HC Deb 01 May 1969 vol 782 cc1701-35

Lords Amendment: No. 1, in page 2, line 7, at end insert: Provided that an order made by virtue of this subsection shall not provide for the payment to, or the vesting in, a custodian of enemy property of any money or other property unless an order had been made under or by virtue of that section before the passing of this Act purporting to require it to be paid to a custodian or to vest it or the right to transfer it in a custodian.

7.12 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mt. William Whitlock)

I beg to move, That this House doth agree with the Lords in the said Amendment.

The general purpose of Clause 1(2) of the Bill is to enable the Custodian to perfect his title to property already purportedly vested in him. Provision to this effect—and I do not think that there is any dispute about this—is a necessary part of the Bill. As originally drafted, however, the subsection could have extended to certain property subject to control under Article 4 of the Trading with the Enemy (Custodian) Order, 1939, that has not been the subject of vesting orders. The property in question consists of some gold coins, a larger amount of foreign currencies, and some securities. These unvested assets have an estimated value of about £30,000 to £40,000. They are not in the physical possession of the Custodian but in various banks etc. in this country where, if they are not claimed by former owners or their heirs, they could remain perhaps indefinitely. Some of these properties may turn out to be bona vacantia and so pass to the Crown.

The amount involved is small. These unvested assets are in origin precisely the same as the property which has been vested and, as with other property the subject of the Bill, there were already adequate safeguards in the Bill for its release to any individual who could establish a valid claim to any of it.

Nevertheless, in another place it was felt strongly that now, in 1969, none of these unvested assets, not even that part of them which is not claimed by former owners or their heirs, should be taken for distribution under the Bill. The Government respect these views which are, I believe, shared by some hon. Members opposite.

My noble friend the Minister of State for Foreign and Commonwealth Affairs accordingly gave an assurance in another place that these unvested assets would remain outside the purview of the Bill, and the Amendment gives statutory effect to that assurance. Orders to be made under this subsection will be made only in respect of property for which an order has already been made vesting it, or purporting to vest it, in the Custodian.

I therefore commend the Amendment to the House.

Sir Peter Rawlinson (Epsom)

This is obviously a sensible Amendment, and it is quite clear that there should be this proper restriction. This was a suggestion which was made in the other place and we were glad to see in the other place that the Government accepted it. I agree with the Under-Secretary of State that this is an improvement to the Bill.

Question put and agreed to.

Mr. Speaker

May I call the attention of the House to the fact that privilege is involved in Amendment No. 2? There is a Motion in the name of Mr. Secretary Stewart that this House doth disagree with the Lords in the said Amendment. Before I call on the Minister to move the Motion to disagree, I have to inform the House that a manuscript Amendment has been put down by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) to leave out the Minister's proposal to disagree and to insert "agree". If the Order Paper had been printed in the ordinary way today that Amendment would have appeared. It is an academic point. I did not select that Amendment because all that an hon. Member has to do is to speak and vote against the Minister's Motion.

Lords Amendment: No. 2, in page 2, line 34, leave out subsection (5).

Read a Second time.

Mr. Whitlock

I beg to move, That this House doth disagree with the Lords in the said Amendment.

I do not think that it will be in the least surprising to right hon. and hon. Gentlemen opposite that I am unable to invite the House to accept the Amendment. It was moved in another place by noble Lords belonging to the party opposite, and has the effect of taking liability for the £500,000 which has been paid to the Soviet Government in accordance with Article 5 of the Anglo-Soviet Agreement of 5th January, 1968, away from what we have known in our debates on the Bill as the "assets" and leaving it with the Exchequer, that is to say, with the taxpayer. I understand that the Amendment was made in another place as a way of expressing disapproval of Article 5 of the Agreement.

Although this matter was fully covered in our earlier debates, I should perhaps briefly remind the House of the reason why we agreed in Article 5 that £500,000 should be paid to the Soviet Government and, be it noted, specifically agreed that it should be paid from the assets.

In 1959 agreement was reached between Her Majesty's then Government and the Soviet Government for the holding of negotiations to cover the various claims and counter-claims put forward after 1939, and I have no quarrel with that decision. It was clearly desirable that there should be an agreement on this question, which would result in payment of compensation to British claimants for their losses and dispose of the Soviet counter-claims to former Baltic and ceded territories' assets held in the United Kingdom. The road proved to be a long one and for a long time the two sides were poles apart.

It was only when Mr. Kosygin visited this country early in 1967 that an agreement in principle could be reached, and it was one which was much closer to our previous position in the negotiations than to the Soviet one. This agreement, as the House knows, involved our payment to the Soviet Union of the comparatively small sum of £500,000. For its part, the Soviet Union agreed to forgo its claims to the assets and to raise no impediment to their distribution to our claimants in compensation for their losses.

It takes two sides to reach an agreement, and the Government were satisfied that these were the best terms available. Hon. Members opposite have called the payment a "tip" or "bribe" and have used emotive language about it. They are free to do as they wish, and no doubt hon. Members will continue to use that emotive language. I would remind them, however, that negotiations invariably involve concessions, and in this case there were concessions on both sides.

It is true that our claims as put forward had a capital value of about £13½ million whereas the Soviet claims were for about £10 million. On both sides, however, there were claims which were not recognised by the other side as valid. On our side, while there was not much room for dispute about the value of our claims for the external bonds, for example, with a capital value of £1.2 million and the State notes at about £2.2 million, there were other claims such as commercial debts and property claims which have yet to be investigated by the distributing authority and which possibly contained some element of inflation. Whether that was so or not, the Soviet Government in fact recognised our claims only to the extent of some £3 million. We, on our side, recognised the validity of very few Soviet claims and were certainly not prepared to accept their claim to the Baltic gold, even if there was no doubt on either side about the value of the gold, which was sold in June 1967 for £5.3 million.

Given this near complete incompatability between British and Soviet views on the legal issues involved and the absence of common ground on the valuation of many of the claims, the Government took the view that a payment of £500,000 was a reasonable concession to make to secure a settlement which left these contentious issues on one side. We believed that the great majority of claimants in whose interests the settlement was being sought, would feel a satisfaction at the firm assurance of receiving compensation in the near future which would far outweigh their disappointment at the reduction of the sum available for distribution by this relatively small sum. To my knowledge, no claimant has yet suggested that we ought still to be negotiating with the Russians rather than have concluded an agreement with them on the terms which finally emerged.

The Agreement as finally formulated after nearly a year of further negotiations provided for payment to be made on 12th January, 1968, and was not subject to ratification because both sides were anxious, particularly after such long drawn out negotiations, to see this question settled once and for all. Parliament was then in recess, but on the first opportunity after resumption on 18th January Parliament was informed by means of a Written Answer of the arrangements made for the payment to the Soviet Union. It was not practicable at the time to make the payment direct from the assets. Therefore it was made initially from the Civil Contingencies Fund and a Supplementary Estimate was approved in March, 1968. The object of subsection (5) of Clause 1 of the Bill as it left this House was to enable the Exchequer to be recouped from the assets; in effect the money was only lent by the Exchequer and the Money Resolution and the original subsection (5) authorised its repayment.

I hope that hon. Members accept the justification for the arrangement made with the Soviet Union. However, even if some of them do not, that money has now been paid and no argument has, so far as I am aware, been put forward either in this House or in another place for allowing the liability for it to rest with the taxpayer rather than with the claimants in whose interests the 'whole transaction has been carried out. Indeed it would, I think, be perverse in the extreme to suggest that the taxpayer should be left with this burden. It is for this reason that I must invite the House to disagree with this Amendment.

