CUNARD (INSURANCE) AGREEMENT [MONEY].

HC Deb 10 November 1930 vol 244 cc1347-84

Considered in Committee under Standing Order No. 71A.

[Mr. ROBERT YOUNG in the Chair].

Motion made, and Question proposed, "That it is expedient,—

1. (a) To authorise the. Board of Trade to enter into and carry into effect—
1. (i) an agreement in the terms of a draft agreement which has been settled between the Board and the Cunard Steamship Company, Limited, for the insurance by or on behalf of the Board of two passenger vessels to be built in Great Britain for the Company; and
2. (ii) agreements supplementing or modifying the agreement aforesaid;
2. (b) To exempt the agreements aforesaid and any agreements entered into by the Board with persons other than the Company, for the purpose of carrying the agreements aforesaid into effect from certain provisions of the Stamp Act, 1891, and of the Marine Insurance Act, 1906;
3. (c) To constitute a special fund into which there shall be paid all premiums and other moneys received by the Board by virtue of the agreements aforesaid, and out of which there shall he paid all expenses incurred by the Board by virtue of those agreements, and to provide that, if the special fund is insufficient, the balance of any such expenses shall be charged on the Consolidated Fund;
4. (d) To authorise the payment into the Exchequer of any moneys received by the Board in diminution of any loss or expenditure in respect of which a payment has been made under the provisions of this Resolution out of the Consolidated Fund;
5. (e) To provide that, in the event of the Treasury being satisfied that no further moneys will become payable by the Board under the agreements aforesaid, any investments forming part of the special fund (being Government stock) shall he cancelled and the balance of the fund applied in reduction of debt;
6. (f) To make certain provisions ancillary to the matters aforesaid."—(King's Recommendation signified.)

The PRESIDENT of the BOARD of TRADE (Mr. William Graham)

I should like very briefly to remind the Committee of the stages through which a Resolution of this kind has to pass. This Resolution is necessary in order to enable us to make progress with an agreement which it is proposed to enter into between the Board of Trade and the Cunard Steamship Company. The next stage will be the Report stage of the Financial Resolution, and later a Bill will be introduced and will pass through the usual stages in the House of Commons. The Bill will include, as a Schedule, the full text of the agreement to which reference is made in the Resolution this afternoon, so that hon. Members will observe that all we are asking the House to do at the moment is to give a Second Reading to a Financial Resolution which is designed to enable us to take those steps. The very fullest opportunities will be forthcoming for considering the text of the agreement itself and I shall be happy, or colleagues on this bench will be happy, to give detailed answers on the particular clauses as they arise in the debate.

The broad purpose of this Resolution is very plain. The Cunard Steamship Company considered laying down two exceptionally large vessels for the Trans-Atlantic trade and it became obvious at once that it would be a matter of difficulty, to put it no higher, to cover the construction and the ordinary marine insurance risks of such a very large proposition in the ordinary market. Within recent times there has been, of course, a great falling off in the numbers of passengers proceeding from Europe or from other foreign countries to the United States of America. In the four years prior to the War approximately 1,200,000 people entered the United States of America every year, and that represented, of course, a very considerable amount of ocean travel, but within recent years the total has fallen to approximately one half, due in part to the quota restriction in the United States, due to some extent to industrial and other depression, but at all events it is a very considerable falling off in the passenger traffic which was available before the War.

We all hope that with an improvement in European and in American conditions the volume of passenger traffic will very considerably increase, and it is certainly of vital importance that the shipping of this country should be in a position to take a part, and, indeed, a leading part, in the recovery when it comes about. To that end the proposal of the Cunard Steamship Company is to lay down two very large vessels in order to make the journey from the American side and from this side every week. That is to do with two specially large vessels the work that is now being done by three vessels, and that is, of course, an altogether exceptional type of construction.

According to some statements which have appeared in the Press regarding this proposal, it has been suggested that the Government are really undertaking the insurance of a part of what might 'possibly be regarded as mere luxury enterprise, but the truth is that other leading countries, competitors of ours in the shipping world, have been expending very large sums, either directly or indirectly, in the subsidising of shipping. Moreover, within recent times there have been the achievements of the "Bremen" and "Europa." I do not think there can be other than a general desire in this House and in this country that we should do everything in our power to take a leading place in transatlantic travel. The object is to lay down two ships which, although very large, will, on the basis of that large accommodation and that necessarily high capital cost, justify themselves as an economic proposition, in other words, attain such speed that they can do the journey every week. From that point of view it is not really luxury enterprise in the strict sense of the term, but an effort based on sound economic principles.

We then come to the conditions which confront any Government in this country—I should like to think irrespective of party—in facing an insurance proposition of this kind. I have alluded to the fact that the United States of America are subsidising shipping or have subsidised shipping to a very large extent. On the mail contract alone when the two very large projected ships are in service, the annual subsidy would be probably £700,000 in our currency. When we pass to Europe, we are reminded that Germany has just received a very large sum of money amounting, if I remember rightly, to £15,000,000 from the United States in respect of German ships detained or interned in America during the War. Italy is subsidising shipping, and also certain other European powers. Therefore, we are not confronted with the ordinary state of affairs in which this is left to the free or unassisted competition of private shipping interests. Governments are making these contributions. It is worthy of notice at this stage that we are not asked as a Government for any direct subvention at all. No cash payment is involved in this Financial Resolution. It is confined to the insurance of that part of the construction and marine risks, which cannot be absorbed in the ordinary insurance market.

I will endeavour to make the terms relating to the insurance as plain and as clear as a layman in these matters can make them, because I do not profess to have other than a very general knowledge of marine insurance. There is, first of all, the construction risks which have to be undertaken. Those construction risks apply at the moment to one vessel, the first of two possible vessels, which will be laid down at Clydebank. The idea at the moment is that that vessel will cost something between £4,000,000 and £4,500,000. The House will understand that that is merely an estimate, but I have no doubt that it is as correct as an estimate can be. It may be that the actual sum involved will be larger than that amount, but in any event it is expenditure on the construction of that one vessel. It is very much larger than any of the great scale constructions in the past, but I confess I was rather surprised at the initial stages of this plan to learn that the insurance market in this country could not absorb such a large sum of money in insurance.

I thought, in my innocence, that by spreading the risk and by re-insurance it would be possible fully to cover such a proposition, but we have to recognise that it is a very large sum to be centred in one vessel, and, quite apart from the value of the construction as it will pass to the owners when the builders have finished with it, there is the necessary insurance of the very valuable goods and the very valuable wealth which a vessel of this type will normally carry, so that in any case the ordinary market is not able to afford the entire amount of the insurance risk. I am not able to say at the moment what proportion of the £4,500,000 will be absorbed by the ordinary Market, hut according to our information perhaps £2,000,000 to £2,500,000 will be so absorbed, and in that case, as regards the construction risks, the amount falling to the Government to be insured under this scheme will be about £2,000,000. It may be rather more or rather less, but the figures are approximately what I have described. The proposal is that the Cunard Steamship Company shall exhaust all the possibilities in the ordinary open market before the Government are called upon to intervene, and it is only after those possibilities have been exhausted and the largest amount of ordinary insurance on the market has been provided that we begin insurance for the purposes of construction.

I trust that this afternoon no large question of principle will be raised, because, strictly speaking, they do not appear in what the Government intend to do. This matter appeals to me as a business proposition designed to secure the construction of one, and I hope two, very large vessels to maintain our place in transatlantic travel and to provide employment for a very large number of men in a depressed industry in one or more shipbuilding yards of this country. In regard to the business proposition, there need be little difference of opinion between us. It is not a matter of the Government entering into competition as regards the actual insurance rates, because the proposal is that when the market has absorbed all that it can absorb as regards construction risks, we are prepared on a premium of 1½ per cent. to cover our part of it. That is the rate that we lay down in the White Paper for the construction, plus 2½ per cent. on that rate, that is in addition to that rate, plus the absence of brokerage so far as the Government side is concerned, the two last conditions being designed to romove any suggestion that there is competition in this scheme as between the Government and the ordinary insurance market.

