§ Order for Second Reading read.
§ Mr. Speaker
Before calling on an hon. Member to open the debate, I have two things to say. First, I think that it would be for the convenience of the House if the Instruction in the name of the hon. and learned Member for Southport (Mr. Percival)That it be an Instruction to the Committee on the Bill that they so amend the Bill as to provide that not less than one half of the amount due upon the redemption of each unit of the new securities shall be paid to the holder of the said unit on the date on which it falls due for redemption or forthwith if the said date has already passed.314 and the Instruction in the name of the hon. Member for Liverpool, Wavertree (Mr. Tilney)That it be an Instruction to the Committee on the Bill that they amend Schedule 5 to the Bill so that it no longer repeals the duty imposed by the Mersey Docks Acts Consolidation Act. 1858 s. LXIX and the Mersey Docks and Harbour Board Act, 1950 s. 21 to maintain landing stages.were discussed on the Motion for the Second Reading of the Bill.
Second, I have selected the Amendment in the names of the right hon. Member for Birkenhead (Mr. Dell) and other hon. Members, and in due course I will call the right hon. Gentleman to move that Amendment. When the right hon. Gentleman has moved the Amendment, I will not restrict the debate to the 315 exact terms of the Amendment but will allow reasonable latitude.
§ 7.12 p.m.
§ Mr. John M. Temple (City of Chester)
I beg to move, That the Bill be now read a Second time.
Before I explain the principles of the Bill, I think that it will be appropriate for me to give a brief history of the port of Liverpool. For 100 years up to 1811, the port was managed by Liverpool Corporation. Then for a period of 50 years until 1858 the port was jointly managed by the Corporation and by what is now termed the Mersey Docks and Harbour Board.
A significant year was 1858. In that year the Corporation dropped out of its responsibilities and the whole responsibility then rested on the Mersey Docks and Harbour Board. The Board was established as a public trust with 24 directors appointed by the port users and four directors Lppointed by the Government. That has been the situation up to this day.
Right hon. and hon. Members may think it strange that I have been asked by the promoters of the Bill to move its Second Reading. I think it was thought that I had a sufficient knowledge of the port of Liverpool and a sufficient connection with Merseyside and was sufficiently detached from the immediate difficulties which surround the port.
I may say in explanation of my being chosen that my family for three generations on both sides has been closely associated with Liverpool and was established on Merseyside before the Mersey Docks and Harbour Board took over responsibilities for the port. As a young man I can remember starting in business in Liverpool. As a boy I can remember looking out from my father's offices on the dock road in Liverpool and watching the great Clydesdale horses drawing the drays which were loaded with bales of cotton which had come from the United States of America and which were destined for the mills of Lancashire. I can therefore claim to have had a long connection with Liverpool and with Merseyside and to have a deep love and affection for everything that goes with the city and port of Liverpool.
316 The reason for the Bill is the Board's present financial situation. The Bill is needed urgently. Hon. Members may have read in today's papers that in the last financial year up to December, 1970 the Board, on a slightly different accounting basis, incurred a loss of £3 million, which was considerably greater than the loss which was incurred in 1969. This indicates the magnitude of the financial problems facing the Board.
After the 1970 General Election, consultations started between the Government and the Board. In December of the same year a receiver of rates was appointed by the Government. The first default on bonds occurred in January of this year. I will not give much detail of this part of the story, because it has been the subject of previous debates and a number of Questions, and hon. Members on both sides who are interested will have studied the debates carefully.
The most important point before the House tonight concerns what I call the guiding principles of the present Board in respect of what it wants to try to achieve for the port. I will set out those guiding principles very succinctly, and I hope clearly, as, first, to continue to expand and to modernise the port to benefit both port users and all employees and, second, to convert a public trust into a statutory company, treating all bond holders as equals. I hope that this statement of guiding principles will give a certain amount of encouragement to the right hon. Member for Birkenhead (Mr. Dell), who has tabled a somewhat critical Amendment.
I will now give a general explanation of the Bill, and towards the end of my speech I will explain the promoters' views of the two Instructions.
The promoters are the new board of the Mersey Docks and Harbour Board under the chairmanship of Mr. J. G. Cuckney. The present management of the Board is under a small executive committee. I have met the committee, and I have met the Chairman of the Board in Liverpool and in London, and I have met people who have been interested in the Board's affairs. They have expressed confidence, not only in the chairman but also in his executive committee.
317 The executive committee has faced a distressing financial situation and is deeply conscious of its responsibility. Clearly there is no easy way out of the Board's difficulties, but a ray of light appears when the situation is considered in connection with the great Seaforth container terminal. I use the term "container terminal" in a general sense, because the Seaforth project will be more than a container terminal. It will have general cargo facilities and bulk handling facilities for grain and meat. Without doubt, there is great urgency for the Bill. Unless the Bill succeeds today, it is doubtful whether Government support on the present scale will be forthcoming. I hope that my right hon. Friend the Minister, who hopes to catch your eye later, Mr. Speaker, will make the Government's position clear. I think I can at least anticipate that my right hon. Friend will express approval in principle of the Bill, and I hope very much that he will be able to help in other directions.
The new company is to be called the Mersey Docks and Harbour Company. It will be a statutory company, with most of the provisions of the 1958 Companies Act applicable thereto. Hon. Members will know that there was a previous Bill, which was withdrawn, the effect of which would have been an arbitrary writing down of the capital by about 30 per cent. That was considered in all quarters to be too inflexible, and the present proposal is that there should be a moratorium of repayments of the capital debt, and that at the same time interest payments should be written down by a maximum of 30 per cent. In other words, 70 per cent., at least, of interest would be paid during the moratorium period. The Bill has been brought forward after extensive consultations with all the various bodies who could possibly be concerned, and I hope very much, therefore, that it will prove more acceptable than the Bill which was withdrawn.
§ Mr. Edmund Dell (Birkenhead)
The hon. Gentleman will be aware that in a document issued to the holders of the capital debt of the Mersey Docks and Harbour Board on 29th January of this year, reference is made in paragraph 7 to an informal Security Holders' Committee. Has that committee approved the terms of the Bill?
§ Mr. Temple
The committee was a party to the consultations to which I have referred. I do not think I can claim that it necessarily approved the Bill, but the committee was a party to the consultations, and I gather that it has not actively disapproved. I believe that to be the position.
I think it is worth looking at the precedents for statutory companies in connection with docks and harbours. There are two now, those at Manchester and Felixstowe. Both are operating satisfactorily and are paying dividends on their ordinary share capital, so that in itself is a relatively hopeful sign.
It is proposed that the Board of the new company will have a majority of directors representing the capital debt holders, and that Her Majesty's Government will continue to have representatives on the Board.
