Clause 2. — (Powers of the Corporation.)

Part of the debate – in the House of Commons at 12:00 am on 27 April 1949.

Alert me about debates like this

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East 12:00, 27 April 1949

I would like to deal with a point made by the right hon. Gentleman the Member for North Leeds (Mr. Peake), and also the point which touches on the legal aspect of the Bill arising out of the Amendment supported by the noble Lord the Member for South Dorset (Viscount Hinchingbrooke). With regard to investment, the Amendment we are proposing specifically preserves powers of investment conferred under Clause 36. The right hon. Gentleman will have observed that paragraph (ii) of the proviso reads: nothing in this subsection shall prejudice the powers of investment conferred on the Corporation by Part IV of this Act. The reason for that is that Clause 36 deals with something quite different, the disposal of money not immediately required for the Corporation's operations. The relevant words in Clause 36 are: Any sums in the hands of the Corporation which are not immediately required for the purposes of their business may be invested"— and then there is the proviso which limits investment.

The Clause does not deal with application of the Corporation's assets as part of the operations of their undertaking. It is an investment Clause, which relates only to the power to invest money not immediately required by the Corporation for carrying on their undertaking. Clause 36 provides that surplus money can be invested in a certain way subject to the limitations in the proviso. That investment should be revenue-producing investment, and that is all. It is different from application of the assets as contemplated in the Amendment. Broadly speaking, the conception of the Corporation is that it is a holding company, in the main. It has always been thought desirable and necessary that the Corporation should be able to carry on certain operations.

In Committee, my right hon Friend pointed out that among other operations it might be desired that the Corporation should be able to carry on were the specific ones we have referred to in subsection (2) of the Amendment, namely, research and the provision of common services for the public companies. But that is not exhaustive. For instance, as a result of research carried on directly by the Corporation a new process may be discovered which it might be thought convenient and commercially desirable that the Corporation themselves should, in the first place, develop. That is why we incorporate subsection (3) in our Amendment. We want to preserve for the Corporation, which is, admittedly, in general a holding Corporation, certain powers which can be used on specific occasions when it is desirable in the general interests of the industry.

The noble Lord the Member for South Dorset asked why, if that was desired, the Amendment could not be accepted. He called attention to the fact that the Government Amendment includes the words "wholly or mainly." The answer to that is that it may constantly arise—I do not say it will always arise but it may be frequent—that there is some outside company which, for example, is desirous of disposing of its undertaking. It may be that it wants to wind up its affairs. Anything of that sort might happen, and it may be highly desirable that the Corporation should be in the position to acquire the undertaking of the company, for it may be an undertaking which is carried on in conjunction with the basic operations of the industry.

If the first Opposition Amendment were adopted, the Corporation would not be competent to acquire a concern of that sort. If the concern were something which could be usefully allied to the basic operations of the industry—it might only be a small concern and only one undertaking—it would be desirable for the Corporation to acquire it if the concern were going into liquidation. If the Amendment were adopted, it could not be said of that concern that it was wholly or mainly part of the operations as set out in the Second Schedule. The Corporation then would not have power to acquire it. It is for that reason that, when we are dealing with the power to acquire—and let me, for the sake of emphasis, repeat that this only deals with the power to acquire by agreement—we say that the companies that can be acquired by agreement are companies whose operations are within the general ambit of the operations authorised by the memoranda of the Third Schedule companies. That is the reason we are doing it.