Sir P. Rawlinson

The Motion which has been moved by the Under-Secretary of State is probably the last act in what I can only epitomise as a squalid transaction, which reflects no credit on those who made it and no credit on those who endorse it. I am glad to see in their place my hon. and learned Friend the Member for Lewes (Sir T. Beamish) and also my hon. and learned Friend the Member for Northwich (Sir J. Foster). If they had not raised the matter this particular transaction might have been less exposed to public gaze.

The other place has done a service, not only in making important changes which we shall deal with hereafter in other Amendments, but in obliging us to reconsider the subsection. I am sure that it is unpalatable medicine for hon. Gentlemen opposite to examine again closely part of the Agreement. The more it is studied the less attractive it becomes.

The Minister has told us a little of the history. It is said that the issue is wrapped up in a Bill which is complex. Part of it may be complex, but certainly this issue is not complex. It reflects an attitude and conduct which should never again be followed by any Government in this country.

The United Kingdom has several valid claims. I exclude the point made by the Minister about the quantity of the claims. I am dealing with the merits of each individual claim. The first of their claims was on the shipping services, in which the United Kingdom Government was the claimant. Secondly, there were claims on official Soviet State-issued notes. Thirdly, there were the losses suffered by United Kingdom nationals and firms arising from Soviet unlawful actions in Eastern Europe.

They were met by Soviet counterclaims which had no prima facie validity and have only to be stated to be shown how spurious they were. They were in the main claims to the Baltic States' gold which had been entrusted to the United Kingdom for safekeeping prior to the invasion in 1940 of the Baltic States by the Soviet Union, then the ally of Hitler. There were then claims to the Baltic States' ships requisitioned by the United Kingdom in the war.

The counter-claim apparently was based on an idea that there could be a call for overseas assets of invaded States whose incorporation had never been dejure recognised by the United Kingdom. The invalidity of such a counter-claim was obvious once it was examined. Except for the claim in respect of the shipping services, these were claims made by the United Kingdom in its position as a trustee on behalf of others.

They were concerned not, as it were, with the United Kingdom as an entity but in respect of others as individuals. Of course there had been 19 years of lengthy diplomatic correspondence which one would expect. In 1959 there was the agreement to hold negotiations and in 1965 detailed and intensive negotiations began in earnest. Those negotiations were concluded in February, 1967.

February 1967 is a significant date. It was the date of Mr. Kosygin's visit—a time when the United Kingdom Government, acting on behalf of the individuals, champion of the claimants, had other interests in mind which required the con-citation of the Soviet's attitude. When the United Kingdom entered into the negotiations on behalf of these unfortunate people it must have been aware of the strength of its position in discussions on this matter with the Soviet Union. The United Kingdom had in its hands an ace—not up its sleeves but in the hand, because it had the assets to hand—the Baltic gold.

It had failed in the last attempt to get agreement. But if they failed to get the Soviet to go to arbitration, there was in hand an asset to satisfy the claimants. Therefore they could expect that if they were not to have a negotiating success, if they were not to get the agreement of the Soviets to arbitrate, they would be in a position to disengage in an attempt to make the Soviets act in a lawful and civilised manner. I presume that that is how they went into the negotiation.

The result, announced in February 1967, was that valid claims were cancelled out by spurious counter-claims, that the spurious counter-claimants should be paid a substantial sum of money, the £500,000 which we are now discussing, and that that sum should be taken out of the assets—assets which did not belong to the United Kingdom Government, but would reduce the amount available to distribute to sufferers of the loss whose interest the United Kingdom was purporting to champion. I can hardly conceive of a more humiliating end to a negotiation.

7.30 p.m.

What could be the reason for the Government ending negotiation in which they were in such a strong position, even if it did not promise well? The Government's answer is that they could do nothing else, there was no chance of getting a better result, and it was ending a troublesome dispute which they were glad to get off their hands. Without a settlement, they say, the claimants would get nothing. But is that a good enough reason?

To appropriate assets entrusted to the United Kingdom and apply them in some cases to wholly different purposes is perhaps in itself of doubtful validity. But, accepting that it was decided to appropriate it, since ownership vested in the Custodian of Enemy Property, why not distribute it without the payment of £500,000 to the Soviets, whose counterclaim was invalid? The Government's answer is that they feared retaliation. But how, and where? The Anglo-Soviet Civil Supplies Agreement of 1947 provided for payment of the final instalment in 1965. There had been long negotiations, and a few months or a year would not have extended them very greatly.

In any event, would £500,000 deter the Soviets from retaliation? I should have thought that the events of 1968 showed how hollow was any such idea. The Soviet negotiators must have mocked when they thought that the British Government's view was that £500,000 paid for no valid reason would persuade them to be more conciliatory over other matters.

Possibly the valid and true reason behind it was the United Kingdom's desire at that time to make the Soviets conciliatory. Her Majesty's Government were looking to their own interests as opposed to the interest of those whom they were in a position to champion, and the sweetener was paid to the Soviets in an attempt to get a more conciliatory attitude when Mr. Kosygin was here and when the Prime Minister was making his abortive attempt to mediate in Vietnam. The Government's interests were put before the rights of others and before the justice of the case.

The Government have not had the honesty to say that they wanted to be rid of the matter and bought off the problem with other people's money. Although the benches opposite, with a few honourable exceptions, are naked, it is an agreement made by right hon. and hon. Gentlemen opposite, and it is the kind of conduct which confirms the opinion of our national detractors. When the Government act shabbily and try to disguise it with this form of spurious self-righteousness, their conduct mystifies our friends.

To argue that a few thousand £s paid out to a few people does not matter if its effect is to conciliate the Soviets is quite wrong. It does matter. The Government act as trustees in this respect. Our honour and commercial reputations are at stake, and I should hope that the House of Commons would not permit the Government to act in such a way. As I have said, it has had no effect. We saw what happened in 1968.

I welcome this Amendment, and I object to the Motion proposed by the Under-Secretary of State. He said that there is no argument, but the argument that I would put to him is this. If it was necessary in February 1967 to make the Soviets conciliatory and if that was to be done by the payment of money, let it at least be ours and not other people's money. It was said in the eighteenth century that debating with a certain bishop was as degrading as wrestling with a chimney sweep. This is a degrading transaction which makes the whole agreement and in this respect the whole Bill so objectionable. It reflects no credit on those who advised in this matter. It reflects no credit on those who agreed to it, and it will reflect no credit on those who endorse it. Since I have no wish to be among those who endorse such a degrading agreement, I recommend my right hon. and hon. Friends to vote against the Motion.

Mr. J. Grimond (Orkney and Shetland)

I stand in something of a white sheet because I had not appreciated the nature of these negotiations and, until now, neither I nor my colleagues protested against them. Having listened to the debate so far and read a little of the background history, it appears to me to be one of the most squalid minor embezzlements ever perpetrated by a British Government.

We have had the crime of Biafra. We have had the farce of Anguilla. Now, apparently, we are to be held up as engaging in this rather disreputable little crime at the expense of people who trusted us.

Apparently the Minister has been trying to say that it would be monstrous if the taxpayer had to pay. I venture to think that the taxpayer would rather pay it than see it extracted out of someone else's till. The argument about the taxpayer makes the whole matter much worse.