In connection with the reorganisation scheme, the Board has rationalisation plans on hand, the object of which is to maximise the present capital assets and encourage modernisation schemes. I give an undertaking that the Board will press on urgently with its review of the whole viability of the port of Liverpool, because on the result of the study hangs the reorganisation programme for the capital structure, and the Board is anxious to bring in this reorganisation as soon as possible.
I shall now give a short explanation of what I regard as the key Clauses, and also make a reference to the position of pensioners. One of the more important Clauses is Clause 5, which is concerned with the Liverpool Pilotage Order. I am thankful to say that negotiations have been taking place with the appropriate bodies. An Amendment will be tabled in Committee, and it will, I think, be agreed. I believe that Clause 5, as amended, will be satisfactory. At the request of the local authorities, Clause 8(3) is to be omitted.
Clause 12 is important. It deals with priority borrowings. Priority borrowings, in effect, are those borrowings which the board has made from the Government subsequent to 27th December, I understand that this Clause may be the subject of an Amendment in Committee, which will permit the Government to renounce their priority rights at any time, 319 rather than just when the scheme was promulgated. It will be a permissive change in the Clause, which I hope will prove acceptable.
I now draw attention to a feature of the Bill which I found it very hard to go along with, but I have reconciled myself to this feature now. I am refering to Clause 38(1)(f), which is concerned with the conversion of capital. The House will know that there are certain actions pending before the courts which have been brought by certain bond holders whose bonds should have been redeemed in January of this year. In the normal course of events I should not have agreed to support a provision of this nature but, having beer' associated with these affairs for some time, I think I can say that very few things in connection with the board are strictly normal. In these circumstances, I have reconciled myself to agree with this provision, and my reason for doing so is that if it were not in the Bill there would not be the equity as between all bond holders which I believe to be essential for the reorganisation scheme. That is my reason for agreeing to this provision, and I hope that it will be accepted as being adequate.
Clauses 47 and 48 are concerned with the ultimate reorganisation of the Board's capital, which must be reorganised not later than the end of 1974. The proposals, briefly, are that an approved scheme should be prepared by the Board, that on the Board there should be a majority of the representatives of the capital debt holders, and that the scheme should be adopted by an ordinary resolution. If there is a difficulty about the adoption of the scheme, the Bill says that there should be an adjudication by an independent expert. The promoters have had second thoughts about the individual expert, and they are prepared to accept, shall I say, three wise men whose qualifications have, I believe, been discussed in certain circles. Possibly the wisdom of three is greater than that of one, and I hope that this provision will give a certain amount of satisfaction.
The other Clause which calls for comment is Clause 53(1), which provides that under the Bill a receiver of rates appointed by the court should be discharged. I admit that we had to go 320 back a long way to get a precedent for the discharge of a receiver of rates in a Parliamentary Bill. All the precedents are in 1867 and 1869. Such situations are, fortunately, extremely rare. I do not think that a receiver of rates gives confidence amongst port users, and I believe that this is a sensible provision, having regard to all the extreme difficulties which surround the Board.
I now turn for a moment, though I do not mean in any way to relegate the importance of my next paragraph, to the position of pensioners. A good deal has been said about their position, and the Board is deeply conscious of its responsibility towards its pensioners. The Board recently called in pension consultants in order to find out the capitalised liability of the pensions which it has to pay. Although the report has not been finalised, it appears that the capitalised liability facing the Board will be about £7 million, and that if the pensioners were paid on an annual basis, which they have been hitherto, the annual charge would be about £800,000 to £1 million. I can give an undertaking that the unions and staff associations will be consulted when the consultants' full report is available, and I think we can say that the position of the pensioners is therefore secure.
I turn now to the two Instructions which have been received, and first to that in the names of my hon. and learned Friend the Member for Southport (Mr. Percival) and my hon. Friend the Member for Surrey, East (Mr. William Clark). Their proposals are that the Board should repay 50 per cent, of the bonds as they fall due, and should, of course, repay the 50 per cent. of the bonds which fell due in January and March of this year. Everyone must have considerable sympathy for my hon. Friend's proposals and objectives. Their objectives are to secure a quotation for the bonds on the Stock Exchange, and also to put a floor in the bond market—two very laudable objectives.
On the question of the quotation, the board is particularly keen to bring forward its scheme as soon as possible. One reason is that, as soon as the scheme becomes definitive, a quotation can be obtained on a recognised stock exchange. I hope that that ray of hope will be accepted by my hon. Friends.
321 Putting a floor in the bond market is a very difficult matter. The promoters feel that to pay out some bondholders 50 per cent. as they go would prejudice the chances of other holders, not forgetting that there is a number of irredeemable securities in the form of annuities, for which of course there is no terminal date. I shall have to explain to my hon. Friends that the financial position of the board is at present so serious that it would be irresponsible of it to accept these proposals. I shall have to advise the House that they would be unacceptable to the promoters.
I turn now to the Instruction in the name of my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney). He is rightly concerned, on behalf not only of his constituents but of the Merseyside users of the ferry services, that the landing stage at present maintained by the Board at Liverpool should continue to operate for the ferry services. I can understand this point of view, and the promoters accept its strength.
I am happy to be able to inform my hon. Friend and the House that a series of conferences have taken place over a number of years, but particularly over the last few days. As a result of a meeting only yesterday between, on the one hand, the Merseyside Passenger Transport Executive and the Birkenhead and Wallasey Corporations and, on the other, the Mersey Docks and Harbour Board, an agreement in principle on a joint responsibility has been reached. I hope that my hon. Friend will feel that that is sufficient to meet the situation and that the details can be worked out in Committee.
In all these difficult circumstances in which the Board finds itself, I believe that the present proposals are as equitable as possible, having regard to the many conflicting and deserving interests. The object of the Board is to revitalise the Port of Liverpool and thereby to provide a satisfactory way of life for all those engaged in the port and indeed all those interested in Merseyside.
The port of Liverpool, which it is a thrill to visit, has, tied up against its great docks the ships of all the maritime nations. Not only is it the second largest port in the country, but it is of ever-increasing importance as an entry port for 322 oil and oil products for the refineries on the South Bank of the Mersey.
Having met the new executive of the port, I can assure the House that I every confidence that they have the capacity to carry out these plans. I know that their problems are considerable. I can give one final undertaking on behalf of the promoters. Where there are small, or large, difficulties, the Board is willing to enter into discussions at the Committee stage. I hope that, with those assurances, the House will feel able to give the Bill a Second Reading.
§ 7.35 p.m.
