. 38, in page 19, line 9, leave cut '100' and insert '200'.
Amendment No. 39, in page 19, line 9, leave out '100' and insert '500'.
Amendment No. 40, in page 19, line 9, leave out '100' and insert '1,000'.
Amendment No. 326, in page 18, line 17, after 'year', add:
'and persons shall not include sub-contractors or persons paid by sub-contractors'.
And Amendment No. 313, in page 19, line 16, at end insert:
'and persons shall mean employees working over 21 hours per week'.
The Clause has provoked a great deal of critical comment in various quarters. It was suddenly slung into the Bill after discussions took place last September at the National Conference on Productivity. It calls for information about wages and the average number of persons employed by companies to be included in the directors' report. Such information has nothing to do with company law. This type of information is kept by companies in their manpower records, but these records vary from company to company. Companies will be put to enormous trouble to obtain the information required. The extraordinarily complex subsection (3) will have to be dealt with by company secretaries and others and will add to the manpower troubles they already experience on the clerical side.
It is worth reading the subsection, because there are one or two points I wish to raise on it. It states:I have read it as well as I can, but it is completely ridiculous to say that this type of information should be included in a Bill concerning the disclosure of certain important items by companies. It is not a matter of company law. We want to know, first, why the Minister of State told us in Committee that agreement had been reached and that it was strongly supported, after the productivity conference in September, by the C.B.I. and the T.U.C. Perhaps the T.U.C. supported it, but the Minister is under a delusion in thinking that the C.B.I. at that time supported it. It had certain discussions about inter-company comparisons, but it did not want this provision, as it appears in the Bill. I want to make this clear because it has given this information to several of my hon. Friends. The C.B.I. does not think it right that this provision should be included in the Bill. At this productivity conference, inter-company comparisons were among the subjects discussed, as were comparison techniques and the use of manpower, but was this subject discussed in connection with the Bill? It is not right to say that one party agreed to it in that sense because the Minister of State, on 13th June, said that this matter had been delayed for inclusion in the Bill in order to obtain general agreement. Has general agreement been obtained on this matter? I do not think so. It is a matter about which there should have been some agreement and full consultation, because it is of importance to every company in the country and involves a great deal of detailed work. My information is that the C.B.I. was not among those agreeing or among those whose agreement was sought. Will the right hon. Gentleman tell us what the position is? The Clause has been drawn in a way which may not provide the results which the Government wish to achieve. It is very likely that specially prepared manufacturing statistics will have to be made by companies, because their systems of keeping manufacturing records are not always done in the same way. In general, the provision involves a great deal of unnecessary work. It is very complex. It refers to people under contracts of service and on weekly rates, but now that a great many companies are going over to payment by cheque, on a monthly basis, what happens? This is an example of the sort of thing that is put into the Bill for reasons which we have not been given. Is it because the intention is that information should be disclosed enabling the Government to make comparisons between firms? What connection has this with the incomes policy? We are completely in the dark as to the purpose of the Clause. It will require a full explanation before industry is convinced that it should be burdened with this additional set of figures. There are many statistics which one supposes can be obtained from the Inland Revenue and the Ministry of Labour. Why is this burden on firms necessary? If the Government want statistics like this, would not a survey be better than averaging complicated details about quotients? Other Amendments seek to lighten the loan with regard to the numbers of employees, but surely this should apply only to full-time workers. If overtime and non-cash benefits were included, the job would be enormous. I am a director of a company which employs several thousand people, and I discussed what this would involve. The right hon. Gentleman must not underestimate the burden which will be imposed by a Bill which is supposed to reform the law regulating disclosure to shareholders. If companies have to disclose all these items and carry out all these requirements, they will have no time for management and productivity. It will add greatly to the cost of manpower, particularly clerical manpower.(3) The number to be stated under subsection (1)(a) above shall be the quotient derived by dividing, by the number of weeks in the financial year, the number derived by ascertaining, in relation to each of those weeks, the number of persons who, under contracts of service, were employed in the week (whether throughout it or not) by the company and adding up the numbers ascertained and the number to be stated under subsection (2)(a) above shall be the quotient derived by dividing, by the number of weeks in the financial year, the number derived by ascertaining, in relation to each of those weeks, the number of persons who, under contracts of service, were employed between them in the week (whether throughout it or not) by the company and its subsidiaries.
I support my hon. Friend the Member for Abingdon (Mr. Neave) and agree that the Clause will involve a great deal of work for companies—far more than the Government appreciate. Has the right hon. Gentleman consulted companies about the number of man hours and the type of administration which will be involved? This Clause will cause more work than any other in the Bill. Few companies have completely centralised wage payments. We have heard much about payrolls handled by computers, but it will be some years before this is general, particularly when the value of benefits in kind must be taken into account.
Therefore, the Clause is justified only if the resulting information is really useful. The Minister of State commended the Clause as having emerged from the Lancaster House National Conference on Productivity in September last year, and it is strange, therefore, that it was slipped into the Bill fairly late in Committee. Perhaps there was a high-level discussion among Ministers at which someone asked whether anything had emerged from the conference. There was then one of those ghastly silences which sometimes occur in the face of such indiscreet questions and the right hon. Gentleman was charged with giving some evidence of the value of the conference—11.45 p.m.
That is refuted by the fact that I referred to it clearly on Second Reading.
rose—
Order. It is not the practice to have two interventions at the same time. Mr. Hall-Davis.
If what the right hon. Gentleman said is the case, obviously he found it harder to translate it into useful legislation than he had expected.
The right hon. Gentleman referred to a comment in The Times Business News of 13th June. I do not think that that comment showed the penetrating and well-documented approach that many of the articles in that publication have shown recently. The reason that The Times Business News over-estimated the value of the provision is that they thought that companies would have to give details of the total work force. The weakness of the provision, in fact, is that those are the very details which will be lacking. The Minister has given us his latest thoughts—I was about to say "second thoughts", but in view of his intervention I will say "latest thoughts"—on the Clause, and I hope that he will have further thoughts and leave it out of the Bill. I hope that, despite the views of a productivity conference and the comments in the Press, we are still capable in the House of forming our own assessment of the value of legislation, and in this case it was strongly felt on both sides of the Committee that the value was very little. It is practically worthless as a source of useful information and it will be positively harmful in its effect on industrial efficiency. I am amazed that the Government have not paid more attention to the fact that it will be damaging to their incomes policy. The Minister of State said in Committee that the origin of the Clause does not lie in the incomes policy, and I was not surprised that he said so, because one certain effect of the Clause will be to increase the upward spiral of wages. The result of the delving for information and the tedious collection by head office accounts departments of the information required will be to serve up to the public this information agglomerated into two figures—the number of workers and the total remuneration paid by the company or group in the year. Those who are not concerned with the finer points of statistical analysis—which means the majority of employees in the company at all levels—will ask themselves only one question as a result of this information, "Is there a firm in my industry where the average pay is higher than in my firm?" If they find that there is such a firm, they will say, "Let us press for a pay increase". It will be as simple as that. I regard the Clause as a spanner in the works of the Government's voluntary prices and incomes policy and an obstacle to its success which the Government themselves have gone out of their way to erect. What is the value of the Clause to those genuinely seeking information? I am sure that the degree of consolidation and aggregation involved in the presentation of the figures is so great that any useful information will be submerged in a mass of unrelated figures. That is all the more ironical in a Bill which in Clause 6 seeks to secure a break down in the presentation of directors' remuneration, in Clause 8 seeks to secure a break-down in employees' remuneration, certainly of the more highly paid employees, and in Clause 17 specifically requires the separation of information in respect of turnover and profitability for companies where different classes of business are carried on. I will take as an illustration the sort of company with which I have some direct personal experience. This type of company carries out manufacturing, wholesaling and retailing activities. About a third of its total employees are engaged in retailing, many of whom work on a part-time basis. What is the value of aggregated figures for employees and re- muneration which do not indicate how many are part time and what proportion of the remuneration relates to part-time workers? There is another damaging weakness in the manner in which the information is to be presented and we should be failing in our duty to examine the Bill if it was not mentioned. There will be no indication of the amount of remuneration which has been paid in respect of overtime. Unless that is disclosed a company whose employees work long hours regularly to supplement their earnings may appear to the people examining the figures in as favourable a light as a company whose employees achieve comparable earnings in a standard week aided either by superior technology, heavier capital investment, or more efficient management techniques. I call attention to two comments in Report No. 36 of the National Board for Prices and Incomes on Productivity Agreements. On page 3, paragraph 10, referring to the productivity agreements that it was charged with investigating, the Board says:I emphasise the phrase,"On reviewing their operations most of the undertakings signatory to the agreements referred to us or to similar agreements came to the conclusion that they were using overtime not as a means of dealing with emergencies but as a regular arrangement; and as much to provide an acceptable pay-packet as to meet the requirements of the job. This situation, they felt, should be changed, primarily because this acceptance of overtime implied a loss of control by management over the pace at which the work was undertaken."
On page 66, referring to a particular productivity agreement, but which I believe has very general application, it says:"… a loss of control by management …"
Acceptance by management and employees of regular overtime as a means of providing acceptable take-home pay is directly contrary to the requirements of industrial efficiency and to the employees' own interests. Yet the Clause almost goes out of its way to sustain such attitudes rather than seek to encourage their abandonment. For these reasons, I believe that the Clause will cause much work and provide little information of value. Finally, to be helpful to the President of the Board of Trade, I have asked myself, if the Government were to agree to delete the Clause, is there a means open to them to obtain the kind of information which would be useful and which they say, in my view wrongly, the Clause will serve up? My hon. Friend the Member for Gloucestershire, South (Mr. Corfield), in one of his many apt comments on the Clause, said:"Earnings therefore depended heavily on regular overtime, which both management and workers accepted at least in part as a means of adjusting take-home pay to locally acceptable levels."
The President of the Board of Trade already has a vehicle to give him information in a useful form in the Statistics of Trade Act, 1947. I suspect that he is one of the few Members of this House familiar with it. This Act gives him a much more flexible instrument to obtain the information which he considers would be of value, and he could obtain it from the type and size of company which he felt, at any given time, could best provide it. I shall not quote it, but I refer the President of the Board of Trade to Section 1 and the Schedule to that Act, which specifically meet the requirements he is seeking, though ineffectually, under this Bill. Lest that might be thought to be resurrecting some antediluvian Measure of 20 years ago, I remind the right hon. Gentleman that it was used in the Science and Technology Act, 1965, when its provisions were invoked to give the Minister of Technology power to obtain information of the sort being sought here. I hope, therefore, that the right hon. Gentleman will be emboldened by the reminder that he already has adequate powers to obtain this information in a much more useful and more easily assimilable form and will drop this Clause from the Bill. If that is asking too much, I hope that he will at least think very hard about the load of work involved for companies in relation to the useful reward obtained and will accept an Amendment to fix 1,000 employees as the limit for exemption."It would be much better if the right hon. Gentleman went back to the Chancellor of the Exchequer or the Department of Economic Affairs or wherever his bright ideas come from and said. 'Think about it again. We will take powers if necessary to get these statistics when we want them, but let us have them in a form which is useful and not in this way in a Companies Bill, which is not a vehicle for this sort of thing'."—[OFFICIAL REPORT, Standing Committee E, 13th June, 1967, c. 1376.]
I am not surprised that the Minister of State has left the President of the Board to reply to this debate. This Clause has been the brain-child of the President of the Board of Trade. He was proud that he forecast on Second Reading that such a Clause would be introduced, yet it took him about five months to put it on the Notice Paper. The consequence was that in Standing Committee, the examination of it—this was at one of the few sittings which I missed—was rather cursory. The Clause was brought forward at the last gasp, without our having a chance to put Amendments down. I read the OFFICIAL REPORT of that debate, and I was not surprised that the Minister of State gave no detailed explanation of the Clause. He was not over-proud of it.
My hon. Friend the Member for Abingdon (Mr. Neave) has already referred to one glaring omission from the Clause. There is no provision for altering its effect by Order to take account of the possibility that payments of salary by cheque on a fortnightly or monthly basis will soon come in. I am astonished that it cannot be altered but is stuck hidebound to the weekly basis. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has drawn attention to another defect. Firms with fewer than 100 employees do not need to make a return. In the contracting industry, it is common for a great proportion of work to be done by sub-contractors. Some of the subcontractors will be large, but some will be extremely small. Those with fewer than 100 employees will not need to make a return. The returns from the principal contractor will, as regards a great deal of the work, be totally misleading on the question of manpower employed. Why are these statistics required? They are not to be in a form which can be fed into a computer. I hark back to the Government's statement in another place, by Lord Brown, on 13th December last, that economic research is going to become an increasingly important matter in the future of our economy. We have heard that there will be overtime work and what I call short-time work. So what economic research can be based on these most misleading criteria which will emerge as a result of the returns to be made by the accountants of the various companies concerned? 12 m. I emphasise what my hon. Friend the Member for Abingdon said about the Confederation of British Industry. The C.B.I. is considerably disturbed by the Clause and is equally exercised about the Minister of State's remarks on 13th June about the Clause thatMy hon. Friend referred to firms which might have been consulted, but I have yet to find any organisation which was consulted on the Clause and was found to be in agreement. The Minister of State was quite right to admit that the Clause would involve more paper work. I am sure that it will. I have had representations from accountants and lawyers all over the country that the accountancy profession is overworked and cannot take on more work. I know from experience with tax returns that everybody is getting behind. What is the value of that additional paper work that the Minister of State admits he is placing upon industry? My hon. Friend read subsection (3) immaculately. He will not mind my disclosing that, when speaking to me only yesterday, he said that he was finding the Clause very difficult to understand. I told him that the more he read it, the less he would understand and I advised him to refrain from detailed study of the Clause. He has, however, made a detailed study of subsection (3), but neither of us is any wiser about its meaning. My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) referred to the fact that overtime was likely to be worked by various people. Of course it will. In Amendment 313, I am more concerned with short-time working. I have studied subsection (3) of the Clause, 13 lines of it without a full stop. It refers to'There has been delay in drafting it, but that was to get general agreement"— [OFFICIAL REPORT, Standing Committee E, 13th June, 1967; c. 1355.]
One might think that "persons who … were employed" were only those who were under contracts of service. One knows that under the Redundancy Payments Act, contracts of service apply only to employees who work more than 21 hours a week. Therefore, in Amendment No. 313 I have sought to define "persons" in the Clause as those"persons … under contracts of service"
I am confused by the meaning of subsection (3). My reading is that it defines a"working over 21 hours per week".
As far as I can make out, we are discussing persons who may be working only a few hours a week. The contracts of employment referred to in the Clause have nothing to do with the contracts of employment which are to be entered into under the Redundancy Payments Act. Perhaps the President of the Board of Trade can unravel some of those mysteries. I strongly advise the House to accept my Amendment, which would specifically limit the action of the Clause to persons who have been employed over 21 hours a week and thereby ensure that only full-time employees of the firm are referred to. I come to a few rather more detailed criticisms of the Clause. I have had strong representations from the National Chamber of Trade. In my view, the Clause means, in effect, an estimation of fringe benefits. This has not been referred to before. It is referred to in our Amendment No. 36, which seeks to delete, in page 19, line 5,"week (whether throughout it or not)".
It will be an extremely difficult calculation by any standards to add up all the fringe benefits which may be attributable to the various employees. I will admit that the President of the Board of Trade is right in assuming that this will be a bulk figure of all the fringe benefits of all the employees throughout the organisation, but when we split it down among all the employees, the full-time workers, the part-time workers—the managing director, I presume comes into this—what on earth does it amount to at the end of the day? Absolutely nothing."and the estimated money value of benefits received or receivable otherwise than in cash."
Is it not highly likely that luncheon vouchers, for instance, will have to be included in this? The Commissioners of Inland Revenue would be bound to take cognisance of this and impose Income Tax on luncheon vouchers.
I am extremely obliged to my hon. Friend for mentioning the matter of luncheon vouchers. I was going to refer to them. He is perfectly right in saying that the Inland Revenue would take cognisance of this matter.
I cut out a little snippet from the Daily Mail of 12th July, because it is relevant to this. My comment on this extract was that confusion will be caused over these fringe benefits, because this snippet referred to a car lent by the firm putting the P.A.Y.E. up. This was in respect of an employee, a Mr. Bell, who is a litho-machine minder of Howard Avenue, Halton, Leeds. I will make a quotation to highlight some of the difficulties which will occur:That was a fringe benefit. When that matter came before the court Mr. Justice Ungoed-Thomas gave a ruling which said this was a taxable benefit. This was one of those benefits which would have to be included under this Clause, because it was a benefit received or receivable other than in cash. But the accountants of the firm would not have known whether to include this or not, because it is extremely difficult to know such a thing. Often, it is decided only by the courts whether these things are genuinely benefits received other than in cash. My hon. Friend referred to luncheon vouchers. The National Chamber of Trade has brought to my attention further comparatively small but nevertheless significant matters which I should bring to the notice of the House this evening. It says that very often—I know this to be a fact—goods are supplied to employees at cost price. Then, canteen subsidies are quite usual, and there is free tea. Who has not been to a works and had a cup of free tea? That would have to be added in. There is also the matter of travel allowance. I could bring up a hundred and one other things, matters of some significance which have got to be added in and be returned under the Clause. I would give one example from farming. I think everyone knows that a high proportion of agricultural employees live in tied cottages. There is a statutory rental for tied cottages, but it is nothing like the real value of a tied cottage. Has one got to put in the real value of a tied cottage, probably about £3 a week? Or does one put in the statutory rental, the 6s. or 9s. a week referred to in the agricultural wages schedules? I am afraid that if the Government insist on retaining these words"Mr. Bell, and his colleagues at John Waddington, the Leeds printing firm, accepted a wage cut as part of a productivity scheme in return for the loan of cars. Everyone was happy. The men had their own transport, the firm had an increase in production."
they will be making an even greater nonsense of the Clause than it is. I refer to a possibly even more substantial criticism. Earlier this evening the President of the Board of Trade—I hope he is paying attention: he looks a bit somnolent at the moment—"the estimated money value of benefits received or receivable"
He is asleep.
We would all like to be. But the right hon. Gentleman failed to refer to the fact, until I reminded him, that in Clause 68 the Government had given way with regard to the non-showing of pension contributions of senior employees and directors, for the reasons which I gave in Standing Committee. Is the President of the Board of Trade fast asleep? Is it in order, Mr. Deputy Speaker, when an hon. Member is addressing him?
Whatever was happening, the President of the Board of Trade is now with us.
Perhaps it is that he was closing his eyes to concentrate to a greater extent on what I was saying. I would remind the House that the right hon. Gentleman gave way earlier this evening on the subject of the non-creditability of pensions, and in this total he is now including pensions contributions. But he has neither acquiesced nor dissented, and I assume, therefore, that pension contributions are, in fact, included.
The insurance industry is very exercised in its mind about this, because there are aspects of this matter with which it is impossible to comply; and I will come to those. There are companies with pension schemes which vary tremendously. Some have been introduced comparatively recently. There are those which cater for only a proportion of the total employees, and some are largely applicable only to women. There are a hundred and one different types of scheme and this very fact would invalidate strict comparison as between one firm and another. There are varying scales of benefit which can be obtained, but I now come to one or two very severe criticisms which are made by the insurance industry generally. I should like to know if what we are talking about includes pension scheme benefits at all, considering that employees very rarely enjoy absolute rights to these in all circumstances. In other words, particular benefits which cannot be said to be received or receivable because the employee dies before he gets the pension, or he may leave the firm and, consequently, there is no benefit received or receivable. Does this subsection include contributions for National Insurance and Industrial Injury benefits paid by the employer? Does it include the Government subvention to the National Insurance stamp? I should like to draw the attention of the President of the Board of Trade to the group life schemes because, here, it cannot be the employees who receive anything at all; it can only be the next-of-kin. So I assume that there will be no return whatever because, by definition, although the employee makes a contribution, or one is made on his behalf, he can never benefit from that contribution at all. There are two small items—[Interruption.]—well, I won my case earlier this evening by being pretty definite about insurance problems and, in fact, the Government accepted one of my Amendments. The right hon. Gentleman put his own name to it. What I was going to ask was whether this subsection covered redundancy payments contributions? They would have to be returned, and if one took out an insurance policy for additional accident cover, would that be included? I take out such a policy on my farm when we are doing certain dangerous work. In short, are these payments covered by this Clause? I have highlighted some of the technical problems surrounding this matter. I re- gard the whole of the Clause as a fabulous monstrosity and I hope that even at this late stage the right hon. Gentleman will seek the leave of the House to withdraw it. However, if he cannot do that, perhaps he can accede to one or two of our Amendments.12.15 a.m.
There are a few queries which I should like to put to the President of the Board of Trade in the hope—I trust that it is not an entirely sterile hope—that I shall get some answers before we vote on the Amendment, if that is necessary.
The first concerns subsection (3). What does "employment" mean? For instance, in every firm of which I am aware it is the habit that employees are entitled to at least two weeks' holiday a year. People in some positions in many of those firms are able to forgo their actual holiday and draw double pay instead. In other words, they are paid for being on holiday and they are paid for being there. Would that count as the employment of an additional person? Alternatively, in some firms personnel are taken on temporarily to replace those on holiday as, for instance, in a bus company; does that substitution add to the total number of people employed? The answer to that question is material because a firm in a category which is exempt because it employs fewer than 100 people can easily be put into a category which is not exempt because it employs more than 100. When people are employed via a third party, for instance, consultants, and when they are specified by name in the contract with the firm supplying them, are they included in the total? I can conceive of circumstances in which they would actually be paid locally rather than by their own remote employer, so there may be an area of ambiguity in that respect. I come now to subsection (4) and the subject of benefits received and receivable other than in cash and bonuses. For instance, if a car allowance is greater than the actual cost of running a car, presumably one is receiving a fringe benefit. That must be so by definition. Most firms, as, I believe, the Civil Service, run car allowances on crude graduations, or with no graduations. If there are no graduations, obviously someone running a car which is expensive to run will lose on the deal, while someone running a car which is extremely economical to run will actually gain from the mileage allowance. Does the unfortunate accountant have to make the computation in every case and include it under subsection (4)? Taking the provision literally, I cannot see how it could be otherwise. Equally, I find it difficult to believe that such an absurd piece of recurring mathematics is the intention of the President of the Board of Trade. If he does not mean that, why has he not made his intention clear in the drafting? Another fringe benefit is service housing. My hon. Friend the Member for the City of Chester (Mr. Temple) drew attention to the two values in agricultural housing—the statutory value and the market value. But what about a bank manager who has to live over the premises? A market value could be put on his house, but what is subtracted from the market value because of the service obligation upon him to live in that house rather than in a house which he might prefer? It is well established that where it is part of the terms of engagement that an employee will live in service accommodation the assessed value of that accommodation is less than the open market rate. I have recently had correspondence with the Ministry of Health on this. How on earth is the individual accountant in an individual firm to make a sure assessment on this basis? I am not an accountant, but my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) is. I imagine that even he would be very perplexed in many cases in determining what sum he should subtract from the hypothetical market value of a house which may not be let anyway because it is over a bank.I do not know whether my hon. Friend is aware that most banks have a regulation that they will not have anyone other than an employee living over the bank for fear that the occupants may break in.
This gives us a double minus, which is a wholly unsatisfactory situation in which to end up.
I hope that I have served further to draw the attention of the President of the Board of Trade to the fact that the present drafting of the Clause is inoperable if it is taken literally. We are talking about a new phase of company law. If it is not to be taken literally we are ensuring full employment for the lawyers who will handle the appeals in so many cases, and before those cases are decided none of the chartered accountants will know what assessments they must make in their reports for the directors to sign and present to the general meeting. Therefore, I think that the case against this atrociously drafted Clause—probably atrociously drafted because it was illconceived—is substantial. I hope that a consolidation Measure of this kind will not be unnecessarily sullied by its drafting and substantial woolliness to the extent already revealed in the debate.I am provoked to intervene now because certain members of my family live over a bank, although they have no connection with a bank, and so far as I know no misfortunes resulted.
I think that some hon. Members opposite are taking rather an antiquated view of company law. If they had attended the two productivity conferences, held last September and this summer, they would know that their speeches tonight sounded very out of harmony with the views expressed by industry. One hon. Member said tonight that it was only the job of company law to make information available to shareholders, and therefore that any question of the number of people employed was entirely irrelevant. That is a very narrow, limited view. As I see it, it is not merely shareholders who should have the information, although perhaps it is primarily for them. We also want information to be available to creditors, employees, customers, the public generally, financial journalists, accountants and those who are professional critics of the financial affairs of joint stock companies. We should look at the matter from that point of view and recognise that in the present condition and development of our economy the efficient use of manpower is one of the most important objectives of successful economic policy. If hon. Members realised that, they would agree with the views expressed from both sides of industry and many other quarters at the productivity conferences that there would be considerable value for general economic policy in having the manpower figures, just as much as figures of exports, disclosed by companies.As a number of my hon. Friends have said, the Confederation of British Industry has specifically dissociated itself from the view attributed to it in Committee that it approved of this Clause. Would the right hon. Gentleman confirm that or not?
I did not say that the C.B.I. formally approved this Clause. I said that views were expressed on both sides of industry at the productivity conference to the effect that disclosure of this kind was desirable from the point of view of economic policy generally, and that was the case. But, although we have many discussions with the C.B.I. on these matters, we do not expect it to draft Clauses for us.
Although that is the general case for including a Clause of this kind in the Bill, I agree that we can argue a great deal about what the definition should be and how far we should go in expecting this information to be given. We have examined the Amendments from that point of view, and, although I have no wish to encourage the hon. Member for the City of Chester (Mr. Temple) to make another of his very detailed, interesting and lengthy speeches, I am glad to say that the Government find it possible to accept Amendment No. 36. The effect of that would be to exclude benefits in kind, such as subsidised canteens and, free recreational facilities, from the definition of "remuneration". It would be perfectly justifiable to do that. I am happy, once again, to have responded to the hon. Gentleman's cogent, if rather lengthy, arguments. The other substantial point which was raised was whether pension contributions were included in the information which had to be disclosed. Remuneration paid or payable to employees does not include contributions paid in respect of them to a pension scheme. Since they are excluded already, it is not necessary to introduce a further exclusion. I am glad to accept Amendment No. 36, but on the substantial point it seems to us that from the point of view, not just of shareholders, but of all the other sections of the community which I mentioned, there is real value in retaining the general provisions in the Clause.Would the right hon. Gentleman refer to the Amendment dealing with part-time employees and the question of 21 hours a week? I do not think he referred to it.
I did not refer to it because in that as in other cases it did not appear to us that the case had been made out for a change in the Bill. As long as the same provision is applied to all companies and the comparability over periods is the same, there would be no great gain in excluding part-time employees. It is reasonable to include them for the purpose of averaging all those employed full-time during the week.
However much one appreciates the minor concession made, the fact remains that this Victorian Clause might have been thought of by Sir Robert Peel and been put in the Tamworth manifesto.
Surely, then, the hon. Gentleman should accept it.
It is the sort of simple-minded Clause which might have been of value when comparing two saddlery businesses or the makers of simple steam engines, but it is unsuitable for the complicated age in which we live.
