HC Deb 23 March 1950 vol 472 cc2214-43

5.40 p.m.

Mr. Erroll

I beg to move that Item Sub-head EE (Compensation Payment to the Burmah Oil Company Limited), be reduced by £5.

I hasten to reassure hon. Members that the purpose of this Amendment is to focus attention on the second of the two subheads, which relates to Burma and concerns a guarantee which, we now learn, the British Government gave to the Burmah Oil Company early last year in respect of its rehabilitation operations in that country. I think it will be necessary for me to outline very briefly the background to this guarantee and state the reasons that led up to it.

After the war, the Burmah Oil Company was engaged in a big programme of rehabilitation of its oilfields, pipelines and refineries, which had been damaged during the war and also partially destroyed in order to prevent their use by the Japanese invader. That programme of rehabilitation was making good progress while the British were still in the country after the war, but, when independence came to Burma, law and order disappeared and it became impossible for the Burmah Oil Company to continue with its rehabilitation work. The company has spent up to about £10 million of its own money on this rehabilitation work, and, towards the end of 1948, it became clear to the company that, owing to the continued disturbed state of the country, it was useless to proceed with further rehabilitation.

The new Burma Government then made an approach to the Burmah Oil Company and suggested that the Burma Government should partly finance further rehabilitation work, in return for a share in the Burmah Oil Company itself. Negotiations then took place between the Burma Government and the British Government for the necessary money to enable the Burma Government to do this. Thus the British Government was being asked to pay the Burma Government the money necessary for the Burma Government to acquire a share in the Burmah Oil Company. The negotiations took some considerable time and the Burmah Oil Company were quite unable to continue further rehabilitation work. The British Government in an earnest desire to do all they could to help the new Government of Burma, thereupon guaranteed to the Burmah Oil Company a full return of all the moneys expended in rehabilitation work if carried on after an agreed date.

Obviously, the British Government and the Burmah Oil Company hoped that such a guarantee would never, in fact, be called upon. However, after some further months of protracted negotiations, the British Government finally decided in January of this year that the state of the country was such that it could not give a guarantee of the further cost of rehabilitation by the Burmah Oil Company. The announcement that a guarantee had been given nine months previously was made at the same time as the Burmah Oil Company had to announce that large-scale dismissals would take place as a result of the withdrawal of that guarantee. Since then, dismissals have taken place, but a number of the staff are still employed at the refinery or, rather, are still on the pay-roll at the refinery.

We require, and I hope we shall receive from the Government today, a full statement on why the guarantee was not made known at the time when it was first given. I think it is quite intolerable that Parliament should only be told months afterwards that a highly expensive guarantee had been negotiated with the Burmah Oil Company. It is obvious, of course, that the Government hoped that the guarantee would never have to be implemented. But, in fact, it is having to be implemented, and this Supplementary Vote is a token amount with which to start the implementation of the guarantee.

Why were we not told about this at the time? Why, too, was it not made public, so that the people of Burma could know what practical assistance the British Government were giving to its people? The net result of this secrecy has been that the full odium for the dismissals has fallen upon the Burmah Oil Company, who are being blamed for what are described as "ruthless sackings," when, in fact, they are merely carrying out the instructions of the British Government. The secrecy in regard to the guarantee has undoubtedly harmed the company's position in Burma, and has resulted in the British taxpayer—who is, after all, going to foot the bill—receiving no credit from the people of Burma for his great generosity.

It is stated that the sum is not expected to exceed £1 million. Nearly all of that sum has been spent on wages, and I understand that very little will go on materials. Therefore this £1 million represents, not a gift to the Burmah Oil Company, but a large measure of unemployment relief to Burmese oil workers. That may or may not have been a good thing to do, but we must be quite clear that this is not any measure of assistance to the Burmah Oil Company as such. It is certainly not helping them to pay their dividends, and I hope that no hon. Member opposite will start any innuendoes of that sort. This money is simply unemployment relief to Burmese oil workers, and it has had no effect at all, since they had to be dismissed in any case.

I do not think that the British Government really care very much about the fate of this company in Burma, or whether their action has helped or harmed the company. We in the last Parliament saw just what the Labour Party thought about many British industries. In fact, the more successful a British company in this country, the more clearly was it to be marked down for nationalisation or expropriation. I hope that we shall not hear from the Minister that this guarantee was in any way designed to help the company. There was no such motive in the Government's mind.

The figure of £1 million, as I have said, is largely made up of wages for the workers in the oilfields and at the refineries. I cannot agree, however, that the figure will not exceed £1 million. I think it is much more likely to be about £2 million when the final bill is rendered by the company. The fact is that, although the company were given instructions to carry out the dismissals when the British Government withdrew the guarantee, very few of the refinery workers could be dismissed because of the rather complicated procedure of the new industrial court in Burma. There is a rule in the industrial court procedure that when a reference has been made to that court, no employees may be dismissed, and therefore some 3,500 refinery workers have remained on the books of the company and continue to receive their weekly wages for doing no work whatsoever. That is a cost, of course, which will have to be met by the British taxpayer. It represents what I would call a terminal payment which may be of a very high order indeed, and may well amount to something like £500,000 before the industrial court reports on its findings and the company is then free to dismiss its redundant staff.

If the Burma Government and the people of Burma had known about this guarantee, we might surely have been entitled to expect that they would have hastened the procedure of the industrial court so as to avoid the British taxpayer being put to unnecessary expense. Hon. Members opposite may say that I am once again trying to impose conditions on an independent country; but I think that where the British taxpayers' money is concerned, we are entitled to get something in return for it, and we cannot idly stand by and see more and more of the money of the British taxpayer being poured out on vague unemployment relief in Burma without some attempt being made on the part of the Burma Government either to reduce the unnecessary idleness which is taking place or to find alternative employment for these men.