§ Mr. Edmund Dell (Birkenhead)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:This House declines to give a Second Reading to a Bill, which, first provides no guarantee at all for the future of the Port of Liverpool in that, the action of the Government in refusing adequate financial support having ruined the credit worthiness of the Mersey Docks and Harbour Board for many years ahead, it makes no provision at all for the future development of that Port; secondly, is likely, as a result of the failure to provide for the future development of the Port, to lead to a running down of the Port and to redundancies; thirdly, constitutes a Statutory Company based on the conscripted capital of the loan stockholders without any guarantee of the extent of the write-down that will be proposed; fourthly, will lead to a scale of fees for Port services related not to the needs of the area for economic development, but to the equity capital compulsorily invested in it; and believes that the Bill fails to provide a proper basis for the Port's future which would in fact he provided only by public ownership as proposed by the previous Government.This is in form a Private Bill, although whether it is so in fact is a matter on which I will cast some doubt later, so we on this side have not put on any Whip. It is perhaps a measure of the nature of the Bill that it has not been found possible to find any Merseyside Member to sponsor it. The hon. Member for the City of Chester (Mr. Temple) has a beautiful constituency on the banks of the Dee, but he is not a Merseyside Member. We will in future call him as a learned authority in favour of retrospective legislation.
The Mersey Docks and Harbour Board has at any rate this cause for congratulation—this is one Bill which it has not been forced to withdraw. Of course, the reason is that it is in fact a Government Bill, not a Private Bill. No public 323 trust or other authority would bring forward a Bill like this without the support and authorisation of the Government.
The previous Bill was withdrawn according to a great principle—that if people's property is to be confiscated they should at least be consulted first.
Therefore, this Bill contains the forms of consultation, although I do not imagine that those who are going to be consulted will be particularly happy with the results or even with the fact of consultation. The hon. Member for the City of Chester said that there would be three arbiters rather than one, on the grounds that three confiscators are better than one. We prefer no confiscators at all.
It has been said that the reason that the original Bill was withdrawn and replaced by this one was to provide the fact of consultation. But this is not the real reason. The real reason is that the previous Bill provided for a writedown of 30 per cent. in the capital of the holders of the capital debt. But now the Board cannot say whether 30 per cent. is enough. It has introduced the Bill not so much to provide for consultation as to provide itself with the possibility, if it proves necessary, of a larger write-down than 30 per cent.
The Bill is presented and justified on the basis that this is the way to secure the future of the Port and the only way of avoiding further uncertainty. But the uncertainty was created by the Government, by their decision last November not to give the necessary support to the Board in the situation with which it was faced.
As a Merseyside M.P. I emphasise that the Board had no consultation with Labour Members on Merseyside before introducing the Bill. We were told that it was a Bill which had to be introduced. I do not wish to complain in any way of the information which the Board has provided to Labour Members. We have had frequent discussions with the Board and it has answered, so far as it has been able, all the questions which we have put to it. But there was no consultation. We were just presented with the Bill as the answer to the predicament of the Port of Liverpool. We were offered a dagger pointed at our back. We were told, "Either you support the Bill or 324 there can be no guarantee for the future of the Port of Liverpool". We have been given no information to show that this is a way of securing the port's future. Indeed, judging by the answers which the Board has honourably and honestly given to questions which we have asked, I do not know how it can claim that the Bill provides any security for the future of the Port of Liverpool.
We have asked many questions. For example, we have asked: What is the financial position of the port? The answer has been, "We do not know, and we shall not know for up to three years" —the period provided in the Bill for the preparation of the draft scheme.
We have asked: What write-down will be necessary to provide the capital base of the Mersey Docks and Harbour Co.? Will it be 30 per cent., more than 30 per cent. or perhaps very much more than 30 per cent.? Again the answer is that the Board does not know, and it does not know until in due course—a maximum of three years—the draft scheme is presented to the new debenture holders.
We have asked whether in its judgment the port can be made viable without Government subsidy—without, for example, using the amended provision, to which the hon. Gentleman referred, by which the Government could renounce their priority on subsequent lendings. But again it does not know.
Finally, as a further example, we have asked whether it can feel sure, or feel reasonably sure, that adequate finance will be made available by the Government for the development not just of Seaforth, but for the development of the general requirements of the port. After all, after this default, money will not be available from any other source. Again it does not know.
The Bill is not a recipe for removing uncertainty. It is a recipe for three years continuing uncertainty. Nevertheless, we are told that the Bill is vital to remove uncertainty and that, unless this uncertainty is removed, firms will move away from the Port of Liverpool But the Bill perpetuates uncertainty, it does not remove it.
There is a clear and simple way to remove uncertainty. The Government should make a simple statement: "We 325 will provide for the future of the port and for Rs development and for the necessary level of investment in the port." After all, the Government are in full control. It is not merely a matter that they will have a percentage of the new debenture stock; they, in effect, in reality, whatever the form, appointed the chairman and deputy chairman, and they are the only conceivable source of finance for this new company if it is formed by this legislation.
In previous debates I called this the cheapest takeover in history. The Government are in control without having had to pay for control. Unless the Government are prepared to say tonight that they will provide adequately for the future, the Bill does not help. If they say that, then the Bill is not necessary. A Bill might be needed to change the management. The old form of the Board certainly needed changing. Therefore, a Bill to that end might be necessary. But the Bill before us would not be necessary if the Government were prepared to make that statement. As it is, the continuing uncertainty can well lead to the running-down of the port and to redundancies.
The statutory company is to be established on the basis of a conflict of interests. The bond-holders, the holders of the capital debt, will naturally want the minimum write-down in their capital. The port, if it is to provide the services necessary in the national interest and for the North-West, needs a competitive level of fees. There will be pressure, especially from the large holders of loan stock, for the highest possible level of fees. In other words, the interests of the port may be sacrificed to the interests of the conscripted loan stock holders. It is entirely wrong that the future of the port should have to be determined by reference to an uneconomic load of debt.
The hon. Member for the City of Chester expressed his regret for the small investors who are being press-ganged into this statutory company. I should like to quote one gentleman, who was a Conservative candidate at the last election, Nigel Lawson, writing in the Evening Standard of 17th March, 1971. He, referring to what is being done, said:It is a cheap and nasty exercise which will cause considerable hardship in individual cases … the small savers who are being so heavily 326 penalised—people this Government oestensibly seeks to cherish—have neither responsibility for the Docks debacle nor any awareness that they were at risk.Everyone in this House knows that this is true.
It may be said: "Why should we worry about small investors losing £200 or £300 of their hard-earned savings at a time of massive growing unemployment when a lot of people are losing a great deal more? The fact of the matter is that there is a quality of deliberate, calculated, pettiness and dishonesty about this matter which is this Government's particular trade mark. With this Government one needs to read the small print.
§ Mr. Dan Jones (Burnley)
I should like to ask my right hon. Friend a direct question as a result of his recent utterances as a number of my constituents are involved in the precise category outlined by him. Is it my right hon. Friend's opinion that under the Bill these small investors will go to the wall in totality?