12.30 a.m. I fully understand that this kind of Clause would appeal to the right hon. Gentleman, with his love of the Victorian age. He is one of the great Victorians. But industry is not at all like the vision that he has of it. It might be all right to compare two companies, both making motor tyres for example, but the diversification of the motor industry makes this complicated, and one does not have such a simple picture. A company making motor tyres has gone on to making bicycle wheels, aircraft spare parts and has a wholesale and retail department. It is a multi-purpose company, with many interests. When one divides the remuneration between all these companies, with all types of employees added, one gets a wholly false picture. When I read in the Sunday Press that in 10 years' time, industry will be in the hands of 330 groups, I think that if we have a few more years of Socialism it will be in the hands of 230 groups.—[An HON. MEMBER: "Or maybe one."]—One can see that the simple comparisons made by the President of the Board of Trade will be quite valueless and ought to be dropped. If this other little addendum, of the benefits received, is to be added, I suppose that the central heating of offices and factories will be included too. I beg the President to look again at this Clause. It will give an awful lot of work, and will add nothing of value.I have tried to argue throughout this Bill that, in respect of public companies, it does not go far enough in many aspects of publication, while it goes much too far in the case of private companies. One of the difficulties has been that the Government are super-imposing upon the requirements of publication that can legitimately be made upon public companies a whole series of requirements which have nothing to do with company law, with the control of the interests of the shareholders or creditors, and nothing to do with the efficiency of a business.
This Clause is a classic example. The President of the Board of Trade has made a "mini-concession"—dragged out of him by my hon. Friend the Member for City of Chester (Mr. Temple), through whose arguments he attempted to sleep. However the force of them do not seem to have entirely escaped the right hon. Gentleman.It is the hon. Gentleman the Member for City of Chester (Mr. Temple) who is asleep now.
The right hon. Gentleman does not seem to appreciate that my hon. Friend has scored a victory. He has extracted from the President a concession—
On a point of order. How can the right hon. Gentleman say that the hon. Member for City of Chester is asleep when he is not even in the Chamber?
That is a mystery beyond even Mr. Speaker.
My hon. Friend has extracted a concession from the right hon. Gentleman which make slightly less of a nonsense of a Clause, which ought never to have been in the Bill, and which certainly ought never to have been in at this late stage. We still have not had any proper explanation from either the President of the Board of Trade or the Minister of State of the reasons for including the Clause in the Bill. During the Committee stage the Minister of State in his kindly and obliging way said that the information about wages could easily be obtained by companies, but clearly he did not read subsections (3) or (4) of the Clause. Nothing that is described there could possibly be easily obtained.
My hon. Friend the Member for Abingdon (Mr. Neave) demolished this claim wholly just by reading the provision. I can only think the Minister of State had not actually read the Clause when he made this splendid and sweeping statement; but he did go on to say, with the fairness we expect of him:If only they would. All the evidence we have had is that they have never "proceeded accordingly" throughout the course of this Bill. I accept that some paper work is more useful than other paper work, but the paper work which is being loaded upon companies by this Clause is of no use to man or beast. The hon. Member for Bradford, North (Mr. Ford) seems to have retreated once more to his Trappist monastery, and I hope he will permit me, as he is nevertheless present, to quote what he said in Committee."I quite agree that by putting the new Clause into this Bill we are asking companies to do a little more paper work, but some paper work is more useful than other paper work. I think that as was suggested in the comment in The Times Business News today, the Government should look carefully at the amount of paper work which they are thrusting upon companies and should decide which is the more important and which is the less important and proceed accordingly."—[OFFICIAL REPORT, Standing Committee E, 13th June, 1967; c. 1356.]
Order. This was rather a long Committee. I hope the hon. Member is not going to read the whole of its debates.
I would not think of reading it all, but it does seem to me to be highly relevant to the Clause we are discussing. I would have been delighted to have the hon. Member remind us in his own words that the President of the Board of Trade, on this Clause, was shot down not from one side of the Committee but from both. However, in deference to your advice I will simply quote one phrase which he used:
He was referring to the type of negotiation which he had been involved in. I cannot see that any case has been put forward that this information, of a complexity which has been demonstrated by several of my hon. Friends, of an unreliability which has been demonstrated by others of my hon. Friends, will serve in any way to improve the relative efficiency of companies or to improve the knowledge of shareholders or creditors about tie affairs of their companies. The philosophy behind the Clause, I suppose, is that in some way we will get by this form of ear-stroking a more efficient use of labour by companies. But do not believe that this will make any contribution at all. If we want to achieve a more efficient use of labour this should be done by taxation and incentive policies and so many of the other things we discuss at other times in this House. It cannot be done by a Clause of this kind. This is a typical example of the sort of narrow-minded, busy-body approach of the President of the Board of Trade. Earlier, the right hon. Gentleman said that a new Clause to require that a purchaser of shares without full voting rights should be told that they did not have full voting rights was outwith the terms of the Bill. Yet we have this sort of rubbish in it. What sort of selective mentality are we up against? This is a case where the gentleman in Whitehall does not know best."… frankly, this type of information would have been of no use to me whatsoever."—[OFFICIAL REPORT, Standing Committee E, 13th June, 1967; c. 1365.]
I do not criticise the President of the Board of Trade or the Minister of State but this is the sort of Clause civil servants produce because, by their nature, they require the maximum amount of information. What use is to be made of this information? Whenever such a Clause appears in a Bill, the House should bluntly ask what is intended to be done with the information obtained under it.
If firm A and firm B are producing the same commodity, but it is shown, as a result of the Clause, that firm A employs 102 people while firm B employs 100, is the Board of Trade going to tell firm A that it must sack two people because it is inefficient? What practical action will the Government take as a result of the information collected under the Clause? It reminds me vividly of a war-time experience. Perhaps because the civil servants were not watching the promotion scales as avidly as they should have been, I finished up commanding a battalion, probably inefficiently. But every week we had to send in a form in quintuplicate, stating in the most trivial detail the running form of all vehicles in the battalion. I regret to say that, in the five years of my Army experience, we never got a vehicle replaced without the transport officer ringing up someone at the depot and saying, "We are one 1,500 cwt. truck short. Can you send another?" Week after week, we filled in forms in quintuplicate. All the platoons and squadrons sent in forms to battalion headquarters. All these had to be correlated; every defect written in.In spite of that, we won the war, so will the hon. Gentleman now come to the Clause?
Thank you for your information, Mr. Speaker. It is not often that I thank the Chair for an intervention. You say that, in spite of that, we won the war. But now we are dealing with the efficiency of British industry. As a result of this Clause, firms will have to produce information which will never be used by the Board of Trade. It will be filed away in pigeon-holes. The Board of Trade will have a wonderful file about firm A having 102 employees, firm B having 103, firm C having 104, while firm B has two pensioners and firm A one-and-a-half.
What use is to be made of this information? What action will the Government take as a result of this Clause to increase the efficiency of British industry? Supplying information costs money and takes time. If this information is not going to be used, it will be a waste of effort, intelligence and time and therefore it should not be sanctioned by this House.12.45 a.m.
rose—[Interruption.]—
I have no power to stop interventions. We have, however, a lot of work before us tonight.
Is it not even more of a waste of time, in that the Government already have this information? They must have it to operate the Selective Employment Tax provisions.
I would not like to carry that intervention too far. It may be so. One of the problems of modern society is that the Ministry of Labour may have information which the Board of Trade has not got. We do not live in a pure and completely efficient society. This Bill has nothing to do with the S.E.T. The information may be available in the Ministry of Labour. If it is, the firms concerned have already borne the cost of producing this information. The Bill requires them to undergo more expense to produce similar information for the Board of Trade.
I sympathise with the President of the Board of Trade and with his officers. There is always a desire in organisations to collect information. When I was running my own business, I collected far more information than I was able to use. Anybody controlling an organisation likes to collect a lot of information. In many cases, such is the pace of society, long before the information is correlated it is out of date. Long before use can be made of information as to whether one firm has a certain number of pensioners, or whether another firm issues a certain number of luncheon vouchers or provides free or subsidised meals, it will be years out of date. Firms which are now declared to be subsidising meals may not be doing so by the time the information can be used.The hon. Gentleman is wasting our time, because that aspect has been accepted.
On a point of order, Mr. Speaker. If hon. Members opposite want to go home, it is entirely up to them. We broke off our deliberations at 11 p.m. the last time we considered the Bill to suit the Government's business. If they want to go through with this business, it is entirely up to them.
Order. I hope hon. Gentlemen will not interrupt. Let us get on with the debate.
I understand the attitude of the Board of Trade officials. If anybody were ever foolish enough to make me President of the Board of Trade, I should collect information and, on any given question, assert that I knew more than anybody else and that I was the most erudite of persons. I repeat that this information will be out of date long before use can be made of it. This puts an additional burden on industry and commerce, and it uses scarce brains to produce this information, which brains could otherwise be doing more constructive jobs. The sum total of the Clause is not an advantage but a disadvantage to the nation. People who could be working at a new sales campaign or doing something similarly constructive will be correlating all the minor things which are asked for under the Clause, and long before the Board of Trade can use the information it will be out of date.
I hope that the right hon. Gentleman will realise that there is a fundamental reason why the Clause should not be in the Bill and will accept the Amendment.As the House will notice, the information is required after the end of the financial year, and when it is in the directors' report. Hon. Members know that the directors' report may be many months after the end of the financial year.
Nine months.
Nine months and sometimes more and sometimes less. If these statistics are to be obtained for the purpose of comparison the House must realise how little comparison they will afford. First, there is the difference in time. Not all financial years end on the same date. We can have any one of 365 days in the year. Then we can have any number of months, from three to 12, before the directors report, so that even if firms do exactly the same work comparisons of this kind are useless.
Few firms do exactly the same job. There is also a variation in the number of subsidiaries. There is also a difficulty in comparing Firm A with Firm B. The President of the Board of Trade drew attention to the fact that it may be useful for journalists to compare one company with another. But there is then the difficulty that the statistics themselves will not be capable of proper evaluation. There is the question of the average number of employees per week. If a firm employs 1,000 people a week throughout the year, it employs 52,000 a year. Another company, by a miracle, may do exactly the same work but may employ only part-time people, and may have 2,000 people employed a week, giving 104,000 a year. Another company may have a mixture of part-time and full-time workers. None of the people whom the right hon. Gentleman mentioned will know how many are employed, counting them as man-day units, because there is no known number of part-time people. The number of man-day units can be gauged only by knowing the total wages. These 52,000 people might receive an average of £20 a week, or £1 million a year in all, and this would average at £1,000, £2,000 or £1,500 a week depending on whether they were part-time, full-time, or on a mixed basis. No one can compare the efficiency of different industries, because, with bigger profits, bigger wages may be paid, or the system may be inefficient, with too high a labour content—My hon. and learned Friend has great knowledge of the Clause. Would he not agree that, in the case of a mixed holding company, with a large number of people employed in tropical agriculture, a very misleading figure might emerge?
I agree that it depends on the labour content of the subsidiaries, which are lumped together elsewhere in the Clause, so the evalution is beyond the wit of man.
Subsection (3) refers to people on contracts of service. What about people who are not so employed? I am not sure whether there the term is a technical one or a tautology. I know the difference between an employee and an independent contractor—a consultant would be an employee—but this cannot apply only to those on written contracts of service, since such contracts may be oral or written. What employees are not employed under either?rose—
Order. I would remind the House that we have debated this matter for an hour and a half and that another 29 debates lie ahead of us.
I know that there is much to be done—
On a point of order. I accept what you have just said, Mr. Speaker, but it was not the Opposition which brought on this complicated Bill at this late stage.
I am making no comment in favour of either side, as the hon. Gentleman knows, but merely stating a fact.
The right hon. Gentleman said that we took an antiquated view of company law, but this has nothing to do with company law. He said that it was out of harmony with the views of industry, but this is not a view of company law. If it is antiquated to say that, when industry is saddled with a burden, it must know what will happen at the end of the day, I plead guilty. That is a fundamental principle of good administration. There is always an argument for the collection of information. It cannot all be collected. The problem is to decide which information will be worth the effort at the end of the day. I do not believe that the Government have begun to meet this onus of proof.
As my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) pointed out, this is not a matter of company law and there is another vehicle by which this information can be obtained. The Statistics of Trade Act, 1947, can provide it in a form which will be much more valuable than anything which will emerge from the Clause. It is clear that there is no possibility, except in purely accidental cases, of comparing like with like. Firms will not produce figures which will make it possible for a test of comparability of the efficient use of labour, which is what the President of the Board of Trade claims. 1.0 a.m. I appreciate that the Clause arises from a productivity conference, but I have yet to find anybody who can remember what they wanted and what they thought it would produce. It arose in the context of comparability between one firm and another. I prefer to be antiquated and to know what use the Clause will be—and that the Government have not told us. The Minister said that it does not matter whether part-timers are included or whether they work 21 hours or eight hours or five hours a week. But consider one of our most important industries—the hotel industry. I know that the President of the Board of Trade has little sympathy with it and that we had to fight hard on its behalf on the Industrial Development Act. It adds greatly to our foreign earnings. There can be no greater contrast between the ways in which hotels are run than that between hotels in the Highlands of Scotland and hotels on the South Coast. In the Highlands, staff move in and are resident throughout the season. There is nowhere else for them to go. They are on full time and probably working a great deal of overtime. On the South Coast the majority of the staff are part time, and a hotel might have four times as many staff as a hotel of the same size in the Highlands. The total number of hours worked would probably be about the same. Trying to compare the relative efficiency of a hotel in the Highlands and a hotel in Brighton on that basis will give an entirely false picture. It is nonsense for the right hon. Gentleman to say that we are antiquated because somebody at a productivity conference, probably after lunch, thought that this would be a good idea. The right hon. Gentleman said that it would be a good idea for the creditors. What on earth value is it to the creditors? He said that it would be useful for the employees. What possible interest is it to them? What interest is it to the customers? They are not concerned with it. They are concerned with the service which they get or the article which they buy. And what of financial journalists? We all know that they like the maximum amount of information and that they will produce stories, but it does not necessarily follow that the stories will have any value. I am all in favour of informed Press comment, but where is the evidence that informed Press comment will arise out of this information? It is non-existent. My hon. Friends have made a series of admirable speeches pointing out the problems. Not a single speech has been made telling us that this Clause will be of value. Bearing in mind the amount of business we have to do, the best way to tackle the situation is for the right hon. Gentleman to withdraw this silly Clause. It was introduced at the last moment. Five months elapsed after the President's announcement on Second Reading that the Clause was on its way —and that was several months after the productivity conference. Yet they put it on the Order Paper one sitting before we had to discuss it. It is half baked. If he wishes to make progress, here is a chance for the right hon. Gentleman to show that he is anxious to accommodate us by leaving out the Clause. As I have said, there is not one scrap of evidence that this will be of any value in comparing the efficient use of manpower, which were the words he used, or in the general economic policy, which were the other words he used. I strongly recommend to the President of the Board of Trade that the Clause be removed. If it is suitable for a Companies Bill—which I doubt—it qualifies for the second Companies Bill. If this is done then we shall make considerably faster progress with the rest of the Bill.Question put, That the words proposed to be left out, to the end of line 44, stand part of the Bill.
The House proceeded to a Division—Mr. JOSEPH HARPER and Mr. LOAN L. EVANS were appointed Tellers for the Ayes, but no Member being willing to act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.
I beg to move Amendment No. 170, in page 18, line 44, at the end to insert:
This is a drafting Amendment.'and adding up the numbers ascertained'.
This is a small Amendment, but we feel that an indication should have been given that these were words of my own in Committee which have been taken in their entirety and placed in the Bill. Perhaps an acknowledgement might go on the record.
I gladly give the credit to the hon. Gentleman.
Amendment agreed to.
Further Amendments made: No. 171, in page 19, line 2, to leave out 'subsection' and insert subsections '—[ Mr. Jay.]
Amendment No. 36, in page 19, line 5, leave out from 'not)' to end of line 6.—[ Mr. Temple.]
Clause 19—(Directors' Report To In- Clude Certain Particulars Of Con- Tributions For Political And Charitable Purposes)
I beg to move Amendment No. 45, in page 20, line 19, to leave out 'exclusively' and to insert 'mainly'.
I think that it would save time, Mr. Speaker, if we considered at the same time Amendment No. 46, in page 20, line 19, after charitable ' to insert:'or otherwise concerned with the advancement of religion, education or social welfare; the maintenance or establishment of almshouses; or the support of any organisation, not established or conducted for profit, whose purpose is the provision of facilities, without charge to spectators, for open-air games or for open-air athletic sports'.
Yes.
The purpose of these Amendments is to simplify the effect of the definition subsection (5). They relate exclusively to the charitable side of the political or charitable subscription question, so we need not get excited about political matters.
One of the most complex branches of the law is that relating to charities. The definition of charities in. legal terms is a matter on which a great number of cases have been decided. It is not practicable to say to the ordinary lay board of directors, or to quite a number of lawyers if they do not happen to specialise in the subject, that they must be certain that what they are doing is exclusively for charitable purposes and that, if a mistake is made, they commit an offence under Clause 23. If one makes a mistake in attaching to the accounts a statement regarding charitable contributions, an offence is, technically, committed. It is unlikely that a prosecution would be instituted for such an offence, but it is wrong that the possibility should arise. Amendment No. 46 is to add words which are taken from Section 8 of the Rating and Valuation Act, 1955. That Act was an interim Measure, and Section 8 was designed to relieve from rates such institutions as under the old system, when rating valuation was done by local authorities, were relieved on the ground that they were charitable. Before the Committee reported on the rating of charities, it was thought desirable to add these various other purposes which are closely connected with charities. They give a good example of the appalling difficulties with which one is faced when deciding what technically is a charity. Unfortunately, the Board of Trade has been quite wrong in putting in the definitionbecause that does not help anybody. 1.15 a.m. A good ad hoc definition might well have been"'charitable purposes' means purposes which are exclusively charitable",
which is a quite good yardstick. It is something which one can find out about if there is difficulty and it is something about which normally there is little doubt. Occasionally there is doubt because it is a new body and it may or may not have completed its negotiations with the Inland Revenue. There are, however, a large number of organisations, many of which would fall within the extended definition of "allied associations", which are not at law charities but which, nevertheless, would be accepted as charities by the Inland Revenue, for obvious reasons. I strongly plead with the Government to realise that this rigid definition of charities is nonsense, particularly in the context of Government Amendment 179, in Clause 23, page 21, line 27, leave out "(except section 18)". I know why that is being taken out: because it refers to Clause 18 in the old Bill. It would, however, be appropriate to leave it, because it seems wholly inappropriate that the penalties provided for and the offence which is created by Clause 23 should apply to a firm, a company director or the secretary of a company which makes a mistake in regard to the disclosure of its charitable contribution. That is a good example of what my hon. Friend the Member for Ormskirk (Sir D. Glover) spoke about earlier concerning the attempt to be logical, blocking all the holes and producing the most ghastly nonsense on the Statute Book. I know that the Minister of State will say that charities were included because the Opposition suggested it and because it was a logical extension of the political contribution. That is true. But if we start carrying things to their logical conclusion we get in a mess, as we have done, and we would be better to withdraw the whole thing."a body which is accepted as a charity for the purposes of taxation",
I always enjoy the arguments of the hon. Member for Gloucestershire, South (Mr. Corfield). When he gets into a state of banging the table, it is usually because he has a bad case. When he has a very good case, he is always extremely persuasive. He was not persuasive on this occasion.
The hon. Member knows very well that, under the Bill, directors of companies—at the request of the Opposition; I was not intending to mention this, but the hon. Member has done so and I will repeat it—will have to state in the directors' report their charitable contributions above a certain limit. They do not need to use the definition of charities as laid down in the Amendment and ask whether a particular contribution, which they know very well is charitable, is within or outside the definition. All that directors are being asked to do is to state in the directors' report the sum of money which, they think, they are paying for charitable purposes. We had better leave it like that. Obviously, nobody would be prosecuted merely by reason of including something which was not exclusively charitable or leaving out something which was not exclusively charitable. The intention is to give a rough indication to the shareholders of the amount of money that the directors think that they are paying out for charitable purposes. I think that we had better leave it like that.
This is not good enough. We cannot legislate for a rough indication. It is said in the Clause that the figure contributed to charities must be stated. We are left in complete doubt as to what is meant by charity. It is not difficult to define what charity is. In fact, in this Clause it has been defined for Scotland:
My hon. Friend suggested that it ought to have been applied in the same way—it was the solution, he said, to define what charity is—in England and Wales. Certainly, it could have been defined in exactly the same way. Probably it is far better to define it in the way contained in Amendment No. 46, because that covers what the ordinary person thinks of as charity."as respects Scotland, 'charitable' shall be construed in the same way as if it were contained in the Income Tax Acts."
Oh?
Oh, I think it does. Those are the sorts of things which are charitable in the minds of those who give gifts —athletic sports, educational and social welfare, religion, and so on. Those are the sorts of things which a company thinks of as being charitable when it makes contributions from the company's funds. If it is in any doubt it can turn to the Act, or take the advice of its secretary, or even its solicitor if it is in great doubt. He could turn to the Statute for the definition of charity, which should there be set out.
As this stands at the moment the only guidance given in the Bill is that charity equals charity; "charitable purpose" is charitable purpose. It really is of no assistance at all. It says the purpose shall be "exclusively charitable" and that makes it more difficult. From the practical point of view what we want is a definition of charity, a definition which is normally accepted as being something having a charitable purpose. We need a definition here so that there can be no doubt in the minds of those who have to draw up this information. We really cannot leave them in the air, as the right hon. Gentleman wishes to do, with just a rough statement of what figures ought to be disclosed. If we are legislating, let us legislate definitely and firmly, and say what is intended by the legislation, and not leave it in this vague fashion.
I think the right hon. Gentleman has missed the point a little here. What the draftsman had in mind was the contributions made by companies to objects which are in the ordinary layman's sense charitable, that those would be left out. In other words, we have first the political one—the subscription to the Communist Party. That has to be in the list. There are many subscriptions to the relief of spastics. That is charity, recognised as such by the Income Tax authorities. Those do not pay any Income Tax. But it is also intended, I think, that directors should list, for instance, the relief of Spanish refugees, or Oxfam. This will not be included because it is not exclusively charitable. Or £100 to the London Library.
Part of the object of this is to encourage other people to give if certain companies do. British Petroleum has given a large sum to the relief of Jordanian refugees. That is not "charitable" because it is outside this country. But other oil companies would, perhaps, be induced also to give these amounts. It has got another side to it. It is not that we want to pillory companies for giving to charity. On the contrary, we want their virtue to shine forth. But directors are put in the difficulty of knowing whether to include it or not. I sympathise with the right hon. Gentleman's difficulty: if there is any doubt, bung it in. But there are things which ought to be included, and that is where the Clause has missed the point.Very briefly, I would say that my case has been made for me, because what will happen is that the companies, if they wish, will give a list of the contributions to what they think are charities—such as relief for the Jordanian refugees—which would not come within any of these definitions. It would be much better to leave this as it is, because to lay down definitions would make it far more difficult for the directors of companies.
If I might just reply on the point about Scotland, the answer is that the courts in this country have defined charities but they have not been defined in Scotland—[Interruption.]—I have to rely on my very good legal advisers, and I think that the hon. and learned Gentleman the Member for Northwich (Sir J. Foster) has let me down.The Minister of State says that my hon. and learned Friend the Member for Northwich (Sir J. Foster) has given him his case, but I think that he has given me mine, especially in relation to Amendment No. 45. If "exclusively" is left out it makes more sense. When we come to Amendment No. 46, we insert
and there we have virtually got the lot. It is a much more sensible approach. Of course, I am not worried that anybody will really be prosecuted, but we should not pass laws which do not make common sense. Yet we have made it a crime not to disclose a subscription to anything which is defined as charitable, but not if it is "exclusively charitable" and this is a nonsensical and irresponsible way for Parliament to behave, even at half-past one in the morning."or otherwise concerned with the advancement of religion, education, or social welfare"
Amendment negatived.
Clause 20—(Directors' Report To In- Clude, In Case Of Certain Com- Panies, Particulars Of Exports)
Amendments made: No. 172, in page 20, line 24, after 'company' to insert 'subject to the requirements of paragraph 13A of Schedule 8 to the principal Act'.
No. 173, in line 28 to leave out 'Schedule 8 to the principal Act' and to insert 'that paragraph'.
No. 139, in line 29, to leave out '£20,000' and to insert '£50,000'.
No. 175, in line 38, to leave out 'unless' and to insert:
'except in a case in which'.
No. 176, in line 40, after 'goods', to insert:
'or a case in which the company submits in respect of that year group accounts prepared as consolidated accounts in respect of itself and all its subsidiaries and the turnover (so far as stated therein in pursuance of the said paragraph 13A) does not exceed £50,000',—[Mr. Jay.)
The next Amendment which has been selected is Amendment No. 177, with which we shall discuss Amendment No. 48, in page 21, line 9, at the end to insert:
(3) The information required to be given by this section need not be given if the Board of Trade agree that the information shall not be disclosed.
I beg to move Amendment No. 177, in page 21, line 11, at the end to insert:
This Amendment is to carry out an undertaking given during the Committee stage to provide that, where it can be shown that disclosure of a company's export figures would be injurious to that company's interests, we shall provide a certificate exempting it from making such disclosure. We had a discussion about this matter in Committee and the Amendment is quite clear and straightforward. 1.30 a.m. The hon. Member for Gloucestershire, South (Mr. Corfield) and his hon. Friends put down their Amendment, I suppose, in order to remind us of our undertaking, and I hope that it will be our Amendment which is accepted. I do not think that it requires a great deal of elaboration.(4) The foregoing provisions of this section shall not require the disclosure of information in the director's report of a company if the directors thereof satisfy the Board of Trade that it is in the national interest that the information should not be disclosed.
I should like briefly to refer to the undertaking that the Board of Trade would have some discretion to grant exemptions from disclosure of export figures. In Committee it was made clear that the onus of proof would lie on the directors to show that such disclosure would be contrary to the national interest, and one or two examples were given. One was concerned with attracting foreign capital to this country, with American subsidiaries finding that if they came to this country, they would have to disclose far more than they would in other countries. In such a case, would disclosure be contrary to the national interest?
Would it be contrary to the national interest if British companies had to disclose a great deal more than they would if they were in a similar position in Common Market countries when that disclosure might affect their competitiveness? Perhaps the right hon. Gentleman will briefly outline what criteria will be used. A considerable onus is being placed on companies to prove that something is contrary to the national interest and I hope that some rules will be laid down to make the position clear. It is said that it cannot be left to directors to decide what they should disclose because that would mean too much pressure on the Board of Trade, but it should be remembered that an enormous amount of pressure will be put on individual companies throughout the country, and the onus is therefore on the Board of Trade to provide a set of rules by which these claims for exemption may be made.There is a difference between the two Amendments, although the right hon. Gentleman did not refer to it. However, I should like to thank him for having reconsidered the matter and for having come much nearer to our approach, although chambers of commerce have expressed to me the view that they are not entirely satisfied with the Government Amendment.
How far will the national interest be interpreted as being the interest of the company? In other words, if a company's exports are likely to be affected by disclosure, would that in general be regarded as being against the national interest? If the two are regarded as being synonymous in effect in normal circumstances, there is no difference between us, but I should like the right hon. Gentleman to comment on the different wording of the two Amendments and to say whether in normal times the difference can be regarded as minimal.In effect, the two hon. Gentlemen have posed the same question. The two Amendments would have the same result, because the Opposition Amendment says that the information required to be given need not be given provided that the Board of Trade agrees that it should not be disclosed. The Board of Trade must work on a criterion, and it would obviously be the national interest. In effect, in our Amendment we have picked up the Opposition Amendment and said that the Board of Trade's criterion would be the national interest.
