IMMUNITIES AND PRIVILEGES (INTERNATIONAL FINANCE CORPORATION) (Hansard, 7 December 1955)

§ Mr. A. G. Bottomley (Rochester and Chatham)
This Order arises from Article VI of the Articles of Agreement of the International Finance Corporation, which Articles, and the Explanatory Memorandum, were presented to the House last June. I assume there is nothing in the Order that could be construed as freeing the Corporation's funds from the general exchange control restrictions. If I am not right in my assumption, perhaps someone in the Government—the Economic Secretary or the Financial Secretary—will so inform me. Contrasting the Order with that Article VI, it appears that some things are left out of the Order. For instance, Section 7 of Article VI seems to be missing from the Order, and so do paragraphs (ii) and (iii) 511 of the three paragraphs of Section 8 of the Article. There may be a good reason for that, but the House would like an explanation.
The view has often before been expressed in this House that there is a danger in having in our country too many representatives who have diplomatic and international immunities and privileges because of the offices they hold. I speak as one who has had a good deal to do with the diplomatic service because of Ministerial posts I have held in the past. I have always found that diplomatic representatives, because of their training, can be relied upon to do the right thing. I recall riding in his car with the former Burmese Ambassador to this country, who is now in Moscow, on an occasion when he was late for a meeting. His driver suggested he should exceed the speed limit. The Ambassador replied, "No. no. It is because we have these privileges that we must not abuse them."
However, I think I speak for Members on both sides of the House when I say that we can give to representatives from overseas too much freedom in this respect. The law should apply as fully as possible to all, whether citizens of this country or from overseas. I think I speak for all hon. Members on both sides in saying that we would not wish to be any less hospitable or considerate than those in other lands, but—and it will not detract from the diplomatic services when I say this—we should like to see an end of this development by which these privileges are continually given in consequence of one international body after another being set up. The Economic Secretary has arrived, and I hope he has gathered these few remarks of mine and also sufficient information to be able to answer them. If I can have an answer, I shall be very pleased.

§ Captain J. A. L. Duncan (South Angus)
I, too, would like to say a word rather on the same lines as the right hon. Member for Rochester and Chatham (Mr. Bottomley). I, too, have noticed Sections 8 and 9 of the Order. I suppose the reason for the Order, apart from the Act passed this year, is that the headquarters of this organisation are to be in London. If that is not so, I do not see the point of having all these immunities.
512 The second point is, why should this Corporation have immunity under this Order? Why should it not be treated as an ordinary diplomatic body—its people are being treated as diplomats hereunder the ordinary diplomatic immunity arrangements of the Foreign Office, instead of being in a special list of immune persons under the Treasury? It seems untidy, to say the least, if not unfortunate, that we now have a special list of diplomatic immunities and privileges for a finance corporation under the Treasury, while for everybody else the immunities, etc., are under the Foreign Office. We therefore have two Government Departments looking after the same thing.
Here is another bunch of people getting immunities and privileges which the rest of us do not get—governors, directors, alternates, officers and employees of the Corporation—and who are to be immune … with respect to acts performed by them in their official capacity. The right hon. Gentleman referred to a motor car incident in which an Ambassador played the game, but many other people may not play the game. There is a vastly increased Diplomatic Corps in this country—I am not complaining about that—and the ordinary people do not like this vast extension of privilege and want to restrict it as far as possible.
Section 9 (b) says: No tax shall be levied on or in respect of salaries and emoluments paid by the Corporation to Directors, Alternates, officials or employees of the Corporation who are not local citizens, local subjects, or other local nationals. This raises a question which has given us a great deal of trouble in the past, particularly with international organisations where the scale of salaries has been—to put it briefly—on the American level instead of on the British level. British employees of these organisations abroad are having a wonderful time because they are paid tax-free on the American level. I want to know whether this Finance Corporation is to be here and whether the scale is to be on the American level. If so, it will be of considerable interest to British subjects who, because they are on the lower scale, will have to pay tax on their emoluments. Is the scale to be British, American or French? We need to get a clear picture of the situation.

§ The Economic Secretary to the Treasury (Sir Edward Boyle)
I must apologise to the House for being late for class, and for the unintentional discourtesy which I committed. Let me answer the points which have just been raised by my hon. and gallant Friend the Member for South Angus (Captain Duncan).
The Sections which he read out exempt from Income Tax the salaries of the Corporation officials, provided they are not local nationals. Therefore, officials who are citizens of the United Kingdom and Colonies will not be entitled to the exemption in this country, and this which is narrower than in the case of a number of other international organisations. For instance, the officials of the United Nations are exempt from United Kingdom Income Tax on their salaries, irrespective of their nationality. I therefore do not think that this exemption is quite as wide as my hon. and gallant Friend thought.
He asked why the Order in Council was needed at all. It has been drafted, in form and in substance, to correspond as closely as possible with the Bretton Woods Agreements Order, which provided for the privileges and immunities of the International Bank, of which the Corporation is an affiliate, and I think it only reasonable for the Order in Council to correspond as closely as possible to that Order. When we debated the Bill earlier this year, I explained exactly the procedure we had to go through in order that the United Kingdom could become a member of the Corporation.
The right hon. Gentleman the Member for Rochester and Chatham (Mr. Bottomley) asked—I think just before I came in—about Article VI and why certain Sections were omitted. I understand that those Sections may be dealt with by administrative action and do not need legislation—even delegated legislation of this House.
In reply to one other point put by my hon. and gallant Friend the Member for South Angus, there is no question of the 514 International Finance Corporation having a headquarters in London. It is an affiliate of the International Bank on the other side of the Atlantic. As a matter of fact, the extension of these privileges and immunities to the Corporation is not likely to have much practical effect in this country. As I said in July last, the Corporation's activities will be concentrated in the under-developed territories and it is, in practice, unlikely to make any loans to any enterprises in the United Kingdom.
Before I conclude, Mr. Speaker, I should like to say just two things—and pehaps you will not rule me out of order if I do so. First, I am sure that the House will be glad to know that the United States, which will subscribe 35 per cent. of the capital of the Corporation, completed acceptance last Monday. It may be expected that many other countries will follow suit in the near future, so the Corporation should be able to make a start soon.
The second point is that I was present at the International Bank and International Monetary Fund Conference in Istanbul in September, when we spent a morning discussing the work of the Corporation, and Mr. Garner read a very interesting address. I can assure the House that the noble Lord, Lord Harcourt, who is our representative on the Bank and Fund in the United States, took a keen interest in our proceedings last July, and told me that he had read the full report of our debates in HANSARD. He is deeply interested in what hon. Members have to say about the Corporation.