§ Mr. Dell
I hope that they will not go to the wall in totality. The extent to which their interests will be sacrificed is dependent on the draft scheme which will be produced. No assurances have been given about the extent of any write-down of capital which will take place.
I should like to make two comments only about the small investors, because this matter has been discussed in the House before. The Mersey Docks and Harbour Board takes this Act of confiscation too lightly. I know that it is fond of using this further weapon as a way of criticising its employees, but it gave the assurances regarding security. The Board placed assurances on its official documents regarding the "double your money if you are not paid on the due date" guarantee. If it now says that its assurances were worthless—it seems that they have proved to be worthless—I should have expected stronger representations to be made where they would really help—to the Government.
I now turn to the attitude of the City in this matter. How quiet it has become since the new Bill was introduced. It is allowing the Government to get away with this act of confiscation. II has abandoned its function as the protector of the small investor rather than embarrass 327 a Conservative Government—its Conservative Government. I can imagine what the reaction would have been if this had been done by a Labour Government. We shall know how to evaluate its protestations in the future.
§ Mr. Temple
In my speech I mentioned that there were cases before the courts brought by the big investors, which were sub judice at present.
§ Mr. Dell
I know that there are specific cases, but if the hon. Gentleman compares such outcries as there have been about the previous Bill with the outcry that there would have been if this Bill had been introduced under a Labour Government, he will see the point I am getting at. Nothing has been done effectively to persuade the Government to change a major mistake in policy which the City should have pressed them to change. I wait to hear what will be the attitude of Conservative hon. Members to this act of confiscation.
The right way to handle the situation was and is public ownership, with proper compensation. The Government through this Bill—it is their Bill—have perpetuated uncertainty, damaged the future of the port and increased the likelihood of redundancy. They are refusing to accept their proper responsibility to the national interest and the future of the North-West.
I wish that it could have been said with some security of the Government that this would turn out at any rate to be their meanest action, but I have not even that security.
§ 7.52 p.m.
§ Mr. William Clark (Surrey, Fast)
As the unhappy story of the Mersey Docks and Harbour Board unfolds it is more and more obvious that under the old management there was a complete disregard for cash values. The previous Government were entirely responsible for that. The present Government took over a mess, and all of us have sympathy not only with the Government and the Minister responsible but also with the management of the new Board.
The Board has three types of investor, bond holder, stockholder, debenture holder and so on. First, there is the Government, with nearly £20 million invested. Next there are the institutions, 328 the pension funds and so on. The right hon. Member for Birkenhead (Mr. Dell) is being unfair when he says that the City has not made representations. The institutions running the pension funds represent millions of small people whose pension depends on the investments of those bodies. They have about £20 million invested, and the general public have £53 million, making a total of about £93 million invested in the Board. The Board has four Government nominees. There are no nominees from the institutions, and no direct nominees for the general public.
It might be asked why people should invest in such an undertaking and why they should not read the small print. The first good reason for investing is that the Government have a large investment in the undertaking. Second, they have nominees on the Board. The third good reason is that it is a trustee security. Is it still considered to be a trustee security? I see that my right hon. Friend the Minister shakes his head. I should like to have on the record whether it is still a trustee security.
I accept that the Government nominee directors have no responsibility to any other bond holder. That is the normal practice. But they had a responsibility to the Government; they were the nominees of the previous Government. What advice did they give them? To whom did they report? They must have reported to the Minister on how the Board was doing. When the Government of the day were injecting more and more money into the Mersey Docks, did they give the cash projections, the profitability and the rest? Who is responsible for this mess? It seems to me that the Government of the day, of which the right hon. Member for Birkenhead was a member, did not use their nominees as normal companies use their nominees, in that the nominees should have reported to them. Did they report back to the Ministry? To whom did they report? Why was no action taken? It was obvious even in 1969 that the undertaking was not profitable.
§ Mr. Clark
I am delighted that the right hon. Gentleman has said that. His right hon. Friend the Member for Sheffield, Park (Mr. Mulley) was the Minister of the day. I am delighted that the right hon. Gentleman has said that they were going to nationalise. Absolutely splendid! So what is now said is, "Because the Government of the day are to nationalise tomorrow, let's not worry about profitability." That is the stupidity of the matter, and that it where we got the lethargy within the last Government which resulted in no action being taken on the Mersey Docks. If a Government are going to take over an undertaking, it is incumbent upon them that there should be no lethargy. They should take over a profitable organisation for the benefit of the taxpayer.
The right hon. Gentleman made great play of his Amendment. The sting is in the tail. He says that we must take the Board into public ownership. I do not know whether he has read the 1969 Annual Report of the Board, with its four Government nominees on it. It was categorically against nationalisation. The four Government nominees were saying "We do not want nationalisation", while their "employers" were saying, "We shall nationalise." The right hon. Gentleman has let the cat out of the bag—that there was no necessity for any cash evaluation, profitability and cash projections, discounted cash flows and so on, because the Government of the day were to nationalise the undertaking, and the taxpayer would have been saddled with a loss-making undertaking. That is monstrous. It is wrong for any Government to pump money willy-nilly into any undertaking, quasi-statutory authority or whatever, and not give the taxpayer benefit.
The previous Bill was eventually withdrawn as a result of a short, narrow debate, led very ably and in moderate terms by the right hon. Member for Birkenhead. The debate lasted about an hour, and each Front Bench took about 20 minutes. Three of us on this side also took part.
I have no vested interest in the Bill. I am not a Member for any of the Liverpool seats. But it is a basic principle that no one should be able to introduce a Private Bill which arbitrarily wipes off 330 30 per cent. of the capital, just like that, and no Government should connive.
The right hon. Member for Birkenhead seemed to be saying that we should not worry about the big investors, because it was in the national interest to maintain the port, but that we must do something about the small investors. That is wrong from the investment point of view. One cannot separate investors into sheep and goats. If we are to maintain the confidence of investors, we have to treat them all alike. It is monstrous that there should be an arbitrary write-off of 30 per cent., because I think that this will affect other loans of a similar nature in other ports. We have many other ports and local authority loans. That is my one interest in this Bill. I am determined that we should never connive at something which may lose the confidence of the investors.
§ Mr. Hugh Jenkins (Putney)
I support the proposition that the Government have a duty fully to reimburse investors and to see that no one loses any money. If that is the hon. Gentleman's argument, it has our support. But it would be wrong to say, in the special circumstances of this case, that the Government must not decide to be selective in favour of the smaller investors.
§ Mr. Clark
I am coming to that point.