When provisions for disclosure of export figures appeared in the Bill in Committee, the Board of Trade received representations from firms that thought they would be affected, and from bodies like the C.B.I. They showed us cases where they thought that not only the company concerned but the national interest might be injured by the disclosure of export information. In many of the cases there was substantial grounds for giving the firms exemption, but it would be impossible to lay down a set of rules to cover all the cases that came before us. Discretion must be left in the Board of Trade. In general, the companies that thought that their interests would be injured are one-product companies or companies supplying one customer overseas, or mainly one customer in a certain area of the world. Astute accountants could often use the information that must now be disclosed and compare it for one-product companies with the export and import figures in the Trade and Navigation Accounts to come to a shrewd idea of what the company is doing. But we agree that there are companies engaged in certain kinds of trades involving fierce international competition for whom the disclosure of some information might make their competitive position very difficult, and in the circumstances we should give exemptions so that they need not disclose their export turnover. I assure the hon. Member for Abingdon (Mr. Neave) that: it would be very difficult to lay down 20es to cover all the companies that might be involved in the requests for exemption and the granting of exemption to them. I also assure hon. Members that if the discretion is left to the Board of Trade I think that we can handle the matter much better than by trying to lay down strict rules.I appreciate that the wording of Amendment No. 48 would have exactly the same effect. But I have never been able to follow why there are the most careful provisions in Clauses 3, 4 and 5, under which harm to the company is the criterion, if the directors can persuade the Board of Trade that disclosure will harm it, but here the criterion is the national interest. Anything that upsets our export trade will normally be against the national interest. Why is the Board of Trade so obstinate that it will not come to the wording in Clauses 3, 4 and 5, as we suggested in Committee?
I do not think that the hon. Gentleman really wants me to answer that question at this stage.
Amendment agreed to.
Clause 21—(Limitation Of Operation Of Sections 16, 17, 19 And 20)
Amendment made: No. 178, in page 21, line 12 leave out:
'Sections 16, 17, 19 and 20 of this Act shall not'
and insert:
'None of sections 16 to 20 (both inclusive) of this Act shall'.—[Mr. Darling.]
Clause 23—(Penalization Of Failure By Directors To Secure Compli- Ance With Requirements Of The Principal Act And Part 1 As To Directors' Report)
Amendment made: No. 179, in page 21, line 27 leave out '(except section 18)'.—[ Mr. Darling.]
Clause 25—(Penalization Of Dealing By Director Of A Company In Options To Buy Or Sell Shares In, Or Debentures Of, The Company Or Associated Companies)
I beg to move Amendment No. 53, in page 22, to leave out line 12 and to insert:
(1) Any profit realised by any director of a company within one year from the date of purchase by him of any of the rights set out in paragraphs (a), (b) or (c) of this subsection shall inure to and be recoverable by that company by civil process:
Provided that in default of action by that company within 60 days after request by any holder of shares or debentures of that company, the said proceedings may be brought in the name and on behalf of that company by any holder of shares or debentures of that company or, whether or not such request has been made, by the Board of Trade in accordance with section 37 of this Act.
The rights to which this section applies are: —
It is proposed that we should also discuss Amendment No. 54—page 22, line 12, after 'director' insert:
and Amendment No. 56—page 22, line 33, at end insert:'employee or person appointed by a company to act as its consultant'.
Provided that in the case of an employee (other than a director) or person appointed as consultant it shall be a defence to show that he was not at the time of the purchase of any of the rights mentioned in paragraph (a), (b) or (c) of this subsection, in possession of any information likely to affect the value of such shares or debentures which was not also available to the public; and in any proceedings that the fact that such information would not normally be available to such person by virtue of his employment shall be prima facie evidence that he was not in possession of such information at the time of purchase of any of the rights aforesaid.
I apologise that the Amendment is not quite complete in that we have omitted the removal of lines 28 to 33. The object is to turn the proceedings under this Clause into a civil claim rather than a criminal charge.
Clause 25 seeks to penalise directors of a company if they deal in options. We support the Clause in principle, but it makes dealing in options in the director's own company a criminal offence. Amendment No. 54 and Amendment No. 56 draw into the net as possible culprits employees of the company and those employed as consultants to the company, because they may have just as much opportunity as directors of the company to obtain information which could be used to their own advantage and to the detriment of shareholders. We would couple with the director of a company who deals in options an employee and a consultant employed by a company. If those two categories are to be included, they would need perhaps a special defence which would not normally be recognised if put forward by a director. We say in Amendment No. 56 that if an employee or consultant can show that he wasof the shares which was also available to the public, then that is a defence. If he has obtained any information which is common knowledge, he would have a defence to the claim against him. Therefore, to this extent, we would widen the Clause to make it bite, not only on directors, but on employees and consultants; but in the other respect we would narrow it to a civil claim rather than a criminal claim. It is reprehensible for a director, an employee or a consultant to deal in options in the way described in the Clause, but it should not be a criminal offence. There is conduct which is criminal in relation to a company by its directors or employees and which should be prosecuted as such, but this is not a case of that sort. This should be a civil claim. There would be one advantage in making it a civil claim. If it is made a criminal offence, it would be prosecuted very infrequently. 1.45 a.m. It would be difficult for anyone outside the company to discover what had been happening in dealings in options, and any member of the company, or the company itself, might hesitate to provide information on which to prosecute if the result was a prosecution disturbing to the business of the company. If it is a civil claim by the company and if there is some reward to the company in taking that civil action, then on more occasions would one make certain of the director, employee or consultant being deprived of his ill-gotten gains. We would make this a civil claim by the company against the offender. This might be said to be illogical, in that the company has made no loss. On many occasions the company does make a loss in that when it is known that there has been some juggling or fiddling in the company's shares, the reputation of the company suffers. One does not need to be logical in this. One wants to find the best way to prevent this sort of thing happening, the best deterrent. The best deterrent seems to be a certainty of some action being taken. There would be very little certainty of criminal proceedings being taken, whereas, if the Bill provided for a civil claim by the company, the company having some reward for doing so, then the knowledge of that would be a great deterrent to those tempted to deal in options in their own company."in possession of any information likely to affect the value"
The hon. Member for Crosby (Mr. Graham Page) is proposing that there should be provision, in the case of a director dealing in options, for the company, by civil proceedings, to recover from that director any profits he has made out of such dealings. Under the Bill, this would be a criminal offence. It is not entirely clear to me from the Amendment whether the hon. Gentleman is wishing to add this provision for the recovery of profits, to the existing provisions of the offence being a criminal one, or whether he is wishing to substitute civil proceedings for the criminal proceedings, which he seeks to eliminate.
I said when I started that we had omitted to put an Amendment on the Order Paper to remove the criminal offence. I would put this in instead of criminal proceedings.
I understood that some words had been dropped out, but I was not sure of their consequence. If the hon. Gentleman is seeking to substitute the civil procedure for the criminal one, it seems that there is some serious lack of logic in the proposal. It seems that if a director, benefiting by inside knowledge, indulges in some deal in options on the market and makes a profit out of it, he cannot be said to have made a profit out of the company, but out of the public or the community as a whole, or perhaps out of the people who sold the options.
The loss has fallen more generally, and therefore proceedings against him by the Crown were thought to be more appropriate than civil proceedings by the company which may, as the hon. Gentleman admitted, not have made a loss. Our proposal is more logical and appropriate. I agree that we want a deterrent, and the possibility of proceedings in a criminal court would be the most effective deterrent. For those reasons we are not convinced that any change should be made.Before the right hon. Gentleman sits down, may I point out that he did not deal with the point of the employee or the consultant.
I thought the hon. Gentleman was taking this together with the separate proposals. Here the Opposition wish to extend the area of penalties beyond the spouses and children, with whom we had trouble earlier, to employees and consultants. It does not seem to us that when we are first embarking on legislation in this sphere, which has already caused some difficulties, it would be wise to go further and cast the net as far as, apparently, hon. Gentlemen opposite wish to. As I said last week, one step enough for me amidst the encircling gloom. Perhaps it is an even more proper sentiment at this time of the night.
It is morning.
I think I am just in time. On the whole we think we should retain this provision as it stands at present in the Bill.
The President of the Board of Trade is right in saying that the company has not lost any money, but if there is an unjust enrichment on the part of a director, having done a deal in options, it is not unjust that the company out of whose shares the profit is made should get the benefit of it. At the moment there is no inquiry necessary to be made as to the amount that the director dealing in options would have made himself, and in a civil action there would be discovery documents and so on and the whole thing would come out. One might get the position where a judge would be unwilling to impose two years' imprisonment, just because the amount realised by the director was a big amount; and the fine is limited to £200, so if the director makes £200,000 out of an option deal he might get a sentence of imprisonment, or might not. He certainly would not be at risk to the community to the tune of more than £200.
There is an argument for saying that the fine should be equal to the amount of the unjust enrichment, but that is rough justice for it is not the community which has suffered. I suppose it is a little less rough justice that the community should get the unjust enrichment, but it is, I think, less just that the director should keep the whole amount, and only have to pay a fine of £200. He would certainly be up, in most cases, on the money side. This is why I should have thought the Government should accept the Amendment.I think I ought to apologise, because I drafted this Amendment, and am responsible for the missing bit. The difficulty, as I see it, was that this was about the third drafting, and I wanted to leave the rights as they were drafted in the Bill, but I neglected to make suitable adjustment for the criminal side as opposed to the civil side.
My own view was that we ought to put this as an alternative rather than as a substitute, for the reasons that my hon. and learned Friend and others have pointed out. There is a case for setting out the principle of accountability and fiduciary relationship, because, referring back to our earlier debates on Clause 30 or the substitute Clause we suggested, one had to get over the problem of making third parties criminally liable for something in which they really had no criminal intent. Clearly, the crux is to get a director or other member of a company who has inside dealings to realise that he is not going to put anything into his own pocket as a result. Particularly if one could combine this approach with the criminal approach, one would give additional incentive to the company to institute a criminal prosecution or some proceedings which it may well not have available when there is no actual fraud from the point of view of making it obvious that there is a case for the police. When all is said and done, if the man is a man of straw, people may shrug their shoulders and say, "We shall not bother to prosecute." We know this happens and it is probably wrong, but the question of setting before a director clearly that his duty is a fiduciary one is no bad thing. I appreciate that the drafting is not as it should be and that, at this stage, we cannot do anything about it. But I hope that the right hon. Gentleman will consider this as a sort of second string to the bow in this much advertised Bill, bearing in mind that I have taken this proposal as near as I could from the American Exchange Control Act. It is not easy to translate American into English but I have done my best. The principle has worked in America, although, of course, the situation there is somewhat different. On that basis, I beg to ask leave to withdraw the Amendment.Amendment, by leave, withdrawn.
I beg to move Amendment No. 180 in page 22, line 14, to leave out from second `of' to 'or' in line 18 and to insert:
This Amendment is in response to a proposal made in Committee and carries out our undertaking to restrict the prohibition on dealings in options to options on the quoted shares or debentures of the company in question. We accepted that as a reasonable proposal. One or two Amendments put down by the Opposition seek to do the same thing but I believe that the objective is more effectively carried out by this Amendment.'relevant shares or a specified amount of relevant debentures'.
We now seem to be getting thoroughly en accord and on this happy note I will leave the matter.
Amendment agreed to.
Further Amendments made: No. 181, in page 22, line 20, leave out 'any such' and insert 'relevant'.
No. 182, in line 21, leave out any such ' and insert 'relevant'.
No. 183, in line 26, leave out 'any such' and insert 'relevant'.
No. 184, in line 27, leave out 'any such' and insert 'relevant'.
No. 185, in page 22, line 33, at end insert—
() In the foregoing subsection—(a) relevant shares', in relation to a director of a company, means shares in the company or in any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company, being shares as respects which there has been granted a quotation on a stock exchange (whether within Great Britain or elsewhere); and (b) 'relevant debentures', in relation to a director of a company, means debentures of the company or of any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company, being debentures as respects which there has been granted such a quotation as aforesaid'.—[Mr. Jay.)
I beg to move Amendment No. 57, in page 22, line 37, at end to insert—
The purpose is obvious and the Amendment has the merit that even the Government cannot complain about the drafting, and it is simple. I put it forward only for the reason that it appears that the offence created in Clause 25, particularly as extended by Clause 30—which is a relatively new Clause, introduced in Committee—could be very technical in certain cases, particularly where a husband, wife or infant child is involved. Indeed, it could almost be innocent, and certainly in the case of a child or spouse it would be entirely innocent. It is surely right that we should not only state our feeling that frivolous prosecutions should not be undertaken but make it clear in the Bill that it is not the purpose that prosecutions should be undertaken except where there is clear ground for doing so. 2.0 a.m. It has become almost the standard form of words on these occasions to make it necessary to refer the matter, normally to the Director of Public Prosecutions, but in a Companies Bill, where the Board of Trade is, in a sense, a policing authority, it is "and/or the Board of Trade". I hope that the Government will consider accepting the Amendment. It would not in any way weaken the Bill. It would give the confidence that these are not matters which are to be regarded as offences for the sake of offences but that the test will be whether they are moral offences, as opposed to purely technical infringements of the Bill.(3) Proceedings in respect of an offence under this section shall not, in England or Wales, be instituted except by or with the consent of the Board of Trade or the Director of Public Prosecutions.
I agree that the drafting of the Amendment is impeccable. Indeed, the Amendment has the almost unique merit of being intelligible to the non-lawyer. It appears to me to say what it means. However, we are not convinced that it would be right to accept it. I agree that it is normal to restrict prosecutions in this way—that is, to the Board of Trade or the Director—where the offence is a technical one and it seems necessary to protect people against vexatious prosecutions. There might be some cases under this provision where the offence would be technical, but 'there would be many others where, the offence would not be technical.
If we accepted this sweeping provision, it would cover those offences as well as the others. That would go too far. I should not have thought that there was any harm in leaving the Bill as it stands. It will be open to the Board of Trade or the Director to prosecute where it thinks fit, but, as there will be many cases—indeed, I should have thought he majority of cases—where the offence would not be a technical one, I do not think that the hon. Gentleman has made out his case.The right hon. Gentleman is not trying to meet us over the very real problems we discussed resulting from the extension of the Clause by the provisions of Clause 30. This is the problem. It is no good ignoring the fact that there may be infant children—admittedly they are not infants in the sense we have in mind, but children of between 14 and 21—charged with a purely technical offence. After all, the Bill is drafted—the Board of Trade has drafted it; we have not—in such a way that the child is put into court and then he is given the defence of saying that he does not know. In many cases it may be an entirely technical offence on the part of the infant child or the spouse, particularly where there is a separated family.
Therefore, I should be willing to accept the argument that probably the new subsection might he attached to Clause 30 rather than to this Clause. I do not think it is a matter of great substance here, but on Clause 30 this is important. If the Government would accept an alteration to Clause 30, there would not be any great difficulty. I would even write out the manuscript Amendment myself. We should have some protection, as the Board of Trade has deliberately created a technical offence in Clause, 30, a technical offence where the onus of proving innocence is on the accused, instead of the onus of proof of guilt being on the prosecutor.I should have thought that cases where there was a purely technical offence by the spouse or the child and in which somebody other than the Board of Trade or the Director sought to institute proceedings because of a technical offence would be exceedingly rare, if they ever occurred. Even if they did and the prosecution were proceeded with, in all likelihood the court would acquit or not impose any penalty on the person prosecuted in these circumstances. I doubt whether there is much substance in what the hon. Member says, but we will certainly consider his argument if it seems to us right and it is in any way possible at this late stage to amend the Bill, which I rather doubt.
I am grateful to the right hon. Gentleman for that. I am sure that the House as a whole does not like the idea of putting children in court unless there is an overwhelming case for doing SO.
Amendment negatived.
Clause 26—(Directors' Service Con- Tracts, Or Memorandums Thereof, To Be Open To Inspection By Com- Pany's Members)
I beg to move Amendment No. 186, in page 23, line 25, at the end to insert:
The Clause requires a company to keep copies of its directors' contracts of service open to inspection to the members of the company at an appropriate place. One of the appropriate places is the company's principle place of business. The effect of the Amendment is to permit a register to be kept at the principal place of business only if that place of business is situated in the country in which the company is registered—in other words, in England if the company is registered in England and in Scotland if the company is registered in Scotland. It had been suggested that this would be an appropriate Amendment, and I hope that it will be acceptable to the House.'provided that that is situate in England, in a case in which the company is registered in England and in Scotland, in a case in which the company is registered in Scotland'.
It seems very acceptable to this side of the House.
Amendment agreed to.
I beg to move Amendment No. 59, in page 23, line 26, at the end to insert:
As the Minister of State has just said, we are now dealing with the publication of directors' service contracts, and the purpose of the Amendment is to provide that members of a company in the case of private companies and members of the public in the case of public companies should be able to obtain copies of extracts from the register of directors' service contracts through the post and that, in the case of public companies, where the requirement is for the provision of such copies to members of the public it should be upon payment of a fee. When we discussed this question in Committee I drew attention to the fact that the Government have made a distinction between the provisions for the passing of copies of extracts in the case of the register of directors' service contract as against the case of the register of directors' share dealings and the register of beneficial ownership of 10 per cent. or more of the equity. In the latter two cases the provisions written into the Amendment are laid down in the Bill, but in the case of directors' service contract this provision is not made. During the discussions in Committee the Minister of State explained that this lacuna was intentional. I had always assumed that it was. He explained that it was felt that there was a degree of confidentiality over directors' service contracts which did not apply to the other two matters, but I was not entirely convinced by this. When a quotation is sought for a new issue, the details of the directors' share service contracts have to be published in the prospectus, so this information is not confidential in public companies. The same obligation does not bind private companies but the information in public companies would be available only to the company, and it is important to recognise this distinction. With public companies, one must determine whether they are service contracts or insider share dealings or confidential ownership of 10 per cent. of the equity. But these registers could be kept at remote company offices and would not be readily available to the public necessarily. In certain public companies a director's service contract arrangement involves a grave oppression of the shareholders' interests; in one notorious case, a director was entitled to a proportion of profits before all charges. By enlarging the company on the loan capital he vastly increased his emolument and therefore had a vested interest in building up a series of agreements which were not in the interests of the shareholders and which eventually landed the company in serious trouble. Presumably Clause 26 is meant to deal with this and it is a step in the right direction—but not far enough. It does not remove the danger, because the damage may have been done by the time that a member of the company has scrutinised the register. Last week we discussed an Amendment to get these things published in regular reports by the Board of Trade. Members of the company, or the general public in a public company, should be entitled to have copies of extracts from the register of directors' service contracts sent to them in the post. In Committee the Minister of State promised to look at this again. I hope that he has done so and that this time he will have a more agreeable reaction. The argument about special confidentiality does not stand up, particularly as service contracts have to be published in the prospectus in the case of a new issue. Let us not have the argument that the Amednment does not fit into the Bill but must come into the next Bill. If Clause 18 fits into the Bill, then anything fits into it—and my proposal is certainly more suitable to the purposes of the Bill than is Clause 18.(5) Any member of the company or, in the case of a company whose shares are quoted or offered to the public on a stock exchange or which is a subsidiary of a company whose shares are so quoted or offered, any other person, may require a copy of the documents described in subsection (1 above, or any part thereof, on payment of a fee of 2s. or such less sum as the company may prescribe for every 100 words or fractional part thereof required to be copied; and the company shall cause any copy so required by a person to be sent to him before the expiration of the period of ten days beginning with the day next following that on which the requirement is received by the company.
2.15 a.m.
In Committee I undertook to look into the arguments which had been put forward and to consider the whole matter. I did not consider it alone, for we tried to canvass informed opinion, and we found that the opinion and our own views were finely balanced between the advantages of greater accessibility of information about directors' service contracts to members and the confidential nature of the documents and the rights to privacy of directors.
After considerable examination and some argument, we have come down against the Amendment of the hon. Member for South Angus (Mr. Bruce-Gardyne). At this stage of our progress towards greater disclosure of information on all kinds of activities in which direc- tors personally are concerned, there is a case for keeping the service contract to a certain extent confidential to members, and as the shareholders of the company can examine the service contract, it seems to me that to ask for copies to be supplied so as to give them a wider distribution is not required at this stage. I must give the hon. Member the answer that he does not want: let us see how it goes. If it can be shown that we have made a mistake and that we should have accepted the Amendment, we will see that it is put right in the next Companies Bill. I feel sure that what we are doing is likely to be accepted and that the disclosure of contracts to members of companies without copies being available—if members of the company want to get hold of a service contract—will be sufficient to stop the kind of activity which the hon. Member mentioned and which we agree must be stopped in the public interest. We have come down, for the time being at any rate, on the side of the directors' privacy.I wish to deal with a small point which the Minister did not mention in his reply to my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) and which occurs in two places, first in the last line of Amendment 59. It sets a time limit within which the information is to be given in relation to the requirement. Having asked for information, the person concerned must be supplied with it within a certain time.
We are dealing also in this group with Amendment No. 101, which is an Amendment to subsection (6) of Clause 34, in page 39 at line 29. The same point arises there, that the information from the register—in this case a different type of register—is to be provided within 10 days of the requirement. The Clause also provides for payment for copies. I should have thought that the word "requirement" in subsection (6) should be altered to "payment", as in our Amendment. Members of the public use the registers for all sorts of purposes. It is not just a matter related to the company. It may be the honest take-over bidder who wants to look at the register to see who to buy from, or it may be a genuine adviser on investments, but more likely it is the journalist or even, I am told, the mail order advertiser who, in connection with the ordinary register, merely writes to the big companies and says, "Send me £5 worth of your register." He is not doing anything other than obtaining names to circulate, but we should protect the registrars and their companies against that sort of thing and allow them to demand payment first, the time to run from its receipt. I hope that when we reach Amendment No. 101 the right hon. Gentleman will say that he accepts it.I had forgotten that we are discussing Amendment No. 101 with Amendments Nos. 59 and 60.
Amendment No. 101 is unnecessary, because under this Bill and Section 113 of the Companies Act, 1948, relating to the members register, provision is made for the company to charge a fee for copies of the members register. Requirement is not a proper requirement unless it is accompanied by the correct fee and time does not begin to run until a proper requirement has been received. Therefore, a company would not be committing an offence if it did not supply copies in response to a request which was accompanied either by the wrong fee or by no fee. For those reasons the Amendment is unnecessary, but I agree that there is a serious problem here. I should have declared an interest. I am a member of the Council of the Institute of Advanced Motorists, and a short time ago it was discovered that under the Companies Act everybody who has passed the driving test and joined the Institute is a member of the association. The Institute has had people asking for the register of members for all kinds of purposes. It has had to get over the difficulty and now the only members of the association are the members of the Council. All the other members are associate members, and we can now keep the register to ourselves.They are nonvoting members?
Arrangements have been made for them to vote. There is a serious problem here, and we shall have to deal with it at some point.
Amendment negatived.
Amendment made: No. 187, in page 23, line 41, after 'kept', insert:
Clause 27—(Obligation Of Director Of A Company To Notify It Of Interests Of His In Shares In, Or Debentures Of, The Company Or Associated Companies)
I beg to move Amendment No. 189, in page 24, line 7 at the end to insert,
Clause 27 requires a director of a company to notify that company of any interest that he has in the company's shares or debentures or in the shares or debentures of other companies in the same group. The rules that are laid down in Clause 28 give a very wide meaning to the expression "being interested in shares or debentures." The possibility has been put to us that some of the interests in shares or debentures which directors will be required to notify will be interests of no significance. To some extent, I suppose, this is unavoidable if the Clause is to achieve its real purpose of ensuring that all interests of significance are notified to the company so that they may be entered on the register. However, I am sure that there will be interests of no significance which can be identified, and we should like them to be covered in the way proposed. It has been suggested, for instance, that the pre-emptive right which directors in some private companies have to acquire the shares of the company is an interest of no significance, as also might be the interest of directors as beneficiaries in the shares held by pensions funds If interests of no significance can be identified, it will be in the interests of all concerned that they be excluded for the purposes of the Clause. The Amendment would do that.'and to any exceptions for which provision may be made by regulations made by the Board of Trade by statutory instrument'.
I am sure that it is right to preserve flexibility in a case like this by means of Statutory Instrument. My only complaint is about what happens to the Instrument. It is merely "made" by the Board of Trade. There is not even a requirement in the Bill or the 1948 Act that it be laid before the House, let alone be subject to Parliamentary procedure of annulment or affirmative Resolution. I do not say that it needs even the procedure of annulment, but at least it should be provided that the Statutory Instrument must be laid. The right hon. Gentleman may be able to tell me that this is provided for somewhere else. For the Board of Trade just to make the Order and tuck it away in a pigeon-hole so that only the Department knows about it would be futile.
The hon. Gentleman has a good point there. I shall try to find out what the answer is and let him know.
Amendment agreed to.
I beg to move Amendment No. 188, in page 24, line 27, to leave out 'any such shares or debentures' and to insert:
This is a drafting Amendment. The words "any such shares or debentures" in subsection (1,b,i), are a reference to'shares in. or debentures of, the company or any other body corporate, being the company's subsidiary or holding company or a subsidiary of the company's holding company'.
in lines 10 to 13 of paragraph (a). The Amendment does away with the somewhat long reference back from line 27 to line 10. Even a layman will now be able to read the Clause and understand it.'shares in, or debentures of, the company or any other body corporate being the company's subsidiary or holding company or a subsidiary of the company's holding company'
Amendment agreed to.
I beg to move Amendment No. 190, in page 25, line 11, to leave out 'seven' and to insert 'fourteen'.
I think that it will be for the convenience of the House to consider at the same time Amendments Nos. 61, 191, 62, 192, 63, 193, 64, 72, 194, 200 and 202 to 208.
2.30 a.m.
I am glad that we can get this long group of Amendments out of the way in one, I hope, short debate. All the Amendments relate to the periods of seven days in the various parts of the Bill within which a director of a company is required to notify the company of an interest in shares or debentures or of the occurrence of an event which is related to such an interest.
In Committee, the Opposition asked us to extend the period to 21 days. We thought that that was too long, and in our spirit of helpfulness and compromise we now suggest that the period should be 14 days. I hope that this will be accepted.I do not want to quibble about this, but by accepting 21 days and leaving out subsection (12)—which states:
we are only one day apart, because in any three-week period there are likely to be six Saturdays and Sundays, three of each. There may even be a bank holiday. There is also the advantage that if one is dealing with a company registered in England or Wales, we do not have to bother about whether there happens to be a public holiday in Northern Ireland, with which we are not always familiar. I suggest that although 21 days may appear to be a long time, it is much more sensible to take 21 days and to cut out the problem of dealing with Saturdays and Sundays, and wondering whether there is a bank holiday, than to stipulate 14 days. I hope that the Minister will have second thoughts about this, because we are only one day apart."In reckoning, for the purposes of subsection (3) above, any period of seven days, a day that is a Saturday or Sunday or a bank holiday in any part of Great Britain shall be disregarded."—
We thought on those lines, but the rather clumsy arrangements for dealing with bank holidays are already in our legislation, and to accept the hon. Member's suggestion would involve us in far more work than we would like to have in drafting the Bill. The best thing to do is to accept the compromise for the time being, although I concede that the hon. Member has a point.
I must confess disappointment with the Minister of State, who has been offered an opportunity for shortening the Bill but has rejected it. It is most ungenerous of the right hon. Gentleman at this stage, when everybody is depressed by the length of the Bill, not to accept the opportunity which we have offered him. It is very disappointing.
Amendment agreed to.
Further Amendments made: Amendment 191: in page 25, line 14, leave out 'seven' and insert 'fourteen'.
Amendment 192: in line 22, leave out 'seven' and insert 'fourteen'.
Amendment 193: in line 24, leave out 'seven' and insert 'fourteen'.—[ Mr. Darling.]
I beg to move Amendment 71, in page 26, line 42, to leave out subsection (9).
