Orders of the Day — Road Haulage Regulations (Compensation Case)

– in the House of Commons at 12:00 am on 25th July 1952.

Alert me about debates like this

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

3.26 p.m.

Photo of Sir Martin Lindsay Sir Martin Lindsay , Solihull

I have a somewhat complicated case dependent upon details, on regulations, on figures and on dates. Therefore, I hope that the House will forgive me if I stick rather more closely to my notes than is the usual custom.

I wish this afternoon to raise the personal case of a constituent of mine who has been most unjustly—indeed I would say outrageously—treated in regard to compensation for loss of office when the undertakings by whom he was employed were nationalised.

In giving the facts of the case to the House, I cannot do better than quote from the judgment of Mr. Justice Devlin given in the Queen's Bench Division of the High Court on Wednesday, 21st May last. I choose to present the story in this way since, in giving the facts exactly as they appeared to the learned judge who heard the appeal, I am putting them in a form in which they can hardly be disputed.

Mr. Hurst was formerly employed by two road haulage undertakings which were taken over by the Road Haulage Executive. He was employed as managing director at a salary of £3,000 a year with an annual commission of £1,000, making £4,000 altogether. He had other advantages such as an entertainment allowance and the use of a car.

There is—and I continue to quote the words of the learned judge—no doubt that his services were very well esteemed by his employers, and that but for the fact that the undertaking had been taken over, they would have been continued on the same advantageous terms. Mr. Hurst at the time of the transfer was 54. He had every reasonable expectation of continuing in the same position until his retirement from business.

On nationalisation, Mr. Hurst was offered—and to his credit accepted—employment as a group manager at a salary of £1,200 per annum, a figure £2,800 below what he had previously been receiving. It is clear that if he continued in this position on these terms until the end of his 65th year, that is to say for 11 years, he would be then in receipt of £30,800 less than his previous expectation in salary and commission, that is to say 11 times £2,800. Similarly, if he were to go on until 70 he will have lost £44,800.

And what by way of compensation did the Road Haulage Executive offer my constituent? The figure—and it is almost unbelievable—was £803 13s. 10d., subject to tax. The Lord Chief Justice's comments were: I cannot believe that it was ever intended that a gentleman who has suffered the very severe loss which it is quite obvious that Mr. Hurst has suffered in this case should be fobbed off with the miserable and almost derisory compensation which it is apparently said he is to be offered in this case. This is very severe criticism of the Road Haulage Executive. It is perfectly clear that the Lord Chief Justice considered that a gross injustice has been done.

I would at this stage ask my hon. Friend two straight questions. Does he agree with the Lord Chief Justice that Mr. Hurst has been fobbed off with "miserable and almost derisory compensation?" Does he agree with the Lord Chief Justice that it could never have been intended, when these Regulations were approved by Parliament, that they should operate in so harsh a manner?

When this miserable compensation was offered my constituent on 5th May, 1951, he appealed to the Ministry of Labour and National Service Compensation Appeal Tribunal, and the hearing took place on 3rd November, 1951. My constituent's appeal was allowed, and Mr. Hurst's compensation was assessed at £140 10s. 0d. each four-weekly period until he attained the age of 70; that is to say, it was assessed at a total of approximately £26,976.

Unfortunately for my constituent, this appeal, at the instigation of the Road Haulage Executive, was set aside on 21st May, 1952, by the decision of the Queen's Bench Division, and, undoubtedly, this court was right to do so, I am bound to concede, according to the legal interpretation of Statutory Instrument No. 1083, of 30th June, 1950.

The point at issue was that, in order that Mr. Hurst should have received the more favourable assessment by his compensation being calculated in accordance with Regulation 9 (1), it was necessary that "customary practice" should be proved; that is to say, that it had been the general custom in Mr. Hurst's own business that a director losing his directorship should be compensated. The tribunal had taken the view that customary practice had indeed been established, but this view was quashed by the Appeal Court.

