HC Deb 14 February 1963 vol 671 cc1486-95

The following Question stood upon the Order Paper:


To ask the Secretary of State for the Colonies if he will make a statement on economic plans for Malta following the restricted use of the dockyard.

The Secretary of State for Commonwealth Relations and Secretary of State for the Colonies (Mr. Duncan Sandys)

With permission, I will now answer Question No. 34.

There is no intention to restrict the use of the dockyard. However, in view of recent differences, I wish to explain the position to the House.

The House will recollect that, in 1958, owing to changes in our naval deployment, it was decided that the Admiralty dockyard at Malta should be converted and operated as a commercial ship-repairing yard. A long lease was granted to a new company, Bailey (Malta) Limited, formed for this purpose by C. H. Bailey Limited, of Newport, Monmouthshire. Under agreements with the company, Her Majesty's Government have undertaken to make loans up to a total of £7¼ million to help meet the cost of the conversion and equipment of the yard and to provide working capital. Up to date, about £3 million have been advanced.

In 1960, certain financial transactions of the company caused concern and an investigation was carried out by Sir Richard Yeabsley, accountant adviser to the Board of Trade. In the light of his report, my predecessor required the company to appoint two independent directors nominated by him, Sir Richard Yeabsley and Mr. Harming Phillips. At the same time, a third independent director, Mr. Lawrence Robson, nominated by the company, was also appointed. These three directors all resigned in April, 1962.

Thereupon, my predecessor appointed Mr. J. R. Muirie, a partner of Peat, Marwick, Mitchell and Company, chartered accountants, to inspect the company's accounts. Last August, Mr. Muirie submitted his report, which is now available in the Vote Office. The facts revealed in the report convinced me that the company had in a number of respects not been conducting its business in a proper manner, and I accordingly called upon the company to remedy the matters complained of within 30 days, as provided for in the Financial Agreement with Her Majesty's Government.

Since the company took no steps to put things right, I decided to adopt a procedure provided for in the agreement for the replacement of certain directors. However, the company issued a writ, which, among other things, questioned my right to take this course. In view of this action by the company, it would obviously have been improper for me to seek to replace the directors who were conducting the litigation against the Government.

Having, therefore, felt obliged to abandon this course, I sought redress under another clause of the agreement which provides that, when breaches of the agreement are not remedied by the company, the Government are entitled to claim repayment of the loans advanced. I caused a writ to be isued for this purpose on 17th January.

In view of the situation revealed by the Muirie report, it was obviously not possible to continue to advance further public money to the company, or to enter into contracts with it for Admiralty repairs. It was equally impossible to allow the dockyard, which is one of Malta's most important sources of employment, to be brought to a standstill, pending the settlement of the litigation, which will probably take many months.

The Prime Minister of Malta and I discussed the whole situation when he was over here in December and we have since then kept in close touch. As a result, we agreed that some way must be urgently found of putting the dockyard under a new and trusted management, to whom loan payments could be resumed and with whom Admiralty contracts could be placed.

I discussed the matter with the chairman and managing director of the company, Group Captain Bailey and Mr. Christopher Bailey, to see whether the necessary change of management could be effected by agreement. However, despite protracted talks, it proved impossible to secure their consent to any arrangement which I would have felt able to justify to the House.

In the absence of any agreed solution, the Prime Minister of Malta, after discussions with me, has decided to introduce today in the Malta Legislature a Bill to set up a Council of Administration to which most of the functions of the board of the company will he temporarily transferred, pending the settlement of the issue, either by negotiation or by the courts.

This action has my full support. The Bill also provides that any powers conferred on the Council of Administration which are found not to be necessary for the discharge of its responsibilities can be transferred back to the board of directors.

The members of the Council of Administration will be appointed by the Prime Minister of Malta after consultation with the Colonial Secretary.

Subject to the passage of the Bill, Sir Eric Millbourn, who has great experience in shipping matters and port administration, and is port adviser to the Minister of Transport, will be appointed chairman of the Council. The other members will include Sir Nicholas Cayzer, chairman of the British and Commonwealth Shipping Company, Mr. Guy Densem, the senior partner in Deloitte, Plender, Griffiths and Company, chartered accountants, and Lord Melchett, a director of M. Samuel and Company, merchant bankers.

The Prime Minister of Malta and I wish to express our thanks to these gentlemen for agreeing, without remuneration, to serve on this Council and to give Malta the benefit of their wide business experience. I understand that they may consider appointing a leading firm of ship-repairers to act as managing agents.

These arrangements will enable us to make further loan payments to finance the conversion of the dockyard and to resume Admiralty orders. Subject to a satisfactory contract, the First Lord proposes in the near future to send H.M.S. "Troubridge" to Malta for a major refit. This should provide employment for several hundred men for over a year.