We had a very short discussion about this matter in Committee, as reported at cols. 814 and 815 of the OFFICIAL REPORT. The question arises because under the Clause there is an obligation for a director to notify the company of his interests in shares and debentures. Of course, as a consequence there is an obligation to notify any movement of shares or debentures he may own or have owned. It seems to us that in the vast majority of cases this will lead to the needless task, not only of having to fill in the usual transfer form, but at the same time of having to write a separate letter stating that he is writing the letter to confirm the transfer and also to remind the secretary to fill in the appropriate register. There are various categories of cases—for instance, the director who has to write to himself in his capacity as secretary; and the vast majority of private company cases, and, indeed, others, where what obviously will happen is that the poor, luckless secretary will have to write to the director, sending him a pro forma letter, saying he must write back to the secretary on the lines of the pro forma letter. We think that in the vast majority of cases this is unnecessary. Finally, I suspect that what will happen will be that a form of transfer will be devised whereby the notice is actually printed on the bottom, so that the whole thing will go through as one document just as if it were a normal transfer, which, I think, while obeying the letter of subsection (9), is getting round the spirit—though, frankly, I think that that probably would be the most sensible thing to do. We cannot have a great deal of sympathy for this Clause. We can see that in certain circumstances an interest may be disguised; therefore it is right, in this case, that the secretary should be put on guard, and instructed to enter up the register accordingly. The vast majority of cases, however, are absolutely straightforward, and we believe that a notice of this sort will be honoured more often in the breach than in any other way.I always defer to the hon. Member's greater knowledge of accountancy. In fact, I have none at all, and he is a professional accountant, so I must defer to his knowledge, but I have been advised that if we took out subsection (9) many people would find it extremely difficult to know in which register to make the entry. It is for that reason that that subsection is in the Bill. If the hon. Member is telling me that we do not really require it because companies would not be in this difficulty if we took out subsection (9), we might look at it again, but I have been advised that companies might find it difficult to know in which register to make the entry unless we had subsection (9).
Amendment negatived.
Amendment made: No. 194, in page 27, line 10, leave out 'seven' and insert 'fourteen'.—[ Mr. Darling.]
Clause 29—(Provision For Securing That Information Furnished Under Section 27, And Certain Other In- Formation About Directors' In- Terests, Is Recorded And Made Available)
We now come to Amendment No. 73, and it has been suggested that it would be for the convenience of the House if, with it, we took the following Amendments:
No. 75, in page 30, line 23, leave out from '(7)' to 'shall' in line 24 and insert:
'Subsection (2) of section 26 of this Act shall with the substitution, for reference to that section, of reference to this section, apply for the purposes of this section as it applies for the purposes of that section.
(8) The register'.
Government Amendment No. 196.
No. 76, in page 30, line 24, after 'kept', insert:
'the registered office of the company or one of its principal places of business'.
Government Amendment No. 198.
No. 98, in page 38, line 40, Clause 34, after 'keep', insert 'at an appropriate place'.
No. 100, in page 39, line 14, leave out from '(5)' to 'shall' in line 15 and insert:
'Subsection (2) of section 26 of this Act shall, with the substitution, for reference to that section, apply for the purposes of this section as it applies for the purposes of that section.
(6) The register'.
And Government Amendment No. 210, to Clause 34.
I beg to move Amendment No. 73, in page 29, line 23, after 'keep', to insert at an appropriate place'.
This Amendment deals with the place where the register of directors' dealings, which arises under Clause 27, should be kept. This matter has been through a somewhat chequered career. Its place has been changed from time to time and it was, originally, the place where the company has its registered office; the register was to be kept there. Then, in Committee, the Government moved an Amendment to provide that it should be at the office where the company's register of members was kept, but people who understand these matters, such as the C.B.I., did not regard this as satisfactory, and so it is now proposed that the register should be moved again. The purpose of these Amendments, generally, is to enable a register to be kept either at the registered office of the company, at the place where the register of members is kept, or at its principal place of business. I must compliment the Government on being flexible in putting down Amendment No. 196, in page 30, line 23, to leave out from 'shall' to 'and' in line 24 and to insert:—We ought to offer a word of congratulation to the right hon. Gentleman. He really is trying in several of these Amendments. We had a reasonably long discussion on the question of indices during the Committee stage, but I do not think we had any debate on this particular Clause, and I would like to ask if we really do agree that while the index is very appropriate for the other registers being kept, it is really necessary to keep an index of the register when we are dealing only with the directors. Very few companies have more than 20 directors, and it really could not take long to go through 20 sheets of paper. I think that to insist on what the Government seek to do is gilding the lily just a little too much.
2.45 a.m.
Subsection (3) as drafted requires a company to make up its register of directors' share interests so that the names appear in alphabetical order. Amendment No. 195 deletes that requirement and in its place there is the new requirement, introduced by Amendment No. 197, that, unless the register itself constitutes an index, the company shall keep an index. I agree that if there are many directors, that might constitute a burden and I should like to look at that again to see whether we are doing something which is not necessary. We are so busy meeting the wishes of the Opposition that we have probably tumbled over ourselves in the process.
I think that our other Amendments are the most satisfactory way in which to deal with the problem with which the hon. Member for Harrow, Central (Mr. Grant) has attempted to deal. Hon. Members will remember that in Committee the hon. Member for Scarborough and Whitby (Mr. Michael Shaw), and I got into a bit of a tangle about whether we were meeting the wishes of the C.B.I. in this matter. Frankly, until we had had discussions with the C.B.I., we were not sure whether we had succeeded in meeting what was a genuine case. Some very large companies are now working out their registers of members on computers. If a company's computer is at place A, there is no point in carting all that stuff somewhere else so that the register of members can be examined. If we accepted the other Amendments and did not accept the Government Amendments, people who wanted to examine the three registers, that of directors' dealings, the register of major share interests and so on, and the register of members, would have to go to three different places. If our Amendments were accepted, however, there would be three possibilities: all three registers would be at the registered office of the company; all three registers would be at some other place; or the directors' register and the register of major interests would be at the registered office and the register of members at some other place, in other words, where the computer was. I am certain that our Amendments cover all the matters about which the hon. Member for Scarborough and Whitby and I got confused in Committee.It seems odd that the register of major interests and the register of members can be kept in one of two places while the directors' service contract can be kept in a third place, namely, the place of business. I do not understand why the directors' service contract should enjoy the privilege of having a third possible office while the others have only two.
I do not think that that is so. I thought that we ended with only three places and not with the place of business. However, I will look into that to make sure that we have it right.
Subsection (2) of Clause 26, referring to the place where the directors' contract is to be kept, provides:
This would be brought forward into Clause 29 by my Amendment No. 75. It seems odd that if one wants to see the register of members or the register of share dealings one has a choice of two places, whereas if one wants to see the contract, which may be a much more complicated document on which one may want to spend much more time and which may be relevant in chasing directors' share dealings, one may find it in a different place. It is curious that, having put subsection (2) into Clause 26, it should not be regarded as equally appropriate for the other purposes, vice versa, if it is appropriate to have two places in Clause 29 it might be appropriate to have only two places in Clause 26.The following shall, as regards a company, be appropriate places for the purposes of the foregoing subsection, namely,(a) its registered office; (b) the place where its register of members is kept (if other than its registered office); (c) its principal place of business.
The hon. Member for Harrow, Central (Mr. Grant) is quite correct, that the directors' service contracts can be kept in the principal place of business, because that is what was asked for by the C.B.I. and other industrial bodies. It is easier to keep them confidential if they can be kept at the principal place of business, which is where the responsible official of the company will be. This is where I was confused. I thought that the hon. Member was talking about a register of members.
Amendment negatived.
Amendments made: No. 195, in page 30, line 5, leave out from 'that' to 'in' in line 7 and insert,
'the entries therein against the several names inscribed therein appear'.
Amendment No. 196, in page 30, line 23, leave out from 'shall' to 'and' in line 24 and insert:
Amendment No. 197, page 30, line 30, at end insert:
(7A) The company shall send notice to the registrar 3f companies of the place where the said register is kept and of any change in that place, save in a case in which it has at all times been kept at its registered office.
(7B) Unless the said register is in such a form as to constitute in itself an index, the company shall keep an index of the names inscribed therein which shall—(a) in respect of each name, contain a sufficient indication to enable the information inscribed against it to be readily found; and (b) be kept at the same place as the said register; and the company shall, within fourteen days after the date on which a name is inscribed in the said register, make any necessary alteration in the index.
Amendment No. 198, in page 31, line 3, after '£50', insert:
'if default is made for fourteen days in complying with subsection (7A) of this section, the the company and every officer of the company who is in default shall be liable to a default fine'.
Amendment No. 199, in page 31, line 4, leave out 'or (4)' and insert '(4) or (7B)'.—[ Mr. Darling.]
Clause 31—(Extension Of Section 27 To Spouses And Children)
Amendment made: No. 200, in page 32, line 35, leave out 'seven' and insert 'fourteen'.—[ Mr. Darling.]
Clause 32—(Investigation Of Share Dealings)
I beg to move Amendment No. 79, in page 33, line 18, after '27' to insert:
To some extent, this is a probing Amendment, although I always like to hope that some day I may persuade the Ministers to accept one of the offerings which I hold forward to them. I have held forth various offerings to the right hon. Gentleman at various times, both in Committee and on Report, and so far I have scored a duck. However, hope springs eternal, if I may coin such a cliché at this hour of the morning. At this stage we have moved on to the arrangements for the Board of Trade to appoint inspectors in cases where it feels that contraventions of the various Clauses dealing with disclosures of insider share dealings and options, and other matters may have occurred. I move this Amendment because we have not had an explanation from the Government about why there is no provision for the appointment of inspectors in cases where the Board of Trade might feel that there was reason to have investigation under Clause 33, dealing with disclosure of major interests. At first sight it seems entirely illogical that there should be this provision for the appointment of inspectors in the first case, and not in the one that I have mentioned. I am not believer in the virtues of Board of Trade inspections, and this is a classic example of shutting the stable door when the horse has bolted. Our experience of Board of Trade investigations in the past is that not only has the horse bolted, but by the time the investigation is completed the backers have probably been gathered to their fathers. It is a very slow process and the damage is invariably done before the inspection even begins, let alone before it is completed. This Clause will not serve a particularly useful purpose. If we want to prevent or discourage contravention of these Clauses, we should go for greater and more rapid publication, at any rate in the case of public companies. But if we are to rely on inspectors we are entitled to have some explanation why the inspectors' scope is limited in the way that I have outlined.'or the next following section'.
It distresses me not to be able to accept so many of the offerings of the hon. Member for South Angus (Mr. Bruce-Gardyne), but in this case the offering is quite unnecessary. The Board of Trade already has power, under Section 172 of the 1948 Act, to appoint inspectors to investigate the true ownership of companies when it appears that there is good reason to do so. This would cover breaches of Clause 33.
The effect of the Amendment would be to give inspectors appointed by the Board of Trade power to make inquiries of stockbrokers and other dealers in securities, but this power would not be necessary in relation to breaches of Clause 33. I would not agree with the hon. Member that the Board of Trade's inspectors, because of the disabilities under which they have worked in the past—
Just to get this point clear. Is the right hon. Gentleman satisfied that the power to investigate the true ownership of a company in terms of the principal Act does deal with the investigation of 10 per cent. beneficial ownership?
Yes. The purpose of the Amendment is to apply the provisions of inspection to Clause 33. That Amendment is unnecessary, because the Board already has the power to deal with Clause 33 under Section 172 of the 1948 Act. I would not agree with all the strictures of the hon. Member about Board of Trade inspectors always turning up after the horse has bolted. It is perfectly true they have worked under legal disabilities in the past, and I hope we are now beginning to get rid of these.
Amendment negatived.
Clause 33—(Obligation Of Persons To Notify Company Of Aquisition, Changes In Amounts Of, And Dis- Posal Of Shares In The Company Carrying Unrestricted Voting Rights)
I beg to move Amendment No. 201, in page 36, line 40, to leave out paragraph (e) and to insert:
(e) any such interests, or interests of such class as may be prescribed for the purposes of this paragraph by regulations made by the Board of Trade by statutory instrument;
and a definition of a class of interests for the purposes of regulations made under paragraph (e) of this subsection may be framed by reference to any circumstances whatsoever.
I suggest that it would be to the convenience of the House to consider at the same time Amendment No. 82, in page 36, line 39, at end insert:
(e) an interest in shares held by an insurance company (as defined in the Insurance Companies Act 1958) or a banking company approved for the purposes of this paragraph by the Board of Trade if the shares are held as a trustee or a personal representative.
Amendment No. 201 is really for the removal of doubt that might arise out of the present drafting of the Bill. Clause 33 requires anyone who is interested in 10 per cent. or more of the shares of any class of a quoted company's share capital to notify the company of his interest and of any change in it. Among the interests which may, however, be disregarded for this purpose are those in paragraph (e) of the subsection. They are as at present defined
This further Amendment widens the interests that may be prescribed. There could, I think, have been doubt as to whether the Clause would permit the prescription by the Board of Trade, for example, of interests of a class of persons of a class, or interests of a class of a particular person. The new version of the paragraph which I am now proposing removes this doubt by referring to any such interests, or interests of such class as may be prescribed; and by stating that the definition of a class of interests may be framed by reference to any circumstances whatever. The Amendment also removes any doubt that there may be as to the meaning of " prescribed "—that is to say, about the method by which these classes would be prescribed—by using words which I think are entirely clear and explicit,"such other (if any) interests, being interests of a class, of persons of a class or of particular persons, as may be prescribed for the purposes of this paragraph by the Board of Trade.'
"prescribed by regulations made by the Board of Trade by statutory instrument."
We are grateful for what is obviously a sensible Amendment by the Government. I take it that this new and fairly broad subsection will include the sort of people we had in mind when we debated this in Committee—banks, insurance offices, and possibly solicitors who are trustees. I am satisfied myself that it is wide enough. My hon. Friend the Member for Crosby (Mr. Graham Page) is concerned that I mentioned solicitor trustees, but I think it is true.
This is a sensible provision, and our gratitude to the Government is tempered by humble and modest pride that we were the people who drew their attention to the point in Committee.I want to ask the President of the Board of Trade about Statutory Instruments under this Clause. It is the same question I asked the Minister of State on previous Amendments.
Apparently, this is a type of Statutory Instrument which does not require to be laid before this House or to be subject to any Parliamentary procedure. This is very wrong in that the House will not be properly informed of the contents of such an Instrument. When an Instrument has to be laid before the House, it goes on the Order Paper and hon. Members can acquire the document and see what it does. But if the Board of Trade is merely directed to make an order by Statutory Instrument, the order can be tucked away in a pigeonhole and not disclosed to the House or the public. It may be that there is some other Clause which requires the right hon. Gentleman to lay these Instruments before the House, and I hope that that is so. But paragraph (e) gives wide power. A Statutory Instrument made under it can be framed by reference to any circumstances whatever. It could say that under paragraph (e) shall come accountants whose hair is red or who wear brown suits or whatever it may be. This wide power should come under Parliamentary surveillance. Merely to make a Statutory Instrument without its coming before the House is a wrong procedure and I hope that the right hon. Gentleman will advise me that such is not the case here and that these Instruments will be laid before the House.The hon. Gentleman has a way of looking a gift horse in the mouth whether or not it has red hair. I assure him that this is far from being a precedent to act by Statutory Instrument of a type which does not have to be laid before the House. It is a customary procedure in appropriate cases and we have not invented it.
I hope that I can relieve the hon. Gentleman's mind by assuring him that all Statutory Instruments, including these, have to be printed and published. They are therefore known to everyone concerned. There is no question of concealment or secrecy about what my Department will be doing.I am not clear to what extent this new paragraph (e) is an improvement on the existing one, which reads:
There is no provision in the Amendment for prescribing these interests in relation to a class of persons. The class of persons that springs to mind is that which includes banks and the public trustee acting as corporate bodies holding shares or debentures in trust for a multiplicity of beneficiaries. Surely the right hon. Gentleman is making his task of definition more difficult by leaving out any reference to an ability to make a definition by reference to a class of persons."such other … interests, being interests of a class of persons of a class or of particular persons, as may be prescribed …"
Amendment agreed to.
Further Amendments made: No. 202, in page 37, line 10, leave out 'seven' and insert 'fourteen'.
No. 203, in line 14, leave out 'seven' and insert 'fourteen'.
No. 204, in line 31, leave out 'seven' and insert 'fourteen'.
No. 205, in line 37, leave out 'seven' and insert 'fourteen'.
No. 206, in line 46 leave out 'seven' and insert 'fourteen'.
No. 207, in page 38, line 3 leave out 'seven' and insert 'fourteen'.
No. 208, in line 27 leave out 'seven' and insert 'fourteen'.
—[ Mr. Jay.]
Clause 34—(Provision For Securing That Information Furnished Under Section 33 Is Recorded And Made Available)
Amendments made: No. 209, in page 39, line 1, leave out from 'that' to `in' in line 3 and insert:
'the entries therein against the several names inscribed therein appear'.
No. 210, in line 14, leave out from second 'the' to 'and' in line 15 and insert:
'place at which the register required to be kept by the company by section 29 of this Act is kept'.—[Mr. Jay.]
I beg to move Amendment No. 211, in page 39, line 18, after first 'inspection' to insert:
With this Amendment Amendments Nos. 212 and 214 are associated. The purpose of these Amendments is to ensure that a dispensation given to a company under Clause 3 or Clause 4 is not nullified by the provisions in this Clause. This would otherwise have been the effect of the Bill. That was not an effect which any of us intended. As the Clause stands, a dispensation given under Clause 3(3) or Clause 4(3) permits a company to withhold from its accounts, or from a statement annexed to its annual return, information about a subsidiary or an associated company which is incorporated outside the United Kingdom or, being incorporated in the United Kingdom, carries on business outside the United Kingdom. It follows that, if the information were open to inspection, there would be publication of the fact that the company keeping the register was a subsidiary of or asociated with the company which had been granted the dispensation. That would defeat the object of the dispensation, which was intended to avoid publication of any relationship between the company to which the dispensation had been granted and the company in respect of which it is permitted to withhold information. The Amendment overcomes that difficulty by providing that, where a register kept in accordance with the Clause contains information about a company which for the time being is entitled to avail itself of the benefit conferred by Clause 3(3) or Clause 4(3), that part of the register which contains that information shall not be open to inspection. I think that achieves what both sides of the House intended.'but save in so far as it contains information with respect to a company for the time being entitled to avail itself of the benefit conferred by section 3(3) or 4(3) of this Act'.
I congratulate the right hon. Gentleman on expounding this matter so clearly so early in the morning. The dawn must be breaking. The Amendment makes a tremendous improvement, because it blocks a very important loophole, in that people could have been very easily embarrassed through having information disclosed under this Clause, whereas the intention was to keep it hidden by loopholes in earlier Clauses. This reveals once again that we are reaching a stage in legislation when there seem to be so many complications that powers of discretion to ease the onus in as many respects as possible are necessary, This is a deficiency in the Bill that we have found. We have found several others. Indeed, no fewer than 175 Amendments have been tabled by the Government on Re- port. There may well be other deficiencies in the Bill which we have not yet unearthed. The more scope we can have to give the Board of Trade power to relieve people of necessities such as this the better.
Amendment agreed to.
Further Amendments made: No. 212, in page 39, line 21, at end insert:
'but in so far as it contains such information shall not be open to inspection'.
No. 213, in line 21, at end insert:
(5A) Unless the said register is in such form as to constitute in itself an index, the company shall keep an index of the names inscribed therein which shall—(a) in respect of each name, contain a sufficient indication to enable the information inscribed against it to be readily found; and (b) be kept at the same place as the said register; and the company shall, within fourteen days after the date on which a name is inscribed in the said register, make any necessary alteration in the index.
No. 214, in line 22, leave out from the beginning to on ' in line 23 and insert:
'As regards so much of the said register as is required to be open to inspection, any member of the company or other person may require a copy of it, or any part of it.'.
No. 215, in line 31, leave out 'or (3)' and insert '(3) or (5A).—[ Mr. Jay.]
Clause 37—(Fresh Powers Of Board Of Trade To Bring Civil Pro- Ceedings On Behalf Of Body Corporate)
3.15 a.m.
I beg to move Amendment No. 102, in page 40, line 33, after `Act', to insert:
This Amendment extends the provisions of the Clause to enable the Board of Trade, if it has an interim report, following the new provisions of Clause 41, that discloses that, amongst other things, civil proceedings ought, in the public interest, to be brought by a body corporate, to act on that interim report under Clause 41 in the same way as it can under the reports specifically mentioned in this Clause. I find this a little confusing. In an earlier Amendment it was suggested that Clause 33 was not covered by a similar power of inspection and investigation as is contained in Clause 32 and applies to Clauses 25 and 27. The right hon. Gentleman referred to Section 172 of the principal Act, but there is a subtle difference here, in that Clause 32(4) provides specifically for inspectors to make interim reports to the Board of Trade, and is very much in line with the provisions of Clause 41. Section 172 of the principal Act does not, as far as I recollect, and as far as I can see from a superficial glance at it, provide for these interim reports. As we have been concerned, in the Clauses dealing with enforcement, with giving power to the Board of Trade to act more speedily, it seems odd that there has been a somewhat ad hoc selection of Clauses to which these provisions—in respect of interim reports, and acting upon them, both in regard to disclosure and criminal and civil proceedings—have been made to apply. This seems to require further consideration. On the face of it the Clause would appear to extend to Clause 41, but I may have misunderstood the situation.'or under section 41 of this Act'.
I am always grateful to hon. Members when they propose adding to our powers on the ground that we have not taken sufficient powers already. The hon. Member is seeking to extend the Board of Trade's powers by allowing it to take civil proceedings on the basis of information passed on to it by inspectors in an interim report, without a final report having been made.
In our view, although there would be no harm in such powers being granted to the Board of Trade, it is so doubtful whether it would ever wish to embark on civil proceedings without waiting for an inspector's report that the Amendment appears to be unnecessary. My advisers would have favoured the power being given if experience had shown it to be necessary, but we believe it is not.Amendment negatived.
Clause 39—(Power Of Inspectors To Secure Attendance Of Persons For Purposes Of Investigation)
I beg to move Amendment No. 103, in page 41, line 34, after 'words' to insert:
The right hon. Gentleman will again be pleased to find that I am seeking to give him more powers. The Clause gives inspectors power to secure the attendance of people at investigations and to compel the production of books or documents which it is the duty of officers of the company to produce. There is no provision, however, to deal with a dishonest officer who wilfully defaces them. I can recall some extraordinary instances, like that of minutes pasted into a minute book which were removed and others substituted, and have known noughts to be added to or taken from figures. Neither action would be an offence. A subtle operator could produce the book or documents which he must, but they could be skilfully defaced or altered. These cases of fraudulent company directors are more common than people imagine, so I offer the right hon. Gentleman additional powers.'" wilfully defaces any book or document which it is his duty, under this section so to produce or'
The hon. Gentleman is right to say that defacing books would not be caught by this Clause, but it would be caught by Clause 109, which makes it an offence to destroy or mutilate a company's books or to be privy to such acts. Proceedings could be taken against anyone who defaced books which had to be produced to inspectors. The Amendment is unnecessary: we could have accepted it, but it would have inserted words which were not required for the hon. Gentleman's purpose.
Amendment negatived.
Clause 42—(Extension Of Board Of Trade's Powers Of Investigation To Certain Bodies Incorporated Outside Great Britain)
I beg to move Amendment No. 216, in page 42, line 23, after 'bodies', to insert 'corporate'.
I will not tell the House the rude words used in Committee by hon. Members opposite about the wordsWe underook to put this right."… bodies corporate incorporated outside Great Britain".
The right hon. Gentleman has not put it right but has made it worse. At least he has now produced consistency, and in every case a body corporate is called a "body corporate incorporated", but this is the wrong direction. I cannot see how a body incorporated in Great Britain, Northern Ireland or Timbuctoo can be anything other than a body corporate. I defy any hon. Member, or the Board of Trade, or, indeed, you, Mr. Speaker, to produce a dictionary definition of a corporate body which has not been incorporated or a body which has been incorporated but is not a corporate body. If that is so, then it is unnecessary to put the word in the Bill, and if we deleted it wherever it occurs, we should shorten the Bill by three words throughout the Bill. We should also have much better English and should make it clear that we know what we are talking about. As it is, we indicate that we do not know what we are talking about. I do not think the right hon. Member's Amendment has improved the Bill at all.
Amendment agreed to.
Clause 43—(Limited Companies May Be Registered As Unlimited)
I beg to move, Amendment 104, in page 44, line 22, at the beginning to insert:
'Without prejudice to the next following subsection'.
It would be convenient at the same time to take the following Amendments:
Amendment No. 105, in line 23, to leave out 'conclusive' and to insert 'prima facie'.
Amendment No. 106, in line 28, at the end to insert—
(6) Notwithstanding the provisions of the last preceding subsection a certificiate of incorporation issued by virtue of this section shall be conclusive evidence of the status of the company and that status shall not be challenged in any proceedings whatsoever.
The Amendments are self-explanatory and I hope that the right hon. Gentleman will accept them because they meet the one objection which he made in Committee to an Amendment similar to No. 105. We think that we have cured that objection by coupling Amendment No. 105 with Amendments Nos. 104 and 106.
Section 43 deals with the re-registration of limited companies as unlimited companies. The early subsections, particu- larly subsection (3) onwards, deal with matters which are subsequently described as "precedent and incidental" which must be gone through before the company can be re-registered. Among these matters "precedent and incidental" is the production by the directors ofSimilarly, paragraph (b) requires"the prescribed form of assent to the company's being registered as unlimited subscribed by or on behalf of all the members of the company".
As the Bill stands, the certificate of incorporation issued as a result of these important formalities is conclusive evidence of all the matters referred to. It is conclusive evidence that the requirements of the Clause with respect to re-registration and all matters "precedent and incidental" thereto have been complied with, and that the company was authorised to be re-registered under the principal Act in pursuance of the Clause. It is clear, therefore, that it is not only conclusive evidence that the company has been re-registered as unlimited; it is conclusive evidence that the members of the company have subscribed, or have had subscribed on their behalf, the assent that the company should become an unlimited company. There could be a situation in which the assent of a member had been forged or obtained by some form of duress. I accept the right hon. Gentleman's contention in Committee that, for all that, it is still essential for people dealing with the company that its status should not be in doubt, and that is the raison d'être of Amendment No. 106, which says that notwithstanding the fact that we have made it prima facie evidence, it shall be conclusive evidence as to status. Anyone dealing with the company is as much protected under the Bill as amended as under the Bill without the Amendment. But the Amendment leaves open the possibility of someone bringing a civil action for having his signature forged or his assent obtained by some form of duress, which is basic to our common law. If we do not do that, we could have the situation in which the necessary formalities were completed by fraud or duress and there would be no redress, as civil proceedings could not succeed against the person carrying out the fraud because the certificate was said to be conclusive evidence that the assent had been properly obtained. 3.30 a.m. This is the object of this set of Amendments. I hope that they will be accepted, because they meet—I am not aware of any grave drafting errors—the only objection that the right hon. Gentleman made to acceptance of the original Amendments moved in Committee."a statutory declaration made by the directors of the company that the persons by whom or on whose behalf the form of assent is subscribed constitute the whole membership of the company".
The hon. Member for Gloucestershire, South (Mr. Corfield) is right in his arguments, but I have been advised that, notwithstanding the words of subsection (5), the certificate would not be conclusive evidence in proceedings involving allegations of fraud or forgery. Therefore, the Amendment is unnecessary and the arguments which the hon. Member has put forward are covered.
It is not only fraud or forgery that one is dealing with here. Subsection (5) says that the certificate is conclusive evidence that the requirements of the Clause have been met. When a company is being converted from a limited company to an unlimited company the individual members of that company now have unlimited liability. While they are members of a limited company, if they hold fully paid up shares, they are under no further liability, but once they become members of an unlimited company they have individual liability. It is not quite the same as a partnership, because a creditor cannot pursue them individually. He would have to put the company into liquidation, and it is only the liquidator who can claim unlimited liability against the members. However, it is a different status for the members, and it might happen by mistake. For instance, if a member's address is wrong or has not been properly registered, notice of the change from limited to unlimited can occur without his knowing anything about it. The fault may not be the member's; it may be the company's. Yet the certificate is to be conclusive evidence that the requirements have been properly carried out.