4.0 p.m.

I am aware that there is certain criticism on the ground that the rate of 1½ per cent. is too low, that it is in fact less than the market rate at the moment, and that in that case the Government might be saddled with a very large part if not the whole of the risk which is involved in the construction. I will pay very close attention to what hon. Members say on that point, but I must warn them that I have taken the very highest and most influential advice at my disposal, from the chairman and deputy-chairman of Lloyds, and I am advised that that is an appropriate rate and that the market, together with the safeguards that I have mentioned, can absorb such part as we might anticipate in existing conditions. That will cover the construction risk as regards the first vessel, and the limit of that contribution by the Government is three years as mentioned in the White Paper together with a small addition of 6d. per cent. per month in the terms set forth as applicable to the period beyond three years which might be occupied if the construction is not completed in the time which, I am again advised, is the ordinary practice which is pursued in construction of this description.

I come to one or two of the other features as they arise in this plan. All that I have said up to the present moment relates to the construction of the one vessel, but the Cunard Steamship Company, as the scheme clearly indicates, contemplates the construction of a second vessel. I am not able to say, because it is entirely a matter for the company, when that construction will be undertaken, or where the keel will be laid down; but, in any event, if a second construction is attempted, we take power under this White Paper, or rather under the Resolution and a later Act of Parliament, to cover the second construction, provided always it falls within six years of the passing of this agreement by the House of Commons. I earnestly hope that that will be undertaken and that further employment will be provided for, perhaps, the same if not a larger number of men, and that the scheme will be complete as regards these two propositions for the great purpose of transatlantic travel and competition.

Let me pass to the other side which is the ordinary marine risks, for the lifetime of either the one vessel or the two vessels to be constructed. There no rate is laid down, because, obviously, no rate could be laid down in the White Paper, but the intention of the Government is to cover that part of the marine risk, which is not covered in the ordinary market, at such rates as may be determined as the market rates for the time being plus the 2i per cent. to which I have referred because that 2½ addition runs right through the construction and marine risks, and no one can say, of course, what the lifetime of these vessels may be. It may be 15, 20 or 25 years, but whatever the period the Government would pro- pose only to cover that part of the marine risk not absorbed by the ordinary market, on the conditions to which I have already referred, and if there was doubt as to what was a fair rate in the ordinary market, then in the agreement, which will be fully set forth in the Schedule to the Bill soon to be introduced, there is provision for a reference to arbitration such as would be accepted, I am sure, at once by any student of this matter. That is the outline of the Government part of this enterprise.

Sir ROBERT HORNE

Do I understand the right hon. Gentleman to say that the reasonable rate with regard to marine risk will be arrived at either by agreement in the market or by arbitration?

Mr. GRAHAM

It will be the ordinary market rate plus the 2½ per cent., but if there is any dispute, any feeling on the part of the company or the Government that there is a difficulty, then that will be covered by reference to arbitration. I was about to turn to certain other features in this Financial Resolution which need not detain us more than a minute or two this afternoon. Hon. Members will observe that there is a reference to the Stamp Act, and also to the Marine Insurance Act, 1906. Later, in terms of the Act and of the agreement, the meaning of these passages will be made perfectly plain, but suffice it for the moment to say that under the Stamp Act approval would not be forthcoming unless the proposition was limited to one year, and that the exemption applies only to the agreements to which I am referring to the Board of Trade contract for such part of the insurance as is covered by the Government, and, of course, that will cover a period of more than one year.

Lieut.-Colonel Sir FREDERICK HALL

May I ask if that is both for the building risk and for the marine risk?

Mr. GRAHAM

The Stamp Duty exemption applies only to the agreements. It does not apply to the policies which are effected through the market. They are subject to the ordinary Stamp Duty charges. It applies only to the main agreement, or supplementary agreement, or other agreements specified in the legislation. This part of the Financial Resolution is necessary in order to remove that difficulty of the one year period, because, of course, a longer period will be required. Then as regards the Marine Insurance Act, 1906, there is a reference to exemption from its terms, because, as I understand it, contracts of marine insurance are not admissible unless they contain under that Act of Parliament certain particulars which are set forth in the Act, and if this is an agreement covering quite a long period, these particulars cannot be supplied at this stage, and may not be available until some later stage. So that for the purpose of this Financial Resolution and the coming Act of Parliament, it is necessary to make this provision, but the provision is purely technical in character for the purpose of this scheme, and does not in any way derogate from the scope of the provisions of the Marine Insurance Act, 1906.

May I conclude with a very brief description of the scope of the employment which will be provided under this Resolution? I am advised that the cost of these vessels will be at least £4,000,000 to £4,500,000 each, and if I take the aggregate capital cost at about that figure this afternoon, I find that as regards the construction of the first to be undertaken in the yards of John Brown and Company, Limited, at Clydebank, direct and continuous employment for three years will be provided for at least 3,000 men, and the employment indirectly affected will cover 1,400 to 1,500 men for a period of approximately 2½ years. So that we may say in very round figures that there will be continuous employment for about 5,000 men for a period of approximately three years, and I am further advised that by far the greater part of this large expenditure will be in wages. So that the relief and assistance to the depressed shipyard industry can be appreciated at once by every Member of the Committee. It appears that at least £250,000 will be saved every year in unemployment insurance benefit, which is in itself a very valuable contribution, and, moreover, when we remember that the tonnage under construction in the shipyards of this country has fallen in every quarter during the past year until it is to-day at a very low point—the lowest point for quite a long time—this contribution to Clydebank and, I trust, in due course to another area, will be of the very highest value.

I do not think that I need detain the House longer by way of preliminary explanation. When the Bill is introduced and the text of the agreement in the Bill is seen, there are certain legal points which hon. Members, perhaps, may wish to raise, which I have no doubt will be dealt with by my hon. and learned Friend the Attorney-General, and there are one or two financial points, which fall more particularly to the Treasury, on which I should, perhaps, add a sentence or two this afternoon. The premiums under this arrangement will be carried to the Cunard Insurance Fund. Any calls in respect of any part of the risk will be met out of that fund, and, similarly, any salvage or any other money will be paid into the fund in satisfaction of the Treasury's claims, the balance remaining in the fund over a period of construction and beyond that over the ordinary marine risks. There will be set out for the clear information of the House of Commons the precise financial position of this Cunard arrangement, each year on all stages in its career. Not only so, but it will be subject to the audit of the Comptroller and Auditor-General, which brings it before the Public Accounts Committee of the House of Commons.

In that way the safeguards for Parliamentary review are very complete, and, at the end of the day, if there should be any balance in this fund—and I trust there may be a balance—that balance will normally be found in the shape of permanent Government securities which will be applied to the redemption of debt. No one, of course, can forecast this afternoon what the result is likely to be. Sufficient for us the immediate construction, the stimulus, it will give to the employment of a large number of fellowmen in the shipyards, the more effectively it will enable us to compete with foreign countries and the conspicuous part which, I trust, it will also help this country to take in trans-Atlantic travel.

Sir PHILIP CUNLIFFE-LISTER

The President of the Board of Trade has explained the general purpose of the Financial Resolution, and I agree with him that what we are concerned with to-day is not the minute details of the agreement, for which he will subsequently ask the authority of Parliament, or the details of the Bill, for we can only be acquainted with them when the Bill comes before us. What the right hon. Gentleman is seeking to-day is a general covering authority for the agreement which he proposes to make, or has made subject to the approval of Parliament. He is seeking the sanction of Parliament for the principle of the agreement, if any principle is involved. I am glad to say that for once I find myself in complete agreement with the right hon. Gentleman for having done what seems to me to be a very practical and business-like thing, which cannot raise any contention on any side of the Committee. It does not seem to me to involve any contentious question at all. It is merely a question whether this is a case in which the Government can conveniently intervene, and are these the proper terms. I think the answer to both questions must be in the affirmative.

