HC Deb 16 June 1947 vol 438 cc1752-60

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

12.13 a.m.

Colonel J. R. H. Hutchison (Glasgow, Central)

I make no apology, even at this late hour, for raising a question of deep and fundamental principles. It is, in effect, the conditions in which growers of rubber in British North Borneo are at the present time treated. The action of His Majesty's Government appears to indicate that their conscience has become as resilient and elastic as the produce which is the subject of my remarks tonight. To enable the House to follow the problems to which this matter has given rise, it is necessary to go back a little into history. In 1905, the Charter Company of North Borneo, in order to help British companies to pioneer in the growing of rubber, offered certain facilities which were published in the "Official Gazette" of December, 1905. Those concessions and facilities included two of fundamental importance, and it is only with those that I am concerned tonight. The concessions were that for a period of 50 years from 1905—and I hope the House will note that period with care—those who applied to have these concessions would be granted the facility of being free of quit rent and free of any export duty on the rubber which they so produced. It was under those concessions that some of my constituents, along with 20 or 30 other concerns, took advantage of the situation and my constituents—the Tenom Rubber Estates, Ltd.—formed themselves into a company. It is from them also that I have obtained the information and details which I will briefly lay before the House. The situation that then obtained was they pioneered the growing of rubber in British North Borneo.

The concession, and the terms of the concession, were respected until the war. As is well known, the Island of North Borneo, in common with a great many other parts of the world, fell into the hands of the enemy, and it was only at a considerably later stage of the war, when the British Military Government were able t3 take over control of the Island, that they proceeded to impose a tax of 4 cents per pound upon all rubber grown in British North Borneo. My constituents, and the other concessionaires, claim that this is a direct and violent breach of the contract which they had enjoyed and under which they had up till then laboured. The next stage in the history of this affair came when, in 1946, His Majesty's Government took over from the Charter Company of North Borneo, and proceeded to occupy the position which the Charter Company up till then had occupied. When they took over the Charter Company, they drafted an agreement, and in one of the clauses of the agreement, the Government agreed as follows: The Crown shall discharge all obligations incurred by the Company, including all obligations and liabilities under, or in respect of, all grants, concessions, leases, and other rights or interests subject to, and with the benefit of which the Borneo assets are, by Clause 2, hereof expressed to have vested in the Crown. There can be no doubt, in any reasonably-minded man's conception of things, that they did, in fact, give a pledge to these concessionaires that His Majesty's Government would carry on the facilities and the rights which they had been granted in 1905 by the Charter Company of North Borneo. My constituents, and the other concessionaires so affected, contend that the Government have acted in breach of these agreements and that they are entitled, from the time the export duty was levied, to a refund of the 4 cents per pound with which they have been taxed.

This case has been the subject of consideration by His Majesty's Government for some considerable time—for about nine months—and representations have been made, not only locally in the Island to the Governor, but also in London, through the Rubber Growers' Association, to the Colonial Office; and in January of this year, a deputation from the Rubber Growers' Association was received by the Colonial Office, and the matter was thoroughly discussed. The Colonial Office explained to the deputation that it would have been in the power and the right of the Chartered Company of North Borneo, as it was, indeed, in the right of His Majesty's Government today, to have introduced legislation annulling that concession and varying its terms, but they graciously said, at the time, that they, did not propose to act on those powers. I should think not, because if they had, in fact, used them, they would have been in breach of the greatest possible moral obligation that one can imagine. Of course, it is always possible for a Government to alter, by legislation, promises which it has given; but I am glad that the Colonial Office does not, in fact, intend to use its powers in that way, because to do so would tend to undermine confidence not only among people who have been given a solemn pledge, but among people in a much wider area of the British Dominions.

Our constituents, and indeed all those who are growing rubber in North Borneo, complain that in any case this 4 cents a pound export duty is far too high. They point out that it is a remote area in which they work, that this necessitates long sea transport, and that these facts together, in addition to the 4 cents a pound export duty, make, or are beginning to make, the growing of rubber in North Borneo unprofitable. They declare also that already some of the smaller concerns are finding it impossible to continue because of this inordinately high levy. They point to Malaya, where rubber is grown in large quantities, and which also sought to introduce this four cents a pound export duty, but in fact reduced it by a series of stages to 2¾ cents a pound, and later to 2.4 cents a pound. I admit, in fairness, that certain other taxation was introduced concurrently with the reduction of the export duty.