Her Majesty's Government and the Government of Malta have from the start been extremely reluctant to intervene. We have, however, felt it our duty to do so in order to ensure the proper use of public money and to protect the interests of the many thousands of Maltese people whose livelihood is directly or indirectly dependent upon the dockyard.

Mr. Brockway

Is the right hon. Gentleman aware that many of us who have been following events in Malta are not surprised by the statement which he has just made? Could he clear up one matter? Is the new Council, which is to take the place of the present directors, to continue to act for the private company and for the shareholders in that company? If so, is not that a most extraordinary arrangement? Would not it be far better, rather than that this Council should act temporarily, that the dockyard should be made the ownership of the Maltese people themselves and that the Maltese people should be able to decide and determine their future with all the technical aid that we can give?

Mr. Sandys

I really do not think that nationalisation will help Malta in the one thing which it most needs, which is outside investment.

Mr. Wall

My right hon. Friend stated that this dispute had been going on for about three years. Is he aware that it also held up the conversion of the dockyard for two years? Can my right hon. Friend give us an assurance that the Council of Administration will do its very best to maintain the present level of employment in the dockyard, and that he will do his best to create a new atmosphere which will attract investment to the George Cross island?

Mr. Sandys

I can certainly give my hon. Friend that assurance.

Mr. Dugdale

Is the Secretary of State aware that many of us on this side welcome his decision, but are extremely surprised that he has taken such a long time to reach it, particularly since he was advised as long ago as 1958 by the Maltese General Workers' Union that the scheme would not be a success? Why has he been, as he says himself, so reluctant to take this necessary action for such a very long time?

Mr. Sandys

I think that it is a very proper attitude for Governments to be reluctant to intervene in commercial matters.

Sir W. Teeling

My right hon. Friend said that he has placed the Muirie Report in the Vote Office. Can he say whether he has also put in the replies of the company to the questions and the accusations in the Muirie Report, in view of the fact that this matter is sub judice?

Mr. Sandys

I asked the company to let me have its comments a long time ago. I said that, if it sent them to me by 31st January, I would publish them together with the Muirie Report. I did not receive them by 31st January. I only received them some time this month, and by that time we had already gone to print.

What matters really, with all respect to this honourable House, is that they get into the newspapers. The company's comments, which are still only preliminary observations, will, I understand, be given to the Press and published at the same time.

Mr. Healey

We shall want to examine the Secretary of State's statement closely and, of course, to read the Report which has only just become available. At first sight, it seems a reasonable answer to the problems which have been created by an unfortunate series of decisions in the past.

Could the right hon. Gentleman answer the question which, I think, was at the back of the mind of my hon. Friend the Member for Eton and Slough (Mr. Brockway), namely, to whom will this Council of Administration be responsible? Will it be responsible to the Government of Malta, which appoints it, or to the board of Messrs. Bailey, or to some other body? Could the right hon. Gentleman explain why, if this decision was pending, the Government took the extraordinary decision in advance to terminate a series of Admiralty contracts, although it was inevitable that this termination would, and has, created a great deal of concern and unrest on the island itself?

Mr. Sandys

The Council of Administration will be responsible to those who appoint it, namely, the Government of Malta. It will not be responsible to the board of directors or to the shareholders.

The stoppage of Admiralty orders was a purely temporary measure. It was a difficult situation in which to place orders with the company, but it is very temporary, and, as far as I know, it has not caused the discharge of a single man in the dockyard.

Mr. Woodnutt

Bearing in mind that a labour force of about 5,000 men has been maintained and that the ratio of commercial work to Admiralty work is about six to four, how does my right hon. Friend propose to continue attracting commercial work? Will he use the overseas sales force of Messrs. Bailey? If not, where will the burden of this large cost be borne? Will it be borne by the Admiralty, the Colonial Office, or the Government of Malta?

Mr. Sandys

The House will not expect me to do the job of these new administrators, who have just been put in.

Mr. Grimond

Can the right hon. Gentleman tell us what the relationship of the Council of Administration is to the shareholders of Messrs. Bailey?

Mr. Sandys

It has temporarily taken over most of the functions of management, the functions which normally belong to the board of directors. There is no direct link between the two, but it is open to the shareholders to make any representations which they wish to the Council of Administration.

Mr. Grant-Ferris

Bearing in mind that the crying need of Malta is the influx of more capital, will my right hon. Friend say whether the arrangements which he has made will be conducive to that end? Particularly does he think that a firm such as the Bethlehem Steel Corporation, which has shown great interest in going into Malta, will be encouraged by the action which he has taken?

Mr. Sandys

I think that good administration makes for confidence and that confidence makes for outside investment.