It is right that it should be conclusive evidence of the status of the company as an unlimited company when it deals with third parties. Third parties should not have to look into the procedure whereby it changed its status and therefore, the certificate should be conclusive there. But if the company has done something wrong, by failing to give notice to a member, he should have his remedy against the company and the certificate should be prima facie evidence only that it has met all the requirements. If the member can say, "It was the company's fault. My assent to this change in my liability was brought about without my knowledge", he should be able to recover from the company. Our Amendments are intended to leave it clear that third parties dealing with the company can rely on the certificate, but, if the company has done something wrong in the procedure of converting itself from a limited to an unlimited company and thereby increased the liability of individual members, the members should have some redress.At this late stage, after about 12 hours of debate on Report, I congratulate my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) on bringing this important matter to the notice of the House. It seems that members of a company which converts itself from limited to unlimited status will be put at risk, albeit inadvertently. The Minister had not grasped that point when he replied. As I listened to my hon. Friend the Member for Crosby (Mr. Graham Page), I was at once seized of the matter because my hon. Friend has a knack of putting complicated matters in a comprehensible way, which is most helpful to hon. Members who are trying to follow these complex questions.
It was clear to me.
That surprises me, because it did not seem too clear to the Minister of State.
This may well be a matter of some consequence. The change from limited to unlimited liability will be encouraged under the Bill. We pointed out earlier that there would be a good many companies turning themselves from one status to another in order to avoid certain of the Bill's provisions. I hope that the Minister will acknowledge the force of the case which has been put. People who had taken shares in a limited company could find that, unwittingly, they had saddled themselves with a quite different level of liability.In Committee, the point now made by the hon. Member for Crosby (Mr. Graham Page) was not raised. We were then concerned with the question raised by the hon. Member for Gloucestershire, South (Mr. Corfield) about difficulties caused by fraud or forgery. Looking at it from that point of view, we took the discussion further to make sure that the points then raised were covered. If they had not been, we would have done something about it by Amendment ourselves. I repeat that, in regard to fraud and forgery, notwithstanding the words of subsection (5), the certificate would not be conclusive evidence in proceedings involving allegations of that kind.
I should like to look into the other point to make sure that the position of the injured innocent person is protected. I should like to be sure that some redress is open to the person who has not received any communication from the company about changes in status and who then finds himself in difficulties.I mentioned fraud or forgery only as examples of the way in which assent could be obtained without the knowledge of the person from whom it was required. The results of assent obtained in that way follow from the nature of the Clause. At the end of the day, a limited company becomes an unlimited company, and the individual members have to face the rigours of unlimited liability.
The right hon. Gentleman did not address his argument to the question of duress. At one end of the scale, there is the slight influence which a man has, for instance, with a relation who is accustomed to rely on him for advice. Predominantly, under this Clause, we have to consider the small family company. Very often, the relatives, parents, aged aunts and so on, have money in the business and they are used to being told, "This is all right. Sign it". They are accustomed to rely on such advice. Whether it is strictly duress, I do not know. At least, I shall not argue it at this hour. Someone could take advantage of such a relationship, knowing full well what the effect would be. Auntie, of course, may be the member of the family with the money who will have to meet the debts. It is quite wrong to have any suggestion that her cause of action against the man who induced her to sign the document, to give her assent or to give her solicitor authority to do it for her could be barred by a certificate which is said in the Bill to be conclusive evidence. Perhaps I can be quite frank at this time of the morning. I simply do not think that the right hon. Gentleman's advice is good enough. If there is any doubt, there cannot conceivably be any good reason for not putting in this safeguard. I beg the right hon. Gentleman to do this. I do not share the Lord Chancellor's views that small companies are the homes of fraud. There are frauds, however, and we should not legislate by putting in a Statute something which could be a bar against the handing out of justice in a case of this sort. Obviously, one cannot think of every possible ramification. There may be other examples. I have given the one which springs to mind. At this late stage of the Bill, with so little opportunity for further amendment, I am compelled again to ask the right hon. Gentleman to accept the Amendments. They could not possibly do harm. I suppose that their Lordships could be induced to throw them out easily at a later date. I believe that the Amendments are necessary. Even if they are not, they could do no harm at this late stage and we should play safe and put them in.I have already explained that on the fraud question, the Amendment is unnecessary. I am also advised that the way the three Amendments are drafted would not satisfactorily cover the point raised by the hon. Member for Crosby (Mr. Graham Page) and that further drafting would be necessary to deal with his situation. The status of the company would have been changed in any event notwithstanding whether the person had been misinformed or whether there had been any fraud. One has to think in terms of the position of the creditors.
Apart from those arguments, however, I am informed—and I must take this advice—that to cover the point raised by the hon. Member for Crosby would require further redrafting. That was why I said that we would look at it.May I interrupt the hon. Gentleman—
The hon. Gentleman has exhausted his right to speak.
I was not endeavouring to speak again, Mr. Speaker. I was endeavouring to interrupt the right hon. Gentleman, if I might interject in that way. Having regard to the fact that, unless an Amendment is made now it cannot he reconsidered in connection with the Bill, whereas if the Amendment were made now it could be corrected at a later stage in another place, will not the right hon. Gentleman accept the Amendment, even though it may not be right, so that he can then bring this valuable principle into the Bill?
The timetable to which we are working and the arrangements that have to be made now will prevent our carrying out what, in other circumstances, would he a very sensible and wise proposition. Our difficulty is that the Bill started in another place.
Amendment negatived.
I beg to move Amendment No. 217, in page 44, line 43, at the end to insert:
With this Amendment is associated Amendment 219, in Clause 44, page 47, line 14. The purpose of these Amendments is to remove possible doubt. In Clause 43 there is a reference in subsection (1) to an application framed in the prescribed form and in subsection (3) to the prescribed form of assent. In Clause 44—this is relevant to the second Amendment—there is reference to an application framed in the prescribed form. These Amendments remove any doubt about the meaning of "prescribed" for the purpose of these Clauses by making it clear that the matters prescribed by regulation are done by the Board of Trade by Statutory Instrument."() In this section, 'prescribed' means prescribed by regulations made by the Board of Trade by statutory instrument."
3.45 a.m.
I want only to object again to the fact that this is by Statutory Instrument which will not be laid before the House. This deals with forms required. It is true that normally a Statutory Instrument providing for forms does not come before the House on any Parliamentary procedure, but very frequently these are laid before the House so that Members can see them—and, indeed, could raise them on an Early Day Motion. These are going to be important forms, especially the one under subsection (3,a), the prescribed form of assent. Moreover, this is something new, something which Members ought to have an opportunity of seeing. Merely to say that every Statutory Instrument is printed is really not sufficient. Important Statutory Instruments of this sort ought to be laid before the House.
Amendment agreed to.
Clause 44—(Unlimited Companies May Be Re-Registered As Limited)
I beg to move, Amendment No. 107, in page 45, line 3, to leave out from the beginning to 'may'.
This Amendment also, to a certain extent, was touched on in our deliberations in the Standing Committee, and I think we raised an important point in those discussions. I hope that, as a result of that, the right hon. Gentleman is now able to concede the point. The position is that under Clause 43 the Bill allows limited companies to become re-registered as unlimited. This is done, as I understand it, specifically because it is accepted that a considerable number of additional burdens with regard to disclosure will be placed on companies in the future, when this Bill has gone through. As a result, it was felt—I think, quite rightly—that there might be many small companies which might prefer to adopt an unlimited status, rather than make the disclosures which would be necessary in future. So the Bill, in Clause 43, envisages that companies should be able to switch to an unlimited status. Then in Clause 44, which we are now discussing, the opportunity is taken of facilitating companies, both those which were unlimited in the past and those coming into being as unlimited companies in the future, allowing them at a later date to transfer into the limited field, as it were. But there is one exception to this permission, and that is where a company has taken advantage of Clause 43 and become unlimited; it is no longer able to avail itself of the following Clause so that it can at a late date become limited in its liability. We believe that this is entirely wrong. We believe that the whole object of Clause 43 is to allow limited companies to put themselves into exactly the same position as other, unlimited, companies are. The facts are clear. There is a completely new situation, and they now have at this moment to decide whether or not they want to change their condition in view of the different obligations which are being imposed upon them, and so they are entitled to go to an unlimited status, and we believe that, in going to that unlimited status—and in being encouraged to go to that status if they so desire—they should be in no worse position than are other unlimited companies. Curiously enough, I came across a company only yesterday that was probably going to be unlimited. I had never come across one in my professional life before, and this particular company had, in the past, been unlimited. In recent years it became a limited company, and I was informed that it was thinking seriously of going back to its unlimited status. Unfortunately, I had to explain that the right, under Section 16 of the principal Act, at a later date to become limited would not be available to this company if it jumped back to its unlimited status, because of Clause 43 of his Bill. This, we think, is most unfair, and the words which we seek to be left out of Clause 44 are to be left out so that those companies opting to become unlimited, should have the same rights as other companies if, at a later date, they should desire to become limited. I do not believe that the statement that companies will alternate is valid because companies cannot stand still or hover. They go up hill, or they go down. That is certain and this Amendment should be accepted. I recommend it to the House.
I agree profoundly with the hon. Gentleman when he says that it is not likely that a company will change backwards and forwards from limited to unlimited status and from unlimited to limited. He did not, as I thought he would, refer to the fact that there would be problems of Capital Gains Tax, and other fiscal problems and, in that context, the way to put the matter right would be to make the appropriate Amendments in the Finance Bill. We can look at the fiscal difficulties in relation to that, but I fully agree that companies cannot switch about in the way which he has suggested.
As a director of an unlimited company, I do not think that there is an intention, generally, to switch backwards and forwards but I must remind the Minister of State that conditions change, and I could envisage that this could happen. It ought to be put right at some stage. There could, I agree, be provision in the Finance Act or otherwise, but circumstances and conditions might necessitate a change.
I fully accept that it is not desirable for any company to jump in and out of limited status or unlimited status, as the case may be. I accept that, but this Clause means that at no time in the future can any company which became unlimited by virtue of Clause 43, ever become limited again. There seems to be an absolutely indefensible discrimination against that type of company compared with all the other unlimited companies.
I should be perfectly satisfied with a promise that this will be put right in the next Bill. This is the one occasion on which I could be satisfied with such a promise, because I shall not worry in the least if a company becomes unlimited next year and does not apply to become limited again for the next two or three years. This is something which can be put right in the next Bill without doing any damage in the meanwhile, and this is perhaps the first provision of which we have been able to say that. If the right hon. Gentleman could give us the assurance that some sort of provision will be made after three or five years, or something of the sort, that the ban on companies becoming unlimited will cease to bite, we shall be very happy and no harm will be done in the meanwhile.I can certainly give the assurance that we will consider this matter for the next Bill, when we will have had a little experience of what happens in practice.
In those circumstances, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 218, in page 45, line 31, to leave out from first 'to' to the end of line 33 and to insert:
This is a drafting Amendment. The point is that an unlimited company which wishes to re-register as a company limited by guarantee will have to pass a special resolution providing for the making of such alterations in its memorandum and such alterations in and additions to the articles which are required to bring the memorandum and articles into conformity with the requirements of the principal Act. What we are here doing is to make sure that the conditions as to the mode of limitation, liability and possession of share capital will be similar to the condition of the company in these matters obtaining upon the re-registration of the company. It is a drafting Amendment which puts right something which needed to be put right.'the condition of the company as to those matters which will obtain upon its re-registration'.
Amendment agreed to.
Further Amendment made: No. 219, in page 47, line 14, at end insert:
() In this section, 'prescribed' means prescribed by regulations made by the Board of Trade by statutory instrument.—[Mr. Jay.]
Clause 46—(Power Of Board Of Trade To Require Company To Abandon Misleading Name)
I beg to move Amendment No. 108, in page 47, line 24, after 'company', to insert 'and not withdrawn'.
In this Clause we deal with a situation in which the Board of Trade issues a direction demanding that a company should change its name if in the Board's opinion it is a misleading name. The Clause now contains a provision by which the company must comply with that direction, unless it is made the subject of an application to the High Court and then, of course, it rests with the High Court. This is a process very similar to many other forms of direction for an enforcement notice, purchase notice and so on in the Town and Country Planning Acts, with which I am more familiar than I am with Board of Trade Acts. In many of those Acts, and I believe in all, when a direction has an effect of this sort and is a mandatory direction—it becomes completely mandatory once the period of appeal has run out—the words "if not withdrawn" are used. The Amendment would make it perfectly clear that the Board of Trade was always able to withdraw a direction and that a direction would not have to operate absolutely from the moment of its making, subject only to the decision of the person on whom it was served to apply to the High Court. This is a little like the argument which we had on what used to be Clause 90 but which is now Clause No. 19. We were concerned whether the exemptions were revokable, and the Board of Trade sensibly decided that, if there was doubt, it should be made clear that there was power to revoke the exemption. Equally, it should be made clear that not only is there a power to withdraw these directions, but that as soon as they are withdrawn they have no effect. This is better drafting and better law, and I commend it to the House.4.0 a.m.
The hon. Member is trying to do something which is additional to what is necessary. His proposal is quite unnecessary. A direction to change a company's name will be made only after very careful consideration of the case; and there is an appeal to the courts. The courts can set aside the direction if the Board of Trade makes a hash of things. It is unnecessary within six weeks to provide also that the Board of Trade shall withdraw a direction once given. I cannot imagine it happening.
The right hon. Gentleman will bear in mind that, although an application has to be made in six weeks, it will be many more weeks before it comes to court. It may turn out that the Board of Trade wishes to change its mind. This applies, in particular, to purchase notices which have gone through the Lands Tribunal, which is a court. In this sort of case it is wise to have this power. The misleading nature of the name may change because the company or some other organisation which the name is similar to may have changed. It is not sufficient to say that because there is only a six-week lag on the question of the appeal it will be six weeks before the decision is made.
We are prepared to look at this matter, just as we will look at the previous Amendment.
Amendment negatived.
Clause 48—(Exemptions From Sections 6 To 8 And 17 Of This Act And Section 196 Of The Principal Act)
Amendment made: No. 220, in page 48, line 22, leave out Clause 48.—[ Mr. Jay.]
Clause 51—(Exemption From Obliga-Tion To Print Certain Resolutions And Agreements)
I beg to move Amendment No. 221, in page 50, line 9, at the beginning to insert:
This is a concession to meet arguments put forward in Committee. The Clause as originally drafted would have permitted the copy of a special or extraordinary resolution forwarded by a company to the Registrar to be in a form other than printed if that other form is approved by the Registrar. This would leave an ordinary resolution for an increase in capital as the only kind of resolution of which a printed copy must be forwarded. An Amendment to extend the Clause to these resolutions was negatived in Committee. We have further considered the matter, as we always do, in deference to the views expressed. In this case we agree that the Clause should be extended in the way proposed.(1) Notwithstanding anything in subsection (2) of section 63 of the principal Act, no company need forward to the registrar of companies a printed copy of a resolution authorising an increase of its share capital, if instead it forwards a copy in some other form approved by the registrar.
I thank the right hon. Gentleman for this Amendment. I assure him that this matter has caused very great practical irritation in offices. Certainly all young clerks, when they first started dealing with these matters, were liable to fall into the trap of sending, in the case of an exempt private company, a typed resolution to the Registrar.
If they had the makings of a good accountant it was the last time that they did it. It was one of those things which probably slipped through in the 1948 Act and I am glad that it has been put right.Amendment agreed to.
Clause 54—(Application Of Certain Provisions Of Part I To Un- Registered Companies)
Amendments made: No. 222, in page 51, line 19, leave out '17 (both inclusive), 19 to 23 (both inclusive)' and insert '23 (both inclusive), 35, 37, 41'.
No. 223, in line 23, leave out from beginning to second 'to' and insert and 13'.
No. 224, in line 25, at end insert:
() in the case of sections 35, 37 and 41, were included amongst the sections of that Act so specified which relate to investigations. —[Mr. Jay.]
Clause 56—(Interpretation Of Part 1, And Application Of Provisions Of The Principal Act)
I beg to move Amendment No. 110, in page 52, line 37, at the end to insert
Under Clause 3 there is to be disclosure, by a subsidiary company, of the country where it is registered. Clause 4 lays down that if a company holds one-tenth of another company's shares the name of the body corporate or the country of origin shall be disclosed. There is protection against this disclosure if it is harmful and if the company is carrying on the business outside the United Kingdom. In Committee it was rather assumed that the words "carrying on business outside the United Kingdom" meant that the whole of the business had to be carried on outside the United Kingdom. The President of the Board of Trade has been helpful, in Clause 20, in saying that disclosure of information need not take place if the Board of Trade is satisfied that this is in the national interest. I hope that he will look sympathetically at this Amendment, which asks that a company shall be deemed to be carrying on business outside the United Kingdom, provided that some of its business is carried on outside the country. Many companies could have part of their business outside this country, maybe an important and distinguishable part. A company may have overseas depots for the sale of its goods, and in that event should have the protection envisaged in Clauses 3 and 4. I hope the right hon. Gentleman will tell us that this is what he has in mind.(5) References in this Part of this Act to a company which carries on business outside the United Kingdom shall be construed as including any company carrying on business of any description whatever outside the United Kingdom provided only that such business is distinguishable in the accounts of that company from business carried on within the United Kingdom.
This argument follows another on an earlier Amendment. We are concerned with companies carrying on business outside the United Kingdom. The object of the Amendment, as I understand it, is to make clear that carrying on a business in this country means a business of any description. It does not seem necessary to add to the words already in the Bill. There is no difference between us as to intention. Before agreeing to an exemption from disclosure the Board of Trade would have to be satisfied that disclosure would be adverse to overseas business, and that that business was significant, so that it was therefore in the national interest, on certain occasions, for information not to be disclosed. In our view it is more convenient and wiser to do this without spelling out in the Bill exactly how this power and discretion would be used. I hope the hon. Gentleman will accept that that is our intention, and that according to the advice given to me we are most likely to achieve it in this fashion.
I do not really want to pursue this point; I just wanted to ask the right hon. Gentleman, in view of the fact that we have just come to the end of the first Part of the Bill and have Parts 2, 3, 4, 5 and 6 to complete, whether he thinks this is a suitable time at which we might adjourn. He will recall that at the last session he felt it was inappropriate to go on after 11 o'clock. It is now ten minutes past four; perhaps the same argument might apply to our proceedings this evening, and we might complete the other half of the Bill at a later time.
Order. Perhaps the right hon. Member could raise this in a moment—we are on an Amendment and it would be tidier to dispose of it.
I am glad to hear what the President of the Board of Trade has said. He has told us that his words cover what I had in mind. If that is so, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
I take it the hon. Gentleman wishes to move that further consideration of the Bill, as amended, be now adjourned.
Yes, Sir. I beg to move, That further consideration of the Bill, as amended, be now adjourned.
If it is in order for me to speak to that motion, I would say that it seems to me that we are making excellent progress in a very harmonious atmosphere with constructive assistance from all sides of the House. Hon. Members opposite seem to me almost as fresh and vigorous as those on this side of the House. The hon. Member for Twickenham (Mr. Gresham Cooke) showed no signs of exhaustion or fatigue; we now have the fresh light of dawn, I would hope, about to re-invigorate us even further, and therefore I should like to propose that consideration of the Bill should proceed now.
I must say that I think that the President of the Board of Trade is a little callous as to the interests of the staff of the House, including, if I may say so, your good self, Mr. Speaker. The House has now been in session on this measure for approaching 13 hours, and, as the President of the Board of Trade said, we have made excellent progress.
When on 12th July he said about the progress made at a previous sittingand"We have had useful, helpful and, if I may say so, rational discussion …"
and his Motion to adjourn was put at 10.55, after a relatively modest discussion. We have now had a fantastically long discussion on the companies' section, and are going to enter into discussion on the insurance section, which is not insuperably difficult but which is a complicated matter. I cannot think we are at our best to discuss this matter at this very late hour. I hope that the right hon. Gentleman will give very much more serious consideration to what my hon. Friend has proposed. I think it is reasonable in all the circumstances. When I go back to my constituency and report that we have been sitting up discussing these complicated matters all night I get no sympathy. All my constituents say is, "You should order your business better." I am afraid that the right hon. Gentleman responsible for ordering business has not even been seen peeping round the back of the Speaker's Chair. I have seen Press reports that he does not actually take his seat, but peeps around the back of your Chair, Mr. Speaker. I have not seen his face once during the whole of these 13 hours. If he does order business like this it is really his duty to come to see how it is being carried on; otherwise, how can he form an opinion which is based on what he reads of the remarks of the President of the Board of Trade?—that everyone is as fresh as a daisy. I must admit I do not feel at all fresh at this hour. At an earlier stage, the right hon. Gentleman accused me of going out to sleep when in fact I had gone out for refreshment. I have not been to sleep tonight and I can still stay on my feet. But I do not feel at my best to tackle this question of insurance at this hour and after so many hours. I hope that he will reconsider."We have made, perhaps not sweeping progress, but some material progress,"—[OFFICIAL REPORT, 12th July, 1967; Vol. 750, c. 967.]
4.15 a.m.
I, too, hope that the right hon. Gentleman will think again. It is undesirable to continue to discuss a Measure of this importance at this hour. It affects vast numbers of our constituents and all the business operations of the country. A quite intolerable strain is being imposed not only on hon. Members but, above all, on the staff and servants of the House, day after day, night after night, morning after morning. But the man responsible does not even have the grace and courtesy to take part in the sort of punishment he is inflicting. If only as a gesture of contempt to the Leader of the House, the right hon. Gentleman should accept my hon. Friend's Motion.
I know at least enough about company law to be able to discuss it fairly intelligently but I am not an expert on insurance, which is a speciality on its own. My hon. Friend the Member for the City of Chester (Mr. Temple) is something of a specialist on the subject, however. Insurance affects persons different from those we have so far been dealing with. It affects millions of motorists and millions of other members of the general public and we should approach it with fresh minds.
I am grateful to my hon. Friend for his compliment but he will recollect that the Minister of State, who is in charge of the part of the Bill dealing with insurance, said earlier that some of these matters could wait for a further Bill. But these insurance matters cannot wait for another Bill. They are pressing and must be got right either tonight or at another sitting on this Bill.
They are urgent because there have been some disgraceful episodes, particularly in motor insurance. This is a very important matter which we should approach with fresh minds.
My hon. Friend the Member for City of Chester (Mr. Temple) said that he could stay on his feet but was not sure if he could go on tackling this important matter at this hour. My great difficulty at such an hour is not that I am not sure that I can speak but that I cannot stop speaking. If that is so, we shall be here a long time yet. Most of us have had some sort of military service and the first thing one learns there about leadership is that, when one inflicts tiresome duty on other people, one turns up onself to see them through. But where is the Leader of the House tonight?
It is outrageous that the Leader of the House, having arranged business in this way in order, basically, to mess about with private Members' time last week, should not even be here. We have got our two sittings on this Bill lop-sided. The first finished at 10.55 p.m. and in the second we are still going on at twenty minutes past four in the morning, having only just reached the end of Part I of the Bill. The original Amendment Paper for Report stage was 75 pages long. A large percentage was taken up by Opposition Amendments and the fact that you, Mr. Speaker, thought fit not to select only a very tiny fraction of our Amendments is an indication that they deal with valid points. There has been no question of drawing out the proceedings. What we are complaining about—we are not complaining to the President of the Board of Trade—is the way in which the business of the House has been mismanaged, which causes this sort of nonsense. This would have been quite unnecessary if we had not been mucked up with Private Members' Bills and if the Government had not abused the whole idea of Private Members' time. The corollary is that, when Private Members have an opportunity to legislate other hon. Members have the opportunity to intervene, but once the Government intervene they upset the whole balance of their business. We bear the whole brunt of it, as does the right hon. Gentleman. It is no good the President of the Board of Trade saying that he is as fresh as a daisy. He is very plucky, and, so is the Minister of State. But neither of them is fresh. We think that it is disgraceful.I think that hon. Members opposite are still not doing 'justice to themselves. The hon. Member for City of Chester (Mr. Temple) said that he was not at his best. In my experience, he is always at his best. Whatever he may feel like, he looks at the top of his form at present. The hon. Members for Twickenham (Mr. Gresham Cooke) and for South Angus (Mr. Bruce-Gardyne) have made perfectly coherent speeches. The hon. Member for Gloucestershire, South (Mr. Corfield), though he said he could not stop, has made two speeches and stopped with great rapidity. Therefore, I think that while this harmonious and constructive spirit lasts, we should continue consideration of the Bill.
Question put and negatived.
Clause 57—(Commencement Of, And Exercise Of Powers To Make Regulations Under, Certain Pro- Visions Of Part I)
I beg to move Amendment No. 225, in page 53, line 7, to leave out from the beginning to '43' and to insert:
`sections 25 to 34 (both inclusive)'.
Amendment No. 226 is associated with this Amendment.
We are dealing with the time at which the Clauses in Part I of the Bill are to come into operation. Clauses 32 and 18 were added to the Bill in Committee after Clause 57 had been considered. The Amendment brings Clause 32, which is concerned with investigation of share dealings, into operation three months after the passing of the Bill, which is the date on which the Clauses with which it is concerned come into operation. Amendment No. 226 brings Clause 18, which refers to the number of employees and their wages, into operation six months after the passing of the Bill, which is the same date as most of the other Clauses concerned with information in the directors' report.
Amendment agreed to.
Further Amendment made: No. 226, in page 53, line 12, leave out 19 'and insert 18'—[ Mr. Jay.]
Clause 59—(Classes Of Insurance Business Relevant For Purposes Of Part Ii, And Definitions Thereof)
I beg to move Amendment No. 227, in page 53, line 26, to leave out 'life assurance business'.
With this Amendment Amendments Nos. 228, 229, 231, 237, 239 and 302 are associated.It helps the Chair if it knows these groupings in advance. I have no objection if the House has no objection.
The effect of these seven Amendments is to alter the phraseology of the Bill so as to change the term "life assurance business" to "ordinary long-term insurance business" wherever it occurs in the Bill. This change is in accordance with the wishes of the insurance industry and the purpose is to avoid confusion between the general understanding by the industry and the public of the life assurance business, which is in accord with the present definition of that term in the Insurance Companies Act, 1958, and the revised definition in the Bill which expands this class to make it inclusive of the other categories of business which cannot strictly be described as life assurance, namely, capital redemption business and long-term personal accident business.
The length of the text of these Amendments which appears rather considerable on the face of it, is in order to facilitate comprehension of the Bill by moving the references to this class of business to their correct places, as well as to make this change in the phraseology. The practical effect of the Amendments is therefore limited to the change of name.I am glad to confirm that the Life Officers' Association has been consulted on this matter and has informed me that these proposed changes will be helpful. The Association drew one other aspect of the matter to my attention, namely, that if this change were not made from the phraseology in the Bill to "long-term business" its member companies would have to rewrite many of their memorandums of association. To that extent the Amendments have cut out a good many changes which would have been comparatively costly to the assurance companies concerned.