The development of shipbuilding has reached a point where it is economically possible to use very large and fast ships, not to make some sensational passage of the Atlantic but as a practical business proposition, and an economical proposition. By building very large and very fast ships you can maintain the regular service which normally takes three vessels, by two ships. That being so, the Cunard Company, having satisfied themselves that it is a practical proposition, with a promptitude which one would expect from a company which has always been in the van of trans-Atlantic passenger service, laid plans to build such vessels. They will not only serve the sound purpose of performing this service and prove of economic value in the future, but they will also during their construction be most valuable in a direct promotion of employment in this country, Having come to their conclusion the Cunard Company found, as indeed they expected to find, a difficulty over the insurance of vessels of such great size during construction and possibly also on subsequent voyages.

There as nothing new in that. Before the War, when vessels were much smaller, there was some difficulty in getting the largest Panama liners completely covered, and there existed a form of mutual insurance between the large liners of this country and companies in foreign countries for the creation of an international pool to provide some form of mutual insurance for these ships. Even when dealing with the insurance of these smaller vessels which cost less to construct the covering of one vessel was a matter of some difficulty, and when you get into the region of the figures mentioned by the President of the Board of Trade, £4,500,000, and possibly £5,000,000, the cover you are calling upon the insurance market to maintain in the case of one single hull is a very large risk. The proposal is that the Government, without in any way interfering with the market, should under-write any risk which the market is unable to absorb. Having to satisfy himself and this Committee that the construction of these ships is a matter of immediate importance and also of future importance to this country, and that the terms upon which he proposes to underwrite the unabsorbed balance of the risk, are not unreasonable the right hon. Gentleman has certainly made out a good case for Government assistance.

He has said that he hopes the market will absorb a large proportion of the risk. I hope so too. I hope when the market gets a little more experience that it will take up the whole of the risk, certainly the whole of the risk upon the ships once they are in commission. He has also laid down the very sound principle that, if the Government are asked to take the unabsorbed risk which the market is unable to take, they should charge a larger premium for the unabsorbed risk than the rate at which the insurance for the first part is taken up by the market. I have no doubt that the right hon. Gentleman has satisfied himself that 2 per cent. is probably the right figure, and that he has taken skilled advice on that matter. We are concerned here with the principle on which this agreement is founded; that the Government should come in to help in this matter so far as the market cannot absorb the risk, and that if the Government does come in they should charge a higher premium than the premium which the markets asks for the risk it takes. That is a business-like proposition. It is not unlike the system of export credits, to which all sides of the House are committed and have approved in principle; and, as the right hon. Gentleman comes to us with a somewhat similar proposal to-day, which he justifies on general and specific grounds, I hope the Committee without any undue debate will approve the proposals which he has put before us.

Mr. LEIF JONES

I do not rise to oppose or criticise the action of the Government in this matter, which is to facilitate the building of these Cunard ships. The whole Committee will agree that it is exceedingly desirable that they should be built as rapidly as possible, and I take it that the whole object of the Government is to hasten the action of the company and ensure that they shall be laid down without delay. The Resolution runs in this way: That it is expedient to authorise the Board of Trade to carry into effect. I wish the President of the Board of Trade had told us something more as to why it is necessary to come to the rescue of insurance companies in the matter of these Cunard ships. [An HON MEMBER: "They cannot do it!"] If that is so then the case is made out and I support the Government in their action, but it is quite clear that they are taking a very considerable risk. If the insurance market cannot effect this insurance is it not largely a matter of the rate at which it is to be effected? If the Government are prepared to do it at 30s., in spite of whatever may be the market rate, might not the Government be left with the whole of this proposition on their hands? The right hon. Gentleman has told us that he has taken the advice of the Chairman and Vice-Chairman of Lloyds; but has the market been tested? I should like to know what are the prospects of a large amount of the insurance being taken up by the market and how much is likely to be left to the Government before we pass this Financial Resolution. If the rate is fixed so low that the market will not undertake it the Government might be left with the whole of the risk. That is not exactly insurance, because insurance consists in spreading risks over many ships, and if the venture is on one ship only there is a risk of great loss falling on the Government. The real point is this; has the President of the Board of Trade assured himself that the market will take up a considerable part of this insurance or does he anticipate that the Government will be left with the whole of the burden on their shoulders. I do not say this in any spirit of hostility or criticism. I wish the Government and the Cunard Company all success in this matter.

Mr. WISE

I do not rise to challenge the purpose or the use of the project which the President of the Board of Trade has laid before the Committee. It is perfectly right, in the present circumstances of the ship-building industry, that the Government should step in here where private enterprise has failed. I want to draw the attention of the Committee to a rather broader aspect of this matter, and it may be more conveniently raised now than at a later stage when no doubt we shall have points to raise on the details of the agreement. This is another of a long succession of cases since the War in which we find that the private organisation of trade and commerce is quite unable to bear the burdens which modern conditions impose. The Government is taking up this insurance because the insurance market is quite unable to grapple with the situation, otherwise there would be no question of the Government coming in. There have been a whole series of such cases since the War. I recall the case of the British Italian Corporation; where the Government came in to finance the development of trade with Italy and if my recollection serves me right the entry of the Government in that particular case was neither satisfactory to the Government nor to the development of British Italian trade. Perhaps a more successful experiment was the Empire Cotton Corporation, which was strongly criticised from these benches. There is also the participation of the British Government in various dye companies.

The CHAIRMAN

Were these insurances?

Mr. WISE

I am raising the general question of the Government's participation in trade.

The CHAIRMAN

We are considering a Money Resolution, and we must confine ourselves to the Resolution before the Committee.

Mr. WISE

I bow to your Ruling. There is a case which exactly illustrates my point; and that is the case given by the right hon. Member for Hendon (Sir P. Cunliffe-Lister), the insurance of trade under the Export Credits Act. That is another case in which private enterprise has failed and has been unable to provide the machinery by which trade can proceed in which the Government comes in and assists the credit insurance market to carry the burden and discharge a duty which otherwise it would fail to discharge. I think that that is an exact illustration which is within the narrow interpretation of your Ruling, Mr. Young. On all those occasions, or on many of them, from this party a point of very serious principle was raised. As far as I recollect it was raised on two or three occasions by the right hon. Gentleman who is now the President of the Board of Trade. Certainly he raised it on every occasion when the Trade Facilities Act came before the House. What he said on those occasions was that when the House was asked to provide assistance to private enterprise in discharging the duty which private enterprise could not discharge without the support of the House, the opportunity should be taken of giving the House and the people of the country some quid pro quo, other than that contained in the immediate business bargain, for the assistance that was given. I remember that in regard to the Trade Facilities Acts the right hon. Gentleman definitely urged on the House that the Government in some way or other, as a return for Government assistance, should be given some share in the profits of the enterprise and some participation in its management.

I am quite aware that insurance is only one part of the great enterprise of building and running these ships, but on the other hand there are points on which I think the Government may—shall I say?—bargain for the public advantage in connection with the assistance that is given—points which are not strictly limited to the question whether the rate of premium should be 1½ per cent. plus 2½, or 1¾ or1¼or a small financial detail of that kind. For example, anybody who has crossed the Atlantic knows that these enormous super-liners cater for a very special traffic, for millionaire traffic, for very expensive traffic. Their charges are enormously high. Their accommodation is extremely and unnecessarily luxurious. That statement is true of the German and French liners as well as of our own. The unnecessary luxury pushes the charges up to such an extravagant figure as to place them outside the possibility of many business men who ought to cross the ocean much oftener than they do but can afford neither the time involved in travelling by the slower boats nor the extremely high charges of the fast boats. The purpose of these giant liners is to provide very fast vessels, and such possibilities at reasonable rates are as necessary to the small business man or the big business men as to the millionaires who can afford to pay extravagant rates.

