§ Mr. Jay
I beg to move, in page 1, line 19, to leave out from "include" to "power".
This Amendment proposes to omit from the Bill the words by which the Board of Trade is attempting to legalise in retrospect its past illegal activities which were discussed on Second Reading. Again, we have not put down the Amendment because we wish to see the Minister of State languishing in the dock at the Old Bailey, or anything of that kind. We put it down in order to give the right hon. Gentleman the chance that he was rather reluctant to take on Second Reading of saying to the Committee that the Board of Trade has noted the rebuke administered to it by the Public Accounts Committee and is taking steps to comply with the really quite mild but, I think, quite reasonable request of the Public Accounts Committee that such irregularities should not be repeated.
The Minister produced a rather extraordinary argument on Second Reading to the effect that Her Majesty's subjects are entitled to disregard the laws if they choose to think that the laws were passed in defective form. I hope that the right hon. and learned Gentleman has since reconsidered that argument, because it seems to me an injudicious one either for a lawyer or a Member of Parliament to advance. Without repeating the whole rather sad story over again, I would say 846 that the Board of Trade did, in the case of the Pakistan transaction, advance £2,790,000 of public money out of the Consolidated Fund without legal authority. The Public Accounts Committee—not I—described that as irregular and disturbing.
I think that the incident, though serious in its way, could be forgiven by Parliament, provided that the Minister said that he regretted it and that it was not likely to be repeated. The reason we raise the matter again is that in our Second Reading proceedings the Minister preferred to treat the whole affair, including the Public Accounts Committee, almost as though it were a joke.
The Minister described the word "irregularity" as being extravagant. For him to come to the House and to describe the Select Committee of Public Accounts as extravagant was rather light-headed or at any rate light-hearted language. All we are asking the Minister to do today is to say that he does take the Select Committee of Public Accounts seriously, and that the Board of Trade will comply with the request that it has made.
There has been a certain tendency on the part of the Government lately, particularly of the Board of Trade, not merely to make innumerable mistakes but to refuse to apologise or express any regret for them afterwards. I should like to remind the Minister that the Select Committee said:They"—that is, the Committee—hope that all possible steps will be taken to guard against recurrence of such irregularities.It is, therefore, not quite enough for the right hon. and learned Gentleman to say that by the very act of bringing forward this Bill, and this Clause, which I agree is the proper thing for him to do in the circumstances, he has thereby complied with that request. The Committee did not simply say that legal steps should be taken to get over this difficulty. It referred to "such irregularities", and I think it will be agreed that that clearly means irregularities not of this identical kind but other irregularities of this type which might occur in the advancing of moneys out of the Consolidated Fund.
I do not think that it would cost the Minister anything to tell us that his 847 Department has taken note of that. I am sure that he will accept Ministerial responsibility for it, especially as he was not there when it occurred—perhaps he was, because he has moved to and fro between Departments. I hope that he will not—as he seemed slightly inclined to do on Second Reading—throw the responsibility on to the civil servants of the Department. It is a matter of Ministerial responsibility, and we should like to know that the remarks of the Select Committee of Public Accounts have been noted.
§ Mr. Walker-Smith
I assure the Committee and the right hon. Gentleman immediately that nothing that I said on Second Reading was intended in any way to treat this matter lightly and certainly not, as the right hon. Gentleman has just said, almost as a joke. If I went into the matter in insufficient detail for the right hon. Gentleman on that occasion, and for the convenience of the House, I am sorry. I will therefore take a few minutes of the time of the Committee now by making good what I did not say then and putting this matter in its full perspective so that it may be entirely clear where blame lies in so far as blame there is.
As I indicated on Second Reading, in columns 406 and 407 of the OFFICIAL REPORT, there are three forms of procedure with which we are concerned in this context: the statutory procedure under the 1949 Act; the legally defective procedure, as it was ultimately discovered to be; and the revised procedure, which counsel suggested would cure the defects of the legally defective procedure. Perhaps I may indicate the course of events in the pattern of that context.
In March, 1954, there was entered into the Pakistan Agreement under what subsequently became the defective procedure. In August, 1954, the Export Credits Guarantee Department received legal advice that sufficient doubt existed whether the Agreement was in fact ultra vires to justify the continuance of existing schemes; but in October, 1954, counsel advised that the Agreement was legally defective, and suggested the revised procedure.