Amendment No. 231 is the substantial Amendment and provides that:
In this Part of this Act, 'ordinary long-term insurance business ' means business of any of the following kinds, namely,—(a) effecting and carrying out contracts of insurance on human life or contracts to pay annuities on human life; (b) effecting and carrying out contracts of insurance against risks of the persons insured sustaining injury as the result of an accident or of an accident of a specified class or dying as the result of an accident or of an accident of a specified class or becoming incapacitated in consequence of disease or of disease of a specified class, being contracts that are expressed to be in effect for a period of not less than five years or without limit of time and either are not expressed to be terminable by the insurer before the expiration of five years from the taking effect thereof or are expressed to be so terminable before the expiration of that period only in special circumstances therein mentioned; and (c) effecting and carrying out contracts of insurance, whether effected by the issue of policies, bonds or endowment certificates or otherwise, whereby, in return for one or more premiums paid to the insurer, a sum or a series of sums is to become payable to the insured in the future, not being such contracts as fall within either of the foregoing paragraphs; but does not include industrial assurance business.
I should like to know why, at the end of the Amendment, it goes out of its way to exclude industrial life assurance business. I had always thought that long-term insurance business was certainly life assurance business and therefore was the same sort of assurance business as was carried out by the industrial life offices.
In this field it is not difficult to get mixed up between industrial life business and ordinary life business. They overlap in some circumstances. I wondered why we had this exclusion.
Obviously the hon. Member is still at his best. The answer is that, as he knows, life assurance business is covered by special legislation and therefore it is affected in a special way by these definitions.
rose—
Order. We are on Report and the hon. Member needs the leave of the House to speak again.
If I may—
Order. It is not usual for leave to be given, but in the circumstances I will call the hon. Member. Mr. Temple.
I am extremely obliged to you, Mr. Speaker. I think that the right hon. Gentleman made a mistake. He said that this was necessary in ordinary assurance business. He should have said in industrial life assurance, because there is special legislation for industrial life assurance.
4.30 a.m.
The phrase which we are introducing is "ordinary long-term insurance business", which includes both industrial and ordinary long-term business.
Amendment agreed to.
Further Amendments made:
No. 228, in page 53, line 38, after first 'business', insert
'ordinary long-term insurance business'.
No. 229, page 54, line 8 leave out subsection (4).—[ Mr. Jay.]
I beg to move Amendment No. 230, in page 55, line 17, to leave out from second 'risks' to the end of line 18.
This is a matter of definition, to make it clear that the insurance of vehicles transporting other vehicles will be treated as motor vehicle business but that the insurance of the vehicles transported, for instance from manufacture to distribution or to a port, is transport insurance within the marine, aviation and transport insurance business. I hope that that is clear and satisfactory.I suppose that this is necessary because one of the vehicles is carrying and the others are for shipment aboard ship.
My advice is that, if one vehicle is carried on another, it is not a vehicle. That is reasonable, and I hope that the House can accept it.
Amendment agreed to.
Further Amendment made: Page 55, line 18, at end insert—
(6A) In this Part of this Act, 'ordinary long-term insurance business' means business of any of the following kinds, namely,—(a) effecting and carrying out contracts of insurance on human life or contracts to pay annuities on human life; (b) effecting and carrying out contracts of insurance against risks of the persons insured sustaining injury as the result of an accident or of an accident of a specified class or dying as the result of an accident or of an accident of a specified class or becoming incapacitated in consequence of disease or of disease of a specified class, being contracts that are expressed to be in effect for a period of not less than five years or without limit of time and either are not expressed to be terminable by the insurer before the expiration of five years from the taking effect thereof or are expressed to be so terminable before the expiration of that period only in special circumstances therein mentioned; and (c) effecting and carrying out contracts of insurance, whether effected by the issue of policies, bonds or endowment certificates or otherwise, whereby, in return for one or more premiums paid to the insurer, a sum or a series of sums is to become payable to the insured in the future, not being such contracts as fall within either of the foregoing paragraphs; but does not include industrial assurance business.—[Mr. Jay.]
Clause 60—(Restriction Of Carrying Insurance Business)
I beg to move Amendment No. 111, in page 57, line 4, after 'subsections', to insert:
'and without any relevant authorisation under section 61 of this Act'.
There is no substance in the argument which I think would have been advanced for the Amendment. It arose out of confusion in Committee when none of us appeared to understand the Clauses. I am told that the Amendment would be improper and contrary to the purpose of the Clause, which we all support. It would merely repeat something which has already been said. That is how the confusion arose.
I do not know where it has been repeated. Under Clause 60(4), a person carrying on business in contravention of the foregoing subsections is guilty of an offence, yet the next Clause contains authorisations for those who carry on these businesses. Surely it would be enough to say that, subject to a later Clause, he would be excused. All we are doing is to make it certain that anyone reading Clause 60(4) knows that it is subject to the next Clause, the excuse Clause.
Amendment negatived.
Clause 61—(Authorisations For Purposes Of Section 60)
Amendment made:
Amendment No. 232, in' page 58, line 4, leave out 'insurance' and insert 'assurance'.—[Mr. Darling.]
Clause 62—(Provisions For Securing Initial Sufficiency Of Assets And Capital Of Insurance Companies)
I beg to move, Amendment 112, in page 59, line 2, to leave out 'and'.
With this Amendment we shall take Amendment 113, in page 59, line 3, after 'months' to insert:
'and which has been in business for a total period not exceeding 12 months'.
I will not dwell on the Amendment at length because for me the mists are rapidly closing in and I do not claim the expertise in these matters of my hon. Friend the Member for the City of Chester (Mr. Temple). This concerns proportions in special cases. The Amendment makes a slight variation to a special type of company, society or body, a type which has not completed its second financial year and which had a first financial year of less than 12 months. It should be even more closely defined; at the same time it should not have been in business for a period exceeding 12 months. It is a new company in its second financial period and its first financial period was less than 12 months.
I am sure that the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) would have been astonished to get this Amendment into the Bill. There may be anomalies, but we feel it best to deal with them administratively. He mentioned a new company—or it might be a company taking over a new kind of business. It might start with a very short financial year and get into the second year, becoming profitable. We see no difference in substance from a rapid expansion produced in subsequent years; it gets the accounting period straight as it goes on. If it started with a three-month financial year, we should say administratively that for this purpose the first year would count as 15 months, not three months.
With a company which had completed a short financial year—for example, outside Great Britain—immediately before authorisation for activities in this country, we would have discretion to require a higher margin of free assets than the Clause specifies if the last available information as to the rate of business showed that to be a reasonable proposition to put forward. It may be that we would get all kinds of different circumstances to deal with and, rather than try to spell out a cover for all the possible circumstances in the Bill, it is better to leave it to the sensible administrative action that we would provide.
I thank the right hon. Gentleman for that explanation. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 114, in page 59, line 26, at the end to insert:
(6) Any of the monetary sums mentioned in subsections (1), (2) or (3) and any of the fractions mentioned in subsection (2) of this section may be replaced by such other sums or fractions, as the case may be, as the Board of Trade may by regulation prescribe.
We have been dealing with some difficult Amendments to understand, but we come to a very simple one now. This is a proposal to give the Board of Trade power to cope with the inflation which is about to come under the present Government. Under Clause 62 a number of figures are given. For example, in subsection (1) there is "the revelant amount", £50,000 and £100,000, and "the relevant amount" is explained in subsection (2) by some further figures. These are figures of assets which the Board of Trade must be satisfied are held by a company before authorisation is given for it to carry on insurance business. It is no use the right hon. Gentleman saying, "We shall have a second Bill soon and if these figures are wrong we can then alter them." We want to give him power to keep up with inflation by being able to alter the figures as necessary. The Amendment would enable him to alter these figures by Regulations in a proper Statutory Instrument which would be brought before the House and come into effect on receiving approval by Resolution of both Houses of Parliament. In my post a couple of days ago there was a document which showed that the £ had gone down in value from 20s. 0d. in 1914 to 3s. 4d. now. The figures in Clause 62 may be out of touch with fact and reality in a few years' time. The whole insurance business may change in values. Therefore, it would be fatal to leave these figures as fixed figures to be altered only by legislation. It has taken long enough to reach this stage in this Companies Bill and, having set out a Clause of this sort, I am sure we want it to stand, except for the figures, which could be altered. I hope that the right hon. Gentleman will accept the offer from this side of the House to take power by regulation to make these amendments to the figures when necessary and to bring the Regulations before the House. 4.45 a.m. There seems to be a general assumption that there will be a second Companies Bill quite soon and that it would be possible to incorporate all manner of Amendments in that Bill. I gamble a pound to a penny that there will be no insurance section in it. This is why the Amendment is so important. We do not have insurance legislation more than once in a decade, and the Government would be most unwise not to take the flexibility which is here offered to them. I am sorry that the economic tycoons on the back benches opposite have left the Chamber. They were in their places earlier and took some part in our debates. It has come to my notice that the economic tycoons on the Government back benches are advocating devaluation. There are other hon. Members who do not, but there is talk today of devaluation. My hon. Friend the Member for Crosby (Mr. Graham Page) said that the figures might have to be altered in a matter of years. Alteration might be needed in a matter of months. I am not saying that it is likely, but it could happen. In Committee, there were criticisms of the smallness of the figures provided for in Clause 62. The affirmative Resolution procedure would be perfectly suitable. In the present climate of monetary reform, with a Lancaster House conference going on, with the possibility of a floating £ and the possibility of devaluation—I shall not say what other possibilities there are; that would be too depressing to discuss at this hour—the Government would be well advised to accept the Amendment.(7) Regulations made under power conferred by this section shall be made by Statutory Instrument which shall not take effect unless approved by resolution of each House of Parliament.
I endorse what has been said. The motoring organisations particularly thought that the £50,000 was too small a sum. They pressed hon. Members to put down Amendments to double it. We did that in Committee, but we listened to the Government's case and reluctantly accepted the £50,000. I am certain that it is on the small side. The demand will come in a year or two, particularly if there are any more scandals, for the Government to raise the figure. They should take the flexibility here proposed.
On the last point, it is far more important to have the solvency ratio right than to put an arbitrary figure into the Bill. I agree that £50,000 is quite arbitrary here; it could have been £75,000, or more or less. The great thing is to have the solvency margin requirements correct.
The hon. Member for Crosby (Mr. Graham Page) astonishes me. As Chairman of the Statutory Instruments Committee, he demands more and more work. The problem of inflation has inflicted successive Governments over a period of years. Every Western country from now on has to face it. With the pressure for increased prices, for increased incomes and the rest, it is built into the economy of every Western nation. We have to face it, but we cannot pick out the solvency margin figure here provided for insurance companies and apply the Statutory Instrument procedure to that alone. We should have to go through the whole Bill. I suggest that, if there is a case for putting into statutory form a provision to allow the figures in all our company law—there are quite a number of them, minimum and maximum figures—we should try to find a procedure for the next Companies Bill which would cover the insurance question is well, instead of taking the Statutory Instrument procedure to cover just one particular case. We could have a form of procedure that would make the task of changing the figures, if they need to be changed by Statutory Instrument, more convenient than having to change each one by itself. We feel that it would be undesirable to introduce a power, which might be a standing threat to insurance companies, of increased solvency margin requirements, because we could not lay down—it is not laid down in the Amendment—that the purpose of fixing the figure by Statutory Instrument is to deal solely with inflation. We would possibly put into the minds of companies an indication that the Government might keep on chopping and changing the figures for other reasons. We have, I think, to find a form of procedure to deal with the inflation problem. When we have the Bill on the Statute Book—and it must, for very good reasons, go on the Statute Book as quickly as possible—I would be glad to start to discuss what kind of procedure we need in this form of legislation to deal with the problem of inflation.The Minister of State has made a sound point in saying that we might consider the Act and the second Bill which he proposes to introduce to see whether some such provision could be made to apply to all the figures. It may not be needed only for inflation. I would not be frightened of frightening the insurance companies in that respect, because the whole basis of insurance may change rapidly over the next few years, particularly motor insurance. We do not know how the number of motor vehicles on the road, for example, will increase in the years ahead. We might need something much larger in the nature of insurance companies to cope with that.
That could be dealt with by means of Regulations of this sort. I would have hoped that the Minister could suggest trying it on this one subject in the Bill. If it worked well, we could extend it in the next Bill to the rest of company law. I think that it will be necessary in regard to insurance companies, and I wish that the right hon. Gentleman could have accepted it in this case.Amendment negatived.
Clause 64—(Provisions For Preventing Unfit Persons From Being Associated With Insurance Companies)
I beg to move Amendment 233, in page 59, line 43, after 'directions', to insert 'or instructions'.
Amendment 255, in Clause 88, is similar, Mr. Deputy Speaker, and I wonder whether we may discuss the two together.Yes, if that is for the convenience of the House.
The two Amendments are desirable for reasons of clarification and consistency. We want to make the Bill as clear and as consistent as possible. The phrase "directions or instructions" is used in a similar context in the 1948 Act. For reasons of consistency, we would like the same wording to be used in the Bill.
For the sake of brevity, we might have reduced and not increased the wording. What is the difference between "directions" and "instructions"? Surely, they are the same word. The House has recently approved on Second Reading a consolidation Bill concerning motor regulations which uses the phrase
I foresee that when we consolidate company law—this Bill, together with the next one which the right hon. Gentleman will bring in—we shall go back again and cut out "instructions" and use only "directions", or cut out "directions" and use only "instructions". The two words mean the same thing in this context. I cannot see the need to repeat an error in the 1948 Act."class or description of class".
Amendment agreed to.
Clause 65—(Power Of Board Of Trade To Impose Requirements With Respect To Initial Conduct Of Business)
I beg to move, Amendment No. 234, in page 61, line 21, to leave out 'of Trade'.
I sincerely hope that the hon. Gentleman is going to accept this one, because it is only a drafting Amendment.Amendment agreed to.
I beg to move, Amendment No. 235, in page 61, line 25, at the end to insert:
(5A) When the Board impose under subsection (1)(c) of this section a requirement on a company, society or body, or rescind or vary a requirement so imposed, they shall forthwith serve—(a) except where the requirement is one imposed on a registered society (other than one registered in Northern Ireland), on the registrar of companies; (b) in the said excepted case, on the appropriate registrar as defined by section 73(1) of the Industrial and Provident Societies Act 1965; written notice stating that fact, and, in the case of a notice of the imposition of a requirement, setting out the terms of the requirement. in the case of a notice of the rescission of a requirement, identifying the requirement, and in the case of a notice of a variation of a requirement, identifying the requirement and setting out the terms of the variation.
(5B) A notice served in pursuance of the last foregoing subsection on the registrar of companies shall be open to inspection, and a copy thereof may be procured by any person on payment of such fee as the Board may direct; and every document purporting to be certified by the registrar of companies, or by a person appointed in that behalf by the President of the Board of Trade, to be a copy of such a notice shall be deemed to be a copy of that notice and shall be received in evidence as if it were the original notice, unless some variation between it and the original be proved.
This Amendment, with Amendment 252, which, I hope, we can discuss with it, is to meet a point raised by the hon. Member for Crosby (Mr. Graham Page) in Committee. The effect of the Amendments is that arrangements should be made to warn prospective mortgagees that certain assets of an insurance company are subject to requirements under Clauses 65 and 79 to the effect that the creation of a mortgage on those assets would be invalid. I hope that the hon. Gentleman will agree that this Amendment meets his suggestion, by making it an obligation on the Board of Trade to serve notice on the appropriate registrar giving details of the imposition, rescission—if that is the right word—or variation of any such requirement, and in addition to that, by ensuring, first, that any such notice is placed on the public file of the insurance company and is open to inspection by the public and, secondly, that copies of such notice may be purchased by the public. I think that that should give due warning in these cases, and that, accordingly, it meets the proposal made by the hon. Gentleman.(5C) Section 71 (1) of the Industrial and Provident Societies Act 1965 (which empowers the Treasury to make regulations respecting, inter alia, the inspection of documents kept by the appropriate registrar under that Act) shall have effect as if the reference to documents so kept included a reference to notices served in pursuance of subsection (5A) above on the appropriate registrar.
I rise only to thank the right hon. Gentleman very much. This covers exactly the point which I raised in Committee, and we are very grateful for the Amendment.
Amendment agreed to.
Further Amendment made: No. 236, in page 61, line 33, after first 'of', insert 'any'.—[ Mr. Jay.]
Clause 68—(Power Of Board Of Trade To Restrict Conduct Of Insurance Business, And Effect Of Exercise Of That Power)
Amendment made: No. 237, in page 64, line 3, leave out paragraph ( c).—[ Mr. Jay.]
I beg to move, Amendment No. 238, in page 64, line 19, at the end to insert:
The effect of this Amendment is to remove from the subsection which sets out the restriction under Clause 68 appropriate to "ordinary long-term insurance business"—which is the new phrase now inserted in the Bill—the banning of the insurance company's right to vary long-term personal accident insurance contracts and capital redemption contracts. It will be remembered that those were two additional categories of business which were to be included in the phrase "ordinary long-term insurance business". The result of that is that the restriction on these two categories is reduced to a ban on the effecting of new contracts only. The need to change the order here results entirely from the renaming of "life assurance business" as "ordinary long-term insurance business". In addition to that, there is the necessity for maintaining the correct alphabetical order for the list of Clauses.() the restriction appropriate to the carrying on by an insurance company of ordinary longterm insurance business is that the company shall not effect a contract of insurance on human life or a contract to pay an annuity on human life or any such contract as is mentioned in paragraph (b) or (c) of subsection (6A) of that section;
Amendment agreed to.
Clause 70—(Alteration To Scope Of The Principal Act)
5.0 a.m.
Amendment made: No. 239, in page leave out from "subsection" to end of line 40.—[ Mr. Darling.]
I beg to move, Amendment No. 240, in page 65, line 40, at the end to insert:
With this Amendment I propose that we should take Amendments No. 269, 284, 285, 299, 300 and 301. We can here clear up a very simple operation. Amendment No. 240 introduces a new Schedule to the Bill, separating those Schedule 5 Amendments which result from the reclassification of insurance business from the other insurance Amendments contained in Schedule 5. The other Amendments in this group are consequential upon the introduction of the new Schedule.() In consequence of the foregoing subsection and of the classification of insurance business effected by section 59 of this Act, the provisions of the principal Act specified in column 1 of Schedule (Amendments of Insurance Companies Act 1958 consequential on sections 59 and 70(1) of this Act) to this Act shall have effect subject to the amendments respectively specified in relation thereto in column 2 of that Schedule; and, for the purposes of those provisions, as amended by that Schedule, the expression "ordinary long-term insurance business" shall have the meaning assigned to it by section 59(6A) of this Act.
Amendment agreed to.
Clause 72—(Substitution Of New Pro- Visions For Those Of Section 9 (Audit Of Accounts) Of The Prin- Cipal Act)
I beg to move Amendment No. 241, in page 67, line 21, to leave out 'so given' and to insert 'given in a statement or report so annexed'.
This Amendment corrects a minor error in drafting.Amendment agreed to.
I beg to move Amendment No. 242, in page 67, line 21, at the end to insert:
During the Committee stage, the hon. Member for Gloucestershire, South (Mr. Corfield) suggested that Regulations to be made relating to audit should not be excluded from Parliamentary scrutiny, as permitted by Section 34(3) of the Insurance Companies Act, 1958. I agreed to accept the negative Resolution procedure, and this Amendment achieves the desired effect by "disapplying" the proviso to Section 34(3) in relation to Regulations made under Section 9 of the principal Act.() The proviso to subsection (3) of section 34 of the principal Act (which excepts regulations made under the said section 9 from the requirement of that subsection that a statutory instrument containing regulations under that Act shall be subject to annulment in pursuance of a resolution of either House of Parliament) shall not apply to regulations made under the section substituted for the said section 9 by this section.
Amendment agreed to.
I beg to move Amendment No. 116, in page 67, line 26, at the end to insert:
This is a rather more complicated Amendment which is designed to achieve a similar object to that which I have just explained. I think that this Government Amendment is shorter and simpler than what was previously proposed, and I hope that it will be accepted.Provided that any regulations made under the section substituted as aforesaid and any amendment thereto or repeal thereof as well as any amendment to or repeal of regulations made under section 9 of the principal Act as originally enacted shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament and there shall be deleted from the proviso to subsection (3) of section 34 (Provisions as to Regulations) of the principal Act the reference to section 9 of that Act.
I am very grateful for the efforts of the Minister on this point.
Amendment agreed to.
Clause 74—(Statements Of Business By Insurance Companies)
I beg to move, Amendment No. 243, in page 68, line 2, to leave out from 'prepare' to end of line 3 and to insert:
With this Amendment I suggest that we take Amendment No. 244. The first of these Amendments has the effect of amending Section 7 of the principal Act by adding to the revised subsection (1) a provision which will enable the Board of Trade to prescribe either the contents or the form of the statements of business to be prescribed under that Section. That is the first Amendment. Amendment No. 244, which inserts a second subsection in Section 7, will enable the Board of Trade to modify in relation to individual companies the requirements of the contents or forms prescribed under Section 7 for the purpose of adapting these to the circumstances of a particular company. The result of the two Amendments together is to bring Section 7 of the principal Act into line with Section 4 of that Act as we have now revised it by Clause 70.'the prescribed statement of business of that class, being, if a form is prescribed for the statement, a statement in the prescribed form'.
How is it to be prescribed? Frequently in previous provision there has been prescribing by Statutory Instrument. Is it to be prescribed by Statutory Instrument in this case, or by some other means?
I understand that it will be by Statutory Instrument, but if by any mischance I am in error, I will let the hon. Gentleman know.
Amendment agreed to.
Further Amendment made: Amendment No. 244, in page 68, line 3, at end insert:
() The Board of Trade may, on the application or with the consent of an insurance company, modify, in relation to that company, the requirements of the foregoing subsection for the purpose of adapting them to the circumstances of the company.—[Mr. Jay.]
Clause 77—(Additional Copy Of Accounts, &C, To Be Deposited By Industrial Or Provident Society)
I beg to move Amendment No. 245, in page 69, line 19, to leave out from '1965' to 'shall' in line 21. I think that with this we can also discuss the next Amendment. All Amendment 245 does is to remove the words in brackets which describe the function of Section 71(1) of the Industrial and Provident Societies Act, 1965, in this case to avoid unnecessary repetition since these words are now included in the new subsection (5,c) to be added to Clause 65 by virtue of Amendment 235. The second Amendment is a consequential drafting Amendment.
Amendment agreed to.
Further Amendment made: No. 305, in page 69, line 22, leave out 'so kept' and insert:
'kept by the appropriate registrar under that Act'.—[Mr. Jay.]
Clause 78—(Margin Of Solvency For General Business)
I beg to move, Amendment No. 246, in page 69, line 32, after 'on', to insert:
With this we could also discuss Amendment No. 247 and Amendment No. 248. The first and third of these Amendments clarify that the references in Section 13(1) of the principal Act to carrying on a general business mean the carrying on of that business anywhere in the world. That is rather clearer than some of the matters which we have recently been discussing. The second Amendment is intended to bring the construction of the Clause more into line with Clause 62(1), and apply the reference to the minimum solvency margin of £50,000 to the company's first financial year only, that is to say, to the period during which there is no last preceding year as required for the calculation of the relevant solvency margin in the table in Clause 62(2). This problem arises for the first year only because there is no last preceding year. I do not think that the Amendment raised any major difficulty.'(whether within or outside Great Britain)'.
Amendment agreed to.
Further Amendments made: No. 247, in page 69, line 37, leave out from the beginning to first 'the' in line 38 and insert 'its first financial year'.
No. 248 in page 70, line 9, after 'on', insert:
'(whether within or outside Great Britain)'. —[Mr. Jay.]
I beg to move Amendment No. 117, in page 70, line 11, to leave out 'relaxative modifications' and to insert 'less onerous requirements'.
This is just an attempt to rectify what I regard as most unattractive, if not positively horrible, English.It is obscene.
I accept that "relaxative" appears in the Oxford English Dictionary and I believe that it was used as long ago as the 17th century by Ben Johnson when he referred to someone suffering from some kind of trouble and said, "It is a kind of stoppage you are troubled with and therefore you must use relaxative." But it has certain horrible medical undertones. This is the sort of phrase which would have provoked a very sharp and terse comment by the late Sir Winston Churchill if it had been put before him in any memorandum or Bill during the war.
The Bill will be read by millions of people and not merely lawyers. They should be spared the agony of having to look at this revolting phrase. They should have something much more straightforward and honest in its place. If anyone suggests that my Amendment would put three words in the Bill as compared with the two which exist, may I assure the House that the number of letters involved is precisely the same.I have a great deal of sympathy with the first proposition, and I wish that we could find some better words. But the words which the hon. Gentleman suggests should replace the words which he and I do not like would, if inserted in the Bill, have some rather unfortunate consequences.
As the Clause is drafted, it will allow the Board of Trade, for a limited period after the passing of the Bill, to reduce the amount of the solvency margin which an insurance company will be required to maintain. If the Clause were amended in the way proposed, the Board would be empowered, not merely to reduce the amount of the solvency margin, but to impose in substitution some other requirement as long as it were less onerous than the solvency margin requirement. We do not want this power at all, and it would not be very clear from the Amendment what criterion we should have to work on to find the degrees of onerousness to be assessed. The best thing to do is to leave us with our "relaxative modifications" and to let us see whether we can find better words which do not involve us in the problems in which the use of the words "less onerous requirements" would involve us.Amendment negatived.
I beg to move Amendment No. 118, in page 70, line 12, at the end to insert:
Clause 78 makes an alteration in the principal Act relating to the margin of solvency of insurance companies. It puts a new Section 13(1) into the principal Act providing that if a company is carrying on business it(3) A copy of every direction given by the Board of Trade under subsection (2) of this section shall be delivered by the Board of Trade for registration to the registrar of companies.
and then there is an alternative calculation. That is the criterion by which the public can judge whether the company is to be deemed to be solvent or not. With knowledge of the assets of the company, any member of the public might assume from the Clause that the company was insolvent and might, therefore, take steps to wind up the company. 5.15 a.m. The company may have one of these extraordinary things which we have been discussing, a relaxative modification. If the company is suffering from a relaxalive modification—I do not know whether "suffering" is the right word. If it has been awarded a relaxative modification by the Board of Trade, strangely enough, it will not be insolvent. The public may be misled into thinking that the company is insolvent and start winding-up proceedings. It would be as well to inform the public that there is this modification, by publishing it on the register of the company, thereby announcing the fact, at least, to the public. We discussed this in Committee and the right hon. Gentleman gave an assurance that he would consider it. I am hoping that he has considered it sufficiently to accept our Amendment."shall be deemed for the purposes … of the Companies Act 1948 … to be unable to pay its debts if … the value of its assets does not exceed the amount of its liabilities by £50,000 Or "—
We have considered this again and the arguments that I put forward in Committee still seem sound, namely that if the Board of Trade made an announcement of this kind it might encourage people to think that although the company was not insolvent, it was probably not quite soundly run.
Any relaxation that may be granted by the Board of Trade under Clause 78 will not be effective after two years from the passing of the Bill, or after such shorter period as the Board may specify when granting the relaxation. That will not be granted unless the Board is satisfied that the company can safely operate at a lower solvency margin during this period. It is very unlikely that anyone would ever need to petition for the winding-up of a company during this period on the ground that the full statutory solvency margin was not attained by the company. A creditor might need to petition for winding up in order to enforce payment of a debt, but such a creditor would not have to show failure to fulfil the statutory solvency margin, but merely the failure of the company to pay or to satisfy a particular debt. Any proceedings that the creditor might bring against the company would not therefore be affected by the temporary relaxing of the statutory solvency margin requirements. It is not necessary that public notice of the temporary relaxation should be placed on an insurance company's public file. In these circumstances, we do not think that it would serve the purpose mentioned, and there is this nagging fear, in my mind at least, that if an announcement is placed on the company's file, even though it would show that the company was solvent, it would put a doubt in some people's mind about whether the property was properly run.I am grateful for that reply. In view of the explanation, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 79—(Provision For Securing A Company's Solvency Is Main- Tained)
I beg to move, Amendment No. 249, in page 70, line 27 to leave out 'society or body'.