Of course, as things stand at present, it is in everyone's interest in Burma, except that of the Burmah Oil Company, to prolong and delay the proceedings in the industrial court, because the longer the proceedings take, the more money must be paid out in wages to employees who are not at work. That money, I submit, will have to be found out of this Vote. I know that the Minister, in reply to a Question of mine earlier this week, indicated that the guarantee would refer only to money expended during the period of the guarantee; but the Minister cannot possibly escape the terminal obligations, the consequences of withdrawing the guarantee, because those consequences are very much more severe now in 1950 than they would have been had the Burmah Oil Company been free to dismiss its staff early in 1949.

The fact is that the people of Burma have become much more conscious in the last few months of industrial court procedure, and have learned what a valuable weapon it is to them for extracting more money from foreign-owned companies, and, in this case, for extracting more money from the British Government. Had the Burmah Oil Company been able to dismiss its staff early in 1949, they would have been dismissed without the industrial court procedure being invoked, with all the expenses involved. This is proved because the company was, in fact, able to dismiss some 2,500 in August without such procedure being invoked when the modified joint venture scheme did not go through.

It is claimed, therefore, that the present cost of continuing to employ these people, or, rather, I should say, to pay them, must be a cost which in equity should be borne under the terms of this guarantee. When the Minister comes to reply, I should like him to state whether he has made any suggestion to the Burma Government that events might be hurried up in Burma so as to reduce the extent of these terminal payments; or would that he regarded by hon. Members opposite as an unwarrantable measure of interference in the internal affairs of an independent country, and are we just to witness the pouring out of money, month after month, while these proceedings in the industrial court go on wearily and unendingly?

I should like to ask the Minister what representations he has made to the Burma Government about the protection of the property of the Burmah Oil Company during the period of this guarantee. We have the situation in which the British taxpayer has had over £1 million of his money spent in paying the wages bill of the employees of this company and, at the same time as this was going on, of seeing the property and the assets of the company being steadily looted and plundered. It is said that the Burma Government have done their best. I wonder whether they have? It is significant that they have made practically no use of the British Military Mission. That is another expensive piece of aid we have given Burma in order that her troops might be more effectively trained and able to keep organised banditry in check.

The truth of the matter is that the British Labour Government do not really care very much about the Burmah Oil Company, or what happens to it. That is the only conclusion to which I can come, because the situation has been allowed to go from bad to worse. However, the money has been spent and the guarantee has been given—unfortunately without Parliament's knowledge. Nevertheless it is plain that Parliament will have to honour this guarantee.

Is there anything we can learn from this fiasco? Is there any way in which we can get something now out of the money which has been spent? Can any good come from this costly and wasteful expenditure? Possibly it can. I believe we can show we have learned a lesson. We can show that we have learned the conditions which must govern any future aid. I know that hon. Members opposite are touchy if any reference is made to conditions being attached to a loan. But why should there not be conditions? After all, the people of Burma are perfectly free to reject a loan if they do not like its conditions. There can be no question of imposing conditions. The other party has a perfectly free right to reject a loan, or to reject it if it dislikes the conditions.

Mr. Diamond

Is the hon. Gentleman referring to financial conditions exclusively, or possibly political conditions also?

Mr. Erroll

I am coming to the conditions I would suggest. What we have learned from the operation of this particular guarantee is that money spent in Burma is wasted until law and order are restored. It ought to be one of the conditions of any aid we may give that really energetic steps will be taken to secure the return of law and order throughout the country. I think it is agreed by most people that we can have a restoration of law and order only when there has been a full and satisfactory settlement of the Karen dispute.

Mr. Wyatt

On a point of Order. Are we not now discussing a specific loan to the Burmah Oil Company? Would it not be out of order to discuss a settlement between the Karens and the Burmese?

The Chairman

I think it would be out of order. As I understand it, we are discussing compensation payments.

Mr. Erroll

With respect, Major Milner, I agree that we are discussing this payment, but it is specifically stated that this compensation payment was to give the Government an opportunity of restoring law and order. That is stated on page 14 of the Supplementary Estimate in line 3 of the small type. I therefore think that I am in order to refer to the maintenance of law and order.

The Chairman

The money has been given. I do not think that is any justification for talking about the details of the present position.

Mr. Erroll

I understand fully the ruling you have given. I would have expected, however, that the hon. Member for Aston (Mr. Wyatt), who ranged very widely on a much narrower vote, might have accorded me the courtesy of allowing me to finish—

The Chairman

The hon. Member for Aston was perfectly entitled to draw the attention of the Chair to the hon. Gentleman's infraction of the rule, and I am obliged to him for doing so. The hon. Gentleman would also appear to be reflecting on the Chair.

Mr. R. A. Butler

With respect, Major Milner, law and order are specifically referred to as the reason for granting this money, and I suppose we can refer to the need for the restoration of law and order for the purpose of making that money a stable proposition.

The Chairman

In reply to the right hon. Gentleman I would point out that the question of Jaw and order is one of the past, and has been dealt with. I think, therefore, that it should not be a matter of present discussion.

Mr. Butler

My information goes to show that this grant is not necessarily limited to the sum included in the Supplementary Estimate, and in discussing that Estimate, are we not entitled to ask whether this is the last instalment to be paid to the Burmah Oil Company?

Mr. Ernest Davies

Notice of termination has been given of this guarantee, so no further liability can be incurred other than is provided for by the token payment.

Mr. Erroll

I had in no way intended to make any reflection on the Chair, Major Milner, when I addressed my remarks to the hon. Member for Aston and that hon. Gentleman knows perfectly well what I had in mind.

I regard it as regrettable that during the period of this guarantee, when it was operating, such ineffective steps were taken by the British Government to assist the Burmese Government in the restoration of law and order. The effect has been negligible. The expenditure of this money might have resulted in a great improvement in the internal situation of Burma had we only been willing to realise that, by giving this money as unemployment relief, we were surely entitled to say something about what should be done with it. We were surely entitled to insist to the full on the protection of British assets in that country and to insist upon proper protection from looting. We might well have said that we disapproved of the discriminatory treatment to which other companies were subjected. Had the guarantee been generally known to the people of Burma and of this country, it would have been easier to say these things, and we might have been able to carry a considerable measure of Burmese political opinion with us in this matter. Now an extremely difficult terminal position has resulted.