It appears to have been a very bad agreement, and it would be interesting to know who in the Foreign Service advised it. The idea that the Russians would be in the least moved about the payment of £500,000 and that a great settlement would be made by this feat of diplomacy makes us look even more ridiculous.

Looked at from purely self-interest, it appears to have been bungled. Looked at from the point of view of our reputation, I cannot think that it will give a good impression to people dealing with the British Government in the future. After all, we are international bankers and are not in a position to ignore the opinion of the rest of the world. Very few people will entrust their assets to the British Government when they find that they can be disposed of without their consent and contrary to their interests. Finally, it discredits the Government and our whole system of government. Even at this late date, I am glad to think that we shall be able to vote against it.

Even now, the Government should reconsider the matter. I cannot believe that anyone will suggest that it can serve any useful purpose. It does great damage to our real interests, and I personally feel ashamed of it. I think that if the facts were put before the people of this country, they would be ashamed to think that, for this fiddling sum, we should engage in this nasty exercise at the expense of people who were invaded, whose countries were raped and who relied on us for protection and to negotiate on their behalf. It is the more shameful that it has been done by a British Government, even though it affects only a few people.

Sir John Foster (Northwich)

The agreement made with the Soviet Government was quite unnecessary. The negotiations started because the British Government had claims which were without contradiction, and it was hoped, I thought from the first in vain, that the Soviet Government would pay something from Russia as well as the assets held in this country.

When, as I suspected, the Russians were unwilling to pay us any money, the negotiations should have been abandoned. It is as if a man had been kidnapped and his kidnapper had said that he had a lot of claims against the assets of the kidnapped person in his bank account. Those were the Russian claims, and they were not worth considering.

An agreement was not necessary. The hon. Gentleman is right when he says that it takes two to make an agreement, but this agreement was not necessary. The £500,000 was paid on the basis of an entirely mistaken view that the Russians had to be brought to consent to something. The assets were in this country, so we did not have to negotiate with the burglar. The assets could have been paid out at any time after the Lithuanian and other republics were occupied.

It is not surprising, therefore, that an Amendment was moved in the other place to make the taxpayers responsible for what was entirely a mistake of the Government. The taxpayers, by a majority, elected the Government, so it is right that they should pay. The claimants had nothing to do with it. They would have unanimously said, "Do not talk to the Russians. Just have one shot to see if they will pay the money. If not, give up and pay us this money."

What is disturbing is that in the previous debate the Under-Secretary indicated that when they come to the Czarist debts they will also pay the Russians an unnecessary amount of money. We have the assets in this country. If they are to be distributed—and here I differ from my right hon. and hon. Friends in this respect—why pay £500,000 for nothing?

The Agreement is justified by the Under-Secretary saying that the Russians gave up their claims. Anyone can fabricate claims or put down claims which do not have any value. There must at least be a semblance of legal basis for a claim if there is to be a compromise. The English claims were worth far more than the Russians' spurious claims. We had to give up our claims because we could not get anything out of the Russians. It did not matter whether the Russians gave up their claims or not. They could have done anything they liked. The £500,000 did not buy anything from the Russians.

Therefore, I submit that the Amendment is proper, because the £500,000 has been paid and we cannot get it back from the Russians. It has come out of the United Kingdom Treasury, so it is only right that the Government's mistake, if it is to fall on innocent claimants or on taxpayers, should fall on the taxpayers.

Colonel Sir Tufton Beamish (Lewes)

It is for me a matter of great regret that the Government have not accepted the wise decision taken in another place to delete subsection (5) of Clause 1 of the Bill.

I oppose most strenuously the Government's intention to restore this subsection on two main grounds. First, Clause 1(5) embodies all that is most shabby and shameful in the Bill, and it highlights the folly and the futility of the Agreement that the Bill seeks to implement. Secondly, the £500,000 paid to the Soviet Union, without parliamentary approval, is by no means the only example in this sorry affair of the Government breaking their word and treating Parliament as a rubber stamp.

I propose to deal briefly with the second point before explaining why the payment of £500,000 to the Soviet Union was as deplorable as it was unnecessary. I remind the House of the sequence of events. The Agreement between the United Kingdom and the Soviet Union was signed on 5th January, 1968, and it entered into force on signature. Under the terms of Article 5 of the Agreement, £500,000 was to be paid to the Soviet Government by depositing this sum, on 12th January, in a special account at the Bank of England in the name of the State Bank of the Union of Soviet Socialist Republics. This payment was accordingly made, or the money was lent as the Under-Secretary euphemistically says, on 12th January. But it was not made known to Parliament until five days later, on 17th January. Indeed, it could not have been made known before, because that was when the House met. The Agreement itself was presented to Parliament the next day, 18th January.

The £500,000 was paid from the Civil Contingency Fund, and it appeared in the Supplementary Civil Estimates for 1967–68, which were not published until 15th February, 1968. These Estimates were not approved by Parliament until the following month. In other words, Parliament was presented with a fait accompli, because it was already far too late to alter the Agreement or cancel the payment.

7.45 p.m.

On 23rd January, 1968, the first parliamentary opportunity, I asked the then Foreign Secretary why this £500,000 had been paid to the Soviet Union without Parliament being consulted. The right hon. Gentleman replied: The Agreement will be subject in due course to parliamentary approval. If Parliament turns it down, that will be that."—[OFFICIAL REPORT, 23rd January, 1968; Vol. 757, c. 210.] Having signed the Agreement himself, the right hon. Gentleman must have known that it was never the intention to make it subject to Parliamentary approval. It has been explained in another place that the reason for this was that the Russians might have failed to ratify the Agreement had it not come into being automatically on signature. I regard that as a ridiculous explanation. It hardly sounds like confidence in the other partner to the deal.

It was also eventually explained in another place that, in making that statement to me, the then Foreign Secretary did not say what he meant or mean what he said. Even if I acquit the right hon. Member for Belper (Mr. George Brown) of any deliberate intention to mislead the House, which I must because he was answering a supplementary question "off the cuff", I strongly condemn his failure to put matters right either by writing a letter to me or by making a personal statement in the House because the House was misled.

I cannot acquit the Minister of State, who, in a letter to me on 15th June, 1967, said: It is our intention, subject to parliamentary authority, to make arrangements to realise the assets (including the gold) remaining in the country and distribute them … That authority was never sought and so has never been given. The gold was sold just two weeks after that letter was written to me.

The £500,000 was distributed, or lent, to the Soviet Union without Parliamentary authority. The fact that it was not paid out of the assets is neither here nor there. Parliament was treated with contempt, and it is time that we had a proper explanation of why this came about.

So much for the Government's treatment of Parliament in relation to this payment of £500,000 to the Soviet Union, which is the subject of this subsection. I submit that this alone is a good enough reason for voting against the Government's Amendment.

I now turn to the Agreement. As my right hon. and learned Friend has said, there was no need for an agreement in any case. The simple and indisputable fact is that the Agreement between this country and the Soviet Union for mutual settlement of the debts in question was totally unnecessary and quite fatuous. My hon. and learned Friend the Member for Northwich (Sir J. Foster) has made this clear from the outset, and again he spelt it out in plain language today.

There was not the slightest need to seek Soviet permission before filching the assets of the Baltic countries entrusted to us for safe keeping. We held these assets The people to whom the money is being paid were here. The Government rightly maintain that the Soviet Union has no conceivable right to these assets. I am glad that they have repeated this on numerous occasions. So why conspire with them in the matter at all? What was the explanation? We still have not been told.

