§ Mr. ALBERY
I beg to move, in page 2, line 2, at the end, to insert the words:Provided that the draft agreement contained in the Schedule be amended, in Article 1, Sub-section (4), line 11, by leaving out from 'keel,' to the end of the article, and inserting 'continuation to be held covered at a rate to be arranged when the period of continuation is known.I should like to hear a few words in explanation of the Money Resolution of this Bill. Speaking on that Resolution the President of the Board of Trade said: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, loss than the market rate at the moment."—[OFFICIAL REPORT, 10th November, 1930; col. 1351, Vol. 244.]The right hon. Gentleman the Member for Hillhead (Sir R. Horne) said: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."—[OFFICIAL REPORT, 10th November, 1930; col. 1373, Vol. 244.]I have made certain inquiries, and I have been informed that the present contract is unsatisfactory as regards the continuation of risk. The continuation rate is 6d. per cent. per month, and if by any chance—it probably is not particularly likely to arise—there was a continuation of one or two months, that continuation would be at a time when the 1664 risk was at its very highest, when these vessels which are being insured would have on board a great deal of material, including, probably, nearly all the expensive fittings; and, in such circumstances, the rate of 6d. per cent. per month would be considered to be inadequate remuneration. On the other hand, if through some unfortunate incident a considerable delay were to occur in the construction of this vessel, or the subsequent vessel, in all probability the rate of so much per cent. per month would be an unfair rate in the other direction, that is to say, if a delay of six or 12 months were to occur, a cheaper rate could be agreed upon.
The words which I have suggested for substitution are some which I understand are used in the underwriting market, and they have this advantage, that the rate is not actually fixed until it has been definitely ascertained, or rather, fairly well ascertained, what kind of delay is likely to occur, if any, in the construction of the vessel. I believe, or at any rate I have been informed, that a change of this kind might make a very considerable difference—in fact, the sum of £1,000,000 was mentioned to me—in the amount of underwriting which might take place in the market on the construction risk. Unfortunately, I have only had the opportunity of notifying the President of the Board of Trade of this Amendment at a fairly late moment, and I am quite alive to the possibility that he may not have been able to make sufficient inquiry. It is not, however, a controversial subject, and I have only put it forward for what it is worth, in order that the right hon. Gentleman may reply, and, if he does not see fit to accept the Amendment, I hope that at any rate he will give the matter his consideration.
§ The PRESIDENT of the BOARD of TRADE (Mr. William Graham)
I appreciate the spirit of the hon. Member who has moved this Amendment, and I think I can give him the information that he desires. During the debate on the Financial Resolution, we made it perfectly clear that it was the hope of the Government that, as far as possible, the great amount of this insurance would be covered in the open market, and I reminded the House that, for the purpose of getting the most 1665 authoritative information on that point, we had consulted the Chairman and Deputy-Chairman of Lloyd's, and they took the view, which I think is the substantial view in this case, that the rate of 1½ per cent. was a fair and reasonable rate, and that the market might cover, say, half of this proposal.
The point raised by the hon. Member turns upon the continuation, that is to say, beyond the period of three years involved in the construction of this vessel. He takes the view that the risk is greater in those circumstances, but our opinion is rather to the contrary, namely, that this continuation rate will apply in the last two or three months, if it should be necessary, of the construction of the vessel, and that, in fact, the risk would be rather less than at the other period, because obviously that would be after the launching of the vessel, when it would be actually in the river. A considerable part of the risk at that time, so I am informed, attaches to the operation of launching, and on those grounds the continuation risk would be regarded as appropriate. I am further advised that the rate is quite a suitable one under present conditions in a construction of this kind. I can only pass on to the House the information at the disposal of the Board and assure hon. Members that this has been very carefully considered.
Amendment, by leave, withdrawn.
§ Mr. ALBERY
I beg to move, in page 2, line 2, at the end, to insert the words:Provided that the draft agreement contained in the Schedule be amended by leaving out Article 5.I have only pit this Amendment down because on the last occasion when the subject was raised, I put a question to the Minister which was not answered. The President of the Board of Trade has given the Committee very detailed information as regards construction underwriting. He told us that his information is to the effect that something like £2,000,000 will be placed in the marine underwriting market. He has, however, given us no information whatever as regards the trading or marine risk when the vessel is subsequently afloat. He has taken powers for the Government to underwrite the whole of that risk. From all that he has said to-night and previously I have gathered that it is the 1666 intention of the Government to underwrite as much as possible of all these risks in the marine underwriting market. I should, however, be glad if he will take the opportunity to tell the Committee what information he has, as to the likelihood of being able to underwrite also, a considerable amount of the trading risk after the vessel has been launched?
§ Mr. W. GRAHAM
On this question also, I think I can give the hon. Member an assurance. In paragraph (1) of the Schedule—which is simply the text of the agreement between the Board of Trade and the Cunard Company—there is a reference to the construction risk insurance which is covered, and in paragraph (5) there is power to the Board of Trade to provide the whole cover for the ordinary marine risk. On that point also, it will not be disputed, that the very large amount of work which is involved, could hardly go on at all, if we were simply in the position of covering the construction risk and if the Cunard Company were not in a position to know that the subsequent long-term marine risks were covered. On that point, of course, I can only pass on again the information, but I have not the least reason to doubt that a very substantial part of that will be covered in the ordinary market. There seems to be no doubt about it whatever. But in order to put it beyond all doubt in what is really a remote contingency, a Clause of this kind most be included, because unquestionably it would then become the duty of the Board to provide cover, which they would do, as far as it could not be provided in the market.
§ Sir DENNIS HERBERT
I was a little disturbed by what my hon. Friend said. I should like a definite statement as to the policy of the Board of Trade. If I understand my hon. Friend aright, he said that there was the impression that the Government were out to get as much of this risk as they could.
§ Sir D. HERBERT
I am very much obliged to my hon. Friend, but that impression having been made upon my mind, I think it is desirable that we should have a definite statement from the right hon. Gentleman that it is only the 1667 policy of the Board of Trade to cover so much of this risk as the market is unable to take under the ordinary market rate.
§ Mr. W. GRAHAM
I made that perfectly plain, though perhaps my hon. Friend was not in the House at the time. It is beyond all question. The object is to place as large an amount of this assurance as we possibly can and have it covered in the ordinary market. It is only that part not so covered that the Government will undertake.
§ Amendment, by leave, withdrawn.
§ Clauses 2 (Power of Board of Trade to enter into supplemental agreements); 3 (Exemption of principal agreement, supplemental agreements and certain other contracts from provisions of Stamp Act, 1891, and Marine Insurance Act, 1906); 4 (Establishment of Cunard Insurance Fund,); 5 (Exercise of powers of Board of Trade under Act); and 6 (Short title), ordered [...] stand part of the Bill.
§ Schedule agreed to.
§ Bill reported, without Amendment; to be read the Third time upon Monday next.