The guarantee may have terminated, but the payment has not, and His Majesty's Government cannot possibly escape from liability for this terminal payment. During the period of guarantee the British Government, had they had a mind to do so, could have enlisted more successfully the co-operation of the Burma Government in speeding up industrial disputes through the industrial court. As it is, this is going to be very costly to the British Government. They might also have taken the opportunity of offering a financial adviser to the Burma Government without any strings. That adviser would have been able to help in the proper application of any further aid which may be given to Burma in the future.

We all recognise, on both sides of the Committee, that Burma is in grave danger from within and without. We appreciate fully how easily Burma could become a centre of Communist infection in South-East Asia. We should help the Burmese Government to improve their position, to restore law and order and to settle the Karen dispute as soon as they can. I believe the lesson our Government have learned from the expenditure of this £1 million is that in future we must be quite firm in our lending policy and not be afraid to give advice and to make conditions at the same time.

6.0 p.m.

Mr. Diamond

I should like to congratulate the hon. Member for Altrincham and Sale (Mr. Erroll) for two reasons. First of all, he was good enough to make clear at the start of his speech that this Amendment had not been put down, as we in our ignorance might have assumed, to give the Opposition an opportunity to criticise either this Government or the administration of the Department, but that it was merely for the purpose of seeking further information. In that I join with the hon. Member. I am sure we are all glad to have information on a rather complex matter of this sort.

Mr. Erroll

It surprises me to learn that the hon. Member for Blackley (Mr. Diamond) should have forgotten the excellent lecture which he gave on Parliamentary procedure in Rangoon, in which he dealt, among other things, with the niceties of our Parliamentary procedure.

Mr. Diamond

It is obvious that anybody who would listen to me talking about Parliamentary procedure must be very ill-informed on that subject. I was therefore very glad indeed that the right hon. Member for Saffron Walden (Mr. R. A. Butler) took the opportunity in our last discussion of making it absolutely clear that in all quarters of the House we are united in our desire to give help and support and to act sympathetically towards Burma. I am glad there is no misunderstanding whatsoever that the Amendment was not put down to criticise the Government or the action of the Government of Burma.

My second reason for congratulating the hon. Member is because of the excellent speech he made on behalf of the Burmah Oil Company. As an accountant, I offer him my professional congratulations. No one could have done it better. He got all the terms right, including "terminal payments." No doubt, the Burmah Oil Company are very grateful to him for having put forward their case in such an excellent manner. He certainly carried out his duty with extreme care, treading delicately midway between the path of suggesting that we should not be careless with taxpayers' money and at the same time making it quite clear to my hon. Friend the Under-Secretary of State for Foreign Affairs that the Burmah Oil Company were not only going to ask for expenditure incurred under the guarantee but that they were also going to ask for payments which, he alleged, they had incurred after the guarantee period. I am sure he trod that path with great delicacy, considering his very substantial proportions.

I too should like information on this question of the guarantee, because I find it very difficult to form any clear idea of how this guarantee will be interpreted, having regard to the answer which my hon. Friend gave the hon. Member for Altrincham and Sale two days ago. He said: … His Majesty's Government invited the Burmah Oil Company and Associated Corn-panics to continue the work of rehabilitation for a period after 7th March. They agreed to guarantee the Company against any losses incurred during this period which were attributable to their response to His Majesty's Government's request."—[OFFICIAL REPORT, 21st March, 1950; Vol. 472, c. 110.] We have to consider losses incurred during a period when rehabilitation was continued. Rehabilitation was continued during the whole of this period of the guarantee. My information from responsible officers of the Burmah Oil Company at the Burma oil fields was that not a single man had been idle. At least, I hope they were responsible officers; I do not wish to tie the Burmah Oil Company in any way. The answer given by the cost accountant of that company to me as an accountant was clear and precise—not one penny had been charged to idle time. That means that everybody had been fruitfully occupied either in building up assets or in earning income.

This is a matter which gives one considerable doubt as to what the word "losses" means in relation to this rehabilitation. If the Burmah Oil Company at a future date re-establishes its business, as we all hope it will, and is able to supply oil, all the rehabilitation work which has been carried out during this period and which accounts for a large part, if not all, of this £1 million will be money well spent as far as the Burmah Oil Company is concerned. In that case the hon. Member will be quite wrong in his statement that under no circumstances should we misunderstand the position as being one in which the Burmah Oil Company has had any benefit at all from this transaction.

If that position does materialise, the Burmah Oil Company will have spent £1 million, taking this figure as the correct figure for the moment, on improving its assets. It will, therefore, have £1 million worth of improved assets and will have been refunded the whole cost by His Majesty's Government, and at no cost to itself. It will have bad £1 million worth of improved assets, in taxpayers' money with which the hon. Gentleman is so concerned. Therefore, my hon. Friend the Under-Secretary will help us all if he can give us any indication as to how this guarantee is to be interpreted.

I nevertheless feel that in terms of other than pure business terms this was a wise transaction, because it helped tremendously in keeping down industrial unrest, in helping to establish law and order, in giving the Government—a new and young Government which was struggling manfully with great difficulties—an opportunity of having some of those difficulties removed for the time being. Everyone was hopeful for the best of reasons that this liability, if it did mature, would not prove too great, and at all events the benefit from keeping down industrial unrest would be of service on all sides. For that reason I am glad that this guarantee was entered into, but I hope, with the hon. Member for Altrincham and Sale, that the taxpayers' point of view will be carefully considered in interpreting the terms and fixing the amount of the guarantee.

6.8 p.m.

Sir Harold Roper (Cornwall, North)

I am exceedingly fortunate, in addressing the Committee for the first time, to find myself speaking on a subject which is very near to my heart. I have lived many years in Burma, and I have long experience in the Burmah Oil Company.