The Under-Secretary told us earlier that claims presented by this country against the Soviet Union amounted to roughly £15 million while Soviet claims against this country amounted to approximately £10 million. The precise amount is not clear and probably never will be. But it is beyond dispute that if these debts had been settled by both sides on the basis of the claims, the United Kingdom would have been substantially the gainer to the tune of about £5 million.

I maintain, therefore, that the Agreement was not only a bad bargain, but was unnecessary and irrelevant. If that is so, it is doubly so about the payment of £500,000 to the Soviet Union. Objection has been taken here and in another place to this payment being described as a "tip" or a "bribe", and the Under-Secretary mentioned this again today. How else can it be described?

Mr. R. J. Maxwell-Hyslop (Tiverton)

It cannot.

Sir T. Beamish

I agree.

Mr. John Biggs-Davison (Chigwell)

Perhaps I might suggest another emotive phrase for the Under-Secretary. What about "baksheesh for Bolsheviks"?

Sir T. Beamish

I think that that is very good. The Under-Secretary said in Committee that he did not believe that £½ million was too great a price to pay for the advantages of an agreement. If that is not admitting that the £½ million was a tip or bribe, I do not know what is.

What are these so-called advantages? The bargain is as strange as it is disreputable. The Under-Secretary described the £½1 million as very modest in relation to the total value of the assets of about £7 million."—[OFFICIAL REPORT, Standing Committee A, 19th November, 1968; c. 48.] In terms of money £½ million is not just "modest". It is peanuts to the Soviet Government. It compares with giving a threepenny piece to a schoolboy. To the Baltic States it is far from peanuts. It is more than 7 per cent. of their slender assets entrusted to this country. It is very far from being peanuts, either, to the claimants, who are to get rather less than 10s. in the £ out of what they hoped to get. This £½ million would have been very nice for them, because they would have got a bit more.

If the Under-Secretary claims that this £½ million is a generous tip to the Soviet Union in political terms, then I wholeheartedly agree. The Soviet Union can now tell the sorely oppressed people in the Baltic States, people who are far more rigorously controlled and terrorised even than the people of Czechoslovakia, that any pretence on Britain's part of remaining their friends, and any protestations of good faith, are hot air. It would not be fair or true to say that, but this is what the Soviet Union can say, and I bet that this is what it is saying.

No doubt Russia is telling the Estonians, the Lithuanians, and the Latvians, with a satisfied smile, "The assets you left in the safe hands of the Bank of England are now being used to settle our debts arising from our liberation of your countries in 1940". They have every right to say that in the light of the Agreement that we have made. I hope that it will not ring true to Baltic ears.

Russia will tell the people of the Baltic States that while Britain still pays lip service to the principle of withholding de jure recognition of the captivity of their countries, in practice Britain has conceded Soviet sovereignty and the Soviet right to enforce an illegal annexation. This is what they will be saying. In fact, I am sure it is what they are saying. They have no right to say that, there is no truth in it, but I am sure that such assertions are being made.

By entering into this shameful Agreement the Government have not only robbed the Baltic States of their assets, but of their confidence in this country. The Government have damaged our reputation in the eyes of the world yet again. It is a heavy price to pay for a paltry sum of £7 million which belongs to somebody else, included within which is this sum of £½ million paid to the Soviet Union.

The fact is that the payment of £½ million to the Soviet Union was not aimed at procuring their quite unnecessary consent to the settlement of certain outstanding financial claims. It was aimed at getting certain political rewards. As the House knows, the story began in February, 1967, when Mr. Kosygin visited Britain and the Prime Minister, with typical overweening confidence and credulous optimism, embarked on his unique brand of diplomacy.

The right hon. Gentleman wanted to act as mediator over Vietnam, especially as America was justifiably annoyed by the finger-wagging over the bombing of oil installations near Hanoi. The right hon. Gentleman wanted to bring about a treaty of friendship with the Soviet Union to show this country and the world at large how brilliantly he could succeed where others had failed. "Only the Left can work with the Left"—shades of 1945. The right hon. Gentleman was delighted with the progress of his talks. The right hon. Gentleman declared that Mr. Kosygin had "in seven days almost become a part of the British way of life". So the £½ million was symbolic; a way of tacitly condoning the Russian treatment of the Baltic States, and a significant mark of friendship on Britain's part. It was to pave the way for a new era in relations between the Soviet Union and Britain.

Having paid this price, and got the Agreement, which was to be followed by a comprehensive treaty of friendship, the Government were cock-a-hoop. The then Foreign Secretary described the Agreement as "very good business". Good business for whom? Where, for instance, is the famous treaty of friendship? The last I heard of it was more than a year ago, when the then Foreign Secretary said that the Soviet draft is not acceptable to us in its present form."—[OFFICIAL REPORT, 14th March, 1968; Vol. 760, c. 352.] The House should now be told what progress has been made towards negotiating an acceptable treaty of friendship before being asked to decide whether this payment of £½ million within the context of this Agreement was properly or justifiably made.

What about the other benefits which were to flow from this payment of £½ million to the Soviet Union? What about the Government's hopes to achieve a civilised policy of friendly relations with the Soviet Union, as the Government spokesman in another place described it? Since the Agreement was signed, the Soviet Union has again invaded a country in flagrant breach of international treaties, including the Warsaw Pact itself, and the bullying in Prague and throughout Czechoslovakia still goes on. The British Government, I admit, made highly critical noises about the Soviet Union's action in Czechoslovakia, and rightly, and, indeed, the Government have been singled out for abuse and vilification by the Soviet Union.

From time to time questions are raised about the harsh treatment and possible bringing of fresh charges in the case of Mr. Gerald Brooke. The Foreign Secretary said recently: … we have frequently impressed on the Soviet authorities the very serious consequences which any retrial of Mr. Brooke would have for Anglo-Soviet relations."—[OFFICIAL REPORT, 22nd April, 1969; Vol. 782, c. 258.] How much friendship is there in this very sad case?

From time to time voices are raised against the barbarous inhumanity of keeping Rudolf Hess, perhaps the least guilty of all the Nazis imprisoned after the war, in solitary confinement after nearly a quarter of a century. The question came up in the House this week. Apparently there has been no discussion with the Soviet Union about this for more than 12 months. The Government's views are well known. Where is the friendship here?

In matters of this kind—and I have given only a couple of examples—the Government seem to be impotent, and I see no sign of what was described by a Government spokesman as a civilised policy of friendly relations. I do not want to be misunderstood in what I air saying, because there is nobody in the House who views more strongly than I do the need to improve our relations with the Soviet Union, and every proper course should be followed to that end.

But the payment of £½ million out of the Baltic assets is not a proper course. In my opinion it was sheer folly, and wholly unnecessary. In fact, I think that this payment to the Soviet Union only strengthens the scorn with which the Kremlin views the British Socialist Government, as hermaphrodite politicians, neither Marxists nor Social Democrats. I do not think that anything has been gained from the Prime Minister's fawning on Mr. Kosygin in the way that he did.

To sum up, in the whole matter of the Agreement and of the payment of £½ million to the Soviet Union the Government have deceived everyone including themselves. They have deceived the House, as I made clear at the beginning of my speech. They have deceived me personally, both in reply to a Question, and in writing about Parliamentary procedures which would be followed. They have deceived themselves into thinking that a half million pound bribe or tip, or baksheesh, as my hon. Friend called it, would influence the Soviet Union and Soviet attitudes.

