HC Deb 22 April 1971 vol 815 cc1372-9
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)

I think that it would be for the convenience of the House, in view of the publicity given to it, if I were to make a short statement about the question of unauthorised possession of confidential information concerning the Vehicle and General Insurance Company.

At a meeting between the directors of the Vehicle and General Insurance Co. Ltd. and my Department on 18th November last year, the former revealed knowledge acquired through a source outside the Department of internal exchanges between officials of the Department about the affairs of the group. A Departmental investigation was put in train at once. This investigation was inconclusive, and the matter was referred to the Director of Public Prosecutions early in Janauary. With the approval of my right hon. and learned Friend the Attorney-General, the Director decided that a further investigation should be carried out by the Metropolitan Police with a view to a possible prosecution. The papers are now with the Treasury prosecuting counsel.

Mr. Carter

May I put four questions to the right hon. Gentleman? First, will he reconvene the Departmental inquiry into the leak, will its finding be made public, and will full Ministerial responsibility be accepted for it?

Second, will the terms of reference of the present inquiry into Vehicle and General be extended to cover the Department?

Third, when it was known last July that the Vehicle and General Insurance Company was in difficulties, why did the Department not take action sooner, particularly since it discovered in November that the leak had occurred?

Fourth, from Parliament's point of view, does not the right hon. Gentleman feel that a Select Committee should be appointed and report all its findings to the House?

Mr. Davies

First, I have no reason to reconvene the Departmental inquiry until such time as the Treasury prosecuting counsel has had access to, and consideration of, the papers which have been put before him. I must leave it to him first and foremost to reach his conclusions on what has been put to him.

Second, the Companies Act inquiry will not cover the specific matter which is the subject of my statement, because it is an inquiry into the affairs of the company. It will look into relations between the company and the Department but only in so far as they affect the company's own affairs.

The third question which the hon. Gentleman raised is not germane to the statement which I have made. He referred to doubts which we had in July, which he considers we did not follow up quickly enough. This is not a relevant question arising on my statement.

Fourth, as to a Select Committee, again it is necessary first to see what is the reaction of the Treasury prosecuting counsel to the information put before him. It would be wrong to try to anticipate it.

Mr. Rost

Will my right hon. Friend consider asking the Stock Exchange Council to hold an investigation into the share dealings prior to the collapse of the company so that, if there were beneficiaries with financial gain resulting out of this affair, they may at least be identified, which would not allow insinuations or allegations to be made against possibly innocent parties, such as civil servants or even Ministers?

Mr. Davies

I entirely appreciate the motive behind that request, but again I must say that until such time as we have the conclusions reached as a result of the investigations which have taken place, about which there are papers, we should not seek in any way to devise a new method of inquiry.

Mr. Benn

Does the right hon. Gentleman realise that, without the persistence of my hon. Friend the Member for Birmingham, Northfield (Mr. Carter), his statement would never have been made to the House at all? Second, does he appreciate that in his statement he has revealed a far graver situation even than was apparent tram the Sunday Mirror leak and the letter written to my hon. Friend yesterday, inasmuch as it now appears that the leak was known on 18th November, and there was thereafter a Departmental inquiry, the Director of Public Prosecutions was not brought in until January, but meanwhile the company was allowed to continue in business when it was known by the Department that a leak had occurred about the Departmental attitude to the company? Does the right hon. Gentleman recall that in his statement to the House on 2nd March, he made no reference whatever to the leak? Indeed, he said that one reason why he had not acted earlier was that he was afraid that if anything go: out the company might collapse, although at the time he knew that something had got out three months earlier.

Hon. Members


Mr. Benn

Can the right hon. Gentleman say now whether any of the directors or principal shareholders of Vehicle and General sold their shares between 18th November and the date when the company collapsed?

Further, does the right hon. Gentleman appreciate that an episode of this kind, however it arose—perhaps it included the passage of documents, and he will tell us—undermines the whole basis of confidence between Government and industry and really does merit an inquiry going well beyond either a police investigation or a Companies Act inquiry —requiring, indeed, a Select Committee which will allow every aspect of the matter, including Ministerial responsibility, to be called into account?

Mr. Davies

I cannot accept the exaggerated views expressed by the right hon. Gentleman. This leak was detected on 18th November. A Departmental inquiry was instituted. It was inconclusive. The necessary proper steps were then taken, and have been taken throughout. I entirely disagree that this should be broadened in the way the right hon. Gentleman seeks into some massive consideraton of confidence, which it absolutely does not justify.

As regards the revelation of this situation, which the right hon. Gentleman ascribes to his hon. Friend's persistence, I understand his point of view, but I must say that from the Departmental point of view it would not have seemed a matter which would have benefited greatly from revelation. [HoN. MEMBERS: "Oh!"] I reaffirm what I have said, that what was important was to get to the bottom of the matter, and this is what we have sought to do. When the hon. Gentleman addressed a letter to a Minister in my Department posing a specific question, it would have been impossible to do other than answer him directly, as has been done.

Mr. Benn

Does not the right hon. Gentleman realise that it was his own statement just given to the House which revealed for the first time that a source outside the Department had access to information which he knew, were it to become general, would precipitate the collapse of the company? Were documents passed? In view of the situation which now confronts us, is it not right that there should be an inquiry looking into every aspect of this matter and not just into the handling of the company? Is the right hon. Gentleman aware that some subjects whose revelation may not be beneficial for some people may be highly beneficial to this House and the public?

Mr. Davies

I am very conscious of that. I am certainly not trying to conceal anything in this matter. [HoN. MEMBERS: "Oh."] But when matters have been referred to the Director of Public Prosecutions, when a police inquiry has been instituted, and when papers have been produced by that inquiry and submitted to the Treasury prosecuting counsel, it is proper that they should be gone through with, and that is what I have adhered to.