The hon. Member for Aston (Mr. Wyatt) said there was a lack of interest taken by private enterprise in the welfare of Burma. I do not know whether he has been in the oilfields; if he had been in the oilfields before their demolition, I feel sure that he would not have said on the Floor of this Committee that private enterprise took no interest in the people of Burma. One great pride I have is that I had the privilege of leading a company in the East which has paid so much attention to the welfare of its workers in the last 20 years. I have also had experience in the Legislature of Burma and, as a former Member of the House of Representatives and of the Senate, I am particularly interested in this matter of procedure to which reference has been made. I am also interested to know that the hon. Member for Blackley (Mr. Diamond) has lectured in Burma on legislative procedure.

I have learned from past experience of procedure, not in this legislature but in the Burma legislature, that an Amendment proposing a cut in Supply is put down in order to raise a subject for discussion and not necessarily to oppose it. It would not he appropriate for me, in making my maiden speech, to dwell on the events which led up to the situation in which Burma finds herself today and in which the Burma Government are themselves unable to finance the loan to the Burmah Oil Company. The first approach made was between the Burma Government and the Burmah Oil Company. The Burma Government made the first suggestion of a joint arrangement and terms were agreed. The Burma Government were unable to find the finance, however. It was not until that point that His Majesty's Government intervened.

I will not go into the course of events which led up to the situation in which the Burma Government were unable to find their own finance. To do so would be to enter into the realms of controversy, which would be inappropriate in a maiden speech. My concern is for the future of Burma and the future of its people. I am still interested in their future and I am interested in stopping the spread of Communism into that part of the world. We have, therefore, to examine this item in the Supplementary Estimates both from the point of view of financial soundness and from the point of view of its value as an insurance in preventing the spread of Communism.

This Debate was preceded by a Debate on the rice position and it has been made clear in this Committee today that the rice industry is extremely important to the economy of Burma. If rice is the most important, then the oil industry certainly comes second. If help is to be given to Burma there is no better way of giving it than, first, by ensuring the success of the export trade of the rice industry and secondly the survival of the oil industry. The Burmah Oil Company was a good employer and there was none better in Burma. The oil industry of Burma is an immense asset to the country. May I make it clear that I am not in the Burmah Oil Company and I am not speaking for them; in stressing its importance, I am trying to bring before this Committee a point which it is essential that the Committee should understand in considering this matter of the guarantee.

The hon. Member for Aston dealt in some detail with the course of events leading up to this loan. It is important, in considering the Government's action in giving this guarantee, that we should realise that the oilfields in Burma are some 300 miles up-country. It is an industrial area and a semi-arid area where there is no alternative employment of any importance. It is a country which would be quite unable to sustain the addition of the large numbers of unemployed which would be thrust upon it if the Burmah Oil Company closed down.

The hon. Member for Blackley raised an important point about what would constitute the losses to the Burmah Oil Company in this rehabilitation. I trust that in his reply the Under-Secretary of State will make quite clear what is the Government's interpretation of this guarantee which they have given to the oil company—whether that guarantee is to be held for payment at some indefinite date when it may be possible to determine whether loss has actually been incurred. How long do the Government propose to wait before they decide this question, which is obviously fundamental to the giving of this guarantee? I trust that in his reply the Under-Secretary will make this clear.

The Estimate refers to the guarantee as being made pending other measures of financial assistance to the Government of Burma and I hope I may be allowed to say a few general words on the giving of such guarantees and loans to Burma. There is no doubt that unless someone helps Burma, the country will fall into complete anarchy. It may be asked, "Are we not throwing good money after bad?" When the Burmah Oil Company undertook this vast scheme of rehabilitation, they did so as an act of faith. There was no certainty that Burma would ever resume its normal condition. I do not accept a suggestion that we are throwing good money after bad. I maintain that we must not abandon hope. We cannot tell what will arise in Burma and what the position may be in the Far East.

As I see it, the tragedy of Burma is that, in gaining that last 5 per cent. of political freedom, she has lost other freedoms—freedom from violence, freedom from fear and, as the circumstances of this guarantee made clear, freedom from unemployment. In Burma it is the political aspect which draws public attention and which is apt to disguise the real wants of the people of the country which are to be allowed to carry on their business, to carry on the cultivation of their fields, and to carry on working in the oil industry without fear of molestation. What is referred to as public opinion in Burma is too often the opinion of the one who shouts the loudest. Let me give an illustration of this point. It will lead up to something I have to say in a moment.

At one time I found myself taking part in a discussion related to the future employment of European professors in Rangoon University. A leading Burmese member of the committee was constantly putting before us the argument that public opinion would not stand for it. At last another Burmese member of the committee, employed in Rangoon University, suddenly spoke up, and said, "I cannot sit here any longer and listen to what is referred to as public opinion. In the course of my duties every year I interview many hundreds of parents, of parents, of potential students and students of Rangoon University, and I am convinced that what the people of Burma want is a good education for their children." He went on—and this is the point—"What is referred to as public opinion is not public opinion at all, but is the opinion of a handful of the politically minded, with the backing of the Burmese Press." That was a most important remark from one Burman to his superior Burmans, and I trust that hon. Members opposite, when they visit Burma, and visit other countries in the Far East, will make quite sure that they get to the bottom of things. There is a danger for those who go to those countries that they go to just those people who have politics ingrained in them, and who often do not represent the true interests of the people.

The true interests of Burma at the present time are the restoration of law and order and, as is becoming increasingly realised amongst the Burmese people, the importation of foreign capital. I believe that the restoration of law and order is by far the more important, and particularly the ending of this most unfortunate civil war which is going on at the present time with the Karen people. It may be it is not for us to suggest how the Burma Government should tackle this question, but following up from my last argument, I ask that the Government consider this question of the continuation of strife between the Burma Government and the Karens. Can we not do something to bring about mediation?