I bitterly regret the way in which this incompetent and unprincipled Government have handled this whole unhappy affair. It leaves a horrid taste in the mouth. It must be seen by the people of the Baltic States and by many thousands of Baltic exiles in this country and other parts of the world as a complete betrayal of the trust which they have long placed in Britain.

8.0 p.m.

Mr. Maxwell-Hyslop

I do not know how to contain my indignation at what the Government are inviting us to participate in, but, fortunately, I do not need to. This squalid act started with the Prime Minister. The Under-Secretary of State, who is here, is not really the guilty man and we need not speculate on what were the motives which animated the Prime Minister when he decided to give away someone else's money without the knowledge or consent either of the owner or, for that matter, of the House of Commons.

It is the desire of the small man to be liked by the person to whom he happens to be talking at a given moment. That is the motivation of the Prime Minister and the person to whom he happened to be talking was the same person who authorised the invasion of Czechoslovakia not so many months ago—[Interruption.] Yes, it was the same person.

I wonder how proud of himself the Prime Minister now feels—a Prime Minister who has taken no part in the House in facing the music for this shoddy Bill at any stage, but has just sent junior Ministers, who took no part in inaugurating this policy, into the firing line to do a task which any honest man would regard with disgust and shame.

These three little countries may well rise again. I hope that they will. I do not believe that anyone can for ever destroy and crush free countries with heritages as long and languages as distinct as theirs, even though over 100,000 of their citizens were kidnapped and murdered by the Soviet forces after their countries were invaded, despite more than 13 non-agression treaties freely entered into by the Soviet Union guaranteeing their independence and national integrity.

They deposited their money with the Bank of England for safe keeping, as others have done since, but as I doubt others will do in future. They would be foolish to do so, because it has now been shown that the Governors of the Bank of England are powerless to act as trustees, when the Prime Minister can sign an agreement without the knowledge or consent of Parliament which would amount to fraudulent conversion if any private citizen did the same thing when in the position of a trustee. Having entered into that agreement, he then raided public funds for the money and now we are asked to condone this.

The Government want another bite at the cherry. The substance of this case has been argued in another place as well as here and it was because of the sense of rampant and scandalous injustice that the Amendment which the Government now seek to overturn was inserted there. It will be to the eternal disgrace of this House if we reject that Amendment. If there is one thing worse than the legalised fraudulent conversion of money entrusted to us by these three unhappy, invaded and abused countries, it is to pay their abuser out of their assets without their consent. A more contemptible act I cannot conceive.

Who is to be paid next? What reward does our present Prime Minister plan to give the Russians for the invasion of Czechoslovakia? Whose money will be used next? Not his own. That, one can be quite certain. Has he any further plans of this nature? It would be interesting to hear. Perhaps their secret could be shared with the House before his signature appears on another treaty without the knowledge or consent either of the House or of the unhappy public whom he represents as Prime Minister.

But no—the moment has passed. The Government thought that they had seen the last of the Bill when it went to another place, that it would just be smuggled through to the Royal Assent with no more trouble from this House. But they were wrong, because it has come back. And who do we see to defend the ethics of this shabby Bill? Three back benchers on the Government side, one of whom is a P.P.S. and a Whip, sitting beyond the Bar—who has now come in to make up the numbers to four—

Mr. Will Howie (Luton)

The hon. Member is way behind.

Mr. Maxwell-Hyslop

He is not even a Whip now. Perhaps he will demonstrate his new-found freedom by rejecting this shoddy Bill and voting against the Motion of a Foreign Secretary who has not even the courtesy to turn up to defend his own shabby work—[Interruption.] But we are not putting forward this shoddy Bill. This is a Motion in the name of the Foreign Secretary, to disagree with the Lords. And the Foreign Secretary is not here to recommend it. He knows the odium and opprobium in which it is held, rightly, by an honest man. This is an act of legalised theft in which he is asking us to participate and he has not the courtesy or the courage to turn up. Why not send for him to come to the House to defend his own shoddy work?

Sir Arthur Vere Harvey (Macclesfield)

Because he is having his dinner.

Mr. Maxwell-Hyslop

Probably my hon. Friend is right: he is having his dinner, while £500,000 of the reserves deposited in the Bank of England by these three little countries is paid to the Russians, to the people who over-ran their country, who deported so many of their citizens literally to be murdered and who tore up no fewer than 13 treaties guaranteeing their independence.

I do not know what we are to expect next from this Government, nor do I care. This is the issue before us and it is a tragedy that Government back benchers who will troop through the Lobby, I suspect, in its support, are not here to hear it condemned by everyone who has spoken tonight, except the Minister put up to defend it.

It is a shameful thing in which we are asked to participate. Let this be said again loud and clear—it is the personal doing of the Prime Minister. In doing this, he brings discredit on himself—that, alas, is merely adding a coat of paint to that of the same colour which already covers him—and he is bringing discredit on the House of Commons and our Parliamentary institutions which have been by-passed and abused, and upon the country of which he is Prime Minister.

Mr. David Waddington (Nelson and Colne)

Let there be no doubt that this is a moral issue. If a private citizen were to attempt a half of what the Government have done, and are still trying to do, he would land in gaol, and rightly so.

Stripped of all legal frills and furbelows, the story is straightforward. The Government have entered into a sordid, squalid deal with the Soviet Union which has cost them £500,000. By disagreeing with the Lords Amendment, they want to recoup that sum from a fund to which they have no moral right or claim.

If the Government get their way, they will have seized moneys belonging to the Baltic States—which have never been our enemies—which was entrusted to us because they thought that we were more honest than most. The Government will then not merely use the money seized to compensate the creditors of those States and those who lost money within their territories, but they will use it—or they have already used part of it—to ingratiate themselves with the Soviet Union, which criminally and illegally annexed the Baltic States in 1940 and which, between 1940 and 1941, deported and killed many thousands of the inhabitants of those countries and which, even now, holds the remaining inhabitants under subjection.

Nothing can provide a moral justification for handing over someone else's money in this way. What makes this case all the more extraordinary—I say this because Governments have acted immorally before—is that there was nothing to be achieved by this immorality, as my hon. Friends have explained.

Having decided to distribute the proceeds of the Baltic assets to the various claimants—in itself a somewhat dishonourable step because there is no reason why the Baltic States should discharge the liabilities of others—why did not the Government do the right thing? The money was here, the claimants were here, and there would have been £500,000 more for the claimants than there is now. What were the Government trying to achieve? What did they fear? What is this retaliation about which we have heard so much? It would not have taken our refusal to pay £500,000 to the Russians to see them behaving in an inhuman manner. What good has this done for Gerald Brooke? Has it put him in less peril? Far from helping to bring about a détente in 1968, we saw the Russians using the same pattern of conduct by its attack on Czechoslovakia.

Out of this shoddy, shabby, shameful deal we merely have the abandonment by the Soviet Union of a completely bogus claim—acknowledged by the Government to be bogus—to gold belonging to the Baltic States. This is the ultimate absurdity.

I apologise for taking up the time of the House when I know that many hon. Members have other business to transact, but this is so shameful a matter that I could not sit here meekly and allow the payroll vote of the Government to crush this sensible Lords Amendment without saying something. I am glad of this opportunity to express my disgust at the conduct of the present Administration.

8.15 p.m.