With this Amendment we could conveniently take Amendments 250 and 251. These Amendments are to correct minor drafting errors, which will be obvious to hon. Members.Amendment agreed to.
Further Amendments made: No. 250, in page 70, line 31, leave out 'society or body';
No. 251, in page 71, line 22, after '66' insert of this Act'.
No. 252, in line 40, at end insert:
(4A) When the appropriate authority imposes under subsection (1)(c) of this section a requirement on a company or rescinds a requirement so imposed, it shall forthwith serve—(a) except where the requirement is one imposed on a registered society (other than one registered in Northern Ireland), on the registrar of companies; (b) in the said excepted case, on the appropriate registrar as defined by section 73(1) of the Industrial and Provident Societies Act 1965; written notice stating that fact and, in the case of a notice of the imposition of a requirement, setting out the terms of the requirement and, in the case of a notice of the rescission of a requirement, identifying the requirement.
(4B) subsections (5B) and (5C) of section 65 of this Act shall have effect for the purposes of this section subject to the modification that, for any reference to a notice served in pursuance of subsection (5A) of that section, there shall be substituted a reference to a notice served in pursuance of the last foregoing subsection.—[Mr. Darling.]
Clause 81—(Obligation Of Insurance Company To Notify Board Of Trade Of Changes In Officers And Con- Trol Of Company And Holding Company)
I beg to move Amendment No. 253, in page 72, line 41, to leave out subsection (1) and to insert:
This is another redrafting of Clause 81(1) to avoid ambiguity. There is no change of substance here. We are doing a cleaning-up job.(1) Every insurance company to which the principal Act applies which is a body corporate shall, upon a person's becoming or ceasing to be, an officer of the company, or acquiring or relinquishing control of the company, be under obligation to notify the Board of Trade in writing of that fact and of his name, and every insurance company to which the principal Act applies which is not a body corporate shall, upon a person's becoming or ceasing to be, an officer of the company, be under a corresponding obligation.
Amendment agreed to.
Clause 82—(Obligation Of Person Who Acquires Or Relinquishes Control Of Insurance Company To Notify It Of That Fact)
I beg to move Amendment No. 254, in page 73, line 19, after 'applies' to insert:
The Amendment rectifies an omission in Clause 82(1). Clause 82 strengthens the provisions of Clause 81(1) by ensuring that the Board of Trade is notified of changes in the persons controlling an insurance company which is a body corporate, by making it obligatory that such a person should notify the company when he gains, or relinquishes, control over it. The Clause should also have provided an additional safeguard in the case of changes in persons gaining, or relinquishing, control over the holding company of such an insurance company, in order to strengthen the provisions of Clause 81(2).'or, if it is a body corporate, of another body corporate which is its holding company (within the meaning of the Companies Act 1948).
Amendment agreed to.
Clause 88—(Criminal Liability Of Directors, &C)
Amendment made: No. 255, in page 76, line 28, after 'directions', insert 'or instructions'.—[ Mr. Jay.]
Clause 91—(Power Of Board Of Trade To Exempt Certain Companies From Certain Provisions Of The Prin- Cipal Act)
I beg to move Amendment No. 256, in page 77, line 4, to leave out 'or of a registered society' and to insert:
I think that we could conveniently discuss it with the following Amendments, up to and including Amendment No. 263. The changes here proposed are necessary because as a result of the reclassification which we made in Committee, the insurance legislation is now being applied more widely to classes of insurance business which were not previously controlled. The result is that certain new companies, some of whom may well be unincorporated bodies, would be brought under Board of Trade supervision. In cases such as that, it will be appropriate, I think, to modify the requirements of the principal Act in their favour. These Amendments will enable us to do that in appropriate cases..'of a registered society or of an unincorporated body of persons'.
Amendment agreed to.
Further Amendments made: No. 257, in page 77, line 5, leave out 'or society' and insert ', society or body'.
No. 258, in page 77, line 10, leave out 'or society' and insert ,society or body'.
No. 259, in page 77, line 15, leave out 'or society' and insert `, society or body'.
No. 260, in page 77, line 20, leave out 'or society' and insert `,society or body'.
No. 261, in page 77, line 22, leave out 'or society' and insert `, society or body'.
No. 262, in page 77, line 26, leave out 'or society' and insert `, society or body '.
No. 263, in page 77, line 29, leave out 'or society' and insert `, society or body'.—[ Mr. Jay.]
Clause 92—(Circumstances In Which Persons Carrying On Insurance Business Of Certain Classes Are To Be Taken As Not Carrying On Also Such Business Of Other Classes)
I beg to move Amendment No. 264, in page 77, line 43, leave out subsection (2).
Amendments Nos. 264 and 266 have a threefold effect. First, they apply Clause 92, which we are now discussing to Section 11 of the Insurance Companies Act, 1958, so that in a case where a company which does not carry on longterm business intends to amalgamate with another company, the directors will not have to seek the sanction of a court merely because the company's property policies include incidental long-term cover against various personal accidents. The second effect is to do what we have already done in other connections, to change the name of "life assurance business" to "ordinary long-term insurance business", which the hon. Gentlemen opposite agree was in conformity with the wishes of the insurance industry. Thirdly, the effect is to move the subsection, following the change of phraseology, once again to its correct position in the alphabetical order of the insurance Clauses.Amendment No. 266 can be welcomed because it gives more flexibility. In modern circumstances, there may well be other kinds of insurance which can be incorporated with the main classification of insurance. But I am full of alarm at the enormous number of technical Amendments the Government are bringing in at this late stage. It does not give us confidence. I wonder what has been left behind. Only two days ago we got more starred Amendments. I wonder what would happen if we were to discuss the Bill further at another sitting. I wonder how many more Amendments the Government will dream up today that they cannot put down tomorrow.
This is a very good reason for getting rid of the Bill as quickly as possible.
Amendment agreed to.
Further Amendments made: No. 265, in page 78, line 20, after 'insurance', insert 'business'.
No. 266, in page 78, line 24, at end Insert:
() For the purposes of this Part of this Act and of sections 3, 5 and 11 of the principal Act, a person shall not be taken to carry on ordinary long-term insurance business by reason only of the incidental inclusion in a contract of insurance whose principal object is to insure a person against risks of a kind such that the business of effecting and carrying out contracts of insurance against them constitutes marine, aviation and transport insurance business, motor vehicle insurance, business or property insurance business, of provision whereby he assumes liability against the happening of personal accidents (whether fatal or not).
No. 267, in page 78, line 33, after 'in', insert 'section'.— [ Mr. Jay.]
Clause 100—(Temporary Limitations Of Effect Of Alteration Of Scope Of The Principal Act)
I beg to move Amendment No. 268, in page 80, line 34, to leave out three months' and to insert 'one year'.
Our purpose in this Amendment is to meet a request from the Life Offices Association that the delay in the application of the Amendments to Sections 3 and 11 of the principal Act should be extended to twelve months after the Bill is enacted. It is a reasonable request.Amendment agreed to.
Clause 103—(Northern Ireland)
Amendment made: No. 299, in page 81, line 16, leave out 'Schedule' and insert:
'Schedules (Amendments of Insurance Companies Act 1958 consequential on sections 59 and 70(1) of this Act) and'.—[Mr. Jay.]
Clause 104—(The Isle Of Man And The Channel Islands)
Amendment made: No. 270, in page 82, line 7, leave out paragraph ( e) and insert:
() section 94, so far as relates to the Industrial Assurance Act 1923;
() section (Power of Industrial Assurance Commissioners to exempt Northern Irish collecting societies from provisions of the Industrial Assurance Acts 1923 to 1958);
() section 96 and Schedule 5, so far as they relate to the Industrial Assurance Act 1923;.—[Mr. Jay.]
I beg to move Amendment No. 271, in page 82, line 9, at end to insert:
'and
It will surprise you, Mr. Deputy Speaker, and hon. Members that the purpose of the Amendment is to bring in the Isle of Man and the Channel Islands which, unfortunately, got left out.() section 99(2), so far as it defines 'registered society' and 'director', and section 99(3)'.
Amendment agreed to.
Clause 105—(Power Of Board Of Trade To Require Production Of Documents)
I beg to move Amendment No. 272, in page 82, line 26, after 'body', to insert `corporate'.
We can also discuss Amendment No. 121, standing in the name of the hon. Member for Gloucestershire, South (Mr. Corfield), in page 82, line 21, leave out 'corporate'.
This is a drafting Amendment. We have already discussed the matter and I am still not certain that we have got the thing right. I think that there are certain technical reasons why the hon. Member for Gloucestershire, South (Mr. Corfield) has not got it right, either. This is something we must look at again.
For the time being, at any rate, I hope that our Amendment will be accepted.5.30 a.m.
Since we discussed a similar problem a little time ago, I have done a little research with the Oxford Dictionary. I am now satisfied that, whereas it is quite possible for a corporate body to exist which has not been incorporated, it is wholly impossible for anything which has been incorporated to be anything but a corporate body. I hope that we shall eventually see that incorporated into the Bill, to its great advantage.
Amendment agreed to.
I beg to move Amendment No. 273, in page 82, line 35, after 'may' to insert:
This Amendment relates to the authorisation to be carried out by the Board of Trade. Under the present laws, the Board may at any time, if it thinks fit, give direction to a body corporate requiring it to produce books or papers. Alternatively, it may authorise any officer of the Board to require the body corporate to produce to him—that is, to the officer—any books or papers that the officer may specify. In the Clause as drafted the words'at any time, if they think there is good reason so to do'.
that is, if the Board thinks fit—apply to a direction given to the body corporate but not to an authorisation of a Board of Trade Officer. It seems appropriate and reasonable that these words should apply also to the authorisation."at any time, if they think there is good reason so to do"—
Amendment agreed to.
Further Amendment made: No. 274, in page 82, line 39, leave out 'provisions of this section' and insert sub-section'.—[ Mr. Darling.]
I beg to move Amendment No. 275, in page 83, line 11, after second 'is' to insert:
The Amendment carries out an undertaking I gave in Committee that there should be power to require an explanation, if need be, from a past employee as there is from a past officer. I undertook to ensure that that power would be written into the Bill. The Amendment provides for it.'or was at any time'.
Amendment agreed to.
I beg to move Amendment No. 124, in page 83, line 25, at the end to insert, (a).
With this Amendment we can discuss Amendment No. 125, in page 83, line 28, at end insert:
'or (b) the requirement was in all the circumstances unreasonable'.
The purpose of the Amendment is to ensure that a person accused of an offence under subsection (4) may claim in his defence that the requirements of the Board of Trade were thoroughly unreasonable in relation to the circumstances. This arises from the fact that, when the Bill was in its first draft when it came to us, which I suppose was about the fifth draft, Clause 105 was Clause 67. The wording was such that the Board of Trade under subsection (1) could operate only when it had good reason to believe that the books etc. were required. This has been altered and the Board may now demand the production of such books or papers as it may specify or as its officer may specify. It is an absolute power.
When a prosecution is taking place for an offence alleged under subsection (4), it will still be necessary for the Board of Trade to stand up to the charge that it has behaved unreasonably and satisfy the court that it has behaved reasonably, if it is challenged. It is generally understood in Statutes that if a power is not exercised reasonably, when the word "reasonably" appears, it is considered ultra vires the statute. I think that this requires making clear, and the proposed words do it.I see the hon. Member's purpose. The Amendment is intended to protect the person in question against over-zealous action by the Board of Trade rather than any action in bad faith—of which he would probably not accuse us. If there were an excess of zeal in such a case a person who complied with the requirement would, since he had nothing to hide by so doing, quickly bring the inquiry to an end, and because of the security provisions which are included in Clause 107 he could be confident that none of the information obtained by the Board would be, disclosed. He would suffer no more than inconvenience of producing books and papers.
If the Amendment were accepted, however, it might be possible, in the case of an individual who had something to hide—provided that he did not have to produce the books and papers in such a case—to be able to make if not a convincing at least a plausible case, to the effect that his affairs were in order and that the requirement of the Board of Trade was unreasonable. Here we have to choose between, on the one hand, being sure of the power to require the production of papers in a case of that kind and, on the other, of providing, in quite a different case, a firm defence against action which did not cause any hardship or injustice but merely caused inconvenience. For those reasons, t seems to us that the Bill would be more effective and would not produce any hardships if it remained as it is in his connection.I find that reply disappointing. We sometimes deal with people who, though straightforward and honest, are not highly intelligent in these matters. I suppose that every hon. Member has, from time to time, come across constituents who enormously resented interference by a bureaucrat. If such a person feels angry he is likely to say that he will be dashed if he will do what required. The net result is that he gets into trouble from an excess of determination not to have his independence interfered with.
On occasions, the fault is probably his, but on other occasions a bureaucrat nay behave with an excess of zeal, and .he person concerned may have good grounds for saying that he will be dashed if he will hand over this, that and the other. I should be happier if I could feel that there was a safeguard which provided that the Board of Trade would not succeed if it could not show that it had not acted unreasonably. I do not think that this substantially weakens the Board of Trade's power. It has only to say that it had good reason to believe that the case fell within subsection (1) and to believe that the books were relevant, and 99 times out of 100 it will be capable of persuading the court that in the circumstances its action was reasonable. But there are occasions when people overstep the mark. Many worthy citizens do not say, "Here you are. Here are the books. We have nothing to hide. Let us get it over with ". If they are angry even at the suspicion cast upon them and get themselves into trouble we cannot entirely condemn them for doing so; in some respects an independence of spirit is an important characteristic of our people. I would not wish to see it so greatly diminished. I realise that the right hon. Gentleman has not much time, but I hope that between now and the next Bill or even by some procedural means in another place, he will get it in, because it is important that the citizen should be able to challenge the unreasonable use of absolute powers.Amendment negatived.
Further Amendment made: No. 276, in page 83, line 28, at end insert:
() A statement made by a person in compliance with a requirement imposed by virtue of this section may be used in evidence against him.—[Mr. Darling.]
Clause 106—(Entry And Search Of Premises)
I beg to move Amendment No. 321, in page 84, line 3, to leave out from 'any' to 'until' in line 6 and to insert:
The Clause concerns the entry and search of premises to take possession of a body corporate's books or papers, which subsection (3) permits to be retained for three months, unless proceedings are begun during that period for an offence to which they are relevant, in which case they can be held until the conclusion of those proceedings. The offence must have been committed by the body corporate to whose affairs the books or papers are relevant or by the person in relation to that body. The kind of offence in which it might be necessary to retain the papers might be one in relation to which disclosure of the papers is permitted by Clause 107 (1,a). As this definition is more precise than that in subsection (3), it would be an advantage. If the papers are retained for more than three months it must be because criminal proceedings have been commenced, as mentioned in (1,a) or (aa) of Clause 107 and the papers are relevant to those proceedings.'such criminal proceedings as are mentioned in subsection (1)(a) or (aa) of the next following section (being proceedings to which the books or papers are relevant)'.
I do not know whether we should discuss now or later the later Amendment which inserts the new (aa) to which this refers.
The Minister of State sent me a courteous note apologising because the Amendments were tabled only on Monday of this week. The Amendments refer mainly to the Exchange Control Act, matters which are the Treasury's responsibility and appeared literally two days before the second and last day of proceedings on a Bill which has been before the House since February. This is bad enough in itself, but it raises an entirely new issue, a new Act which is not even mentioned in the Short Title. I have not studied the Act in great detail, but the opening phrases of every Section in it apply to offences committed by a person. It is clear that it would be wrong to bring in any form of procedure of a criminal or investigational nature which was applied only to corporate bodies. 5.45 a.m. The Exchange Control Act lists a large number of currency offences committed in every case by a person. In introducing the reference to it in the Bill, the Government—and, of course, the Treasury, is involved—are saying, "We should like more powers. We cannot conveniently get them in a general Measure which will amend the Exchange Control Act, and we will take these powers for companies only—not for partnerships or one-man businesses—and insert them in the Bill." We have said many times that some of the other provisions of the Bill are not part of company law. That is even more true in this case than of other provisions which we have mentioned, such as those dealing with exports and those in Clause 18. This is even further removed from company law. It is particularly objectionable in that it takes out certain types of people by classes—corporate bodies—and takes more powers to investigate exchange control offences in respect of them, simply because there happens to be a Companies Bill before the House. This is wrong. It is only by the grace of God that they got it in the Short Title—that was an accident, and an extremely unfortunate accident—and I hope that the right hon. Gentleman will very seriously consider withdrawing the Amendment. I wish in no way to be critical of the Chair, but if I had brought forward new Amendments on an entirely new subject on Monday of last week, I am certain that they would not have been called. I see no reason why a matter of this sort, in respect of which one must stretch one's imagination to get it within the Long Title, should be put in the Bill at this late stage. It has nothing whatever to do with company law. I am certain that it is not the wish of the Board of Trade that this should happen at the last moment, but the President of the Board of Trade for our purposes this morning is the Government and I must address my remarks to him and his right hon. Friend the Minister of State.I apologise to the hon. Member for Gloucestershire, South (Mr. Corfield) and the House for the fact that these Amendments were put down rather by the grace of God at a late stage in the proceedings. That is partly due to the fact that they arose in the interrelation of this legislation with the Exchange Control Act—an inter-relation which is somewhat complex and, therefore, needed elucidation.
But I think that the hon. Member's anxieties on the point of substance are misplaced, although I accept that they are sincere. The Amendment does no more than put the law back to where it was before the Bill was introduced. The Treasury has power to investigate suspected offences under the Exchange Control Act, 1947, and where an offence has been committed they can arrange for proceedings to be instituted. It is possible, under the present law, before the Bill was introduced, that an inquiry into a suspected offence under the Protection of Depositors Act will show that there has been an offence under the Exchange Control Act, and at present, if that should be so, any information or documents obtained by the Board of Trade in the exercise of their powers under Section 18 or 19 of the Protection of Depositors Act may be published or disclosed for the purpose of criminal proceedings under the Exchange Control Act. That is the present position. However, if the Bill were enacted without these Amendments no directions would be given and no authorisations would be conferred under Section 18 of the Protection of Depositors Act and Section 20 of that Act would, in effect, be repealed. I realise that it is complicated—that is why it took time to elucidate it—but it follows that, with Clause 107 as now drafted, the Board of Trade would lose the power it previously had, and indeed now has, to publish or disclose documents or information for the purpose of proceedings under the Exchange Control Act. These Amendments will permit such publication or disclosure of documents or information for the purpose of proceedings under that Act to the Treasury as the competent authority. We are not doing anything new. We are merely ensuring that a power for enforcing the law, which is now in the hands of the authorities, is not taken away. It seemed reasonable to do this, because, although we are dealing with company law, if, by enacting company legislation, we weaken the enforcement of the Exchange Control Act, that is not something that any of us would wish to do. I apologise for the lateness and complexity of this issue, but, with that explanation, I hope that the hon. Gentleman will agree that his anxieties were perhaps exaggerated.I confess that the matter becomes clearer after the right hon. Gentleman's explanation. None the less, far from this Bill being in any sense ready to come before us, I feel that it has been going through its early formative period when life should have already come to it. It will be a most extraordinary birth.
We feel dissatisfied that so many important Amendments have come to us late in the day, either in Committee or on Report. It does not give us a great deal of time to make our necessary inquiries and it shows that things must have been very hurried in their preparation. To that extent it reinforces the argument that has been used by my hon. Friend in saying that it leaves us with a grave suspicion that, as soon as this Bill becomes an Act and the law of the land, it will already have been shown to have many defects because so rapidly are new facets being disclosed which require alteration or attention. I hope that, coming so late, these Amendments will be found to be satisfactory, but we must disclose our very great regret at the lateness at which they have arrived before us.Amendment agreed to.
Clause 107—(Provision For Security Of Information)
Amendments made: No. 322, in page 84, line 33, at end insert:
(aa) with a view to the institution of, or otherwise for the purposes of, any criminal proceedings pursuant to, or arising out of, the Exchange Control Act 1947;
No. 278, in page 85, line 4, at end insert:
'or
(f) for the purposes of proceedings under the last foregoing section'.—[Mr. Jay.]
I beg to move Amendment No. 128, in page 85, line 6, after 'shall' to insert (i).
We may discuss, at the same time, Amendment No. 129, in page 85, line 12, at end insert:
(ii) liable at the suit of that body in civil proceedings for any loss sustained by that body as a result of such publication or disclosure.
These two Amendments are designed, not very elegantly perhaps, to meet an important problem. The Board of Trade and certain other bodies can, under various enactments, acquire a great deal of confidential information as a result of investigations undertaken for a variety of purposes. Very properly, Clause 107 makes clear that anyone who has acquired such information in the course of duty to investigate shall not use for any purposes other than may be necessary in relation to criminal or other proceedings arising out of the investigation. In other words, there is a protection against improper disclosure.
It takes no great imagination to recognise how a company which had been investigated but turned out to be innocent of any fraudulent or criminal intent or action might suffer ruinous damage if someone at the Board of Trade or another person to whom he spoke let out information to a competitor. The Clause makes it a criminal offence to disclose information, but the trouble is that that does not reimburse the people who have lost or suffered damage. The Amendments are designed to create, in effect, a statutory tort, something I have never tried to draft before. I do not, therefore, put it forward on the "drafting network" with any great confidence. But it seems right that there should be a civil action open to the company which has been damaged by a leakage, perhaps, by deliberate sale of information, or by the publication of knowledge in some way. This should give rise to civil proceedings and the chance, unless the person concerned is a man of straw, to obtain damages. The Amendments are an amalgamation of various people's ideas, plus, curiously enough, some words out of an American statute, because I could find nothing suitable in a British Statute. The purpose is clear. I believe that the right hon. Gentleman is sympathetic to it, and I hope that, even if he will not accept the wording, which would not surprise me, he will promise to give the matter really genuine attention. The criminal sanction is not effective to make good the damage which can be done and, I have no doubt, in some cases will be done. I cast no aspersions on the officers of the Board of Trade, but in the best arranged organisations accidents of this sort happen, and the innocent person suffers. It is the innocent person whom I seek to protect.I agree entirely, but I assure the hon. Gentleman that, if a mistake is made or an offence is committed under the Clause, a civil action can at present be pursued. If a person committed an offence under the Clause, he would commit the civil wrong of a breach of statutory duty and it would be possible for a person who committed that wrong to be sued for damages in a civil action. What the hon. Member seeks to achieve can, therefore, be achieved without his Amendment. I am sure that on that assurance he will wish to withdraw the Amendment.
6.0 a.m.
I am happy to draw near to the end of the Bill on that note. I certainly was unaware of that right of action. Curiously enough, many of my learned Friends were also unaware of it. I am glad to have that assurance. Perhaps the publicity which we have managed to give, although the newspapers are not very interested in us at this time of morning, may help some people to know of that remedy, which may help them. I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 279, in page 85, line 16, after 'business', to insert:
If you agree, Mr. Deputy Speaker, I suggest that we take, at the same time, Amendment No. 280, in line 21. These Amendments have the effect that the expression "industrial assurance business" in the subsection means business as defined by Section 1(2) of the Industrial Assurance Act, 1923. I am sure that no reasonable person could object to that.'(as defined by section 1(2) of the Industrial Assurance Act 1923)'.
Amendment agreed to.
Further Amendments made: No. 323, in page 85, line 18, leave out 'and'.
No. 324, in page 19, at end insert:
',the Treasury and an officer of theirs'.
No. 280, in line 21, after 'business', insert '(as so defined)'.
No. 325, in line 25, leave out and an officer of his' and insert:
',an officer of his, the Treasury and an officer of theirs'.—[Mr. Darling.]
Clause 111—(Application For Purposes Of Part Iii, Of Certain Provisions Of Parts I And Ii)
I beg to move Amendment No. 281, in page 86, line 30, after '88', to insert '(as read with 99(3))'.
The Amendment takes us back to Clause 88, which states that where an offence under Part II of the Bill committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director or officer of the body corporate, he as well as the body corporate shall be guilty of that offence and liable to be proceeded against and punished accordingly. For this purpose, a person in accordance with whose directions the directors act is deemed to be a director. Clause 111 states that Clause 88 shall have effect in relation to offences under Part III of the Bill as it has in relation to offences under Part II. The Amendment states that for this purpose, Clause 88 shall be read with Clause 99(3), which states, in effect, that a person shall not be deemed to be a director of a company by reason only that the directors act on advice given by him in a professional capacity. The effect is that a person who gives professional advice is given the same safeguard in relation to an offence under Part III as he has under Part II. I am sure that this will be accepted by all those who fight for the liberty of the subject, as the hon. Member for Gloucestershire, South (Mr. Corfield) has done so manfully throughout the long proceedings on the Bill.Amendment agreed to.
Clause 117—(Fresh Exemption From Moneylenders Acts 1900 To 1927 Of Persons Carrying On Business Of Banking)
| New Schedule.—(AMENDMENTS OF INSURANCE COMPANIES ACT 1958 CONSEQUENTIAL ON SECTIONS 59 AND 70(1) OF THIS ACT.) | |
Provision amended and Subject-matter thereof
| Amendment
|
| Section 3 (separation of funds relating to certain classes of business). | In subsection (1)(b), for the words 'two or more of the said classes' there shall be substituted the words 'both the said classes'. |
| In subsection (5), for the words 'life assurance business, industrial assurance business, bond investment business and employers' liability insurance business' there shall be substituted the words 'ordinary long-term insurance business and industrial assurance business'. | |
| Section 5 (periodic investigation of certain companies by actuary). | In subsection (1), for the words 'life assurance business, industrial assurance business or bond investment business' there shall be substituted the words 'ordinary long-term insurance business or industrial assurance business'. |
| Section 11 (provisions as to certain amalgamations and transfers). | In subsection (1), in paragraphs (a) and (b),the words 'or employers' liability insurance business' shall be omitted and, in the proviso, the words 'carrying on life assurance business or industrial assurance business', the word 'that', where secondly occurring, and the word 'life', where, last occurring, shall be omitted, and after the words 'in the company' there shall be inserted the words 'that is attributable to the carrying on of ordinary long-term insurance and industrial assurance business'. |
| In subsection (2)(b), the words 'except' in relation to a transfer of employers' liability insurance business' shall be omitted, and for the words ' sinking fund or bond investment' there shall be substituted the words 'or capital redemption'. | |
| Section 33 (interpretation). | In subsection (1), immediately before the definition of 'chairman' there shall be inserted the following definition:— |
| '"capital redemption business" means such business as, by virtue of paragraph (c) of subsection (6A) of section fifty-nine of the Companies Act 1967, falls within the definition in that subsection of ordinary long-term insurance business', | |
| in the definition of 'general business', the words 'of a class or classes specified in section one of this Act' shall be omitted, in the definition of 'long-term business', for the words 'business of all or any of the following classes, namely, life assurance business, industrial assurance business and bond investment business' | |
Amendment No. 282 made: In page 88, line 16, leave out Clause 117.—[ Mr. Darling.]
Clause 118—(Repeal Of Section 1 Of Moneylenders Act, 1911)
Amendment No. 283 made: In page 89, line 13, leave out 'as regards Great Britain.'—[ Mr. Darling.]
Clause 123—(Short Title, Citation And Repeal)
Amendment No. 284 made: In page 90, line 16, leave out from first 'and' to 'may' in line 17 and insert:
'Part II of this Act, Schedule (Amendments of Insurance Companies Act 1958 consequential on sections 59 and 70(1) of this Act) to this Act and Part I of Schedule 5 thereto'.—[Mr. Darling.]