It may be that there will be political objection from the other side, but following on what I have said, I believe that beneath the surface there will be a strong feeling in Burma in favour of patching up this trouble, and if the Gov- ernment could find any way. without offending Burmese susceptibilities, of suggesting a settlement of that trouble, they would make a great contribution, not merely to the wellbeing of the Burmese people, but towards going forward with this financial contribution.

I believe that the Government, generally speaking, are tackling this question on the right lines. There is no question of pouring money into Burma, unchecked as to its use. I agree with one Member who, in the last Debate, expressed the view that the responsibility for working out their own salvation must be left with the Burmese people themselves, and if we overdo the financing of their needs, we shall be defeating our own object. I believe that our help to Burma should be in the form of limited ad hoc aid. We must keep the door open.

The need in Burma is steadily growing and may continue to grow, and I can see the possibility of a situation developing in which the Burma Government may come to us with readiness to agree to terms which would be acceptable to both of us. So we must keep the door open, because I believe that it is in the association between ourselves and the Burmese, two free, independent peoples, in the forging of a new link between us that there lies the best hope for Burma, the best hope for the Burmese people, and the best hope of holding back Communism in that part of the world.

6.27 p.m.

Mr. Wyatt

It is a pleasure to me on behalf of the whole Committee to be able to congratulate the hon. Member for Cornwall, North (Sir H. Roper) on his maiden speech. It was, I am sure, wise of him to address us on a subject he knows very well; because the House and the Committee always appreciate speeches from people who have singular and peculiar experience of the subjects on which they address us. I should like to say straight away to the hon. Gentleman that I do not for one moment criticise the Burmah Oil Company.

I believe that the Burmah Oil Company was and probably still is one of the best employers in Burma, and it did conscientiously go out of its way to try to improve relations between the British and the Burmans; and improved the education and welfare facilities of its employees to a very considerable extent. I hope the hon. Gentleman will acquit me of thinking the company in some way reprehensible. I hope also he will acquit me of only getting my views from the violently politically minded in Burma. The main information I have on this particular topic comes from long talks I had with Mr. Lingeman, the Burmah Oil Company's representative in Rangoon when I was there and met him several times last year. I do not think the hon. Member would consider him to be someone motivated by political considerations.

I believe that there are two prime reasons why this guarantee had to 13e given and was rightly given to the Burmah Oil Company during the last few months. One, as my hon. Friend the Member for Blackley (Mr. Diamond) has already pointed out, was that it was vital at that time to do nothing which might make the Burma Government's problems on the law and order side more difficult than they were. If at that time a large number of the employees of the Company, through no fault of the Company, had been thrown out of work it would very much have exacerbated an already difficult political situation and might have made it unmanageable.

On that score alone, this guarantee was justified and fitted into the framework of our general policy in South-East Asia of trying to assist any new Government there. As the hon. Member for Cornwall, North, rightly said, we must not think that it is a hopeless task. It is not a hopeless task, and I think that over the last year there has been a substantial improvement in conditions as against what they were a year ago. It may be a long task and a difficult one, but it is certainly one that should not be given up.

There was, as I understand it, quite another reason for this guarantee and perhaps an even more important reason. It was that in Burma and in other countries in the East there is going to arise increasingly a conflict between local national feeling and foreign-owned industries which operate in those countries. As soon as a country approaches self-government, or acquires self-government, it begins to feel very strongly that it should own and operate at least some of the basic industries of that country. It was the case, I think, that the Burmah Oil Company had some very enlightened representatives on the spot in Rangoon, who felt very strongly that it would be possible to work out an arrangement with the Burma Government by which some new association could be developed which might even be a model for the whole of that part of the world.

It was with that in mind, I believe, that the British Government said, "Let us have a look at this scheme you are trying to work out. While we are looking at it, please try to keep the work on the oilfields going, and we will give you a guarantee that we will make up your losses during that period, while we consider the wisdom or otherwise of applying the wider scheme which both the Burma Government and the Burmah Oil Company are considering."

I do not want to reveal any details of this scheme because I believe that it has not yet been made public, other than to say that the central idea was that over a period of years the Burma Government would acquire a part-share in that section of the Burmah Oil Company operating in Burma, and that it would gradually learn some of the "know how" and the business side of producing oil and marketing it, and of operating oil companies, which would be of enormous benefit to the Burmans themselves, and also of enormous benefit in promoting good relations between Britain and Burma.

I think that the way in which the Burmah Oil Company handled this matter showed that they were acting with the best possible motives and were doing a great service to both countries, and we certainly have no complaint on this side of the House of the operations of the Burmah Oil Company. Several hon. Members have already pointed out it is absolutely essential to such a scheme, if it is to operate in the future, that there should be some law and order, and during all this time it is quite true that the oilpipe line has been cut off and it has not been possible to get ahead with the re-opening of the oil fields to anything like the extent that was originally desired. So I think that although it is a pity that the British Government have now had to withdraw this guarantee, and it is a pity that both the British Government and the Burmah Oil Company had, at any rate, for the time being to abandon the wider scheme, it was really forced upon them by a number of factors.

One is, of course, that we were substituting for special assistance to the Burmah Oil Company through the Burma Government a general Commonwealth plan for assistance; and the second is that although the Burma Government have been considerably strengthened vis-à-vis the disruptive elements during the last year, the oil pipeline is still not operating; and the third point is that the Burma Government are now in a better position to deal with any labour difficulties that may arise than they were a year ago. On these grounds it is reasonable to put the wider scheme into cold storage.

I think that it was wrong of the hon. Member for Altrincham and Sale (Mr. Erroll) to say that the British Government do not care about the Burmah Oil Company, as he very emphatically stated. I am sorry that he said that. The rest of his speech indicated that he realised that we were not standing any nonsense on this side of the House on these subjects, and consequently he very much tempered his observations. I think that it was a pity he did suggest that because as far as I know the relations between the British Government and the Burmah Oil Company have been of the friendliest and both have been working towards the same very good end.

