HC Deb 27 May 1908 vol 189 cc1175-85

Motion made, and Question proposed, "That the Contract, dated the 29th day of August, 1907, between the Crown Agents for the Colonies and the Royal Mail Steam Packet Company for the conveyance of Mails between certain Colonies in the West Indies for a period of ten years (printed in Parliamentary Paper, No. 24, of Session 1908), be apdroved."—(Mr. Hobhouse.)

MR. WILLIAM RUTHERFORD

said this contract was of a very much more important character than either of the two they hid been discussing, not merely from the point of view of the amount of money involved, but also from the point of view of the particular traffic contemplated. There had hitherto been a contract, liable to be terminated at any time on three months notice, whereby the Royal Mail Steam Packet Company had to provide a fortnightly service between certain islands, and a four-weekly service between certain others. They undertook that service for the very moderate amount of £17,500 a year. He had during the last few months had the advantage of visiting some of these islands, and of experiencing some of the inconveniences met with by travellers, who had very great difficulty in getting from one island to the other. The whole trade of these islands depended on an efficient inter-island service. It was very noticeable, in Jamaica particularly, that the tendency was to get more nearly allied commercially, and he might almost say politically, with the United States, and there were considerable sections, in each of the islands, of people who honestly held that their interests would be better served by their being ceded to the United States. The black population were, curiously enough, absolutely loyal to the British Crown. It was the white traders who found their interests more in accord with those of the United States. Anything which could be done to give better inter-island facilities—transport and communication—both for goods and passengers, was worth far more to the permanent interests of these islands than the paltry two or three thousand pounds a year which was now proposed to be given. The £17,500 which used to be paid was only to be increased to £25,000 a year, which was a small subsidy, because steamboat services were exceedingly costly to carry on. He had no personal interest of any sort in the Packet Company, but he was exceedingly relieved to find that so desirable an inter-island service could be procured for such a reasonable amount, and when he found that in addition to giving this extremely desirable additional service, of which the islands were so badly in need, it was stipulated that two steamers should be built at an approximate cost of £100,000 and put upon the service, he thought the Treasury and the Postmaster had made very excellent arrangements. In Clause 4 of the contract he noticed that the contractors undertook not to increase materially the existing rates of freight and passage money without three months notice being given. He would like to know whether the Treasury had made any arrangements under which they could enforce that clause in respect for instance to through rates, because the passage money and rate of goods from one particular island to another was of very little importance. What really required to be protected was through rates, say from the United Kingdom to one or other of these islands, which would require at some point trans-shipment and the use of this particular service. Possibly there were one or two Members interested in this particular company, but he thought as he had had recent experience of the matter and had taken the trouble to read the contract, it might be useful for him, at all events, to express his own satisfaction at this very excellent arrangement.

MR. J. M. ROBERTSON (Northumberland, Tyneside)

said it was very edifying to note that the right hon. Member, who was usually such a vigilant guardian of the public purse, adopted an entirely opposite rôle when something was going on in the nature of protection. As far as he could make out this subsidy was a purely protectionist measure, or at least had, the effect of a protectionist measure, and the hon. Member's idea was that the object was to encourage trade between these Colonies—and, he supposed, incidentally between them and the Mother Country—as a process counteracting the tendency they might have to trade with the United States. He gathered that the trade of those Colonies with the United States tended to increase, and that consequently this country would do well to foster the trade between them and the Mother Country. This was an illustration of the tendency of such subsidies to go on increasing. The present subsidy had been greatly raised, and there was no security against being called upon to enter into contracts for still larger subsidies. The only security they had was a promise that the contractors would not raise their rates without three months notice, which was a very broad hint that they were likely to raise their rates. The whole arrangement was financially unsound and alien to the commercial and fiscal traditions of this country. This appeared to him to be an expenditure in the interests of the islands concerned and not in the interests of the trade of the Mother Country. If those islands had a profitable trade they should be capable of running it without a subsidy. The paying of a subsidy always meant they were getting comparatively little value for their money. He was at a loss to see why the revenues of the Mother Country should be expended in any such fashion. He would like to hear from the Minister in charge any excuse for this expenditure compatible with the general assertion of free trade principles. It seemed to him to be an expenditure of a purely protectionist kind. It was not on those lines that the maritime commerce of this country had been built up, and he saw in the proposal a departure from their principles which the Government should be called upon to justify.

MR. ASHLEY

reminded the hon. Member in charge of this Resolution that he promised on the last contract to state fully and fairly the reason why the clause providing that no Member of the House of Commons should gain any advantage from these contracts had been excluded. This contract was a much more important one, and that was all the more reason why such a safeguard should be inserted.