I would only add at this moment that it would be practically impossible to establish such a practice in a business which is only about 20 years old, when, not surprisingly, there had been no previous case of an active director losing his directorship.

Mr. Hurst was in a particularly unfortunate position as, through sheer bad luck, his existing contract had only three months to run on vesting day. He had been appointed managing director by written agreement in 1935 for a term of seven years. The contract expired on 1st October, 1942, but Mr. Hurst was quite happy to carry on without a further written agreement, as it was then mutually understood between himself and his chairman that he should retain his office so long as he was physically capable of performing his duties. However, two months after that occasion, the chairman suggested that a new written agreement should be entered into, and that was done for a further seven years, expiring on 1st October, 1949.

That agreement would, of course, again have been renewed for another seven years, but unfortunately, the two undertakings were acquired by the Road Haulage Executive on 1st July, 1949, which was three months before Mr. Hurst's agreement expired.

It is, of course, quite true that Mr. Hurst had no legal right to the renewal of his contract, but he most certainly had a moral right, and one which, but for the fact that the Transport Act precluded renewal, his contract would, of course, have been renewed.

I have no complaint whatever, to make against the decision of the Divisional Court of Appeal, even if I dared to, because even to a layman like myself it is clear that the learned judges had no option whatsoever but to take the view that Mr. Hurst's assessment could not fall under the more favourable Section 9 (1) of the Regulations which are called the Transferred Undertakings (Compensation to Employees) Regulations, 1950, since customary practice of giving compensation until the normal retiring age could not in this case be proved.

But I do not hesitate to say that the Road Haulage Executive, in insisting upon their last ounce of flesh and the very ultimate drop of blood, have behaved abominably. The Road Haulage Executive did not have to stick to the strict letter of the law, interpreting the Regulations in the harshest possible manner. They did not have to take the case to the Court of Appeal. They could perfectly well have accepted the award of the tribunal, and I have no hesitation in saying that the conduct of the Road Haulage Executive in this respect is quite below any ordinary standards of decent business management. Therefore, I think it is not at all surprising that the Lord Chief Justice should have thought fit to censure them so severely by implication.

The question is this. What can be done to remedy this injustice. It is quite clear that these Regulations are at fault and that, as the Lord Chief Justice expressed the opinion, they could not have been intended to operate in this manner. My hon. Friend the Parliamentary Secretary who has already been good enough to give some considered thought to this case, and who, of course, with his right hon. Friend the Minister has no responsibility whatever for this situation since the Regulations were brought to Parliament during the previous administration, wrote to me on 9th July and said: These regulations follow the general line of similar regulations made in recent years for providing compensation to employees who suffer loss of employment or earnings in consequence of transfers resulting from statutory changes. I venture to say, therefore, that it is quite clear that the phrases in these Regulations were coined out of past Regulations applying to entirely different circumstances of older industries, and without thought to their implications in a new industry which could, in a lifetime of only about 20 years, hardly be expected to provide examples of customary practice, and that they were drawn up without thought to the injustices which such Regulations may cause.

Clearly where a gross injustice has taken place Parliament should remedy it, because the removal of injustices is one of the most historic functions of this House. If this can only be done by an alteration of the Regulations, with retrospective provision, then such alterations must be made.

Of course, I cannot expect the Parliamentary Secretary to commit the Government to any such promise this afternoon, particularly in view of pending legislation which it would be out of order to discuss on the Motion for the Adjournment. But I hope that he will give an undertaking to consider most carefully what action the Government can ask Parliament to take to remedy this particular injustice and others which may be similar.

3.40 p.m.

The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite):

For the second time within a period of 48 hours I find myself at this Box replying to an hon. Member bringing a complaint against the administration of the Road Haulage Executive. On this occasion my hon. Friend the Member for Solihull (Mr. Lindsay) has put his case before us with the most studied moderation and good temper, and if I have to disappoint him in one respect, I think that he will understand the reason immediately.