Mr. Ashton

Does not the right hon. Gentleman remember that when the hon. Member for Worcestershire, South (Sir G. Nabarro) made allegations two years ago of a Treasury leak, allegations which received extensive publicity, my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), the then Chancellor of the Exchequer, immediately set up a Select Committee of inquiry to get to the bottom of the matter? Will the right hon. Gentleman give an assurance that on this occasion, irrespective of what the Director of Public Prosecutions finds out, he, too, will set up such a Select Committee to ascertain whether information has been divulged?

Mr. Davies

No, I will not do so irrespective. I will first and foremost see what the conclusion of the Treasury prosecuting counsel is.

Mr. J. T. Price

In view of what the right hon. Gentleman has now told the House in mitigation of this deplorable incident, is he not aware that long before he held his present office there was another serious insurance company collapse, that of the Fire, Auto and Marine Insurance Co., as a result of which the House passed amending legislation strengthening the Companies Act? I served for three months on the Committee considering that Bill. All hon. Members on both sides who took part in that consideration were satisfied that his Department were suitably armed to deal with similar cases. It is simply because his Department has procrastinated and failed to use the amended legislation available to it over the past 12 months that hundreds of thousands of policy holders have been inflicted with misery as a result of the collapse of Vehicle and General.

Mr. Davies

It is thanks indeed to such legislation that I am able to carry out the inquiry which is in course, so it would be wrong for me to do other than to be grateful for the existence of its provisions. But I cannot deal with the first part of the hon. Gentleman's question, which does not arise from my statement.

Mr. Thorpe

The whole House will agree that matters which may be of a criminal nature are very properly being investigated by the Director of Public Prosecutions, and it would not be right to comment on them. But the right hon. Gentleman has told the House today as a fact that a source outside the Government knew of exchanges within a Department relating to confidential information. Is he aware that the public are very concerned about the possibility of Governments obtaining information and making it known to third parties, and that nothing more than a thorough Departmental inquiry, the results of which will be published, whatever the outcome of the Director of Public Prosecutions' inquiry, will satisfy the public, although the right hon. Gentleman may be prepared to be satisfied with something less?

Mr. Davies

I think the right hon. Gentleman has jumped a stop, because I have not said that the Government revealed anything. I have said that information was acquired through a source outside the Government. That does not imply necessarily that the Government have revealed it.

Mr. Thorpe

How does the right hon. Gentleman consider that a source outside a Government Department knew what went on between two officials in a Government Department without one of those officials being indiscreet?

Mr. Davies

I simply ask the right hon. Gentleman to use his imagination On that. [HON. MEMBERS: "Oh!"] I can think of several methods of so doing. I will not discuss any of them with the right hon. Gentleman pending the report of the Treasury prosecuting counsel.

Mr. Roy Jenkins

The Secretary of State has made the most extraordinary series of statements to the House this afternoon. An event such as we are discussing is, fortunately, extremely rare in our administrative experience. What is clear is that this was known to the right hon. Gentleman on 18th November. The matter went to the Director of Public Prosecutions in January. It has become known to the House at the present time, and his statement, it is clear from what he has said, has been made only because of the intervention of my hon. Friend the Member for Birmingham, Northfield (Mr. Carter). It is most extraordinary that the Prime Minister should have chosen today to say that my hon. Friend was wrong as usual. The right hon. Gentleman has made it quite clear that he would not otherwise have made this statement. Is not it a most extraordinary state of affairs that this should be revealed to the House solely because his hon. Friend the Under-Secretary had to reply to my hon. Friend, and therefore revealed it incidentally? Is not the right hon. Member for Devon, North (Mr. Thorpe) on a very strong point when he says that Treasury prosecuting counsel are concerned only with the criminal aspect of the affair, but that there is a much wider aspect, which is the general relations of confidence between public Departments and business and the public generally?

Mr. Davies

I am very well aware of what the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) says. I am simply saying that until such time as I see the results from the work carried out by the police and the Treasury prosecuting counsel I shall take no further action, and I am convinced that that is right.

Mr. Jenkins

Will the right hon. Gentleman assure us that as soon as he sees that he will make a statement to the House without having to be prodded by my hon. Friend the Member for Northfield?

Mr. Faulds

Honest Government.

Mr. Davies

I do not very much take to the dig at the end, but I will certainly consider what further statement can usefully be made to the House in due course.

Mr. Tugendhat

Is my right hon. Friend aware that there is considerable support on this side of the House and throughout the country for the Government's attitude of not jumping to conclusions before the facts have been fully investigated? Is he also aware that under previous Administrations of both parties great harm has been done to the reputations of individuals when Governments have assumed that certain allegations have been right and have acted before the full facts have been assessed? This is a matter of which the Opposition have considerable personal experience.

Mr. Davies

It is for that reason that I do not wish at this stage to take action in anticipation of the results of the work in hand.

Mr. C. Pannell

Is the Secretary of State seized of the point which I think puzzles the whole House, that this was known at the end of last November? Bearing in mind the precedent of frankness between Government Departments and the House, why have we had to wait until now before any statement was made? We could quote many precedents of Ministers faced with similar situations being frank with the House and the matter —after disclosure—being treated as sub judice until all the facts were known. I make no assertions about this, but because the Minister came late to Government service he does not seem to have appreciated the conventions of the relationship between the Government and the House.

Mr. Davies

I do not think that that has anything to do with it. The truth is that when matters arise which involve the possibility of criminal prosecution it is infinitely better to let the proper course of investigation be proceeded with, and that is what has happened.