These producers in Borneo have been informed by the Colonial Office that the devastation which has been suffered in that island owing to the war forces the Colonial Office to find other sources, or increased sources, of revenue over those which were required in the past. The growers recognise that necessity, but they say that before an arbitrary breach of a previous agreement of this kind was sought to be brought into operation, they should have been consulted. They still want consultation. They contend that it may be possible to find other methods of taxation which will increase the revenue, but they say that this taxation should fall on an industry able to bear it, and that a flat rate of export duty may kill an industry. They claim also that this new method of taxation should fall upon those who are prosperous; but whether it should take the form of a profits tax or income tax must be determined. They point out that they are not able to draw compensation from War compensation schemes and Acts, such as play their part in other countries. They contend, further, that in any case, whatever system of taxation is devised, they should enjoy this original concession, and should be in a relatively privileged position compared with the other rubber growers in the same island.

I understand that that attitude has been resisted but there is a certain amount of logic and fairness in it, because it is the pioneers who developed the industry who suffered in the past, and those who came later may well have reaped the benefit of picking the brains of those who preceded them. I do not think it is illogical or unfair for the pioneers to contend that they had to bear the burden and heat of the day in 1905 and earlier years, and are entitled to have that taken into consideration. There is a deep matter of principle here. There are only eight years of this concession to run. Surely, His Majesty's Government are not going to break faith with those people who have been relying on this concession.

Eyes are turned from the Dominions and Colonies to see how far the British Government are going to carry on and honour a pledge given by a Charter Company which it has taken over. Therefore I urge the Colonial Office once again to continue with the consultations which I know are taking place, but are dragging on interminably. They have dragged on for nine months and already the position is serious for all rubber growers, and desperate for the small people. The Government must be jealous of their good name and their reputation. The British Government's name and reputation have hitherto stood high in our Colonies and Dominions. I urge them to bear that in mind and to accept and follow the noble principle of the past, and not to let it be said that the Mother of Parliaments has turned itself into a common pickpocket. Let them make the distinction between mothering and smothering their Colonies.

12.26 a.m.

Sir John Barlow (Eddisbury)

I should like to add a word on this matter, but before doing so, I would like to declare my interest in that I am a director of a plantation company in British North Borneo, and I have certain personal experiences of that country, as I visited it before the war. The hon. and gallant Member for Central Glasgow (Colonel Hutchison) has put extraordinarily well the feeling of injustice now experienced by plantation companies which enjoyed the advantages of a long time of pioneering in British North Borneo. I will read very briefly two very important clauses in the original agreements between the British North Borneo Charter Company and the plantation companies. Clause 4 says: The Charter Company shall not charge any export duty on cultivated rubber from the said land during a period of 50 years from the date of registration of the rubber company. That is clear enough, and one would have thought there was no doubt about it in any way.

Clause 14 reads: If there should be any variation or inconsistency between the provisions of this agreement and the said land regulations, the provisions of this agreement shall prevail. One would have thought that was plain and explicit enough and that there was no shadow of doubt about the interpretation. For those reasons, those companies in British North Borneo, who find it much more difficult to produce rubber than do companies in Malaya and other parts of the world, find this a very difficult pill to swallow, and there is a good deal of feeling about it. I hope we shall be told this will be settled in a satisfactory way in the very near future.

While talking about this matter, there are other matters which I would like to mention. During the occupation of that part of Borneo by the Japanese, obviously the bank balances of any firms in that country were frozen. Immediately the Japanese left the island, the Colonial Office took control and for a very long period these bank balances remained frozen. The question has been raised in this House and we have been told that the matter was being considered periodically. The freezing of those bank balances caused very serious embarrassment to many companies in that many were poor and could not afford to have all their liquid capital, as was the case in many of the companies, frozen for a long period.

There has been issued by the Colonial Office during the last month a statement saying that the Colonial Office does not intend to carry on the banking system as formerly was done by the British North Borneo Charter Company, and that one of the banks is going to take over the business and has invited representations to be made by people interested. That does not completely settle the matter. It is now nearly two years since the evacuation of the island by the Japanese, and it seems to me that that is far too long, and one has a right to expect the Colonial Office to move far more quickly in such a matter in order to assist industry onto its feet again. I could give instances of serious embarrassment in this matter.

One other matter I would like to mention is the way in which the Colonial Office, apparently, are taking over the assets of the Charter Company. It became known nearly two years ago that the Colonial Office intended to take over this territory. A Question was asked in this House, on 22nd August, 1945, as to whether there was to be any modification in the system of government in the State of North Borneo on liberation from the Japanese. The Colonial Secretary at that time replied: "Yes," and stated that discussions were already taking place. It is unfortunate that nothing definite has been issued so far, but it is possible that the statement that was made as far back as August, 1945, was rather premature, as at that time the value of the Charter Company's shares suddenly rose without any apparent reason. The price of the shares in 1944 varied between 5s. 6d. and 8s. 7d. In May, 1945, they stood at 9s. 3d. In August of that year, for no apparent reason, they suddenly went up to 18s. 3d. and in August, as I have pointed out, this statement was made by the Government. As far as I know, there has been no finality about those arrangements, and I hope the Minister will give some information on that point.