I agree with him on this point, however. Whereas it is obviously wrong to try to impose political conditions on another country when offering it a loan of the kind he was suggesting in his earlier speech, when he suggested that they should abandon certain practices of having a State marketing board or bulk buying or anything of that kind, I think it is perfectly right that we should point out to the Burma Government that this rather strange system of settling industrial disputes should be hastened so far as this matter is concerned. As he rightly said, we had been "carrying the can" for the last nine months or more, and there is no reason why we should have to do so longer. I am sure that the Burma Government would listen to representations of that kind which are perfectly reasonable.

As to why we have not heard about this guarantee before, I was under the impression that the general reason was that it had been agreed by all three parties—the British Government, the Burma Government and the Burmah Oil Company—that none of these negotiations should be made public until the final decision had been reached, because there was a tricky political situation in Burma and a very complicated series of negotiations to go through, and it was not desirable to focus publicity, particularly in Burma, at that time on the negotiations going on. The Government of Burma was having some difficulty in persuading its followers that it was wise to co-operate with foreign industrial interests. I think that on the whole the British Government was right. It was not the intention to keep this secret from the House of Commons for the sake of doing so, and there is nothing sinister in that we have not heard about this guarantee before.

I am sure that no one would go to elaborate pains in keeping secret a matter of £1 million which, although considerable, is infinitesimal compared with the Budget itself, and obviously we must be prepared to accept that the Government had very good reason for not making the guarantee known earlier. We on this side of the House were glad to register the rather more temperate spirit with which the hon. Member for Altrincham and Sale approached his second topic for Debate, and I was glad that he did not want to make any complaint about the Government advancing money towards a private enterprise concern and that he wanted to reserve his complaint for money advanced towards State-owned concerns. That is an ideological difference which I can understand coming from him. In general, I am sure the Government have acted wisely in this matter, and I am sure that the Burmah Oil Company have too, and that all three parties in this matter have done their best to help in bringing about law and order.

I should like to make a special plea, because I think that the wider oil scheme has in it the germ of an idea which could be adopted by many other countries in the East, that this scheme be reconsidered as soon as law and order is sufficiently obtained in Burma to allow the pipeline to be re-opened.

6.40 p.m.

Mr. Gammans

The only comment I will make on the speech of the hon. Member for Aston (Mr. Wyatt) is on that portion of it in which he said that the hope of the loan was to keep the oilfields going. If that is the justification for this expenditure, the policy has failed, because the oilfields have not been kept going; not a trickle of oil has come through the pipeline; no work is going on at the refineries, and the only way one can get to the oilfields today is by means of an air-lift. So the policy has failed. But we are not only being asked to pass a Supplementary Estimate. We are also being asked to approve the policy of His Majesty's Government towards Burma generally in the restoration of law and order. Indeed, we are asked to do more than that, because there is reference in this statement to Pending other measures of financial assistance. Our contention is that His Majesty's Government's policy towards Burma has not only been a failure with regard to Burma oil, but has been a failure generally. It has obviously meant considerable financial loss to the taxpayers of this country; it has meant a tragic fiasco for the people of Burma; and it may be one of the main causes of a potential large-scale tragedy for South-East Asia. I do not think that anyone can accuse us of any lack of generosity towards Burma. As the Foreign Secretary told us yesterday, since 1945, in one form or another over £70 million has been advanced or spent by the British taxpayer towards Burma. I need not remind the Committee of the many thousands of British graves in Burma. Today, we have over £100 million worth of British assets in Burma, most of which I think are in jeopardy.

We have criticised His Majesty's Government's policy towards Burma in three respects. To start with, we did not in any way differ from them on the ultimate attainment of self-government by Burma; there was no quarrel on that point. But we did vote against the Second Reading of the Government of Burma Act, because we felt that there were adequate reasons for us doing so. Those reasons were as follows. We thought it was wrong that this country, which had a responsibility towards the people of Burma, should hand the country over in a state of chaos and anarchy. We see that chaos and anarchy continuing today, and it is referred to in this Supplementary Estimate. The second reason why we opposed the Government was that we did not take at its face value the Panglong Agreement alleged to have been made between the Burmese and non-Burmese people.

The Chairman

I cannot conceive that these matters have any reference to this particular compensation payment, and I therefore hope that the hon. Gentleman will not pursue that line of argument.

Mr. Gammans

I naturally will not do so if you rule me out of Order, Major Milner, but, with respect, I would point out that we are considering the restoration of law and order; and we are also considering a token Vote which suggests that other measures of financial support to the Government of Burma are pending. I would therefore submit that we are entitled to make a general criticism of His Majesty's Government's policy towards Burma where it concerns the question of law and order.

The Chairman

I am sorry, but I cannot agree to a general debate at all. Even if other measures of financial assistance are pending, we cannot deal with them now because they are not before us at the moment. Nor can we deal with the question of the opportunity to restore law and order, which presumably has already passed. The sole question is the ground on which the Government have thought fit to make this compensation payment, and I certainly cannot agree to the whole policy towards Burma being gone into on detail upon this Supplementary Estimate.

Mr. Gammans

But, with respect, are we not entitled, where we have an item which says: Pending other measures of financial assistance"—

The Chairman

When that question of financial assistance comes before the House, that will be the time to discuss it. This is not the time.

Mr. Erroll

On a point of Order. Surely one of the objects of the compensation payment is to give the Government of Burma an opportunity to restore law and order. The sentence beginning in the second line is one of the objects of the compensation payment, and is not influenced by the subordinate clause which precedes it.

Mr. Ernest Davies

This compensation payment for which a token Vote is being asked is for a period which has already expired. Therefore, the question of restoring law and order does not come into this, and is in respect of a period during which an attempt was made to restore law and order.

Mr. Dodds-Parker (Banbury)

The whole need for this compensation arose from the fact that there was no law and order because of the relations between the Government of Burma and these other peoples, such as the Karens.