In March, 1955, the Iran Agreement was entered into as a new Agreement on the basis of the revised procedure; but the Pakistan Agreement, which had been 848 concluded under the defective procedure before the receipt of counsel's advice, was continued on the basis of the defective procedure until July, 1955. In July, 1955, the issues out of the Consolidated Fund were suspended in respect of the Pakistan Agreement until that Agreement was in effect varied to the revised procedure. During the period August to December, 1955, the revised procedure was introduced into the Pakistan Agreement by an exchange of letters with the Pakistan High Commissioner and then, on the conclusion of that, in December, 1955, the issue out of the Consolidated Fund was resumed.
The points that now arise are these. First, there was the failure of the Export Credits Guarantee Department to acquaint the Treasury with the position in the autumn of 1954 on receipt of counsel's opinion, and in respect of that the spokesman acknowledged error, as will be seen by reference to page 458 of the proceedings of the Select Committee of Public Accounts. He said:… in retrospect I admit that it would have been better if we had made this situation fully known to the Treasury.That was a frank statement, and I have no desire to resile in any way from it; but that is something which is now concluded and not, as I see it, relevant to the Amendment.
The other point which is relevant to the Amendment is the major point. Payments were made out of the Consolidated Fund for purchases under an agreement which was in fact ultra vires. Paragraph 46 of the Report of the proceedings of the Select Committee of Public Accounts says:Issues from the Consolidated Fund totalling £2,790,000 had been made in 1954–55 for purchases under this agreement which, at the time, were ultra vires.That is the Pakistan Agreement; but, of course, that was not the only Agreement made under the defective procedure and under which payments were made out of the Consolidated Fund. Agreements which are ultra vires do not become ultra vires only when counsel advises that they are.
§ Mr. Jay indicated assent.
§ Mr. Walker-Smith
I am glad that the right hon. Gentleman accepts that. Such agreements are ultra vires ab initio from 849 the time they were made. Therefore, as the right hon. Gentleman will appreciate, it becomes material to inquire what other Agreements were initiated under the defective procedure and in respect of which payments were made ultra vires from the Consolidated Fund. It is those Agreements, and not only the Pakistan Agreement, which are being validated by the retrospective provision of the Clause which the right hon. Gentleman's Amendment seeks to omit.
The right hon. Gentleman talked about irregularities of this type and indicated that what the Select Committee on Public Accounts criticised might not apply only to the Pakistan Agreement. That is quite true, and I would invite his attention to these Agreements in particular, because I think that they will be of special interest to him: December, 1949, the Agreement with Yugoslavia under the old defective procedure; the President of the Board of Trade at that time was his right hon. Friend the Member for Huyton (Mr. H. Wilson), the right hon. Gentleman himself holding office in the Treasury as Economic Secretary. Next, also in December, 1949, the Agreement with Iraq under the old defective procedure; the President of the Board of Trade was the right hon. Gentleman the Member for Huyton, the right hon. Gentleman himself then being Economic Secretary.
Then, in December, 1950, was the Agreement with Yugoslavia, still under the same old defective procedure; the same President of the Board of Trade, but a change in the position of the right hon. Gentleman, he by then being Financial Secretary to the Treasury and right at the heart of the citadel of the nation's finances. In January, 1951, there was a further defective agreement with Yugoslavia; still the same President of the Board of Trade, and still the right hon. Gentleman as Financial Secretary. I have nearly finished. In May, 1951, there was a further defective agreement with Yugoslavia; a new President of the Board of Trade—because the then Labour Government had succumbed to one of their traditional splits, and the right hon. Member for Huyton had been superseded by the right hon. and learned Member for St. Helens (Sir H. Shawcross). The right hon. Gentleman was still Financial Secretary.
850 Five defective agreements were entered into by the right hon. Gentleman's Government. I hope that he will attend to this matter, because he asked me specifically to particularise about what had happened and criticised me for my restraint during the Second Reading debate. The Labour Government entered into five agreements—all of them defective. Matters then followed the normal pattern, because it was left to the Conservative Government to discover the mistakes of the Labour Government and to set them right. Does the right hon. Gentleman contest the fact that all the agreements made by his Government were defective, and that when they went out of office nothing had been done to put them right?
He says that £2,790,000 was a lot of money to issue out of the Consolidated Fund upon this ultra vires basis. What does he think of the amounts which issued out of it under the agreements for which he and his right hon. Friend were responsible? In the case of Yugoslavia no less than £17 million issued out of the Consolidated Fund in relation to those Agreements. Of that £17 million, no less than £15,920,000 issued prior to November, 1951, and only £1,080,000 after. In the case of Iraq, £2,660,000 issued prior to November, 1951, and only £60,000 after. When the right hon. Gentleman talks about not wanting to see me languishing in gaol, it seems to me that he should have a greater care in regard to himself and his right hon. Friends who were responsible for all these defective agreements and these vast sums issuing ultra vires out of the Consolidated Fund.