I congratulate my hon. Friend the Member for City of Chester (Mr. Temple) on his speech. But I am rather worried about the question of consultation. If consultation has taken place with all the interested parties, why are there still petitioners against the Bill? Many people in the City have petitioned against the Bill, particularly the banks.
One aspect which I very much regret, as I am sure my right hon. Friend and the present management regret it, is that we are again discussing this matter without all the figures before us. We have not the 1970 accounts. We have the 1969 accounts, which were ready before this time last year. I accept the strictures of my hon. Friend the Member for City of Chester that this is an important and urgent Bill, but if that is so, the management should have seen that we got the accounts for 1970.
It is true that yesterday's Press release stated that the 1970 accounts would be 331 available within the week. It also said that the accounts for 1970 showed a loss of £3,028,000. But in discussing a Bill of this magnitude it would have been better to have had the accounts before us. All we know is that in 1969 the Board had a loss of £1.8 million and for 1970 a loss of £3 million. No doubt my right hon. Friend has some reason why the 1970 accounts are not available.
The Bill has answered many points raised during the debate on 18th December. But because of the brevity of that debate, it was impossible to raise many other points which we wished to raise. The Bill is to facilitate capital reconstruction, and the Board, the stockholders and the bond holders can agree or disagree. I should like my right hon. Friend to spell out what the Board has in mind on the position of the stockholders, whether debenture holders or bond holders.
In relation to redemption, it is extremely unfair that many stockholders who should have had their money on 1st January have not had it because of the previous Bill, the appointment of the receiver and the standstill arrangement. What, for example, in the capital reconstruction, whenever it comes, is to be the position of the £100 holder of stock? He should have got his £100 back on 1st January. If he had done so, he could have reinvested it in local loans at the going rate of about 9½ per cent. At the moment, however, he is probably still getting only 3½ per cent. He has been deprived of the difference between the 3½ per cent, that he has at present—I am including the moratorium—and 9½ per cent. He is, consequently, going to lose the enjoyment of his £100 for possibly two more years, thereby suffering an additional loss of income of about 6 per cent. per year. That same investor, of course, is also going to lose, for the two years before we get the definitive scheme, 30 per cent. of interest. Thus, over the two years, he will lose a further £4 in interest as well as his £12 from the difference between his present 3½ per cent. and the 9½ per cent. which he could get.
When capital reconstruction comes about, the original £100 holder will have lost two years of an extra 6 per cent. on his money, a total of £12, plus the loss 332 of 30 per cent. interest which he has to suffer. The capital reconstruction in order to give equity, should be about £100 plus redemption loss plus moratorium. The capital reconstruction will not be on the present £93 million capital plus redemption and interest, however—that is, £1 for £1—since it is understood that the £9 million which has gone in since November last year will come back as priority borrowing. It will perhaps be on only £84 million plus redemption and interest, making a total of £94 million.
Before the final scheme is formulated, the Board has many problems. One of these is the length of the docks, many of which are not being used. There should be land available to be sold off. But we do not know how much that is worth or by how much it will reduce the capital. We do not know whether the grain terminal is making a profit. The 1969 accounts gave no indication. We do not know how much stevedoring is making or losing. We do not know which are the less economic parts of the docks complex. Until we know how much we can get for the land or how much we can cut the loss by getting rid of the loss-making elements, the capital reconstruction cannot be formulated.
One may compute, as the previous Bill did by inference, presumably based on the 1969 accounts, that there should be a 30 per cent. write-off. When capital reconstruction comes and the Board knows the price fetched by the sale of land and which are the loss-making parts of the complex, it may be determined, for example, that the £100 stock is worth only £90 or £80 or £70. Whatever the figure may turn out to be, in these circumstances there is no justification for the Government money which has gone in since November last year ranking in priority over these stockholders. It should rank pari passu.
Let us assume that capital reconstruction comes and that 30 per cent. must be written off. A person with £100 in stock would, therefore, then have an asset worth only £70. I should have thought that the other £30 could be written up in a piece of paper issued to the holder stating "£30 equity in the Mersey Docks". I accept that at present it would be only a piece of paper, but, who knows, in 15 or 20 years' time it could become a profitable venture. It 333 would at least mean that the ordinary stockholder would have a piece of paper showing that of his £100 he has £70 in loan stock and the rest as a £30 worthless equity, but it would be worthless only at present and it might become valuable in future.
I suggest that this would be a good idea to introduce for statutory authorities. After all, any commercial undertaking gets its capital gearing right, with so much as fixed capital and so much as equity capital. This means that in building up the business one does not have to pay interest on all the money one borrows. One must, of course, pay the fixed interest on the first sum, but the equity capital is long-term. I have always maintained that fixed capital tends to make management lethargic, and I suggest that in this case the issue of equity for the written-down amount would be to the point.
The right hon. Member for Birkenhead claims that there are facilities in the Bill for this sort of thing to be done, but we want it spelt out so that both small and large investors know where they stand and what lies ahead. The right hon. Gentleman made a strong plea for the small investor. I suggest that it would be a dangerous precedent to pick out different-sized investors in the way he suggested.
If one suggests that the large investors, the institutions, which have £20 million in this undertaking, are so large as to be able to afford to be hammered by the small man, one is in fact only hitting the small man, because the institutions' investors are the small men, and it is on their investments and the yield on them that the pensions of the small investors are guaranteed.
§ Mr. Simon Mahon (Bootle)
As one who does not have a penny piece invested in this undertaking, but as one who comes from the area, I wish to inform the hon. Gentleman that, having listened to him with patience, there are some on this side of the House who hope that he will extend to us the courtesy of appreciating that the Port of Liverpool represents all that we have done and worked for on behalf of the nation. In other words, lest anybody forgets—and this should be clearly on the record in a debate such as this—this port is the gateway to the 334 Western Approaches and has on more than one occasion saved the country.
§ Mr. Clark
I do not dissent from that, but if we upset the person who might invest in Mersey, we may at the same time be upsetting the person who might invest in the Clyde and elsewhere. I appreciate the historical background to Mersey and I agree that it has been, and is, important to the nation. It has done a tremendous amount for our national wealth. I am arguing about the loss of confidence of investors.
Once the Government descend the slippery slope of precedent by dealing with different investors in different ways, they will be in trouble. After all, the Government have no money. If they want money, they must get it from the tax payer, and if they create a precedent of this kind it will be the tax payer who will eventually foot the bill. My hon. Friends are anxious to get taxation reduced, and already the Government have taken steps towards this end.
I agree that the Government should not subsidise any undertaking that merely wants money. However, my right hon. Friend should seriously look at this in the wider sphere. Let us consider the three types of investor with whom we are concerned tonight. First, we have the Government. They do not want their money back because they can afford to wait for it. Second, we have the institutions. They do not want their money back because they, too, can afford to wait; and their money is based on pensions and the actuarial value of the funds. They are more interested in yield than in capital.