SIR F. BANBURY

said the subsidy under this contract was to be increased from £17,500 to £25,000 a year, and that was a very large increase. He did not agree with the argument of the hon. Member for Tyneside that a subsidy ought not to be granted because it was protectionist in its nature. That did not concern him, because if the contract was good and made on economical lines it did not matter whether it was protectionist or not. They had, however, to see that the contract was a proper one. No valid reason had been given for such a large increase. The only argument in support of this increase was that the company undertook to construct two new steamers for this service at a cost of £100,000. The companies were going to get the benefit of those steamers for this service, and he presumed they would not be constructed unless they were required for business purposes. He knew something about this company. They had a number of old-fashioned inefficient vessels and this seemed to be an opportunity for them to construct new and more efficient boats. Clause 4 of the contract provided that in the event of any material increase being made in the freights or the passage money three months notice must be given, and another clause laid down that the contract was to remain in force for ten years. Apparently, by giving three months notice they could do as they liked, because as the contract had ten years to run there was no control whatever over the company, and therefore Clause 4 was absolutely illusory. It seemed to him that this had simply been put in as a blind. Then came the question of the omission of the clause relating to Members of Parliament not taking any advantage under a contract made with the Government. It was only by chance that he found the existence of that clause. It seemed to him very extraordinary that they had three contracts brought forward on the same day dealing with three different steamship companies, and whilst in two of them this clause was inserted it had been omitted from the third. It might be argued that it was not necessary to put in a clause to that effect in this contract because the company to which the contract referred was the Royal Mail Steam Packet Company, which was authorised under the Limited Liability Acts. He would like to know if the defence was going to be that where a Member of Parliament was a director or a shareholder in a limited liability company he was allowed to reap an advantage to which he was not entitled if he happened to be a partner in a private firm. It seemed to him that this raised an extremely important question, to which he hoped they would receive a satisfactory answer.

MR. MITCHELL-THOMSON

hoped the arguments of the hon. Member for Tyneside would not have much weight with the Government. The Report which had been made on this question showed that an increase in the facilities of communication between these islands was very desirable. The words of the Report were to the effect that an increase in the facilities for communication between the islands was a matter of life or death to the West Indians. As to the new steamers he would like to know whether those boats had been actually laid down or not, and if they had not been taken in hand were they going to be built at once.

MR. MARKHAM

said he wished to know from the Solicitor-General the exact position of a Member of Parliament who was a director in the company concerned in this particular contract. Only last week he was in communication with a Government Department in regard to a tender for the supply of coal, and he was informed that as the particular colliery was his own property and not the property of a limited liability company he could not make a contract with the Government; but if it had happened to belong to a limited company in which he was a shareholder he would have been entitled to make a contract with the Government. He did not see the force of that argument. In innumerable cases Members of the House of Commons were owners in South Wales collieries which supplied coal to the Admiralty, and other hon. Members were connected with railways and other commercial enterprises. He would like the Solicitor-General to tell the House whether a Member of Parliament who happened to be the sole proprietor of a concern which was not a limited company was prevented from making a contract with the Government, and whether a Member of Parliament who was a director of a company acting under Charter and which was not a limited company was entitled to contract with His Majesty's Government.

MR. HOBHOUSE

said that up till the year 1905 the Royal Mail Steam Packet Company for something like sixty years had maintained a fortnightly service to the West Indies. In 1905 that contract terminated and a new one was signed in June of that year. The cost had previously been £84,500 a year, of which the Colonies contributed £24,600, and a further sum of about £10,000 was recovered from foreign countries, leaving a net charge on the Exchequer of £50,000 per annum. In 1906 the Royal Mail Company found they were running the service at a loss, and they threatened to withdraw altogether what was called the branch line service. The Government found themselves in the dilemma that they had either to agree to a subsidy or see the inter-Colonial communication disappear altogether. He confessed that if he had been in his present position at that time he would not have had a single moment's hesitation as to which course he would adopt. The Government, as a matter of fact, chose the alternative of giving the contractor a subsidy of £17,500, of which the United Kingdom gave £8,750 and the Colonies contributed a like sum. That was for a line not across the Atlantic, as provided for by the old contract, but for the branch service between Barbadoes and the other Colonies. The hon. Baronet the Member for the City of London had asked why they were paying £5,000 or £6,000 a year more than in 1906. The answer was very simple. The arrangement under which a subsidy of £17,500 was paid, of which the Colonies contributed one-half, only gave a fortnightly service to the southern islands, and a monthly service to the northern islands, and this was not at all a satisfactory state of affairs to the islands themselves. There were frequent delays in the service, and very great complaints on the part of the Colonies. The result of that arrangement was that Barbadoes withdrew altogether from the contract and stopped her contribution to the Colonial subsidy. Practically the contract terminated. In 1907, therefore, the same dilemma arose. They were bound to grant a subsidy to that line or leave the islands without any communication with the outer world. Again there could be no doubt or hesitation as to which of these two alternatives they had to accept, and a contract was arranged in terms which the House has now before it—a contract which he thought both commercially and from every other point of view redounded to the sagacity of the then Financial Secretary to the Treasury, and to the acumen of the Treasury generally. What were the terms of that contract? For a subsidy of £25,000, of which the United Kingdom contributed £12,500 and the Colonies a like sum, they got a fortnightly service for both the northern and the southern islands instead of a monthly service to the northern islands. But they got a great deal more than that. They also got two steamers instead of one, and a guaranteed connection four times out of five with the Transatlantic service Two new steamers were to be constructed. It might be that on a contract assured for ten years the company found it advantageous in every sense of the word to lay down two new steamers. The company were ready to lay down these steamers the moment the House approved of the contract. They therefore got assured communication between the islands themselves inter-Colonially, and between the islands and the outside world. He thought the Treasury might fairly be congratulated on having made a contract which gave the Colonies and ourselves an assured means of communication. That was the purely commercial side of the question, but it seemed to him that it was advantageously conducted from the point of view of the Colonies. This country had practically got all that it had up to 1905, and had saved £27,000 under the new arrangement, after allowing for the payments by the Post Office for Transatlantic mails. Commerce, if he might venture to say so, was not the last word in an arrangement of this sort. There were bonds and obligations, historical and traditional, which had to be considered in this relation. The West Indian Colonies were one of the oldest dependencies and possessions of this country. They were linked to us in their good times, and we reaped considerable advantage from that association with them, and, putting it on no other ground than that which he had stated, he thought we should be prepared to stand by them in the more evil times that had fallen upon them now. He went further than that and said that the orthodox free trader was in no way endangered by adhering to this contract. He had no intention of going into the question of free trade on a subject of this sort, but he did say quite clearly that the contract in no way infringed or impinged upon the orthodox free trade maxim that trade should be allowed to flow in its natural channels, and it in no way improperly fostered the trade of the West Indian Colonies. Mention had been made of the West Indian Commission of 1896. That Report laid it down that it was the imperative duty of this country to keep open the means of communication between this country and the West Indian Colonies, and the present Government had no need of being ashamed of having accepted that obligation and given a subsidy to keep open postal communications. The Government had laid down no regulations as to the carrying of cargo, but they said that if there was any alteration there should be three months notice.

