HC Deb 16 December 1965 vol 722 cc1462-5

Mr. Heath (by Private Notice) asked the Chancellor of the Exchequer if he is aware that Lloyd's of London and British insurance companies are not now being allowed to pay on claims arising in Rhodesia, and if he will make a statement on this aspect of the Government's economic control?

The Chancellor of the Exchequer (Mr. James Callaghan)

Yes, Sir. This is one of the types of contractual payments for which permission has been refused since 1st December.

Mr. Heath

May I ask the Chancellor very seriously to reconsider this position when looking at these measures? Is this not the first time that payments of Lloyd's have ever been stopped, except in time of war, and that then special measures were taken to make currencies available to Lloyd's, when necessary, so that it could make payment? Secondly, will the Chancellor consider the balance of payments aspect of this, which is that the British insurance companies have always resisted, as we resisted at U.N.C.T.A.D. in Geneva, depositing moneys in other countries to cover their payments? This will undoubtedly have a detrimental effect on the situation and the balance of payments, because it would increase the pressure of other countries to make British insurance companies hold deposits in their native lands for payment?

Mr. Callaghan

I considered the position in time of war before this decision was arrived at. The right hon. Gentleman correctly states most of it, but not quite all. In this case the payments which should be made are being held in London and will be made when Rhodesia returns to a state of constitutional government. As regards the balance of payments aspect, the right hon. Gentleman points to a real problem, but if we were to be limited in our actions to those which do not adversely affect our balance of payments, there would be no effectiveness in the sanctions which we are taking.

Mr. Sharples

Can the right hon. Gentleman say what is the position regarding payments by insurance companies in respect of benefits payable under the terms of the Workmen's Compensation Acts?

Mr. Callaghan

Not without notice; but generally contractual payments are not allowed. Whether the Workmen's Compensation Act payments have some particular loophole I would not be absolutely sure, but I very much doubt it.

Mr. Emrys Hughes

Can the Chancellor of the Exchequer tell us how much British insurance companies would stand to lose if anything happened to the Kariba dam?

Mr. Callaghan

I think that these questions point out the dilemma. It is all very well being in favour of everything in general and nothing much in particular. I have no doubt that there may be people who will be willing to take advantage of any action of this sort. There may be such people in other countries, acting in a private capacity, but I do not think that that relieves us of the obligation of recognising the enormity of the act which has been committed and of taking all the steps possible to ensure a return to constitutional government in Rhodesia as quickly as possible. If we do not achieve this, there will be other consequences that might be equally repugnant to this country.

Mr. Peter Walker

How can the Chancellor argue that it is right to meet the pensions of people enjoying a public service pension and not to meet the pensions of people who are covered by British life offices?

Mr. Callaghan

I am sure that it is possible to make a great many logical points about the actions which are being taken. I have asked the House for general support, and I thought that I had it. I understood that this was given to the stopping of payments of a contractual nature. Pensions were relieved on humanitarian grounds, but once one starts making exemptions for contractual payments, exemptions which have not been made in time of war—and I do not know whether the argument is that a declaration of illegal independence is any less or more worthy than that—then there is no logical ground on which to stand. I must ask for the support of the House on this.

Mr. Heath

Is the Chancellor aware that he has made a statement which is unworthy of him? He has said that we on this side of the House have given him support in general but on nothing in particular. That is certainly not the case. We have raised one point so far, on pensions, which he rightly accepted. Would he not consider that with Lloyd's it is not a question of normal trade arrangements nor even, if he likes, balance of payments arrangements in the long term. It is a question of integrity, which has always been maintained by every Chancellor of the Exchequer. I would ask him to take that seriously into consideration.

Mr. Callaghan

I can assure the right hon. Gentleman that I was not necessarily putting the cap on his head when I made my first comment. [An HON. MEMBER: "It fitted him."] I was not doing so. As regards the contractual nature of these arrangements, these payments will be made in full; but it is for those in Rhodesia in a position to influence events to ensure that their country returns to the path of constitutional government. Then the payments can be made.