The rates which these liners charge for passages are, as is well known, settled, not by competition, but by agreement between the liners. Broadly speaking, the charge per passage and for freight also on the Cunard and other British liners is approximately the same as that on the French, the German, the Italian and other liners crossing the Atlantic. At least I think it is; if I am wrong I shall be corrected. I suggest that the rates charged on these great liners for passages across the Atlantic are much too high, and that here is a favourable opportunity for the right hon. Gentleman, in general line with the principles which he has frequently enunciated in this House, to make State assistance, in an enterprise which would not proceed without such assistance, an excuse and justification for insisting on arrangements which will protect the common interest. The right hon. Gentleman has now an opportunity which does not often occur, of dealing with the enormously powerful interests which are banded together under international agreements and are able to exact from the travelling public and from those who have to send freight across the Atlantic quite extravagant rates. It is just as important to control the rates at which liners convey people from country to country as it is to control the rates charged by railways and by other forms of transport and locomotion in this country.

There is another point as to which I would like to know whether it is not possible to use this opportunity for the satisfaction of general needs. I gather that the period to be allowed for the taking up of the option which apparently the Cunard Company has in regard to the second liner, is six years, though I understand it is expected that the first liner will be completed in about three years. Why so long a period? Does the right hon. Gentleman think that the slump will last so long? If he does not, is it not worth while to insist that, if State assistance is to be afforded, the enterprise should be put in hand at a time when it will help much more directly and effectively the serious slump in the shipbuilding industry? We all hope that. long before the end of six years the shipbuilding and other industries will have recovered. It used to be a cardinal feature in all consideration of the unemployment question that it was the special business of the Government to interfere during the periods of cyclical depression. God forbid that the depression should last all this time ! We all hope that it will not. Therefore I urge that it would be reasonable to limit the period to a very much shorter time than six years. Moreover, long 'before the end of six years we may in this House have attached to State assistance such conditions as will achieve the other object to which I have referred in the earlier part of my speech.

I put these points, not because I am against this particular proposal. I think it is perfectly clear that the proposal ought to proceed. We shall, of course, scrutinise more carefully the details when we see them. But this scheme raises a principle of very great importance—a principle which, I am convinced, will come more and more before the House as private enterprise progressively breaks down. There are signs in all directions of that happening. I do not want to enter further into matters of that sort, nor do I want to have quoted against us in later years a precedent which may be very inconvenient.

Sir F. HALL

The hon. Gentleman who has just spoken, if he will allow me to say so, has not really grasped the situation. It is not a question of six years for the construction of the steamer. understood from the President of the Board of Trade that one ship will be laid down now, and in the ordinary course will take three years to construct. The second steamer, if and when it is laid down, will be laid down within some given period of one, two or three years, and in all probability will take a like time to construct.

Mr. WISE

I think I have interpreted the agreement accurately. What I am complaining of is that the second vessel is not to be laid down, or need not be laid down, until the expiration of six years. I want to bring the work forward.

Sir F. HALL

I can only repeat what I have said. The hon. Gentleman asked why the President should not say at once, "The other steamer must be laid down forthwith." This proposal is quite a new feature in regard to shipbuilding. Although I am deadly opposed, in the ordinary course of events, to any Government interfering with trade or commerce, I am not so hidebound that in special circumstances I am not prepared to consider such a proposal, as I do in this ease. We have not to go far back for precedents. In 1914, at the beginning of the Great War, the Government of the day came forward and said that insurance of war risks would be so large that in all probability the market would not be sufficient to cover it. The Government said they would come in and give assistance so that there would not be enormous premiums charged or people would not have to go uninsured. In my experience of the insurance world I have learned something about the insurance market. I say here and now that there never have been ships built in any country at a cost anything like that of the two new Cunarders—if there are to be two.

I take the greatest exception to any suggestion that the Government have come in because private enterprise has failed. There is a certain amount of market for every commodity. Those who know anything about the insurance market know that £2,000,000 is a gigantic amount to be accepted by the market on one specific risk. Suppose that the insurance companies or the underwriters at Lloyds were to say that, whatever the amount of insurance offered, they would take it, irrespective of whether they got an average book. There are at Lloyds something like 1,250 underwriting members. Hon. Members know full well the number of insurance companies of first class standing that there are. If hon. Members go carefully into the matter they will see at once that for the British insurance market the absorption of anylike £2,000,000 or £2,500,000 is a huge undertaking. The underwriters cannot afford to make a book on one specific risk. As the right hon. Gentleman said just now, the Government will not be in the position of an ordinary business community.

I congratulate the Government on the attitude they have adopted. They have said that, shipping being in such a bad state, in order that this country may maintain British shipping prestige, "We will come in"; and I hope I am right in stating that they also say, "We will undertake the insurance on similar lines and at rates similar to those of the insurance companies in the open market. We will assume the balance of the insurance, whatever it may be." I can see where the shipowners would be without this assistance. They would be in the position of placing £2,000,000 or £2,500,000 at a rate of per cent. Then people would take a little more at 2 per cent., others a little more at 2½ per cent., and perhaps still more at 3 per cent.. It can he seen that the premiums would he so large as to be absolutely impossible for any shipping concern. In view of the position which the Government took, in regard to War risks, I do not want anyone to say that this is a question of private enterprise having failed and of the Government having to intervene. If hon. Members opposite will excuse me for saying so anyone who makes a suggestion of that kind shows that he has not made himself thoroughly conversant with the position in regard to this matter.

I wish to ask the right hon. Gentleman a question concerning the premium. He has mentioned a rate of I 1½ per cent., plus 2½ per cent. of that rate. That., I understand, is in reference to the construction risk. In the ordinary course, in the insurance market, a premium of 30s. is subject to a brokerage of 5 per cent., and a discount of 10 per cent., and is not plus anything. I wish to know if it is the intention of the Government to accept this risk on all-fours with the practice in the open market, not only on the construction risk but on any subsequent risk, because after the ship has been constructed it is possible that the 12 months' premium for the marine risk may be another 2 per cent. or 2½ per cent. I wish it to be understood that as regards premiums the Government are prepared to accept this risk on the same rates as those which are prevailing in the open market and that they will give the same rebates, neither more nor less. I think if the right hon. Gentleman gives the question careful consideration he will see that that is a reasonable proposition. The Government have not come in for the purpose of making any additional profit. They are not taking on some additional risk, but if they do not give the same rebates as those given in the ordinary market, then they will be getting an advantage. I repeat that, opposed as I am to the interference of this or any other Government in private enterprise, yet there are circumstances in which Government assistance is wanted and ought to be given. I congratulate the Government on having taken their courage in both hands in deciding that although this insurance is only for one or two steamers, nevertheless they are going to assist shipping enterprise. IL is not a question of assisting one company, but of assisting shipping enterprise qua shipping enterprise, and of helping to maintain the prestige of British shipping and enabling it to hold its own against foreign competitors.

Mr. ERNEST BROWN

I cannot think that the hon. Member for East Leicester (Mr. Wise) has given such careful attention to this problem as he has given to some others. If he proposes to discuss the question of private enterprise as against nationalisation in the matter of shipping, he will find that there is a great deal to be said against the side for which he has been arguing. In the post-War period the experiments of Governments in Australia and America in this matter did not bear out the hon. Member's general thesis that Governments manage shipping affairs better than private enterprise. If the hon. Member is going to argue that private enterprise is breaking down in this instance, which T do not admit, he will find that there is a very strong case for the other side of the question, based on the experiences of those years. Again, in the suggestion that this company should be asked to build the two ships at once, the hon. Member shows that he has not given That care and thought to this problem which he ought to have given. He certainly has not paid due credit to the Cunard Company for their enterprise in this matter. This is undoubtedly a very great enterprise on the part of the Cunard Company.