Third, we have the small investor. He wants his money back. While I accept the philosophy that if one takes a decision one must stand by it, in this case the Government are telling the small investor, "You have invested £100. You will lose some of it. We do not know how much you will lose and we cannot tell you for two or three years. In the interim, 30 per cent. of your interest will be cut."
This shows the disadvantage of the Bill. The small investor is being told that he will definitely lose money, that the amount that he will lose cannot be stated but that between now and the appointed day he cannot sell his security. 335 For this reason the Instruction which stands in the name of my hon. and learned Friend the Member for Southport (Mr. Percival) and myself seeks to have a floor below which the price of the security will not go.
We have deliberately inserted the figure of 50 per cent. We are asking the Board to say, "Of your £100 invested, we will give you at least £50", and the interesting point about it is that one would immediately be able to obtain a quotation on the Stock Exchange. At present one cannot get a quotation for any Mersey Docks stock simply because, from 27th November, quotations were suspended, and they cannot be reintroduced until a definitive stock scheme is announced and agreed.
The small investor with, say, £100, has, from 27th November, not been able to sell his stock because he has not been able to get a quotation. Small investors in this position will probably not get a quotation this year or even next year. They only know that before 30th June, 1974 they will be able to get a quotation. This is a provision in the Bill which has not been properly thought out.
Consider the position of the Board The Government are continuing to finance the Seaforth scheme, and it was unkind of the right hon. Member for Birkenhead to say that the Government were not helping in this matter. They are, in fact, pumping a great deal of money into this scheme.
§ Mr. Clark
Sufficient to keep the Sea-forth scheme going. It was unfair of the right hon. Gentleman to comment in the way he did on that point.
It is obvious that the Board does not have any money to redeem those debentures or bonds which will fall due in January or July of next year, and it will have to get money from somewhere. It has been rightly said that nobody but the Government will invest money in this instance. We are merely asking in our Instruction that the Government should advance the money and stand in the shoes of the person who must sell at £50. We have used the sum of £50 simply because that is the lowest to which these stocks ever fell before the loss of 336 quotation. One might make a political point by saying that at 18th June of last year they reached the position of £50 or 50 per cent.
There would be no loss to the Government from taking this step. It would merely be a deferment of repayment and I suggest that the Government can afford to defer repayment, the institutions can afford to defer repayment, but the small man, in many cases, cannot.
The Government's philosophy is growth in the economy. That depends on three things—labour, management and capital. The Government with the policies which they have evolved over the last three or four months, have strengthened two of them—labour and management. It would be a tragedy if my right hon. Friend were not to ensure that capital was strengthened as well. I beg him to remember that we shall have to live with this loss of confidence in investment. It is essential that we keep investment in this country going. We can do that only if we maintain the confidence of the investor.
§ 8.20 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
The hon. Member for Surrey, East (Mr. William Clark) has, rightly and fairly, made a special plea for small and large investors. I shall not quarrel with his argument because I think there is a great deal to be said for it. But, like my hon. Friend the Member for Bootle (Mr. Simon Mahon) and others who come from the Port of Liverpool, I am deeply concerned about the future of the port and of the workers and families dependent upon it. Many of us have had personal experience of working on the port and getting our living from it. In fact, Liverpool and Merseyside would be nothing without their great port.
Therefore, when the Bill came before the House, remembering the situation prior to it, I wanted to be as sympathetic as I could because my constituents are dependent upon the port, and, to a large extent, their future is now being discussed. I wanted desperately to be able to say that, while I did not accept the general tenets of the Government's policy, the Bill was perhaps an interim Measure which I could support.
Whether we like it or not, we must recognise that the Port of Liverpool and the Mersey Docks and Harbour Board 337 are in their present state because the Government abdicated their responsibility. The hon. Member for Surrey, East made the point, which we thought the whole world knew, that the previous Government intended publicly to own the ports, because they recognised that the only answer to the situation, not only in the Port of Liverpool, but in practically every port in the country was to make a planned approach to the development of the ports, and that could be done only on the basis of Government investment and public ownership.
We recognised that there were problems. When I worked in the Port of Liverpool the management was most inefficient. I have discussed these matters with the Minister and explained that we in the trade union movement have on many occasions put forward proposals which could have increased the productivity of the workers. Many years ago, I argued in the Liverpool City Council that the port had to be reorganised and that the existing Board structure was not right. I called for public ownership. But, because of the Conservative Government, I felt that perhaps the local authorities should have taken over the ports. We have known for years that something was wrong. We knew that there had to be a reorganisation. Our answer for that reorganisation was public ownership.
I find it difficult to support the Bill because the solution offered will not solve the problem. Two years ago the Under-Secretary of State at the Department of Trade and Industry went to the Port of Liverpool and was asked by one of his hon. Friends who now holds a responsible position in the Government to make a report on the situation there. He rightly recognised that the Port of Liverpool was backward, that it needed better facilities and modernisation, and that the Labour relations were antequated. His solution was that there should be a private company. He said in his report:Ideally this solution would go quickest to the heart of the trouble…complete return to private hands…would help the Board to do what is needed to compete with the other ports of Europe. This is the free enterprise solution.…To sum up, the best solution for the next Tory Government is to reorganise the capital, and to return the Docks Board to private enterprise.That is basically what the Government intend to do. But we cannot compete 338 with the foreign ports on the basis of a private enterprise system. The report made to the National Ports Council by Touche Ross, issued in January, 1970, which analysed the situation to see whether the ports of Antwerp, Dunkirk, Rotterdam and Hamburg had any special advantages over Liverpool, London and Southampton, said:From our investigation we have reached the conclusion that the four continental ports we studied have a major advantage over the three U.K. ports.They go on to say:In addition to financial aid all the continental ports receive benefits from central or local government in the form of services provided free which U.K. ports have to pay for.Examples include dredging rivers. To those hon. Gentlemen who talk about ports not being money making I would say that at Liverpool dredging of the river does not make a halfpenny, because that is one of the most difficult rivers in the country to deal with and it costs a great deal of money to keep that channel clear. This document says that such services are provided free, as are the police, and so on.
This is the real answer. This is what capitalist Governments, free enterprise Governments on the Continent of Europe do. They know that if the ports are to compete the only way they can do so is by Government giving forms of subsidisation in one way or another—to help the ports compete with their rivals. I do not know why this Government do not accept that as a solution, but that is not their answer. They are not prepared to give a subsidy. They are caught, we in Liverpool are caught, my people in Liverpool are caught, on this nonsensical, doctrinal, dogmatic and dangerous theory that we should not help so-called lame ducks. Full responsibility for this situation rests entirely with the Government and with no one else.