Mr. Gammans

I do not want to go back too far, but I hope, Major Milner, you will allow me to say just this. From what we have seen of His Majesty's Government's policy towards Burma, there was no real safeguard for British interests in that country, and we see here, in the case of the Burmah Oil Company, an example of that. I think that we ought to have some soil of statement from the Government about the present condition of Burma itself, because my information is that the present Government of Burma is wholly unable to maintain law and order, or to put down the dacoits who are ravaging a large part of the country.

So far as I know, there is no traffic on the railways between Rangoon and Mandalay; it is impossible even for there to be river traffic; and the only way to the oilfield is by an air-lift. In other words, it is as if in this country His Majesty's Government could only maintain itself in London, the suburbs of London, the Thames Estuary and Manchester, and that the only contact between London and Manchester were by air; and that all Scotsmen, both at home and in England, were in revolt, with the Welsh in the same position. I think that is a fair analogy with the position in Burma today. My information is that the Government of Burma do not control one-sixth of the country.

The Chairman

I am sorry to interrupt the hon. Member again, but he really cannot drag in the whole of His Majesty's Government's policy towards Burma for which country, in any event they are not responsible. He must make his remarks appropriate to the particular item. I must ask the hon. Gentleman to confine himself to the question raised by this token Estimate. That is whether it is proper or improper to make a grant to the Burmah Oil Company, which has already apparently been made, for the purpose of stimulating employment, to give the Government of Burma an opportunity to restore law and order. That is the only question.

Mr. Gammans

That is exactly my point, that they have failed to restore law and order, and I am endeavouring to give the Committee proof that that is so. I hope I may be entitled to point out to the Committee that there is no law and order over a large part of Burma; that the writ of the Government of Burma does not run, except in the large towns; and that therefore this money which has been advanced for that specific purpose has very largely been wasted. Would you rule on that, Major Milner?

The Chairman

I must not be tied down, but if the hon. Gentleman will put the matter somewhat in that form, he may be in order. Hitherto he has not done so.

Mr. Wyatt

Would it be in order if the hon. Member were to try to show that this compensation should not be paid to the Burmah Oil Company?

The Chairman

Yes, I think it would.

Mr. Gammans

If only for obtaining that concession, I am grateful to the hon. Member for Aston.

My other point is shortly this—and I hope this will be in order—that the Government of Burma have failed to allow British interests to maintain themselves in the country. Perhaps here I might quote a speech of the British Ambassador in Rangoon reported in "The Times" on 23rd February, in which he said: So far little has been done to implement the Government's declared policy in regard to industry and capital.

The Chairman

I am sorry, but I really cannot allow this line of argument. I have re-read the note and the matter is perfectly clear. The United Kingdom Government are guaranteeing the Burmah Oil Company against loss. That is the point to which the hon. Gentleman must address himself. The question is not one of the general condition of Burma, but the grounds on which the Government have thought it proper to guarantee the Burmah Oil Company. The hon. Gentleman must relate his remarks to that

Mr. Gammans

I will conclude then, by saying that this loan has been a failure. It has been a failure because it has failed to effect the purpose set out in the Supplementary Estimate. It is quite obvious that politically Burma is in a state of semi-dissolution, and that we shall be very lucky if the country exists at all as an independent land within the next two or three years. The policy has failed economically, because we have seen Burma, which before the war not only fed itself but was able to look after, with food, oil and raw materials, a large part of South-East Asia, rapidly relapsing into a bullock-cart civilisation. For that reason, the policy of the Government in regard to this particular loan has been a failure. I should like to have suggested, if it had been in order, the conditions which should attach to any future loans that are advanced, because the time has come when the British taxpayer can no longer be asked to pour money into the sieve of Burma.

6.52 p.m.

Mr. R. A. Butler

I think the time has come when we can draw this discussion to a conclusion. I do not think my hon.,Friends will wish to press this matter any further, and we should like to have a few words from the Under-Secretary. I do not propose to add very much to this Debate, except to endorse the excellent maiden speech made by my hon. Friend the Member for Cornwall, North (Sir H. Roper). He has spent a most useful life in Burma, and his excellent services in the war in denying some of these very services to the enemy are well known to the Committee. He has enhanced an already distinguished reputation in the contribution he has made today.

I had wished to develop this matter rather more fully, but I understand the Ruling of the Chair, is to the opposite effect. I would remind the Committee that we are dealing here with a company that has a first-class record in Burma. In the inter-war period, the production was averaging 18,000 barrels of oil a day, and in the year 1939–40 the export of oil alone from Burma was valued at over £10 million. That is the past glory of the Burmah Oil Company. The present situation is absolutely tragic, both from the point of view of world oil production and from the point of view of the situation in Burma itself.

In view of the Ruling which has been given, I shall confine my remarks to this one point, and that is that the position today in Burma and during the currency of this agreement is one which causes my hon. Friends the utmost anxiety. It is a situation to which the Under-Secretary should address himself. As my hon. Friend the Member for Hornsey (Mr. Gammans) has said, however honourable the motive in giving aid to the Burmah Oil Company in assisting employment, it is of no value because the circumstances are such that full and proper advantage cannot be taken of the loan.

I appeal to the Government, in regard to the granting of money which has been made and in regard to their future policy, so to conduct their attitude towards Burma, in company with the Commonwealth countries, that law and order, to which reference is made in this Supplementary Estimate, is re-established, and so that future aid we give, either from the British taxpayer or other sources, may be spent to the best possible advantage. It would be very wrong to allow these Estimates to pass without expressing the great anxiety we feel about the internal situation in the country, despite the aid of the Government and many other high-minded people to improve the situation.

6.56 p.m.

Mr. Ernest Davies

I wish to endorse the closing remarks of the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler). The purpose of this guarantee was to assist in the restoration of law and order in Burma, or at least to prevent the position, if that were possible, from deteriorating through the discharge of large numbers of men from the Burmah Oil Company. The Government are very concerned about the position in Burma, but are satisfied that there has been some improvement during the last 10 months. Any assistance which can be given by this Government, in co-operation with the Commonwealth, will be given. As evidence of that is the loan to which reference has been made, and in regard to which a further statement will be made in the near future.