Mr. WISE

I do not suggest that they should build the two ships at once. Apparently, a period of three years may elapse between the completion of the first ship and the beginning of the second, and I suggested that that was an unreasonable period.

Mr. BROWN

I do not think that the hon. Member's remarks as reported will bear the construction which he has now given to them. I am responsible for my own hearing and for nobody else's, but that was the construction which I put upon his speech. The whole burden of his remarks was to argue that this construction ought to be "speeded up" and carried out much more rapidly—I will put it in that way. As I have said, this is an amazing enterprise and a great work of construction. It is unprecedented in the history of this or any other country, and any company or any Government would be very unwise not to take the greatest care so as to see that the utmost shall be learned from the construction of one ship before they proceed to lay the keel of the second ship. So far from agreeing with the hon. Member that the Government ought to have made their terms as regards control and other things, I congratulate them on having handled this matter as a pure business proposition without being hidebound by any theory of any kind. I am sure that the majority of the House and the majority of the country will agree as to that point, because they do not hold the view held by the hon. Member for East Leicester that anything which Governments do, in the matter of control and management, must ipso facto be right. We hope that this great enterprise will go forward and that the Resolution which we are now about to pass will be sufficient to enable both ships to be built inside the period specified.

Mr. HARDIE

An attempt has been made by hon. Members opposite to make it appear that there has been no failure of the present system in this case. The system, however, has absolutely failed. The failure of any organisation and any system is evident when it is incapable of dealing with ordinary developments as is the case in this instance. It is quite obvious from all that we have heard this afternoon that, owing to the increase in the size of ships, and all the improvements that have been put into them, the commercial side of private enterprise is now incapable of taking the insurance risks. Supposing that this £4,500,000, instead of being concentrated on the construction of one ship were spread over the construction of a number of ships. I can quite imagine the fury of the hon. and gallant Member for Dulwich (Sir F. Hall) in that case, at the idea that the Government should interfere with his private enterprise when the transactions were of that degree and size which enabled him and his friends to deal with them. But the fact is that private enterprise cannot keep pace with scientific invention.

The CHAIRMAN

I can foresee a long discussion on the merits of private enterprise, if we proceed on those lines, but we cannot have such a discussion on this Resolution. This Resolution deals specifically with the question of this insurance in connection with the Cunard Company.

Mr. HARDIE

And with regard to this Cunard insurance the hon. Member for Dulwich pointed out that when the War came our insurance system failed because it was not organised, as an insurance system, to deal with the emergency and the State had to come in behind it.

Mr. LEIF JONES

That was because the War was not the work of private enterprise but the work of Governments.

Mr. HARDIE

The right hon. Gentleman cannot have it both ways. You are acting as one thing or another. If the private enterprise people claim that they are all-capable and that they require no assistance, under any conditions, why, when these emergencies arise, are they not capable of carrying out the insurances just as they do in peace time? The failure to keep pace with shipping developments in the matter of insurance, is an instance of what has taken place in relation to other industrial developments in this country.

The CHAIRMAN

The hon. Member has been long enough in the House to know that when dealing with a Money Resolution we are confined to the terms of the Resolution itself.

Mr. HARDIE

I was going on to refer to what had been done during and after the War in regard to State interference on an insurance basis.

The CHAIRMAN

We are only concerned this afternoon with the particular insurance agreement dealt with in the Resolution.

Mr. HARDIE

Surely if other hon. Members have been allowed to bring in arguments of that kind I should at least have the privilege of replying to them. I had hoped to get an extension of that privilege which has been given to others. Coming as I do from Glasgow where, it is said, one of these ships is to be built, I am interested in this business especially as regards the statement of the President of the Board of Trade in reference to unemployment. While this is essentially a question of insurance, the Government, in taking up this insurance, are trying to help to relieve unemployment and distress. If State insurance is one of the means whereby we are going to do something on a large scale in that direction, surely we can put the argument from these benches that State interference everywhere is bound to be the logical conclusion from the statements which we have heard. We are told that unless the Government stand in and give the security, or the insurance, which is required by the Cunard Company that this work cannot be proceeded with, and we are also told by hon. Members opposite who are in the insurance business that they could not possibly take up such a risk. Between these two statements the argument appears to be plain. Here you have a development in industry which we are anxious to push forward for two reasons—

The CHAIRMAN

We are discussing here a Resolution dealing with this insurance for the Cunard Company, and although at an earlier stage I allowed an hon. Member to introduce the analogy of insurance during the War, we must not proceed to a general discussion.

5.0 p.m.

Mr. HARDIE

From the statement of the President of the Board of Trade it appears that without State help the construction of these ships cannot proceed, not from any want of material or anything of that kind, but because private enterprise fails to provide the insurance which must be provided before the ships can be put on the stocks. All that has been said goes to show that whenever private enterprise insurance breaks down, the State has to interfere. If the State does not interfere now, these ships cannot be built. Is not that the position before the Committee? If the Committee fail to give this Vote to-day the Cunard Company cannot go forward with this work because private enterprise is unable to provide the insurance. I think that is quite clear. There are one or two questions which I should like to put to the President of the Board of Trade. We are told that there is to be no cash payment. We are also told that the ship is to take from 2½ to 3 years to build. In regard to the second ship I wish to get this point quite clear. When we fix a period of six years does it follow that the first ship to be built is purely experimental, and that we must wait until that ship has been tried out and has voyaged across the Atlantic before we proceed with the second ship. If that is not the position I would ask if the designers and the constructors of this ship are satisfied that they can do no better, why not go on with the two now instead of one? What is the reason? It cannot be the question of insurance. I want to put the direct question as to whether any part of this work is really in its experimental stage. Do we know whether what is calculated for this ship will be carried through? Do we know that it will get the speed and take the tonnage that it is stated it will carry at that speed?

Sir R. HORNE

I hope the Committee will forgive me if I put before them my estimate of the situation and the way in which I venture to look at it, from the statement made by the President of the Board of Trade. I think, from what he said, there were two prime factors which presented themselves to the consideration of the Government in approaching the subject. In the first place, it is of vital importance to any country which is an island like ours, as it would be to others which have considerable frontages to the sea, to ensure that their ocean transport is adequate to their needs, and from time to time, as a matter of fact, the Government of this country has taken notice of that particular factor in our civilisation and has aided in the construction of ships which were adequate to our ocean-going transport.

At the present time what. must be brought home to the mind of everybody is that the Germans have succeeded in wresting from us what is called the blue riband of the Atlantic. Prestige is worth something in itself. I am not looking at it from the point of view of fame or of the position which we hold in the world, because I look at it purely from the point of view that prestige stands to bring business, and anyone who knows what is going on on the Atlantic to-day knows the extent to which we are suffering by reason of the fact that we have not got the fastest ships. I have met many people in the past few months who have travelled to America, for the first time in their lives, by something other than a British ship, either by the "Bremen" or the "Europa," for no other reason than this, that it gives them two more days in New York between their journeys, and a business man, I imagine, if he found that he would get two extra days in a city like New York after taking that long journey, would regard it as of prime importance that he should have the longer time.

That undoubtedly is taking a large number of people away from British ships and British lines and inducing them to travel by other lines. We cannot go on in that way and expect to do as well in this country as we have been doing in order to earn those revenues which ultimately produce the revenues upon which the State depends. Accordingly, I can quite well understand the anxiety of the Government to see that when the opportunity offers and a large company is willing to find the finance, it should not be impeded in its efforts to recapture the trade of the Atlantic.