We who are Members of Parliament for Liverpool are forced into this situation that, as my right hon. Friend said, if we do not support the Bill there could be a collapse of the Port of Liverpool, that the users will move away—as they may—and that if we do not support the Bill we shall be basically responsible. That is the sword of Damocles hanging above our heads, as though we were 339 responsible. The people who are responsible for this situation are the present Government and the Minister for Transport Industries. They are responsible for this by failing to meet their responsibilities in relation to this situation. Hon. Gentlemen opposite have to face this, that if anything unfortunate happens to the Port of Liverpool because of the failure of the Government they must accept the full consequences for that.
I have not heard, and I hope we are not going to hear, any speeches about everything being the responsibility of the wicked workers on Merseyside, the wicked workers who are always going on strike, and so on. I have no doubt that some hon. Members will drag that argument out. That is their only answer to every problem. Let me quote from the Liverpool Daily Post of today. There is a very interesting little piece in it which says:One of Merseyside's largest cargo handling companies, the Port of Liverpool Stevedoring Company, have increased throughput by 25 per cent. at their North 2 King's Dock berth during the first three months of the year. Mr. Lionel Storrs, Port of Liverpool's managing director, said yesterday that more than 38,000 tons of cargo—mostly fruit and vegetables—had been handled at the berth, a rate which compared favourably with that at any other port in the world. 'This surely confirms that given a proper environment and reasonable conditions of work, the Liverpool docker and those who work in the cargo handling industry here, are among the foremost in Europe in giving an efficient, speedy and reliable service,' he said.Then comes this most telling point:'We took the men into our confidence and told them exactly what the position was,' Mr. Storrs explained. 'We had lost the Jaffa trade because of our unreliable service—and we were determined to win it back again.'They took the workers into their confidence. The facts are there.
There were problems last year. There was the problem—we all know about it—of dirty money, a problem which has largely been solved; there has been a reduction in disputes as a result. The other problem was of the extra workers who were needed in the port; an agreement was reached with the unions and those extra workers are now on in the port. That is the position. Progress is being made the whole time. In an area of high unemployment it is understandable that workers are frightened at the prospect of extra men being taken on 340 in case that should lead to redundancy. But the problems have been overcome.
I have studied the Bill carefully. The gentlemen concerned in the new Board are doing about the best job they can within their terms of reference. But their terms of reference are wrong, and the members of the Board are not responsible for that. The responsibility lies with the Government. The alternative for the future of the Port of Liverpool, the future employment of our people and the development of the port is set out in the Amendment.
Reference has been made to the Sea-forth extension. In 1959 when the Liverpool Trades Council and the Labour Council issued a report on unemployment, one of the proposals in that report which I wrote was for an extension and development of the Port of Liverpool in the Seaforth area. We have argued this for years. This is basically what is required, and we believe that the answer is to extend public ownership. If the Government are not prepared to extend public ownership, they must be prepared to guarantee financial aid to Liverpool to ensure the future development of the port. That is why I hope that the House will support the Amendment.
§ 8.36 p.m.
§ Mr. John Tilney (Liverpool, Wavertree)
The hon. Member for Liverpool, Walton (Mr. Heffer) will not expect me fully to agree with his philosophy, although I am in agreement with his strictures of past management. He talks about public ownership, but in the minds of most people that means nationalisation and national control. Had he spoken about municipalisation as at Bristol, or backing up a free enterprise company, as at Manchester, I would have been more likely to support his views. It is no good handing over a partial bankruptcy to the city of Liverpool which has up to now had no say in the running of the Docks Board.
It is with great reluctance that I shall vote for the Second Reading of the Bill although I believe it to be necessary. I listened with care to what the right hon. Member for Birkenhead (Mr. Dell) said about this being a Government Bill. I only wish it were. We are dealing with the second largest port in the country. Private Bill procedure is very expensive, 341 and many people do not understand it. One sees in the Private Bill Office a stack of letters from people who are suffering under the Bill and want to petition against it, but, because of the extreme expense, they cannot do so. The Government have a major obligation to many of the people who have written to me and to the Private Bill Office.
I am not blaming this Government, but past Governments have interfered. They have said that they have no responsibility, yet they have controlled in the background much of what the Mersey Docks and Harbour Board has done. It was first made a public trust. The securities were not strict trustee investments under the old Trustee Acts, although they are in a priority section under the new one.
My hon. Friend the Member for Surrey, East (Mr. William Clark) referred to the Government's appointed members. What were they doing when the profits began to turn down under the Labour Government? It was the Labour Government who reorganised the Mersey Docks and Harbour Board on the wrong principles and those who made up the Board had divided loyalties. It was the Labour Government who introduced the price freeze, which prevented the Dock Board putting up its dues. It had no proper reserves to fall back on or from which the George's landing stage could have been repaired had it been looked after properly. The Bank of England said that the Dock Board should not borrow long because their masters no doubt said that nationalisation was around the corner. The Labour Government concentrated on dogmatic ideas of nationalisation rather than on improving the communications so necessary to the port of Merseyside.
§ Mr. Tilney
At least the Government of the day should have been aware of what was happening. They should have known that losses were being incurred. Surely they would not want to take over a loss-making business any more than a municipality would want to do so. But what did the then Government do? They urged the Dock Board to spend 342 more. Its plans were always submitted to the Ministry of Transport before it could invest £100,000, or even less.
Although some people may say that strikes and the slow turn-round have frightened shipowners away and made them think that Liverpool is an expensive port—and it is certainly an expensive port to dredge—those owners can choose wherever they wish to go. There is no necessity for them automatically to come to the port of Merseyside. I accept that past management is much to blame as well, but I believe that the Government should accept a measure of the consequences of their past actions.
I received a letter from somebody in the south of England which describes the situation in the following terms:The stock fell within Part II of the First Schedule to the Trustees Investment Act, 1961. All local authority obligations fall in this Part II.…Issues under Part II do not have to comply with the commercial requirements of the Companies Acts…as they do under Part III as respects the quality of information which must be given to the public.…But classified under Part II, they are not deemed a commercial risk, any more than a local authority issue or nationalised industry issue is so deemed.…There has been confusion as to the standing of these stocks and advice on investment in Part II investments would be confined probably to the relative returns as respects capital and income and not to the security of the investment as such.The Dock Board brochure states:Under the present constitution of the M.D.13.H. copies of its annual report and accounts are only available to security holders on application.If this is so, how can the Government argue that the small people who invested in the Board knew what was happening and were aware that the profits had turned down. The brochure also says:Because of the terms of the statutes under which the Board operates this receivership cannot lead to a winding-up of the undertaking. The ownership of the assets and the duties of managing the assets and operating the Port remain with the Board.In fact, this has put bond holders in a worse position than many shareholders in a major risk-taking enterprise. I suggest that the Government as large shareholders should be more generous than they are being at present. There are 36,000 bond holders, with £23 million invested in units of £5,000 or less; 11,000 in units of less than £1,000. If the Government were to offer to take more of the equity from the small shareholders up 343 to £3,000, it may be that in a few years' time the Government would do quite well since the Manchester Ship Canal equity now stands higher than any fixed interest stock of the Manchester Ship Canal. But it would show a consideration for the small shareholders and would bring about a certain amount of confidence.