Mr. Eldon Griffiths (Bury St. Edmunds)

The Under-Secretary can be under no illusion, after what he has heard from every hon. Member who has spoken with the exception of himself, of the burning anger and shame that we feel over what the Government are proposing to do.

When the Under-Secretary spoke I had the feeling that he had become the Government's fall guy. In the last few weeks he has come among us to deal with Anguilla, and now he is with us to deal with the Baltic gold. If we try to contrast his approach to Anguilla with his approach to the Soviet Union, we see that in Anguilla he and his Government have acted the part of the bully while with the Soviet Union they are cringing or, to us a famous remark, are turning over on their backs like spaniels waiting to be fondled or kicked.

There are five reasons why my hon. Friends and I will oppose the Government in seeking to throw out the Lords Amendment. The first is because we doubt if the money that they now propose to hand over is our money to give. The proposal is that the money should be taken from the Custodian and given back to the Consolidated Fund.

It was not originally British money but the money of the successors and heirs to the Baltic States and of their creditors in this country. The Baltic gold, from which this sum of £500,000 springs, was first lodged in the Bank of England for safe keeping, for "physical safe custody" to quote the Governor of the Bank. There used to be a phrase. "As safe as the Bank of England." Who will say that now?

The Baltic States were overrun by the Nazis and the gold was taken over by Her Majesty's Government's Custodian of Enemy Property to stop it from being used or falling into the hands of our enemies. In June, 1967, the gold was sold by the Custodian. It is a matter of some doubt whether he was ever entitled to sell it when he did. He may have done things his legal title to do which may have been in doubt. I hope that the Under-Secretary agrees with that, for these are not my words. They were spoken with gravity by the Lord Chancellor when the Measure was in Committee in another place.

The subsection with which we are concerned is designed retrospectively to legalise the Custodian's unlawful—or, to say the least, doubtfully lawful—act. In the circumstances, we have no alternative but to accept it, although we do so under protest. But is it right or decent that we should also be legalising retrospectively the taking away of other people's money and the handing of it over to those who had conquered and subjugated their countries?

Our second main objection to what the Government are doing is that it is utterly unjust that a portion of the assets of the Baltic peoples—who, for all the Government know, may one day somehow recover their independence—should be handed over without their consent to the very country which extinguished their independence.

The Soviet Union is a great power. We must live with it in the world and, like the rest of my hon. Friends, I want to live in peace and friendship with Russia. But we do not believe that peace can be bought with bribes, and we do not accept that friendship between peoples can be based on rewarding aggressors with their victims' money.

Before we agree to make good to the Consolidated Fund the deficit which it has incurred by paying off the Russians, we are bound to consider carefully the merits of the recipients. With the best will in the world I cannot say that the Soviet Union over recent years has done a great deal to deserve this British generosity. Its tanks have suppressed the first glimmerings of freedom in Czechoslovakia. Its navy threatens our sea lanes. Its diplomats and broadcasters heap abuse on Britain in the United Nations and everywhere else. Yet this is the country to which the Prime Minister has handed over £500,000 and the House is asked retrospectively to make good the hole which his free gift has made in the Consolidated Fund.

A year ago the Foreign Secretary signed with the Russians a solemn Convention binding both Governments to grant consular access to such of their nationals as might be held in each other's gaols. One such national is Mr. Gerald Brooke. Mr. Brooke, in spite of that Treaty, has not been granted proper access to the British Consul. Indeed, it is rumoured that he may be in further jeopardy. What has this to do with subsection (5)? It is quite plain that the Russians are quite capable of cynically breaking a treaty signed barely one year ago. Yet this is the country to whom Parliament is now asked under subsection (5) to approve this tip of half a million pounds.

Our third reason for objecting to what my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) quite rightly called "a shabby payment" is that it was unnecessary. This was the point made by my hon. and learned Friend the Member for Northwich (Sir J. Foster). The Government's argument has been all along that this deal was good business, that the subsection was actually cheap at the price because there was no other way of getting the Soviet's agreement. I do not understand that argument. Our notional claims against the Russians were for something in the region of £13½ million. Their claims against us—again notional—were for a great deal less, perhaps £10 million. Britain was therefore in the stronger bargaining position. In this case at least it was the Soviets who were the demanders.

It was therefore one might think the Soviet and not the British Government which might have been expected to make the first concessions to reach an agreement. Yet as it turned out it was we not they who actually made the concessions.

I have a great deal of respect for the toughness and patience of Foreign Office negotiators, but I confess that I have been puzzled why, when for once the British had the stronger deck of cards, we found it necessary to grease the Russians' palm to the tune of half a million pounds. Therefore, in my puzzlement I have looked carefully into the complex history of these negotiations. Like my hon. and gallant Friend the Member for Lewes (Sir T. Beamish), I think I have found the answer. Once again, as so often in the past when international deals of doubtful value to this country have been cooked up behind closed doors, we spy the fateful footprints of the Prime Minister.

Subsection (5), I suspect, had its origins in the talks which the Prime Minister had with Mr. Kosygin in February 1967. At that time I dared to suggest in the House that the talks had not gone well and I was savaged by the Prime Minister for my pains. Now we all know, thanks in part to a recent publication of the Sunday Times, just how badly those meetings did go. We were told of an American official holding an open line to the White House out of the window at Chequers so that President Johnson's aides could hear Mr. Kosygin's motor cycle escort revving up before leaving, with nothing agreed.

It was in those talks that we first came across the traces of subsection (5). That was when the deal to pay the half million pounds was agreed. Of course we can all understand the Prime Minister's situation. He had got nowhere on Vietnam, nowhere on Europe, nowhere on Gerald Brooke, and nowhere on disarmament. He was desperate and looking around for something, anything, to put in his shop window. Otherwise he would have to appear in this House, and, perhaps more important to him, to go on television with nothing at all in his hands.

It is easy to see what happened then. Someone remembered the joint debt settlement of British and Soviet claims which had been dragging on through hundreds of meetings for nearly five years. Here was inspiration. Here at last, the Prime Minister must have thought, was one small scintilla of success with which he could pad out the communiqué. But it was not so simple as that. The Russians would not play. Instead of agreeing to write off the claims of both sides, Mr. Kosygin, wiser man than the Prime Minister, held out for more.

What did the Prime Minister do? He caved in, just as he has caved in too often when dealing with Mr. Kosygin. He chucked in a half-million to clinch the agreement. It was very easy for him to do this because he was giving away someone else's money.

It was this more than anything else that is the dark secret of subsection (5). We cannot avoid the suspicion that the Prime Minister's need for an agreement—any agreement—with the Russians was so great that he dipped his hand into somebody else's pocket and forked out a cool half million of what my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) called baksheesh for the Soviet Union.

The fourth reason why my hon. Friends and I object to this subsection is because the agreement on which it sets the seal of Parliament was not only unnecessary but was an extremely bad bargain for Britain. Not for the first time in recent negotiations with the Soviet Union—the Consular Relations Convention was another example—we gave up much more than we gained. I hope the Minister of State will correct me if I am wrong, but this is how the balance sheet looks from this side of the House. First we abandon all outstanding claims against the Soviet Union. This includes the £30 million originally awarded to us by international arbitration for the Lena goldfields. The Soviet of course had refused to accept that award, but had agreed to pay £3 million of it. It was still owing on that agreement £2,200,000.