The other point is of even more importance. You have a chance at the present time, when you are spending vast sums of State money in relief works for people who are unemployed, of seeing private enterprise spend large sums of money, which will not only not come as any charge upon the State, but will in the end bring revenue to the State. You are going to succeed in giving 5,000 people employment for three years by a simple guarantee of the insurance upon these ships and you are going to do that without any expenditure upon the part of the State at all, as contemplated at the present time. From every point of view, these two objects seem to me to justify the Government taking exceptional action under present conditions. The action is exceptional. If it were not exceptional, I confess that I should not support it, but I think that all the conditions at the present time are of a character that require us to take a different point of view from that which we do in ordinary times.

What is the actual position with regard to these insurances? It starts thus: The Cunard Company contemplate building a vessel which is entirely new in its contrivances, and which passes beyond all previous experience of shipbuilding. It is going to cost a very large sum of money. They have to take measures in advance to see what requires to be done, and necessarily they say to themselves, "We are not going to build this vessel unless we can be certain that when we put her on the water she can he insured, and that the insurance market will be able to take up all the necessary risks." It is going to be three years before that vessel will go into the water, and their information is that the insurance market at the present time is not in a position to say that three years hence they can guarantee that all the insurance of such a ship as that will be provided for, that a single specific body will carry so much risk at that time, three years hence, under conditions which they do not entirely foresee.

But I think the Committee will be making a mistake if it assumes to-day that three years hence that insurance will not be provided. I hope that by that time ways and means will be found by which that insurance will be provided—no man can say—but the Cunard Company require the certainty before they begin to build, and the Government are in a position to give them that certainty. That is all that is being done to-day, and accordingly I think it is a wise action on the part of the Government to provide the kind of conditions which would induce the Cunard Company to go on with the building of the ship at the present time.

Mr. SANDHAM

And turn it into a commercial proposition?

Sir R. HORNE

Certainly.

Mr. SAN D HAM

Which it is not now.

Sir R. HORNE

I do not understand what is meant by saying that it is not a commercial proposition.

Mr. SANDHAM

Because it lacks the insurance.

Sir R. HORNE

But the question is what the insurance market will be prepared to do in three years' time, and you cannot provide that certainty to-day—such a certainty as will justify the expenditure of capital now. With regard to the other case, the insurance of the ships in course of construction, that is a totally different proposition, because a ship at sea carrying all these risks is on a totally different insurance basis from that of a ship in course of construction in a shipyard. I understand, from reading the White Paper with regard to the marine risk, and from what the President of the Board of Trade said, that the Government are going to take up all the insurance that cannot be effected in the market at a reasonable rate, that that reasonable rate is to be determined by what the President of the Board of Trade described as the ordinary market rate, and that if there is a dispute about the ordinary market rate, it is to be decided by arbitration.

It is my belief—I may be wrong, as I have had no opportunity of testing the whole matter—that if such a provision could have been applied to the insurance of the ships in course of construction, the market would have taken up the whole of the insurance risk, but as the President of the Board of Trade has. pointed out, he has fixed a rate of 30s., upon the advice that he has received. But he told us also, in the course of his speech, that there were many people in the market who considered that that was below market rate. Of that, indeed, I am assured. It is, in the view of many people, below the ordinary market rate of to-day, and if the ordinary market rate could have been discovered by some such provision as he means to apply later, I think, giving only my own opinion, it is probable that the great bulk of the risk, if not the whole, would have been taken up by the market. But the 30s. rate is something which has surprised some portion of the market at least.

I do not know what will happen upon the rate which the President of the Board of Trade has fixed as the result of his advice. I cannot say whether the insurance companies will be likely to take up the risk at that rate. I am perfectly certain they would be anxious to help under present circumstances, but, of course, they must use their judgment as to whether a risk upon a rate is justified or not. I admit that the President of the Board of Trade would only act upon advice. His advice was got from Lloyds, which, of course, has the highest possible standing and reputation, and I would not for a. moment presume to say, nor would anybody, that it is bad advice, but it is always possible that people do not make the best calculation, or at least a calculation which is justified in the minds of everybody else.

I have no doubt that the President of the Board of Trade found himself in a position in which he had to fix a rate at once in order that this work should be rapidly carried out. I take it that that is the justification in this case for fixing the rate for the insurance upon the building risk instead of leaving it to be fixed in the way in which he will have it done upon the marine risk, and probably he is justified in taking that course in order to get the work expedited and the people employed on the building of this ship. As I say, nobody can tell what the market will do in these circumstances, or how much the Government will be left with, or whether large sums will be supplied from the market or not, but I am perfectly certain that if the market takes up the whole of the risk and relieves the Government of any burden with regard to the construction insurance, it will be because the insurance companies are anxious to do everything that they can to help in getting work into this country at the present time for as many people as possible.

As I say, I am not predicting what may happen. The situation is a difficult one at the moment, and upon the whole matter, so far as I am concerned, I do not place any impediment in the way of the Government at all, hut I hope the President of the Board of Trade can reserve to himself room in which there might be some slight alteration which would induce the market to take up the whole rather than put any burden upon the Government. I hope he will he able to give me an affirmative answer to that suggestion. It is not that I am wanting, or that anybody wants, to put any squeeze upon the position—the President may be assured that there is no idea of that kind in anybody's mind—but I hope he has not completely tied himself. In any case, as I say, I would not suggest that the Government have clone anything which is wrong in the circumstances, or that the conditions which they have put before the Committee do not justify their intervention in this matter at the present time.

Lieut.-Commander KENWORTHY

I am sure my right hon. Friend the President of the Board of Trade roust have been astonished by the reception of this proposal to-day. It is not often that I find myself in agreement with the right hon. and learned Member for Hillhead (Sir R. Horne), and still less often am I in agreement with the hon. and gallant Member for Dulwich (Sir F. Hall). Indeed, it is not often that I am in agreement with my hon. Friend the Member for East Leicester (Mr. Wise), who has now gone out of the House. There is complete unanimity in the Committee, and it is only because I want to draw the moral of this that I venture to intervene at all. Here is my right hon. Friend the President of the Board of Trade coming forward with a proposal that the Government should insure these two great liners, in order that they should be built and in order to take men off the Unemployment Insurance Fund and give them work. That is what we have all been urging him to do all these months, and he gets nothing but blessings and praise when he does it. I congratulate him, and I hope the effect will be that he will be able to take further and bolder steps of this excellent nature. There is an overwhelming majority in this House for the credit of the country being used at the present time for the assistance of useful work that will take men off the street corners and out of the Employment Exchanges.

Before I come to the lesson of this extraordinary spirit that we have had displayed on a Monday afternoon, may I ask my right hon. Friend some questions? When my right hon. Friend says in this Motion, "in Great Britain," that, I suppose, does mean Great Britain, and there 'is no question of one of these ships being built in Belfast.

Mr. W. J. STEWART

Why not?

Lieut.-Commander KENWORTHY

I will tell the hon. Member. The hon. Member for Springburn indicated that one was to be built on the Clyde and the other on the Tyne. The reason I object to one of these ships going to Northern Ireland is that the Government of Northern Ireland had retained the Trade Facilities Act; that is the only good thing I know about them. By that means, they have obtained a great many orders for their shipbuilding yards which we have lost, and they have a great advantage over us in that matter. I rather suspect that the credit guarantee which they give under their Trade Facilities Act is really based upon British credit. I wish the shipbuilding yards in my own constituency—

Lieut. - Commander KENWORTHY

It does not, but perhaps I shall be in order in saying it is obvious that, wherever else these great Cunarders can be built, they cannot be built in the smaller shipyards, and I think that those of us who are interested in the small shipyards have a right to draw attention to this fact. There we can build very fine ships of a smaller type. The Atlantic greyhounds of the past received a subsidy from the Admiralty if they were able to do a certain speed, and their decks were straightened in such a way that guns could be mounted on them, and if there were other requirements. Is this subsidy being applied to these ships?