I think that the right hon. Gentleman owes an explanation to the Committee upon one or two points. Has he consulted his right hon. Friend the Member for Huyton about all these things which happened in his time? Has he consulted his right hon. and learned Friend the Member for St. Helens? This is very much a legal problem. Has he consulted any lawyer Members on his side of the House?—not necessarily his right hon. and learned Friend the Member for St. Helens, because he may not have been very easy to get hold of. But there are others. Has he taken the precaution of inquiring what will be the legal effect of the Amendment for which he takes authority by putting it on the Order Paper? Will he tell the Committee 851 whether he was aware of these agreements from 1949 to 1951?
I want to know. If so, why did not he mention them? Was he suppressing them from the House or did he not know about them?
§ Mr. Walker-Smith
I am quite happy to give way at any moment in relation to any of the questions I asked him.
Perhaps he did not know about the Agreements. Was he ignorant of these five defective Agreements between 1949 and 1951, when he was at the Treasury? Was he ignorant of this £18 million or so issuing ultra vires from the Consolidated Fund when he was Financial Secretary? If so, it seems to me that he was very negligent in the conduct of his office. If he did not know about them it was surely very disrespectful to Parliament to put down this Amendment without taking the trouble to inquire into the facts and explain them to Parliament. The Committee is entitled to an explanation on all these points from the right hon. Gentleman.
The retrospective provision is necessary so that the action taken under the old defective procedure by both Governments—but initially by his—shall be validated, and so that any doubts that may exist in regard to the question of validity under the revised procedure may be removed. When that has been done I am satisfied that the law will stand in accordance with the original intention of Parliament in 1949.
I had endeavoured to put the matter upon a temperate and objective basis during the Second Reading debate. My reward was to be criticised by the right hon. Gentleman and told that I had treated the matter lightly. In response to that I have given the Committee a much fuller explanation of the whole history of this episode and of the rather ignominous and ignoble part played by the right hon. Gentleman and his hon. Friends. I hope that he is grateful to me for the explanation and the elucidation that I have given.
§ Mr. Jay
The trouble about the Minister of State is that he is always more concerned with making partisan points than seeing that the Government act in the interests of the whole country. We have made it clear that we are not blaming anybody for what happened in this case. What we are anxious to do is to take steps to see that this kind of thing should not occur again. I have made it quite clear on several occasions that we are suggesting that he should comply with the recommendations of the Public Accounts Committee. All he had to say, quite briefly, was that that was what the Government intend to do. I take it that that is what his speech implies, although he always thinks it necessary to add these controversial and contumacious arguments which are largely superfluous.
It does not surprise me in the least to hear that other irregularities were committed. Surely the important thing is that when they come to light the Government should take the necessary action. In point of fact, it was the Public Accounts Committee which brought this matter to light. If they had come to light, with the help of the Public Accounts Committee, when either I or my hon. Friends had responsibility in the matter, we should have been the first to tell the House that we certainly would comply with the recommendations of the Committee. I do not understand why the right hon. and learned Gentleman could not quite simply have done the same. I take it from his speech that that is in fact what he was trying to tell the Committee.
§ Mr. Walker-Smith
The right hon. Gentleman asks why I do not give the assurance. The reason is that I have already done so, in direct response to the right hon. Gentleman's request. If he will look at the OFFICIAL REPORT of 20th March he will see that I said:I will unreservedly give that assurance to the right hon. Gentleman, with which I hope he will be content."—[OFFICIAL REPORT, 20th March, 1957; Vol. 567. c. 441.]It is because the right hon. Gentleman was not content with that, but chose to put down the Amendment and make these further critical observations, that I ventured upon this rather wider explanation of the whole circumstance than I had thought strictly necessary during the Second Reading debate.
853 The right hon. Gentleman must not accuse me of introducing partisanship into this matter. I am merely in the position of the wicked animal in the French proverb, in that when I am attacked I defend myself.
§ Mr. Jay
No, it was not. That was the only reason why we gave him a further opportunity to explain today. I think that he has "come clean" a little further today, and that on the whole the Committee may rest content with the position that we have now reached.
I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause ordered to stand part of the Bill.
§ Clause 3 ordered to stand part of the Bill.