That sum of £2.2 million will now be written off with the passage of this Bill. So will our further claim under the Ships Expenses and Freights Agreement of 1944. That is an additional £1.2 million. If we add to this the Prime Minister's personal half million, we get a total of £4.1 million written off or handed over to the Soviet Government. What do we get in return? The Soviets have agreed not to pursue claims against this country and against the Baltic gold which no British Government and no British court has ever thought were worth the paper they were written on. There is not much of a concession there. Yet that is all there is in this Agreement.

8.30 p.m.

To be fair to the Government, as my hon. and gallant Friend the Member for Lewes, said, they also assumed—I think "imagined" would be the better word—that by sucking up to Mr. Kosygin they would get a bonus in the way of a better balance in our Soviet trade. That bonus has not been achieved British trade with Russia continues to show a markedly favourable balance to the Soviet Union and against Britain.

So where, then, lies the evidence that this deal represents a good bargain for Britain? The answer, I suspect, is that Ministers were hoping to buy a more sympathetic attitude on the part of the Russians to a number of other bilateral questions, including perhaps, that of Mr. Brooke. The Prime Minister, to his credit, has raised these matters with Mr. Kosygin both in Moscow and in London, and no doubt he sincerely hoped that by treating the Russians generously albeit with the Baltic States' money, he might get a quid pro quo. Subsection (5) is the quid—half a million quid. But where is the quo? We are still waiting for the the Russians to honour the Anglo-Soviet Convention in the case of Mr. Brooke. There is no evidence whatsoever that the £500,000 has helped our trade. All that we know is that the Government have demonstrated the folly of making concessions to the Soviets without first making sure that those concessions will achieve their end.

I turn to the final and perhaps most decisive reason for our resisting the Government's intention. That reason, as my hon. and gallant Friend the Member for Lewes said, is their quite flagrant contempt of Parliament. I want to give two examples. The Under-Secretary said on 7th November: Neither this nor any other British Government could have handed the assets over to the Soviet Union. I am sure that both sides of the House would have rejected such a solution as completely intolerable."—[OFFICIAL REPORT, 7th November, 1968; Vol. 772, c. 1132.] Yet on 12th January, nine weeks later, the Government did exactly what the Under-Secretary had earlier described as "intolerable": they handed over, without telling Parliament, £½ million from the Civil Contingency Fund.

Then again, on 23rd January, as my hon. and gallant Friend the Member for Lewes reminded the House, the Foreign Secretary said specifically— This Agreement will be subject … to Parliamentary approval. If Parliament turns it down, that will be that."—[OFFICIAL REPORT, 23rd January, 1968; Vol. 757, c. 210.] Later, when the Bill was debated in another place, Lord Chalfont, speaking on precisely the same point, said categorically … this agreement is not subject to the approval of Parliament". What is more, Lord Chalfont, just rubbing it in, you might think, went on to say: it never was intended to be subject to such ratification. Both sides"— that is, Russian and British— approached the Agreement in the belief that it was right to have an agreement which was not subject to ratification."—[OFFICIAL REPORT, House of Lords; 13th February, 1969, Vol. 299, c. 616.] That was the statement in one House. How can it possibly square with the Foreign Secretary's statement in this House? This is not the first time that the noble Lord, Lord Chalfont, has embarrassed the Foreign Secretary.

Mr. Maxwell-Hyslop

Did my hon. Friend notice at that moment the mirth with which the complete contradiction between Ministerial statements in the two Houses was greeted from the Government Front Bench?

Mr. Griffiths

I did not notice the mirth and I cannot imagine why there was any. The difference is that for once Lord Chalfont was right and the Foreign Secretary was wrong.

I admit that there is nothing unusual in the Soviet Union's approaching ratification in this way. They do not have a Parliament—at least not in the British sense. They did not give a fig for Parliamentary consent. The extraordinary thing is that the Prime Minister, who made the Agreement, and the Foreign Secretary, the right hon. Member for Belper (Mr. George Brown), who signed it, apparently took the same attitude to Parliament as did the Russians. Like Mr. Kosygin, they seemed to think that Parliament's views do not matter and that the consent of the House of Commons for the giving away of other people's money not only could be taken for granted but need not even be sought. There is no doubt about this. This is one of the crucial reasons why my right hon. and hon. Friends and I propose to divide the House of this subsection.

Indeed, it is hard to find any reasonable excuses for what the Government have done. The most charitable explanation I have been able to find for what the Minister of State in the other place had himself to admit was an inadvertent case of misleading the House of Commons was that given by the same Lord Chalfont. Decent fellow as he is, he said in another place that what the Foreign Secretary said and what he actually meant "were not entirely congruent". What an extraordinary admission to come from the Minister of State and what an extraordinary fact that the right hon. Gentleman the Foreign Secretary has not felt it right to come to the House and put the record straight!

This subsection ought to be deleted. It gives away someone else's money. It is unjust. It is unjust to the Baltic States and to the residuary British claimants who are getting less so that the Russians may have more. It is an Agreement that was unnecessary. It was a bad bargain for Britain. It was and still is a contempt of Parliament; and I believe that it is an affront to the honour of the British people.

Mr. Whitlock

With your permission, Mr. Deputy Speaker, and that of the House, I would like to speak again. Once again we have heard a great deal from hon. Gentlemen opposite about the iniquity of the Anglo-Soviet Claims Agreement and, in particular, about the alleged unwisdom of the Government making this payment of £500,000 to the Soviet Union as part of the Agreement.

Mr. Hyslop

Dishonestly!

Mr. Whitlock

I do not propose to tread over every inch of the well-worn path we pursued in the Second Reading and Committee stages, the Third Reading, in another place and now today, or to abuse your indulgence, Mr. Deputy Speaker, by repeating the arguments that have already been deployed. Hon. Members opposite continually represent—I might almost say "misrepresent"—this agreement ase if it were a gesture of appeasement to the Soviet Union, as the hon. Member for Tiverton (Mr. Maxwell-Hyslop) has said, for unworthy reasons and at the expense of the former owners of Baltic assets. But this picture is totally at variance with the facts.

The truth is that we were able, at a favourable juncture in Anglo-Soviet relations, the occasion of Mr. Kosygin's visit to this country in 1967, to secure an agreement with the Soviet Government about post-1939 financial claims on terms which were very near the best we could reasonably have hoped to secure under any conditions and which brought very substantial benefits to British claimants, the people whose interests we had in the forefront of our minds then and now. I am sorry to see that hon. Members opposite apparently have such scant regard for those they represent.

Let me repeat this was an Agreement first and last, which we entered into in the interests of the British claimants. Those people had no prescriptive rights to assets under the control of the British Government, but they had legitimate hopes of receiving compensation which would bear some relation not only to their claims but also to the value of their assets; and we had a responsibility to see that these hopes were not disappointed. Two years ago we had an opportunity to reach an agreement on terms which were favourable to our claimants and which we took. It involved subtracting less than 10 per cent. from the total value of assets which otherwise might be available to our claimants. As I said in first speaking to this Motion, not one of them has suggested to my knowledge that they would rather have had 100 per cent. of a bird in the bush than 90 per cent. of a bird in hand now.

It is all very well for the hon. and learned Member for Northwich (Sir J. Foster) to say we, or indeed the previous Administration, ought to have given the claimants their 100 per cent. years ago. There were good reasons for not doing this, so we thought, and so the previous Administration must have thought, since they took no such unilateral action as the hon. and learned Gentleman suggests; and it was they who initiated the negotiations which resulted in the Agreement. I would point out that the mere fact that they entered into negotiations meant that they accepted that the Baltic gold was not inviolate. I find it difficult, therefore, to take seriously the crocodile tears we have witnessed today.