AN HON. MEMBER asked the hon. Gentleman if he could explain what would happen after the three months notice had been given. Had the Government any option at all, or was the rate necessarily raised?

MR. HOBHOUSE

said he did not think there was any necessity to anticipate that the rate would be raised. At all events, if that case did occur there would be ample notice to shippers and others concerned. There was another consideration which he thought ought to weigh with the House. He had said that the West Indian Islands had fallen upon evil times. There were distinct signs that the industries in that part of the world were reviving, and he thought they were justified in giving these reviving industries opportunities for taking advantage of a line of steamers and securing that they should not be hindered in their renaissance by the want of snipping facilities. He reminded the House that in times past the Government of this country had had to come to the assistance of these Colonies with various grants-in-aid. These grants-in-aid had largely diminished, and they were a diminishing quantity, though they had not altogether disappeared. But supposing that they did not subsidise this line of steamers as they had done for postal purposes they would actually have had to increase these other subsidies to a far greater extent than they had done under this contract. Therefore, a good bargain had been concluded from the point of view of economy, and they had done a wise thing from the point of view of keeping up the communication which was essential in small and isolated communities of this sort with the outside world. Whether from the commercial or from the civilised and historical point of view, he ventured to say that there was no fault to be found with this contract.

SIR F. BANBURY

The hon. Gentleman has not answered my Question.

MR. HOBHOUSE

The Solicitor-General will reply.

THE SOLICITOR-GENERAL (Sir S. EVANS,) Glamorganshire, Mid.

said that the hon. Baronet had called attention to a clause in two of the mail contracts referred to—which had reference to a provision in an Act of 1782 forbidding Members of Parliament from entering into Government contracts, and imposing disabilities and penalties upon Members of Parliament entering into such contracts—and had asked why such a clause was omitted from the Royal Mail contract. His answer was that probably the clauses referred to wore copied from old forms of contract entered into with private individuals; but whether that was so or not, such a clause was quite unnecessary and useless in a contract with an incorporated company like the Royal Mail Company, which had existed as a corporate company for sixty or seventy years. The Act of 1782 contained an express provision in one of its sections (Section 3) that nothing in the Act contained should affect or apply to any incorporated trading company, like the Royal Mail Company. The House was well aware that whereas it was regarded as against public policy that a Member of Parliament should be directly interested in a Government contract, it had long been settled that there was no objection to a Member of the House being a shareholder in a company which entered into such contracts, and which had a separate legal existence, and was a separate legal entity. This was a sound distinction; it was generally approved of; and if it were otherwise, the result would be that no Member of this House could invest or be a shareholder in concerns like large railway or shipping or industrial companies which might have cont acts either large or small with any Government Department.

MR. STUART WORTLEY (Sheffield, Hallam)

said that the customary clause with reference to a Member of Parliament taking a contract with the Government appeared in two of the contracts which had been discussed. That clause was, in his opinion, on the most favourable explanation, mischievous surplusage. In the case of the third contract it was omitted altogether. Everyone would see that, whether the clause was inserted or not, it made no difference to the operation of the Act. It was, however, unfortunate that in a case where an hon. Member was chairman of the company concerned the clause should not make its appearance, and that a most unfortunate error in drafting should be corrected for the first time in this particular case. There remained attaching to any hon. Member all the vague terrors and pitfalls which might arise out of his giving a vote in accordance with his personal interest, and therefore in conflict with the rules and orders which made it dangerous for him to give a vote. He could congratulate the Government upon neither their draftsmanship nor their choice of the occasion to review the original defects in the contracts.