He asked me for a categorical statement as to whether I agreed or disagreed with certain strictures passed by the Lord Chief Justice. It would be setting a most unfortunate precedent for a Minister either, junior or senior, to express an opinion on observations coming from so high a legal quarter; but if my hon. Friend will accept them I am going to supply some observations of my own.

The Regulations under which this case arises were made, as my hon. Friend has reminded us, by the previous Government in accordance with Section 101 of the Transport Act, 1947, a now notorious Socialist Measure. They provide a basic scale of compensation on what might be called a "good employer basis"—a standard which may or may not commend itself to hon. Members as fair and reasonable, and which they may regard as generous or ungenerous, but which at least aims at making provision for all who qualify for compensation under the Regulations.

If, however, anyone can show that he could have expected more than this in his previous employment, the Regulations provide for him to get more than the basic scale. Such a man would be one who could point to some established practice or some arrangement or understanding in the concern employing him. It was recognised when these Regulations were framed that few in the road haulage industry—a young industry—would be able to show, as the Regulations put it: … right or expectation by customary practice. … But it was considered proper that wherever anyone could do so that fact should be taken into account, as indeed has happened in some cases.

This brings me to the case now before us. Mr. Hurst's original claim was made, as Regulations require, to the British Transport Commission. That body did not accept his contention that he had an expectation of compensation in his previous employment, and awarded accordingly. Mr. Hurst then took the perfectly proper course of appealing to the Appeal Tribunal who, in their turn, found that he had such an expectation and awarded compensation on that basis.

It is significant, however, that the tribunal appeared to recognise that there might be some doubt in law as to the correctness of their finding, since their award was made in a form which not only allowed the Commission to take the case to the High Court on a point of law but actually facilitated that procedure. When the Commission did so the court found that the tribunal had been wrong in law and that there was in this case no right or expectation by customary practice within the terms of the Regulations.

I ought to mention at this stage, because it is only fair that the House should be in possession of the facts, that although costs were awarded against Mr. Hurst the Road Haulage Executive felt that in the special circumstances they should bear all the costs of the application. They did so.

It has been suggested that the Commission might have made an ex gratia award to Mr. Hurst, but this proposal I believe to be misconceived. The Act requires the Commission to pay compensation in such cases in accordance with the Regulations made by the Minister. It gives the Commission no discretion in the matter, and having quite rightly and properly obtained the ruling of the courts as to the meaning of the Minister's Regulations, it was not incumbent upon the Commission to take the view that the Regulations made either too generous or too restricted provision.

In any case, the Minister in another but dissimilar context had previously informed the Commission that he was advised that they had no power to pay compensation beyond that provided for in the Act and the Regulations made under it. The British Transport Commission have, therefore, taken the only course open to them and, whatever view may be held as to the compensation awarded to Mr. Hurst—and my hon. Friend did not mince his words on that matter—it cannot be sustained that the Commission have acted unfairly towards him in this respect. Mr. Hurst's claim, in fact, failed because he was unable to establish a previous right or expectation under customary practice to a higher award.

My hon. Friend very properly postulated the question, what can be done to rectify the matter? To alter the present position—I am sure my hon. Friend realises this—would necessitate an amendment to the Regulations not merely of detail but in one of their essential basic principles. It would not be easy to justify such an amendment at this stage, because already hundreds of cases have been settled under the Regulations as they now are.

Although there was criticism of some features of these Regulations when they were made in 1950, notably by my right hon. Friend who is now President of the Board of Trade on this very point of expectation, they were accepted both in the House and outside as a not unreasonable first measure of provision for compensation in an industry which had been without such a provision previously, and which could not claim the high stability and continuity of employment of industries which had previously enjoyed such provisions because they had been established for so many years longer.

Of course, these Regulations may not and do not fit every case precisely to everyone's satisfaction, and I appreciate my hon. Friend's desire to bring to notice this one where he feels a higher award should have been possible. But I submit that in such a matter as this it would be difficult to devise Regulations which left everyone completely satisfied. To attempt a fundamental change in the Regulations at this stage would present serious practical difficulties, and in trying to meet isolated cases might well upset the generally satisfactory results already achieved.