Provision amended and Subject-matter thereof
| Amendment
|
| there shall be substituted the words 'business of either or both of the following classes, namely, ordinary long-term insurance business and industrial assurance business', for the definition of 'policy', there shall be substituted the following definition:— 'policy— | |
| (a) in relation to ordinary long-term insurance business and industrial assurance business, includes an instrument evidencing a contract to pay an annuity upon human life; | |
| (b) in relation to insurance business of any other class (except capital redemption business) includes any policy under which there is for the time being an existing liability already accrued or under which a liability may accrue; and | |
| (c) in relation to capital redemption business, includes any policy, bond, certificate, receipt or other instrument evidencing the contract with the company', and, in the definition of 'policy holder', for the words 'bond investment business' there shall be substituted the words' capital redemption business', immediately before the word 'bond', where secondly occurring, there shall be inserted the word' 'policy', and for paragraphs (a) to (c) there shall be substituted the following paragraphs:— | |
| '(a) in relation to such ordinary long-term insurance business or industrial assurance business as consists in the granting of annuities upon human life, includes an annuitant; and | |
| (b) in relation to insurance business of any kind other than such as is mentioned in the foregoing paragraph or capital redemption business, includes a person to whom, under a policy, a sum is due or a periodic payment is payable'. —[Mr Darling.] |
Brought up, read the First and Second time, and added to the Bill.
Schedule 1—(Amendments Of Schedule 8 To The Companies Act 1948)
I beg to move Amendment No. 286, in page 94, line 45, Schedule 1, after the second 'of' to insert 'fixed'.
Perhaps we could take Amendment No. 292 with this Amendment.If that is convenient to the House.
These two are improving Amendments to deal with the situation where some building companies hold a stock of land—we have had this before on Report—which they regard as a current asset and show it in their balance sheets as work in progress. The purpose of the Amendments is to confine the requirement to show freehold land separately from leasehold land to land held as a fixed asset. A previous attempt at this improvement was accepted by hon. Members opposite, and I am sure this one will be, too.
Amendment agreed to.
I beg to move, Amendment No. 287, in page 96, line 6, Schedule 1, after 'of' to insert provision for'.
Perhaps we could take at the same time Amendments 288, 289, 293, 294 and 295. These are drafting Amendments. The expressionis already used in paragraph 12(1,a) of the Eighth Schedule which is one of the major provisions of the 1948 Act, and I am sure we should go on being consistent here."charged to revenue by way of provision for depreciation"
Amendment agreed to.
Further Amendments made: No. 288, in page 96, line 7, after 'charged", insert 'by way of provision'.
No. 289, in page 96, line 9, after 'revenue', insert 'by way of provision'.
No. 290, in page 96, line 26, leave out 'the following sub-paragraphs' and insert 'sub-paragraphs (2) to (4) below'.
No. 291, in page 96, line 35, at end insert:
(5) A company shall not be subject to the requirements of this paragraph if it is neither a holding company nor a subsidiary of another body corporate and the turnover which, apart from this sub-paragraph, would be required to be stated does not exceed £50,000'. —[Mr. Darling.]
Schedule 2—(Form Of Schedule 8 To The Companies Act 1958 As Amended By This Act)
Amendments made: No. 292, in page 105, line 5, after second 'of', insert 'fixed'.
No. 293, in page 106, line 41, after 'of', insert provision for'.
No. 294, in page 106, line 42, after 'charged', insert by way of provision'.
No. 295, in page 106, line 44, after 'revenue', insert by way of provision'.
No. 296, in page 107, line 9, leave out 'the following sub-paragraphs' and insert 'sub-paragraphs (2) to (4) below'.
No. 297, in page 107, line 17, at end insert:
(5) A company shall not be subject to the requirements of this paragraph if it is neither a holding company nor a subsidiary of another body corporate and the turnover which, apart from this sub-paragraph, would be required to be stated does not exceed £50,000.—[Mr. Darling.]
Schedule 4—(Enactments Of The Companies Act 1948 Applied)
I beg to move Amendment No. 298, in page 117, line 7, Schedule 4, at the end to insert:
Section 449 of the 1948 Act, as I am sure you will be aware, Mr. Deputy Speaker, states that orders made by the High Court under that Act may be enforced in the same manner as orders made in an action pending therein. The Amendment adds Section 449 to Schedule 4. The effect of this is that in a case where a company refuses to allow an inspection of the register required under the Section, the court may by order compel an immediate inspection, and where there is a failure to send, within the proper period, a copy required under the Section, the court may by order direct that the copy shall be sent.Section 449 … Power to enforce orders.
Amendment agreed to.
Schedule 5—(Amendments (Of Minor Nature Or Consequential On Part Ii) Of The Insurance Companies Act 1958 And The Industrial Assurance Act 1923)
Amendments made: No. 289, in page 117, leave out lines 25 to 39.
No. 300, in page 118, leave out lines 3 to 20.
No. 301, in page 119, line 3, leave out from beginning to end of line 9 on page 120.—[ Mr. Jay.]
No. 302, in page 120, line 10, column 2, at beginning insert:
In paragraph 7, in the proviso, for the words 'life assurance fund' there shall be substituted the words 'ordinary long-term insurance fund'.—[Mr. Darling.]
Schedule 6—(Spent Or Obsolete Enactments Ceasing To Have Effect)
I beg to move Amendment No. 303, in page 123, column 3, Schedule 6, to leave out line 28 and to insert:
The effect of this Amendment is to delete the opening wordsIn section 3, in subsection (1), the words Subject to the provisions of this Act'; in subsection (2), the words 'Subject as aforesaid'; and subsections (3) and (4).
and "Subject as aforesaid" of Section 3(1 and 2) respectively of the Insurance Companies Act, 1958. Those words would only be appropriate so long as Section 3 (3 and 4) of, and paragraph 3 of the Second Schedule to, the 1958 Act are in existence. Since those three provisions are being repealed in Schedules 6 and 7 to the Bill the words in question would become meaningless, and are, therefore, being repealed. I am sure that none of us would wish to leave in the Bill meaningless words."Subject to the provisions of this Act"
Amendment agreed to.
6.10 a.m.
I beg to move, That the Bill be now read the Third time.
I must start with an apology which everyone who has served on the Bill must have from the Government. It is for the way in which the proceedings have been rushed to some extent so that Parts II, III and V could go on the Statute Book as quickly as possible for reasons which all hon. Members fully understand. If we did not have the powers which Parts II and III give us and a new scandal blew up during the summer, we would have great difficulty defending any delaying action to the public who might be affected. It is also essential that Part V, which deals with moneylenders and contains retrospective provisions, should be on the Statute Book. During the course of the Bill, we have had co-operation and helpfulness from everybody concerned, particularly from hon. Members opposite who are still with us at this late stage and who have worked extremely hard and who have helped us to make this a very good Bill. The hon. Member for Gloucestershire, South (Mr. Corfield) has repeatedly said that it is a slipshod and badly drafted Bill, and so on, but that is all part of the operation and we all quite understand it. However, in the long course of the Committee stage and again on Report hon. Members have helped us enormously to make sure that it is not a slipshod Bill. It is a very carefully drafted Bill and we can send it back to the House of Lords confidently knowing that it is. We shall have to apologise to another place for all the massive changes which we have made in the Bill, which was sent to us what seems to me to be many, many months ago. I have found this to be a most useful exercise. I cannot say that I am now an expert on company law, but I know much more about it than when I first started. The only trouble has been that I have had to learn the hard way, and I can think of easier ways of learning company law than going through all the proceedings which I went through. However, I should like sincerely to thank all the hon. Members who have helped us, particularly those on the Opposition Front Bench and the hon. Member for the City of Chester (Mr. Temple) for the hard work which they have put in in a sincere desire on their part as on ours to make the Bill worthy of the labours which we have put into it.6.15 a.m.
I should like to congratulate both right hon. Gentlemen on having got their Bill to Third Reading and I should like to say a special word of congratulation to the right hon. Gentleman the Minister of State, who has battled throughout, often single-handed. At times, with our assiduous assistance, he has even made progress.
May I say a word about the Bill? It came from another place with 96 Clauses and seven Schedules, or, in other words, 77 pages of Clauses and 35 pages of Schedules. It is reported back with 123 Clauses and seven Schedules, or with 91 pages of Clauses and 37 pages of Schedules. We came to it with no fewer than 175 Government Amendments on report, and some Amendments were put down between the various report sittings. Clearly, a lot of work has been done on this Bill during its progress through the House, and with all sincerity—for nobody wants acrimony at this hour of the morning—I say that this is a Bill based on the Jenkins Report presented as long ago as 1962, and, having had a dummy run in the last Parliament, it has now to go forward to the other place with dramatic changes made to it. I believe that much of the Bill is required, and I am confident that the work we have put into it has been of benefit to the Bill. We on this side are still not satisfied with its terms about quoted and non-quoted disclosures, but experience in the field, so to speak, will prove who is right in that respect. Certainly, the insurance provisions are essential, and we welcome the anti-fraud provisions, as well as what has been done in respect of the moneylender Clauses. Yet all the work we have done has served as much as anything to highlight a consideration for the future. Like a gleam in this Bill, there is the promise of another Bill yet to come, and in the work done in bringing this Bill to this stage, I hope that the President of the Board of Trade has learned from an error made at the very outset. I am surprised that the Government had not learned from a recollection of company law that it is always unwise to start such Bills in another place. Much of the trouble tonight, and earlier, has come from that very fact that the Bill started its long journey in another place. Moving the Companies Bill of 1862—the first we had ever had—the then Lord Chancellor said on Second Reading that similar Measures had been introduced previously, but that, for various reasons, they bad never passed the Commons. Those words might well have been said only tonight. It was thought more desirable to start the Bill in the Commons in 1862, and at the time it was stated that that Bill was there "maturely considered". Surely it would have been better to have followed the lesson learned so long ago and, while nobody would wish for a Liberal Government to be in power as it was in 1862, let us hope that when the next Companies Bill arrives, the Liberal Party will play a part in our deliberations. This has been a long, hard course—27 sittings in Committee, and now, on the second day of the Report stage, an all-night sitting. We have seen much of each other throughout these long hours. It says much for our tolerance that we can still face each other in reasonable amity across the Floor of the House. We congratulate both right hon. Gentlemen on the Government Front Bench, particularly the Minister of State, and wish the Bill well.6.21 a.m.
I should like to say just one sentence. I speak on behalf of a large number of back benchers when I say that they also serve who only stand and wait.
6.22 a.m.
It is entirely fitting that the last stages of the Bill in this House should end on a note of harmony. I congratulate the Minister of State on the very charming way in which he has conducted our proceedings. It is amazing what a little charm will do.
I congratulate, too, very sincerely my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) and our Front Bench team, who have put in magnificent work. I know that the members of the Government Front Bench have congratulated them, but I feel that we should congratulate them from these benches. I echo the sentiment of the Minister of State that it is extraordinarily important that the insurance provisions of the Bill get into statutory form as soon as possible. The Bill will. I suppose, go very rapidly to another place. No doubt we shall have Amendments sent back from another place. I should like an undertaking that when those Amendments come back they will be taken at a reasonable hour and not at six o'clock in the morning. It has been a great pleasure to take part in the most interesting deliberations on the Bill.6.24 a.m.
I am sure that at this stage we all wish the Bill well on its way to another place. The Minister of State set the tone for the Third Reading debate with his typically attractive and courteous remarks.
I do not wish to strike a discordant note, but it seems to me somewhat disturbing that we should be completing the Bill's passage through the Commons in a sitting lasting about 15 hours. I wonder whether we have been able to give the Bill the proper consideration which it should have had. I know that that is not the fault of either the right hon. Gentlemen at present on the Government Front Bench. Perhaps we should go into the responsibilities for that again. They have been pointed out, and I hope that they will have been noticed where they should be noticed. I have found the consideration of the Bill intensely interesting and worth while. I join in the remarks made about the Minister of State, who has given a model performance in presenting the Bill. I remember saying on Second Reading that the Bill was something of a curate's egg, with a difference, and it still is, although it is a very much bigger egg than we first had. Parts of it are good—and I am thinking particularly of the parts dealing with provision for wider disclosure in the case of public companies. I am not sure that the Bill, in this particular, goes far enough. We have to recognise that we cannot protect all the interests and rights of shareholders through company legislation in this way. The Stock Exchange Council has a very important part to play too. It is vital that we should see the Council playing its part because if it does not, one must think carefully about the possible case for something along the lines of the Securities of Exchange Commission. One or two recent events, which will be in hon. Members' minds, have raised certain suspicions about the adequacy of the Stock Exchange Council's ability to police the activities of companies operating on the Stock Exchange. This is a matter which will have to be watched before we come to this famous second Bill. I do not know how long it will be before the second Bill comes before us. I know that the Minister of State has assured me that I have been wrong to express doubts as I have done about this. We shall see. By the time the second Bill comes before us, we shall have had an opportunity to see how this Bill has worked. I believe that we may well find that there are gaps in the Bill which will leave us an opportunity to act, so long as the Government brings it before us. To conclude on a harmonious note, we can only hope that, if the Bill does come before us, the Minister of State will be there to give us his gentle guidance through another Committee.On the other side of the House.
6.26 p.m.
I have to disappoint the Minister of State, because I do find this a disappointing Bill. It could have been so much better. I want to thank my hon. Friends for all the hard work that they have put in. My complaint against the right hon. Gentleman is that, however angry I get against the Government, he always manages to melt my anger with his charm and courtesy, even at 6.30 in the morning, and that is a great achievement.
I have to strike one discordant note. The House ought not to be treated like this. We have put in a lot of work on the Bill and we ought not to have had to consider the last stages for 14 solid hours.Question put and agreed to.
Bill accordingly read the Third time and passed, with Amendments.
Road Crossings (Greenford And Northolt)
Motion made, and Question proposed, That this House do now adjourn.—[ Mr. Howie.]
6.28 a.m.
In a couple of hours' time parents in many parts of my constituency of Ealing, North will be running considerable risks in conducting their children to school. They will be going through the same task probably at lunch-time, and certainly at tea-time, when they collect their children.
This is a rather serious state of affairs, which probably exists in other parts of the country, and I hope that this debate will not only benefit my constituency, but those other parts of the country, too. I want to draw attention particularly to one area situated in Northolt, namely, Dabbs Hill Lane and Eastcote Lane junction. On one side of a brand-new highway, running towards Eastcote Lane, is a large housing estate, and on the other side are practically all the schools which the children living on that housing estate attend. Morning and evening parents face a considerable hazard in taking and fetching their children. Even on a council housing estate, anyone who wishes to go there and see will be able to note with some alarm the problem that young mothers have, pushing their prams taking small children to school, then going through the same thing later on, in the evening. I have written to my hon. Friend the Parliamentary Secretary to the Ministry of Transport, and he has given me every facility to meet and talk with him. It was not so very long ago that a deputation of the parents from Dabbs Hill Lane and the surrounding area came to see my hon. Friend with myself, and we talked about the serious situation there. One of the young mothers who explained the situation to my hon. Friend, Mrs. Jean Young, has had her own small child knocked down and injured since she came on this deputation. I ask my hon. Friend whether he will add to the encouragement he has given us, and use his influence to get something done to alleviate this serious situation. As much as is possible, we have had good co-operation from the police, but the problem there is that the police tell me constantly that, while they would like to man this junction, they find themselves very short of staff, and cannot always carry out this responsibility. There was a site meeting on 13th July at this place to ascertain whether refuges could be constructed, and whether some form of patrol could be organised to ensure safety; but as I pointed out, the police cannot guarantee that they can supply the necessary officers. My hon. Friend has agreed, I think I am right in saying, that the real answer is the construction of a footbridge. But while we are awaiting for this the danger will still exist, and it has its financial implications, although I am not too concerned about that. I understand that the cost of the footbridge would be about£10,000, and I would be pressing for it just as urgently if the cost were £100,000. We simply must have a crossing erected at Dabbs Hill Lane, while we are waiting for the footbridge to be erected. The other serious situation relates to the position at Yeading Lane and Kings-hill Avenue. Here again, a similar position exists. This is a major road between two highly concentrated residential areas, and it has been described by many of my constituents as deadly. I agree with them. It has a nasty accident record, and it would be a tragedy if we had to wait until a few people were killed or seriously maimed until action was taken. The Ealing Borough Council has devised a scheme for widening the central reservation and also providing a waiting bay for people wishing to turn right at this junction. It has also designed this scheme to provide a zebra crossing. I want my hon. Friend to give urgent consideration to these proposals from the council. From time to time I have met the tenants' association of the Yeading Lane estate with my colleagues, councillors of the Ealing Borough Council. There is no doubt that it is a tragedy that a really nice, smart and clean housing estate should be blighted by the fact that there have been no pedestrian facilities for people to be able to cross from one side of a very well-used road to the other. From the meetings I have had with the association and my colleagues on the council, I know that their patience is running out. I understand that there was a site meeting on 4th April between the council and representatives of the Ministry, the police and the G.L.C., and that the scheme devised by the very able borough engineer will cost about £10,000, but that the G.L.C., which plays an important part in this, has said that it cannot provide the cash. In a situation like this, where people run grave risks every day, while we can spend millions of pounds on all sorts of things one might question, we are told that we cannot provide £10,000 to enable people to live reasonably contented on a new housing estate which is being blighted by lack of adequate pedestrian facilities. There is another serious situation at a junction referred to in official terminology as Oldfield Lane and Greenford Station. It is near to the central line station. It is almost in the middle of Greenford. There is also a shopping centre with bus stops, but there is no zebra crossing. I live not far away and I know that, during the rush hour, this site is busy and as dangerous, if not more so, than any other comparable road in London. It is particularly dangerous, because it has no zebra crossing. Only the other day the child of a neighbour of mine was knocked down—paradoxically, by a police officer on duty on a motor cycle. This was one of many accidents or near accidents over a period. Local people are getting irritable about it. They wonder how many accidents must occur before they get a crossing. The borough council has submitted details to the Ministry. Here again, the G.L.C. comes into the picture. I cannot understand why it is not co-operating. I do not know who is responsible for compiling and examining the statistics of the G.L.C., but if he saw the realities of the situation I am sure that he would change his mind. I hope that my hon. Friend will give his full co-operation before any more serious accidents occur. In another part of Greenford—Greenford Road and Otter Road—a pedestrian refuge has been applied for. The borough council has agreed and I hope that my hon. Friend will give it serious and urgent consideration. I turn now to another very important part of my constituency. Its people are in almost mental agony because of the traffic situation. Here again, mothers literally take their lives and the lives of their children in their hands when they have to cross the roads to take the children to school and back. My right hon. Friend the Secretary of State for Education and Science is responsible for seeing that children are properly educated and it might have been a good thing if he had been here, for then he would appreciate the difficulties faced by ordinary people in this area in getting their children to and from school. Recently, there was a serious accident in which a young mother and child were smashed to the ground by a vehicle. She was simply taking her children to school. In this day and age, with all the dangers that exist, we should make every effort to alleviate this situation. This area is in the permanent grip of a massive traffic thrall. Dangers to children in going to school are enormous. The borough council has been aware of this. The Parliamentary Secretary has been very concerned. Officers of his Department have seen the residents' Association from time to time, and schemes are being worked out. I understand that the borough engineer has worked out a scheme to redesign the traffic routes and the signals at Hanger Lane and the North Circular Road. These interim measures may take some time to implement, unless someone is willing to tackle the problem urgently and give things a jerk. The real answer in the West Twyford area and the North Circular Road area is the provision of subways. I pay tribute to Mr. James, the secretary of the residents' association, and his fellow officers, and to the parent teacher association. They have shown both interest and understanding. I hope that their patience and understanding will not run out because of the lack of action. I appeal for urgent action. At the Western Avenue and Church Road junction the problem is identical. Mothers and children try to get to school across Western Avenue, where there is no proper crossing. There have been times when the police officer on duty, who is there to control the traffic and enable the mothers and children to cross, has been in danger of being knocked down. I ask my hon. Friend to work closely with the borough council and try to bring in some interim arrangement whilst a subway, which I understand is under consideration, is being prepared. In addition to the subway, I understand that it is planned to build a footbridge in this area. I welcome this. I hope that it will be erected as soon as possible. The layout plans have been submitted. The G.L.C. has decided to widen part of the road. Therefore, the details of the footbridge cannot be submitted until the road widening plans are known. I beg those in charge of the road widening plans to get a move on so that the building of the footbridge can be put in hand. I have met delegations of mothers. I understand their grave anxiety. There are other spots. There are so many such spots in my constituency that I cannot understand why many of these things were not alleviated years ago long before I entered the House. At the Mandeville Road, Eastcote Lane black spot the council wants to widen the road and provide a central refuge. I hope that my hon. Friend will give this project urgent attention. I know that the various residents' associations whose delegations have seen my hon. Friend and myself will want me to express gratitude to my hon. Friend for the help he has given us on these immediate issues. He has a remarkable record. During the two years I have been in the House I have, with his help and collaboration managed to get about a dozen zebra crossings installed at what were dangerous places. Two footbridges have been erected in Western Avenue either side of the Greenford roundabout. These are a blessing. The people in the area are very grateful for them. Because of my hon. Friend's alacrity, we were able to get these footbridges erected speedily. There has never been an occasion when my hon. Friend refused to see me. On occasions he has suspended other meetings or amended his arrangements so as to see me and discuss these matters. I have cited these cases in an appeal on behalf of my constituents for appropriate action, because they wish to be released from the threat of themselves and their children being slain or maimed. This is an appeal in Parliament this morning to ask all those concerned and my hon. Friend in particular, to help us in this constituency, for the simple reason that "mums" should be able to take their children to school and bring them back in reasonable safety. Because these threats exist in my division of Ealing, North in all the places I have mentioned—Dabbs Hill, and West Twyford—the quality of life has been impaired. The very fact that these threats exist has caused disturbances within families and surely this cannot be right. All the efforts of the borough council to provide homes and playing grounds and to make life better have been marred and blighted because of the lack of adequate pedestrian facilities in the places I have mentioned. I express my appreciation to my hon. Friend and also to the borough engineer of the Ealing Borough Council—a brilliant man of human understanding, and also the police officers of my division—and last, but certainly not least, to the editorial staff of the Middlesex County Times, who have kept these issues in the public eye without trying to whip up any undue emotion or to adopt a biased attitude. They have acted sensibly and intelligently, without exaggerating the position. My first words in this Parliament when I came here for the first time were to the effect that I considered my major responsibility at all times to be to try to see that my constituency was the happiest in the land. I shall not succeed in that until these pedestrian facilities are created. They are a prerequisite in the self-imposed burden which I have been eager to take on. All that I am seeking to do is to ensure that safety and sanity are given a greater priority than lorries and cars. I ask my hon. Friend to help me restore the peace of mind of the people living in the areas that I have mentioned and I hope he will agree that instead of the anxieties and anguish that exist there should be tranquillity, which is the hallmark of any civilised society.6.47 a.m.
It is characteristic of the assiduity of my hon. Friend the Member for Ealing, North (Mr. Molloy) that he should stay throughout the night to make these representations on behalf of the pedestrians of Ealing. I do not know whether I shall be able to cover all the points he raised; if not I shall communicate with him later.
I want to say something about what has been done during the period that he has been making his representations. I will summarise it. In December, 1966, a footbridge was opened at South Green-ford Halt, on Western Avenue between Medway Parade and Greenford Road. At Long Drive, on Western Avenue, a footbridge was opened on 7th February this year; and in March, 1966, on a length of Horsenden Lane South, between Perivale Lane and Western Avenue, a footpath was provided. The carriageway of Church Road at its junction with Alderney Gardens is to be widened and improved with the addition of pedestrian refuges. On 6th June of this year we recommended that the local authority, the London Borough of Ealing, should see whether the existing pedestrian crossing in Greenford Avenue could be improved by widening the black and white strips. Also, in November, 1965, we recommended that when Whitton Avenue East was widened pedestrian refugees should be constructed at its junctions with Cross-gate and Ridding Lane. Unfortunately this work has not been carried out because some mature trees would have to be removed and the Borough of Ealing has not yet decided on further action. It will be seen from this that we have a record of action taken as a result of representations made, because we appreciated the fact that my hon. Friend and those others who made representations are faced with very complex and difficult problems in this area. The position at Yeading Lane is quite straightforward. We cannot yet pronounce finally on this case, because we have not yet received any formal application for a crossing where it joins Kings-hill Avenue. We know of the proposal, but, after a site meeting at the council's request, the views of the police and the G.L.C. are now awaited. But when we have all the information and when and if the council makes a formal application, we will naturally give it the sympathetic consideration which my hon. Friend wants. On Oldfield Lane, Ealing wants an additional crossing, and we are examining this closely with the police. On the West Twyford Avenue part of the North Circular Road, there is the question of constructing a footbridge at Brentmead Gardens. There is a scheme for traffic control here, with a signal junction at Iveagh Avenue and closure of the centre gaps in the A.406 between Iveagh Avenue and Hanger Lane. A side road order has been published and we are now considering objections. Provision of a footbridge must await the confirmation of the order and a start must also be made on the road works. Subject to this, a footbridge could be ready in under 12 months. My hon. Friend also reminded me of a petition from local residents which he submitted about an accident at the junction of Hanger Lane and the North Circular. We have carefully examined their request for improved pedestrian facilities and officials of the Ministry, the police and the council have inspected the traffic control signals there and have looked into accident reports and the flows of traffic and pedestrians. Everyone has agreed that the existing provisions are satisfactory. However, a junction improvement scheme is programmed here which will enable us to modify the signals and to put up a "Cross Now" signal on the North Circular. This will probably be started in six months and will be a considerable advantage to pedestrians. I turn now to Dabbs Hill and Eastcote Lane. I was saddened to hear of the accident which occurred to a woman whom I met in the House as a member of a deputation which my hon. Friend brought along. We have concerned ourselves with this difficult situation. The Dabbs Hill junction in Eastcote Lane is the focal point of my hon. Friend's concern, not only for improved pedestrian crossing facilities but for improved facilities for child pedestrians. He pointed out that the new road here separates a housing estate from the schools and that consequently a large proportion of the pedestrians needing to cross the road are children. A general point of principle is that we do not consider uncontrolled pedestrian crossings at all suitable for use by children, who are apt to run on to them without caution, giving motorists insufficient time to stop. Thus, when numbers of children need to cross a busy road on their way to or from school, and there are no facilities like footbridges or subways, we consider that the appropriate solution is a school crossing patrol. Such patrols have recently been authorised in Ealing at Wood End Lane and at the Dabbs Hill Lane junction in Eastcote Lane. Unfortunately, the police have not been able to fill these posts yet. A pedestrian crossing is not the answer—and, in any case, the problem is significant only at peak hours—and if the recruitment difficulty continues, it will be a case for the council to consider whether to provide a footbridge or subway. All that the Ministry can do is help with advice. The eventual provision of a patrol may have to be preceded by some temporary footbridge. We shall keep a constant watch on this situation. At a recent site meeting it was decided that barriers should be provided so as to concentrate the crossing at one point, and that the existing pedestrian refuge should be widened—My hon. Friend will appreciate that a crossing, with all the warning signs that children are crossing, would direct the children to one point instead of their being all over the road. That is our case for a crossing as an interim measure. The police are unable to provide people.
I take the point and I realise that the police in this and other areas of Greater London are overburdened. If it proves impossible to recruit school crossing patrols on whom reliance can be placed by the parents, then a temporary footbridge, and possibly a permanent footbridge, may prove the only solution.
I have given some indication that the interests of pedestrians in Ealing are being carefully looked at by the Ministry as a result of representations which have been made. Even where we have been unable to consent to every request which has been made to us, we have at least done what we can to ensure greater safety conditions for pedestrians and children. I am sure, therefore, that my hon. Friend agrees that the account which I have given of what we have done so far and my summary at the beginning of my speech of what we are doing now will show to the people of Ealing that there is a continuing and real improvement in the facilities which are being provided.Question put and agreed to.
Adjourned accordingly at Four minutes to Seven o'clock a.m.