Mr. G. Brown

Nobody would want to make the task of the Council of Administration any more difficult. We would all want to help it. On the other hand, does not the situation which the right hon. Gentleman has outlined begin to appear a bit complicated and confused? He says that the Council will be responsible to the Government of Malta, who appoint it. It will then be administering assets which, to a large extent, belong to the shareholders of the company. It will be making decisions which involve other people's property. How does it get authority to do that? What power does it have to dispose of or otherwise deal with assets which do not belong to it'? Can the right hon. Gentleman tell us more about how the whole thing will work?

Mr. Sandys

I do not think that I can go into very great detail. Of course, this is a complicated set-up to deal with a complicated situation. If this happened in the ordinary course of events, the Government would stand back, orders would stop, the company would either solve its problems or not, and the litigation would take its course. But we cannot afford to allow that to happen here, because of the big employment problem which is mixed up with this. We have, therefore, had to find a solution which does not deprive the shareholders of their property, but which, at the same time, enables further public money to be put into this concern and protects the employment interests of the people of Malta.

Mr. G. M. Thomson

On a point of order. May I direct your attention, Mr. Speaker, to the fact that there is on the Order Paper a Notice of Motion for Unopposed Returns: Mr. Nigel Fisher. Malta: Address for Return containing Reports on Bailey (Malta) Ltd. by Mr. G. B. Muirie and Sir Richard Yeabsley, with an explanatory introduction. The Minister has just made a statement which hon. Members wish to question, having the maximum information available to them. I sought these documents from the Vote Office two minutes before the Minister made his statement. They were not available. The Minister said that he had asked Messrs. Bailey Ltd. to make its replies available to him by 31st January, so that they might be published for the information of the House. Today is 14th February. It is public knowledge that the Minister had his interview with Messrs Bailey Ltd. earlier this week.

Is it not very difficult for the House to deal with the Minister's statement since this Notice of Motion was put on the Order Paper for this afternoon, and the documents involved in it are not available to hon. Members, and there is not adequate time for them to absorb them so that they can question the Minister's statement? Further—

Mr. Speaker

Would the hon. Gentleman indicate what is the point of order?

Mr. Thomson

With respect, I am addressing this to you, Mr. Speaker, as the guardian of the rights of Members of the House. We have had a very important statement on public policy from the Secretary of State on a matter which he himself has said was available to him some weeks ago.

Mr. Speaker

I am sure that the hon. Gentleman will understand that I cannot allow a point of order to be made a cue for a speech. If the hon. Gentleman does not like what the Minister has done about not putting down his Notice for an Unopposed Return sooner, it is a matter between him and the Minister which he must deal with, but I cannot deal with it as a point of order.

I should have to inquire about the course of events with regard to the reports not being available in the Vote Office a few moments ago. I cannot help the House about that matter now. The reason that I am being a little austere is that every day I have great trouble. One day lately there were 31 hon. Members wishing to speak on one side and I was in a position to select only three. I am anxious that we should not consume the time for other business.

Mr. Thomson

Further to that point of order. I was certainly not seeking to make a speech, Sir. I was merely drawing attention to the fact that a Notice of Motion for Unopposed Returns was given on the Order Paper today—presumably, with your consent, Mr. Speaker—on a matter which is of immense public importance. Hon. Members are unable to receive the documentation that enables them to cross-question the Minister and—

Mr. Speaker

Order. This is getting very much like a speech, whether it is intended to be one or not. The Notice was put on the Order Paper by authority of the Minister, who is allowed to put it there provided that it is not offensive, which, in form, it is not. If he did it at the wrong time, that would be a matter between the hon. Member and the House and the Minister.

Mr. Sandys

I have no wish to mislead the House. I understood that the papers were due to be in the Vote Office at half-past three. The hon. Member complains that I did not publish the report before making my statement. It is normal for Ministers to present papers to the House and to introduce them with a statement. That is what I have done today.

Sir W. Teeling

On a point of order. I should like your guidance, Mr. Speaker. My right hon. Friend has told us that the statement has now been published and, presumably, it is under the protection of the House. He has also told us that the reply of Bailey's can be issued in the Press. Is that equally protected?

Mr. Speaker

That is not a point of order.

Sir W. Teeling

I was asking guidance, Mr. Speaker, as to whether—

Mr. Speaker

Order. I do not make pronouncements about the application of the law of defamation to newspapers. I have enough to do without that.

Mr. G. M. Thomson

Further to that point of order—

Mr. Speaker

What is the point of order?

Mr. Thomson

I apologise for pressing it, Sir. I preface my remarks by saying that I do not necessarily disagree with what the Minister has said. The Secretary of State for Commonwealth Relations and Secretary of State for the Colonies is, however, about to leave for Kenya and will not be available for some time. I suggest to you, Mr. Speaker, as the guardian of the rights of the House, that it is a considerable discourtesy that these papers, on which our questions are bound to be based, are not available.

Mr. Speaker

The hon. Gentleman is so charming and convincing that I indulge him much too much: but it does not resemble a point of order.