12.32 a.m.

The Under-Secretary of State for the Colonies (Mr. Ivor Thomas)

I did not come prepared to deal with the points raised by the hon. Gentleman the Member for Eddisbury (Sir J. Barlow) and I was not aware that they would be raised, but, as he has raised the question of compensation to be paid to the Charter Company, I will reply briefly that this is provided for in the terms of the agreement. I hope that within a few months the case can go to the arbitrator, Lord Uthwatt, as is provided for in the agreement. There is a great deal of correspondence between solicitors to be dealt with before the case can come up for determination.

The hon. and gallant Member for Central Glasgow (Colonel Hutchison) made his case with studious moderation, and I have no cause to complain of his presentation of it. He made two points. He objected, first, to the existence of the export tax on rubber, and, secondly, he urged that even if there was to be such a tax, it was too high. With regard to the imposition of the export tax on rubber, it is the case, as he said, that in 1905 the Charter Company, in order to induce planters to develop the cultivation of rubber, offered concessions with the promise that there would be no export tax on rubber for 50 years. That is a very long period indeed, and I believe the Charter Company itself, at a later period, found it rather onerous. There can be no doubt, however, about the legal position. I do not think it is disputed by the hon. and gallant Gentleman. It is firmly established in law, I am advised, that a sovereign body such as the Charter Company, or such as His Majesty's Government, cannot by a particular enactment restrict its sovereign power. It would, therefore, be inherent in the sovereignty of the Charter Company and its successor, His Majesty's Government, to undo this concession, but as the hon. and gallant Gentleman stated, we are not relying upon these legal powers.

He argued that in the transfer of the sovereign powers and assets of the Charter Company to His Majesty's Government, there is a moral obligation to fulfil this undertaking, onerous though it may be. If we talk about morals, there are two sides to the matter. The revenue of North Borneo has to be found from some sources, and the rubber industry must make its contribution to the revenues of the Colony. The present position is that in the current year the estimated expenditure of the Colony is £1,070,000 and the estimated revenue is £590,000, leaving about half a million pounds which must be found by grant-in-aid. Of that revenue of £590,000, no less than £187,000 is estimated to come from the export tax on rubber. It will, therefore, be seen that it will not be easy to forego such a tax. If it were to be foregone, it would be necessary to find some other source of revenue.

The hon. and gallant Gentleman, in his second point, urged that the tax was too high, and he made a comparison with Malaya. He pointed out that when the export tax on rubber was reduced in Malaya, other sources of taxation were found—in this case, a tax of other primary products. Although Malaya has been very seriously ravaged by war and its finances are bound to give much anxiety to the Government, North Borneo has been even more ravaged, and its finances give even greater anxiety. So much, then, for the argument that the tax is too high.

These matters have been the subject of negotiations, as the hon. and gallant Gentleman indicated, for some period. These negotiations are still going on with the Rubber Growers' Association, and the Association are content with the progress of the negotiations, and have not complained. They have asked for a further interview with the Colonial Office. It was necessary to collect additional information and to examine the implications of that information before it was worth while to invite the Rubber Growers' Association for a further interview, but such an interview has certainly not been ruled out. I trust the hon. and gallant Gentleman, having raised a matter which, as he said, raises questions of principle of great importance, will now be prepared to leave it for discussion between the Rubber Growers' Association and the Colonial Office. There are two points with which I should like to close the Debate. The first is that His Majesty's Government will, of course, honour their obligations, legal and moral. There need be no question on that score. The second is that the rubber industry in North Borneo, as one of the most substantial industries of the country, must make its proper contribution to the revenues of the territory. I should hesitate to accept the hon. and gallant Gentleman's proposition that it is entitled to a privileged position in virtue of the agreements of 1905. Whatever force they may have, it is unlikely to be the case that the people who planted rubber in 1905 are those who would benefit from the concession today. But he may be assured that this matter will be very carefully examined and, if it is shown that His Majesty's Government have obligations, they will be honoured.

Colonel Hutchison

Before the Under-Secretary concludes may I raise one point? He has spoken of the necessity of making Borneo pay for itself. We have listened to plans for the expenditure of large sums of money on groundnut schemes. Surely, we would be wise—

Mr. Speaker

The hon. and gallant Gentleman is making a second speech. He has only the right now to ask questions.

Adjourned accordingly at Eighteen Minutes to One o'Clock.