I think that the hon. Member for Altrincham and Sale (Mr. Erroll) was a little less than fair to the Government when he referred to our assistance to the Burmah Oil Company. He said that the Labour Government did not care about the Burmah Oil Company and that we had allowed the position to go from bad to worse. One of the main reasons why this guarantee was given was to enable this very important British interest to be protected, if it were possible to do so. If conditions had improved during the period of guarantee, this important British interest would have been maintained.

The tragedy, and I endorse the word used, is that the oilfields are at present producing an extremely small quantity of oil, as a large section of the pipeline is still cut by those opposed to the Government. As the hon. Member for Hornsey (Mr. Gammans) said, the oil cannot flow down to Rangoon. The purpose of the guarantee was to put off the labour discharges that were threatened by the Burmah Oil Company. It was because it was considered that there would be a serious deterioration in the position if these discharges were made at that time, and because it was thought that it would prejudice any decisions that were to be made on any further proposals, such as that put forward by the Burma Government for acquiring a share in the oil industry in return for a large loan with which they approached the company, that this guarantee was given.

There was a risk taken at the time that law and order would not be restored, and that it would not be possible to bring about the rehabilitation of the oilfields. As it has turned out, the rehabilitation of the oilfields has not been possible. During the period of this guarantee, of which notice of termination was given at the end of last year, labour was employed and considerable work was done in reconstructing the refinery near Rangoon. Some of this work is not wasted. There are some assets there, but it would be a mistake to exaggerate their value as a result of the expenditure of this money.

I think Members will appreciate that the risk was one worth taking at the time. It appeared that there was a possibility at that time of law and order being restored, and the oil industry being got going again. That has not been possible, to the regret of His Majesty's Government. I can quite understand the criticism that has come from some Members in regard to the failure to inform Parliament of this guarantee.

There are extenuating circumstances, however, why the information was kept from Parliament. It was considered that any announcement of this, guarantee at that time would have encouraged disastrously undue speculation in Burma and at home about the Government's future policy in respect of the oil industry. At the same time it might have diminished Burma's own efforts to restore law and order.

In other words, if this guarantee had been announced, it was thought that it would indicate to Burma and the Burmese that far greater assistance was forthcoming than actually was contemplated at that time. It might have prejudiced consideration of future Commonwealth loans and oil ventures to which reference has been made. That was the main reason why Parliament was not informed at the time. It was considered preferable to decide on a Commonwealth loan prior to making an announcement in regard to this guarantee.

I would point out to the Committee that the Burma Government themselves were not informed of the guarantee at the time, and, because of that, conditions certainly could not have been imposed on the Burma Government such as those suggested by the hon. Member for Altrincham and Sale. He should realise that this assistance was to the Company and was not to the Burma Government. It was the company which received the guarantee, of which the Burma Government was not aware, and, therefore, it was not possible to say to that Government, "You must do this or that because we are making this guarantee." They are entirely separate entities and cannot be related; but at the same time, in defence of the Burma Government during this period, it should be stated that energetic steps were taken to restore law and order. As I have stated, the military position is, in our view, somewhat improved.

Reference has been made to the terminal payments which will have to be made in one form or another by the Burmah Oil Company. The position is that the company have not been able to carry out their full programme of discharges, since the issue of retrenchment of labour has been referred to the industrial courts because those courts had intervened. Whether this labour can be discharged or not is before the industrial courts, and the Burmah Oil Company have to keep these men in their employment.

The Government do not consider that they can decide at this particular moment whether there will be a liability on the part of His Majesty's Government to meet these terminal payments. We prefer to leave that to the experts to decide, but we take the point of view that it is not possible for this matter to go on indefinitely. We cannot be subject to an indefinite continuing liability on account of the refusal of the industrial courts to allow these men to be dismissed. We have made representations to the Burma Government for this matter to be solved as quickly as possible in view of our liability. We do not admit liability for these terminal payments, and we seek an early decision on that matter. We are hopeful it will be forthcoming in the not very distant future. It might be pointed out that these terminal payments would presumably have been paid by the Burmah Oil Company whether there had been a guarantee or not.

Mr. Erroll

That is the whole point. A year ago there would not have been an industrial court arbitration, and during 1949 the company were able to dismiss 2,000 men without the excessive terminal payments. The terminal payments only arose because the company operated the guarantee given by His Majesty's Government.

Mr. Davies

That just depends on the date the Burmah Oil Company would have discharged these men had the guarantee not been given. They postponed any discharges contemplated until 7th March, 1949, when our guarantee came in. In other words, in November they proposed to close down on a care and maintenance basis. In practice this did not take place.

I do not think I need deal at any further length with this matter. The guarantee was given after the Burmah Oil Company had spent £6½ million on rehabilitation. We consider that, that money having been spent, and the Burmah Oil Company being such a valuable British asset, it was well worth while to make a guarantee in the hope that we could keep the company operating in Burma, enabling it to rehabilitate itself, and that it would continue to be a valuable investment for this country. We risked in the event possibly something over £1 million to save that £6½ million and other assets. For the moment, it appears that the £1 million will have to be met out of the taxpayers' money. Some of it remains the property of the Burmah Oil Company, but for the most part the taxpayer will have to meet the bill. We make no defence of doing that, because we consider it was in the circumstances fully justified. Therefore, I would urge the hon. Member for Altrincham and Sale to consider withdrawing his Amendment to reduce the Vote.

Mr. Erroll

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Original Question put, and agreed to.

Resolved: That a Supplementary sum, not exceeding £1,010,355, be granted to His Majesty, to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1950, for the expenses in connection with His Majesty's Embassies, Missions and Consular Establishments abroad; certain special grants and payments, including grants in aid; and sundry other services.