The CHAIRMAN

This Money Resolution deals with insurance, and if there be a question of subsidy, the hon. and gallant Member had better ask it when the agreement comes to be discussed.

Lieut.-Commander KENWORTHY

I ask this question because it affects the insurance. If it is necessary for a ship to have a certain speed and to have certain structural alterations, there must be a higher rate. If I could have information on that matter, as it affects the insurance rates, I should be obliged. It has been mentioned that this is no new thing, and that during the War we entered very largely into the insurance of ships and cargoes. Not only was there no loss, but there was a big profit. The Ministry of Food, in their insurance of ships and cargo, made a profit, in spite of the tremendous devastation and terrible losses of ships, of £10,000,000. This £2,000,000 liability here does not alarm me in the least. As it is very often the first step that counts, I hope that this will be a first step to a long step which will lead to a much larger taking of Government risk in insurance matters. Even if there were risks, we have been told by my right hon. Friend that £250,000 each year will be saved on this one transaction alone in unemployment insurance—a remarkable thing. Does not the Committee see that, when my right hon. Friend speaks of the 1,500 men who will be employed for three years, it is an argument for the reintroduction of the Trade Facilities Act, and the introduction of insurance for other ships with which to win the blue riband of the Atlantic? The right hon. Gentleman the Member for Hillhead spoke of national prestige, and how some people went on German ships in order to be able to spend two more days of pleasure in New York—

Sir R. HORNE

The hon. and gallant Gentleman must be fair. It is a question of business men here.

Lieut.-Commander KENWORTHY

I know how they spend their time. National prestige depends on other things besides the winning of the blue riband of the Atlantic. It depends on whether we can find employment for our people, or whether we are going to he held up as an awful example of dwindling industries and unemployed workmen. I would like to see, in addition to help given to these two great liners, help given to the shipbuilding industry in regard to the humbler types of vessels.

The CHAIRMAN

That question does not arise here. The Resolution deals only with the Cunard liners.

Lieut.-Commander KENWORTHY

The Cunard Company have received a special favour. It is a very great company, which has done much for British shipping in the past. I congratulate the company on having been able to persuade the Government to do this thing where other companies, which are up-to-date and have spent enormous sums to equip their building yards, have not been able to get similar assistance. The principle of this grant for these two Cunard liners is thoroughly sound, and could be tremendously extended. I am glad that the Committee has received this Resolution with such agreement, and I hope that the next time the hon. and gallant Member for Dulwich is making one of his great orations on certain proposals held by a section of his party, he will remember his remarks here that he objects to any interference by governments with commerce.

Sir HILTON YOUNG

I have no comments to make on the merits of this scheme, but there are two points of financial procedure which require elucidation. The first is that raised by my right hon. Friend the Member for Hillhead (Sir R. Horne). I feel confident that the President of the Board of Trade will realise that there is a strong argument in favour of greater elasticity in fixing the rate of the construction risk. We have heard that fixed rates at a definite figure in the Bill can only be merely prudent. It must not be taken for granted by anybody with a practical acquaintance with the subject, but when real doubt has been expressed, as in this case, the right hon. Gentleman will see that it is more prudent in the final provisions in the Bill to allow elastic machinery for fixing the rates, rather than to fix them at a figure which might prove to create some dislocation in the market.

The second matter on which I should like to ask for an explanation is purely a question of financial procedure upon the Resolution. Paragraph (c) of the Resolution provides that there shall be constituted a special fund into which there shall be paid all premiums and out of which expenses shall be paid. That is, in effect, asking the Committee to short-circuit the Consolidated Fund as regards certain receipts of public moneys; and I am sure that the right hon. Gentleman will agree with me that whenever the Committee are asked to short-circuit the Consolidated Fund in order to allow for payments into and out of a further fund, the Committee should be told of the reasons for that course. It would seem to me prima facie that there are some reasons against this course and in favour of the more orthodox procedure of allowing all the receipts to go into the Consolidated Fund, because in effect we are by this procedure constituting one of those special sinking funds which are, as regards the general principles of public finance, usually considered to be undesirable. So on broad principles, in order to avoid a multiplication of funds and sinking funds, it would seem proper to follow the ordinary procedure and allow these payments to go into and out of the Consolidated Fund. There may be a special reason why it is of some advantage that this special fund should be created, but there is a wide principle at stake, and the Committee should be informed of the reasons.

Mr. REID

I would like to call attention to the procedure which is adopted here. The Committee are asked to authorise the President of the Board of Trade to enter into a draft agreement. Except for the meagre information in the White Paper, the Committee know nothing of the contents of the agreement into which they are asked to authorise the President to enter. I understand that when the agreement is entered into, it will be scheduled to a Bill. The Bill, I take it, will confirm an agreement already entered into, and it will be impossible for anyone in the House to discuss it. We have had that point a number of times before. When a document goes into the Schedule to a Bill, it is impossible to move any Amendment to it, so the only recourse the House would have if they did not care for the agreement, would be to reject the Bill. The document cannot be a secret, for if it is going to be scheduled to a Bill, everyone will know of it, and why, when we are asked to authorise the President to enter into an agreement, should it not be circulated It may be that the House would be prepared to authorise the President to enter into the agreement with some modification. It has been suggested that certain points about wages may require further consideration, but how can we consider such points when we have not seen the agreement? This is really not giving the House a proper opportunity for discussion.

Mr. MORLEY

In the course of this discussion the hon. and gallant Member for Dulwich (Sir F. Hall) has confessed that he does not object to State assistance; all that he objects to is State interference. It would be interesting if, on some future occasion, he would tell us where State assistance ends and State interference begins. Judging by his speech, I assume that State assistance is all right for an enterprise where no profit is being made; but that if there is any chance of profit then private enterprise ought to have the opportunity. I have one question I would like to ask the President of the Board of Trade. In return for this guarantee, can we get an undertaking from the Cunard Company that decent accommodation will be provided for the crews of these vessels Many large liners sail from my constituency to various ports. The accommodation for their first-class passengers is luxurious, and even palatial—

The CHAIRMAN

If the hon. Member has any question to ask on this matter, he must defer it until Second Reading of the Bill.

Mr. MORLEY

I will postpone my further remarks to the Second Reading of the Bill.

Sir ROBERT ASKE

So far as the details of this proposal have been stated to us, I think they are on sound business lines; but there is one point on which I desire to ask a question, and that is the proposal that the policies are to he exempt from the limitation which applies to all marine insurance policies that they shall not run for more than one year. Since the extent of the Government's obligation will depend on the amount of under-writing accepted by the ordinary market, I wish to know whether this benefit is to be extended to the other persons who will underwrite any part of the risk; because the ordinary provision that a marine policy can cover a risk for a year only is obviously rather irksome in circumstances such as this. Another point on which I would like information is whether it is expected that the limit of six years within which the keel of the second vessel is expected to be laid down is likely to be reached. This financial undertaking on the part of the Government is intended to assist employment, and it is desirable that the period of six years be shortened as much as possible, in order that unemployment, which amounts to 38 per cent, in the shipbuilding industry, may he alleviated as early as possible. I would also like to ask whether the Government have made any stipulation as to the places where the keels are to be laid down.

The CHAIRMAN

I have called another hon. Member to task because he wanted to make an appeal for his own constituency, and I must warn the hon. Member that he must not follow that example.

Sir R. ASKE

I bow to your Ruling, Mr. Young, but when the State is undertaking an insurance risk of £4,500,000 I want to make sure that the Minister is taking care where the keels are to be laid down, and to know whether he can give the Committee any indication of the extent—

The CHAIRMAN

The question before us is one of insurance. and we cannot go outside that question.