It is, of course, no new thing in a nationalisation process, notwithstanding all the Regulations and other safeguards which may be made, that many individuals find themselves worse off because of nationalisation than they were before. Certainly I should not be prepared to contend that everybody has benefited from the nationalisation of road haulage and that nobody finds himself worse off than before. Indeed, the nation is worse off.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Would the hon. Gentleman in fairness admit that in other large businesses that are not nationalised people are dismissed without any compensation at all, and the fact that we have these provisions in nationalised industries is greatly to the advantage of the staff?

Mr. Braithwaite:

If the hon. Gentleman had been here when my hon. Friend was speaking he would have realised just how irrelevant was his intervention. Before one intervenes I think it is as well to hear what has been said previously.

Whatever the precise effect of the legal process and notwithstanding that the Commission, as they must do, conducted this settlement strictly in accordance with the statutes and Regulations by which they are bound, Mr. Hurst has clearly found himself worse off than he might have been. There is no argument about that. The evidence is that he was doing pretty well under private enterprise and he has done a good deal worse since the business in which he was employed was nationalised and he became a member of the Road Haulage Executive Staff.

I cannot refer to legislation on this Motion, but perhaps I may be allowed to express the hope that when the intentions of the Government are carried out and road haulage is returned to freedom and private enterprise—and when its life blood is again flowing—he may find some restoration of the prospects under private enterprise which he lost through State expropriation.

3.51 p.m.

Photo of Major Geoffrey Bing Major Geoffrey Bing , Hornchurch

I wish to address myself strictly to the Motion before the House, on one of the few occasions when that is possible. I want to advance one or two reasons why I think it most improper, in view of what happened this morning, for the House to adjourn at this early hour. This presents an excellent opportunity of making a firm protest against the way in which business has been carried on during this week.

Photo of Sir Martin Lindsay Sir Martin Lindsay , Solihull

If I may speak again, by leave of the House—I think the hon. Member was addressing himself to the question of the Adjournment—I should like to conclude by saying that I am profoundly disappointed with the reply of the Parliamentary Secretary. He makes a very agreeable appearance at the Despatch Box on all occasions, but what he has said will be of no assistance whatever to my constituent. The Parliamentary Secretary does not seem to admit that gross injustice has been caused by the fact that a man who was in receipt of £4,000 a year has lost his job at the age of 54 and is being paid £1,200 a year without any more compensation than £800.

The only sop of compensation which my hon. Friend can offer is that if my constituent pays a large sum of money to buy himself back into road haulage when the business is denationalised, he may obtain some employment comparable with what he had before. I am bound to tell my hon. Friend that I shall raise this matter again and again until I have done a great deal more to get this injustice put right.

Mr. Braithwaite:

My hon. Friend is entitled to his disappointment. The difficulty is that the Socialist Act of 1947 has left the Minister completely helpless to intervene in these matters. All that can be done is for us to come to this Box and state what is the situation under the Regulations which were made before we came into office. This is a sad example of the tyranny of Socialism. I am merely here to expound what has happened. The remedy, as my hon. Friend knows, is not in my hands.

Photo of Major Geoffrey Bing Major Geoffrey Bing , Hornchurch

I did not intervene in what must have been, in the opinion of the House, a somewhat irregular procedure. I think it marks the point which I was making, that we have reached a stage on the Adjournment debate—a time that is generally much needed by hon. Members—when it is possible for one hon. Gentleman to make not one but two speeches. It is for that reason that I rose to make this protest, which I hope will be dealt with by the Deputy Chief Whip, whom I am glad to see on the Front Bench. His right hon. Friend the Leader of the House saw fit to make an attack upon hon. Members on this side of the House—

Notice taken that 40 Members were not present;

House counted, and 40 Members not being present, the House was adjourned at Four minutes to Four o'Clock till Monday next.