The words "tip" or "bribe" have been freely used in connection with the feature of the Agreement to which hon. Members opposite seem to take most objection. A number of them seemed to suggest that a bribe of £500,000 was offered to the leaders of the Soviet Government not only as the price of a claims agreement but as part of the price of a treaty of friendship with the Soviet Union. Their naivety in this connection would be almost beyond belief if we did not know them as well as we do.

Sir P. Rawlinson

Is the hon. Gentleman going to tell the House that, considering the debate on this issue, and weighing up United Kingdom claims against Soviet claims, the United Kingdom negotiators honestly believed that the balance lay with a £500,000 payment to the Soviet Union?

Mr. Whitlock

The claims agreement was a business-like agreement with the Soviet Union, entered into at a time when the atmosphere between us was possibly more favourable to arrangements on such sensitive subjects than it is now. It was no more and no less than that. I readily agree that it involved some concessions on our side, but so it did on the Soviet side. We gave up a small part of the assets; they gave up their claim to the gold, a claim which they had previously maintained, however wrongly, was a good one.

Very little of this, however, has a direct bearing on the Motion. The point at issue is simply whether the taxpayer should foot the modest bill for this Agreement, which was entered into for the benefit of one identifiable group, or whether that group itself should pay. I believe that the claimants are and were perfectly willing that the sum of £500,000 should be paid from the assets, to which, after all, they have no legal title but that which we create through the Bill. In the interest which has been accumulated on the assets since the signature of the agreement they will in any case receive more than the sum to be deducted to cover this payment. I am aware of no good reason

why the taxpayer should be asked to find this sum.

Therefore, I have no hesitation in asking the House to support the Motion.

Mr. Eldon Griffiths

Is that all the Minister is going to say? Is he not going to deal with the contempt of the House? Does he not think that these points deserve and demand a reply?

Question put:—

The House divided: Ayes 95, Noes 74.

Division No. 186.] AYES [8.43 p.m.
Anderson, Donald Huckfield, Leslie Norwood, Christopher
Archer, Peter Hughes, Emrys (Ayrshire, S.) Page, Derek (King's Lynn)
Atkinson, Norman (Tottenham) Hughes, Hector (Aberdeen, N.) Palmer, Arthur
Bidwell, Sydney Hunter, Adam Pannell, Rt. Hn. Charles
Binns, John Hynd, John Parkyn, Brian (Bedford)
Booth, Albert Irvine, Sir Arthur (Edge Hill) Pavitt, Laurence
Brooks, Edwin Janner, Sir Barnett Peart, Rt. Hn. Fred
Brown, Bob (N'c'tle-upon-Tyne, W.) Kelley, Richard Pentland, Norman
Carmichael, Neil Kenyon, Clifford Perry, Ernest G. (Battersea, S.)
Coe, Denis Kerr, Mrs. Anne (R'ter & Chatham) Perry, George H. (Nottingham, S.)
Davidson, Arthur (Accrington) Kerr, Russell (Feltham) Price, Christopher (Perry Barr)
Davies, Ednyfed Hudson (Conway) Lawson, George Roberts, Gwilym (Bedfordshire, S.)
Davies, Dr. Ernest (Stretford) Mabon, Dr. J. Dickson Robertson, John (Paisley)
Dell, Edmund McBride, Neil Ross, Rt. Hn. William
Dewar, Donald McCann, John Rowlands, E.
Diamond, Rt. Hn. John MacColl, James Sheldon, Robert
Dunnett, Jack Macdonald, A. H. Shore, Rt. Hn. Peter (Stepney)
Eadie, Alex McKay, Mrs. Margaret Short, Mrs. Renée (W'hampton, N. E.)
Ellis, John Mackenzie, Gregor (Rutherglen) Silkin, Rt. Hn. John (Deptford)
Ennals, David Mackie, John Slater, Joseph
Evans, Ioan L. (Birm'h'm, Yardley) Maclennan, Robert Small, William
Fernyhough, E. McNamara, J. Kevin Tinn, James
Foley, Maurice MacPherson, Malcolm Urwin, T. W.
Fraser, John (Norwood) Manuel, Archie Walker, Harold (Doncaster)
Freeson, Reginald Marquand, David Wallace, George
Gregory, Arnold Mellish, Rt. Hn. Robert Watkins, David (Consett)
Grey, Charles (Durham) Mendelson, John Weitzman, David
Griffiths, David (Rother Valley) Millan, Bruce Whitaker, Ben
Harrison, Walter (Wakefield) Miller, Dr. M. S. Whitlock, William
Haseldine, Norman Morgan, Elystan (Cardiganshire)
Hooley, Frank Morris, Alfred (Wythenshawe) TELLERS FOR THE AYES:
Houghton, Rt. Hn. Douglas Morris, Charles R. (Openshaw) Mr. Alan Fitch and
Howie, W. Murray, Albert Mr. Joseph Harper.
NOES
Baker, W. H. K. (Banff) Glover, Sir Douglas Maginnis, John E.
Beamish, Col. Sir Tufton Goodhew, Victor Maxwell-Hyslop, R. J.
Bennett, Dr. Reginald (Gos. & Fhm) Grant, Anthony Monro, Hector
Bessell, Peter Gresham Cooke, R. More, Jasper
Biggs-Davison, John Grieve, Percy Morgan, Geraint (Denbigh)
Black, Sir Cyril Griffiths, Eldon (Bury St. Edmunds) Noble, Rt. Hn. Michael
Boardman, Tom (Leicester, S. W.) Grimond, Rt. Hn. J. Nott, John
Body, Richard Hall-Davis, A. G. F. Onslow, Cranley
Boyle, Rt. Hn. Sir Edward Harris, Reader (Heston) Osborne, Sir Cyril (Louth)
Braine, Bernard Harvey, Sir Arthur Vere Peel, John
Brinton, Sir Tatton Powell, Rt. Hn. J. Enoch
Brown, Sir Edward (Bath) Hirst, Geoffrey Pym, Francis
Bullus, Sir Eric Holland, Philip Rawlinson, Rt. Hn. Sir Peter
Burden, F. A. Hordern, Peter Ridley, Hn. Nicholas
Campbell, B. (Oldham, W.) Irvine, Bryant Godman (Rye) Scott, Nicholas
Clegg, Walter Jennings, J. C. (Burton) Shaw, Michael (Sc'b'gh & Whitby)
Dance, James Jones, Arthur (Northants, S.) Smith, John (London & W'minster)
Dean, Paul King, Evelyn (Dorset, S.) Steel, David (Roxburgh)
Deedes, Rt. Hn. W. F. (Ashford) Lambton, Viscount Summers, Sir Spencer
Dodds-Parker, Douglas Langford-Holt, Sir John Taylor, Sir Charles (Eastbourne)
Doughty, Charles Lewis, Kenneth (Rutland) Thatcher, Mrs. Margaret
Foster, Sir John Lubbock, Eric Tilney, John
Gilmour, Ian (Norfolk, C.) McNair-Wilson, M. (Walthamstow, E.) Turton, Rt. Hn. R. H.
Waddington, David Wilson, Geoffrey (Truro) TELLERS FOR THE NOES
Ward, Dame Irene Woodnutt, Mark Mr. Reginald Eyre and
Wiggin, A. W. Younger, Hn. George Mr. Bernard Weatherill.
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