Mr. W. GRAHAM

I am grateful to hon. and right hon. Members in all parts of the Committee for the remarkable unanimity which has characterised this debate. After some recent debates, it is pleasant to see that there is one proposition which finds almost universal support. Two considerations are prompting me in my reply; one is the desire to be very brief indeed, and the other is that. as many speakers have found it difficult to keep within the four corners of the Financial Resolution, I must not get out of order in trying to reply to them. I will concentrate now on one or two points of importance, giving hon. Members an assurance that when we come to the text of the Bill, in which the actual' agreement will be included, there will bescope for a much fuller explanation than is possible now. Two or three of the speeches, notably those of my right hon. Friend the Member for Camborne (Mr. Leif Jones), the right hon. Member for Hillhead (Sir R. Horne) and the right hon. Member for Sevenoaks (Sir H. Young) turned upon the 1½ per cent. construction risk which is mentioned in the White Paper, and it was suggested that it might he desirable to make that elastic in character. Before I come to that may I say a word in amplification of the explanation which I gave in my introductory speech? We hope the market will absorb a very large part of the insurance—we would be very pleased if it would absorb the whole of the construction risk—but the essential point was put by my right hon. Friend opposite when he reminded us that even before the War there was a certain difficulty in getting the market to provide the full cover on very much smaller undertakings. This proposition of £4,500,000 is far in excess of any pre-War proposition. All I can tell the Committee this afternoon, and, indeed, all that I think any Minister in my position could ever tell the Committee, is that I have taken the most competent advice open to me, that of the chairman and the deputy-chairman of Lloyds, and on that information have reached the conclusion that the 1½ per cent. is an appropriate and a reasonable rate for the construction of this vessel—subject to the additions, namely the 2½ per cent. on that rate, the small addition to the I per cent. and the absence of brokerage since otherwise the Government would be accused of entering into competition with the market for the construction now proposed.

My right hon. Friend the Member for Camborne quite properly raised the question of what would happen if, in effect, this proved to be too low, if the rate were say, 2, or something between 1½ and 2; and I made it perfectly plain in my introductory remarks that in that case the Government might be left with the whole of the cover; but I can only repeat that we have no reason to believe that that will be the state of affairs. According to all the information at our disposal the chances are—I do not put them higher than that—that the market will absorb £2,000,000, or whatever the figure is—at all events, a substantial proportion of this construction risk. Beyond that it is impossible to go in any debate on the Resolution. My right hon. Friend the Member for Sevenoaks and another hon. Member raised the question of the position of Parliament in passing this Resolution. I must make the procedure perfectly clear. This Resolution refers to an agreement which has been reached between the Board of Trade and the Cunard Steamship Company. I could not come to the House of Commons with a proposition which was still in the air. I must know exactly what the company is prepared to do, and, on the other hand, I must have the most precise information as to the possible commitments of the Government, and that involves an agreement between the Board of Trade and the Cunard Steamship Company. That agreement is presented to Parliament for its assent or rejection. There is no restriction on any hon. Member. It is my duty to present the agreement, which will be included in a Schedule to the Bill, and it is then open to the House to reject that agreement or to modify certain Clauses in the Bill, and particularly the first Clause, which, however, I must point out, might have the effect of making the agreement an impossible proposition.

Sir P. CUNLIFFE-LISTER

May we get one thing clear? There are two ways in which a document of this kind is brought before the House. It can be brought before the House in the way in which a Treaty which requires ratification is submitted—a Treaty which has already been made and which the House, by a one-Clause Bill, confirms or rejects. Here the President of the Board of Trade is coming to the House to seek authority to conclude an agreement the terms of which have been discussed and provisionally agreed between himself and the Cunard Steamship Company. He says to the House: "I propose to enter into this agreement with the Cunard Steamship. Company, and I put the draft of the proposed agreement in a Schedule to my Bill." If ft comes in that form, it will be competent for the House to make any alteration in that agreement, because the Schedule is as much before the House as any Clause in the Bill, but the President would be entitled to say: "If you make that alteration, it is something to which the Cunard Company cannot accede." So far, however, as the competence of the House is concerned, it will be competent for us to make any alteration in the terms of the agreement.

Mr. GRAHAM

I do not differ from the way in which my right hon. Friend has stated the case as to what happens when, the Bill is presented to the House, but I wish to make it perfectly clear that if the conditions were seriously varied that might be the end of the agreement. In that position we leave this I½ per cent. this afternoon, and I can only repeat that that figure has been inserted on the very authoritative advice at our disposal.

The right hon. Gentleman the Member for Sevenoaks raised a point of financial procedure as to why we should take this out of the Consolidated Fund and set it aside in a separate Cunard Insurance Fund. On the question of a specific agreement with an outside interest, it is an advantage to have it separate from the general financial statement, because it shows the incomings and the outgoings of the fund, and exposes it in the appropriation account to the essential review of the Comptroller and Auditor-General, and to the attention of the Public Accounts Committee. There are many precedents for these agreements, and I find no difficulty in defending that part of our arrangement. Certain hon. Members have alluded to the period of six years mentioned in the White Paper during which this cover will last. I beg the Committee not to believe that there is anything fixed or final about that period. Plainly we have to have some period during which the offer is open, and if the construction of the first vessel covers three years, it might be suggested that the other period of three years for the second vessel would make up the six years; but I hope that it will not work out in that way.

In reply to a point which was very properly put by the hon. Member for Springburn (Mr. Hardie), as to whether the first construction would be regarded as an experiment, and the trials in the Atlantic or elsewhere would be taken before the second vessel was laid down, I have already informed the House that I have no information as to the beginnings of the second construction. or whether the vessel will be constructed. That is a matter for the company, but I hope and believe that the second construction, provided things work out satisfactorily, will not depend upon experiments, but will begin, at as early a date as possible, and then the other part of this proposition will come into play, namely, the cover supplied by the Government, in so far as the open market does not absorb the amount of insurance which is necessary either for construction or for the longer marine risk. The point raised by my hon. Friend the Member for Southampton (Mr. Morley) as to the conditioning of the vessel, I regret that I could not pronounce upon that, because I do not regard it as within the terms of the Resolution, but I am satisfied that there will be every desire, in a vessel costing £4,500,000, to make it an enterprise which will be worthy of every part of the service, and I include in that the passengers who will travel in it, and the very large number which will be necessary to man a vessel of this kind.

I am charged with having made speeches in the past which I should be the last to dispute. I was anxious to avoid questions of controversy, and to concentrate on the purely business proposition. I do not depart in any way from the principles which I have tried to lay down to the House in the past as to the rights which should accrue to the Government in return for contributions which any Government makes at the taxpayers' expense, whether in cash or by the acceptance of a contingent liability, as was the case with the Trade Facilities Act, and as indeed is the case here. But—and this is in reply to my hon. Friend the Member for East Leicester (Mr. Wise)—I think we have driven a bargain which the Government and the community can regard as mutually advantageous. It is clear that, but for this cover, which we are prepared to accept, if it be not overtaken by the ordinary market, this construction, either of one or of two vessels, could not take place.

The Cunard Steamship Company could not undertake so large a financial obligation in the post-War market. It was indicated that it would account for £4,500,000 for a single construction, and we were assured that it would provide work for 5,000 men for from two and a-half to three years, directly or indirectly, in an industry which is under profound depression at the present time. In addition we should save in unemployment benefit some £250,000 a year, and we should preserve the morale and the industrial skill of some of the finest craftsmen in this country. These are real and tangible benefits for the community as a whole. To my Liberal friends, for whom I have always had a tender spot, since the Coal Mines Act, I would say that this State cover is applicable to a great effort as a result of which we shall see one of the giants of ocean travel rise literally in our midst. That, perhaps, will suffice by way of peroration, and I now commend the Resolution to the Committee.

Question put, and agreed to.

Resolution to be reported To-morrow.