The Bill will end up as a temporary Act. The proper solution is that the port should be municipalised, but we have no power to do that in any of the corporations around Merseyside, which at present is Balkanised. However, under the local government reform, I hope that we shall have a Merseyside County Council and that that will be given the power to run its port. This is in keeping with the Tory philosophy expressed repeatedly during the Committee stage on the Ports Bill. I hope that we shall be able to stand on our own feet, but at present we are denied the power to do so. Whether the port is nationalised or under private enterprise, it must be profitable.
I am grateful to my hon. Friend for what he has said about the Georges landing stage, which I again looked at yesterday morning. It is in a shocking state. I do not know why it has not been maintained in the past to a greater extent.
I regret that it is only in the last day or so that the letters have been exchanged. I regret that parts of Schedule 5 were put in the Bill. I wish that there had been greater talk between the city of Liverpool and the Dock Board, but it was not so. I shall, however, reluctantly vote for the Second Reading of the Bill.
§ 8.47 p.m.
§ Mr. Eric Ogden (Liverpool, West Derby)
The hon. Member for Liverpool, Wavertree (Mr. Tilney) has the respect and, in many ways, the admiration of his colleagues from Merseyside. He has shown great interest in the affairs of the port. We hope that his interest and the work which he has been doing over the last few months in this regard have not seriously incapacitated him and that he will be feeling quite well at the end of the debate.
The hon. Gentleman made the point—and I may tease him a little—that he was 344 in favour of municipalisation. I have always thought of the hon. Gentleman as a good, true-blooded Tory. I begin to worry a little when he is moving some way towards nationalisation and beginning to accept municipalisation.
Quality of management is vital whether it be under nationalization, municipalisation or anything else. At least the hon. Gentleman accepted that the Government have a major obligation in this matter and asked that the Minister be more generous.
The hon. Member for Surrey, East (Mr. William Clark) claimed that while this matter primarily interests Merseyside and the North-West, it had much wider implications regarding investment. Investment is certainly vital, both for present and future employment, in any part of the country.
The hon. Gentleman claimed that his Government had strengthened management, and he went on to claim that they had also strengthened labour. I challenge both claims. He also said that Government aid for the port of Merseyside was continuing. That is so, but it is only continuing on the basis of legal obligations entered into before 28th November. In the note which the then Board of Management sent to its bond holders, stock holders and interested persons, it included a letter from the Minister for Transport Industries in which this matter of future capital investment was spelt out very clearly. The Minister's letter to Mr. Taylor of the Docks Board said:As regards capital works and in particular the Seaforth Dock project the Ministry will continue to make loans in accordance with their existing legal obligations.That is very different from the general claim that the Government are helping and will continue to help the docks scheme. In that letter, the Government spelt out a limited promise of aid—
§ The Minister for Transport Industries (Mr. John Peyton)
Perhaps I can help the hon. Gentleman. In that letter, I was saying merely that the Government would have a limited commitment on those obligations to which we were already hound by law. We have gone a great deal further since then, of course.
§ Mr. Ogden
I accept that a great deal has happened since then. But there is a contrast between what was rightly said 345 by the Minister about this limited loan and what might happen in the future.
This has not been a happy debate for anyone, least of all the Minister. As we on this side of the House see it, the Government are completely responsible for the Bill. It is a Government Bill in all but name. The fact that it is introduced as a Private Bill promoted by the Mersey Docks and Harbour Board means merely that it is the best proposal for support that the present Board can obtain from the Government. It is a bad Bill, but it is the best bargain that the board has been able to make with the Minister.
When we last debated the affairs of the Mersey Docks and Harbour Board, I tried to be fair. I said that I thought that the Minister understood the problems and had tried to find a better solution, but that his suggested solution had not been accepted by his Government. The right hon. Gentleman may have wanted to find a more generous, more fair and more equitable solution than the one contained in this Bill. He has shown a real interest in the affairs of the Board. Indeed, he was on Merseyside only last Friday. Sometimes, the right hon. Gentleman has expressed greater concern about the results of failure of industrial relations in the port than about the reasons for such failures. However, he appreciates the importance of the Board, not only for Merseyside but for the whole North-West and for the country's economy. He has done his best to find a solution. Tragically and shortsightedly, the Cabinet turned down his proposals. However, I do not ask him to resign because of that. He had done his best for the port, yet his proposals have been rejected by the Cabinet.
The Mersey Docks and Harbour Board was to be the first example of tough, determined Government policy concerned with the disengagement of Government from industry. It may not be just a coincidence that the Board is a statutory authority in an area which showed the greatest support for the last Labour Government. I do not say that that is a factor which influenced this Government against helping Merseyside, but certainly it did not encourage the Government to provide any extra help.
The Second Reading was moved lucidly, logically and tactfully by the hon. Member for City of Chester (Mr. 346 Temple). He said that the two guiding principles which he had in mind were the continuation of the port as a viable unit and the employment for the port. That may be the intention, but good intentions do not necessarily result in good principles. He said that he was convinced that if the Bill did not get a Second Reading, Her Majesty's Government would be very reluctant to make future investment in the Port of Liverpool. I believe that those were his words.
The contents of the Bill may be necessary, but I do not believe that it has any friends, certainly not wholehearted supporters, either in the House or outside. Hon. Members on both sides who are interested directly in Merseyside, or in the wider implications, take the view that the Bill is the best we can get from the present Government. I do not know whether, if the Bill failed to get a Second Reading, more Government aid would be forthcoming, or whether the port would be worse placed.
We have made it clear that this Bill is not our solution, that it is a deal of which we have no part. As Labour Members of Parliament and certainly as Merseyside Members, we are not able to support the Bill, and the most that the Government can ask of us is that we should not formally oppose it. But we have offered an alternative, and it is for the House to make a judgment on a Private Member's Bill.
Merseyside Members have always shown a deep interest in the affairs of the board. At times we have been brought in by the trade unions, or the operators, or even the management. But my right hon. Friend the Member for Birkenhead spelled out what consultation over the Bill has meant—from time to time we have been told of decisions reached by the Board and the Government. That is all the consultation we have known. However, over the past months it has been closer than at any other time. There is a good case for close consultation with hon. Members, regardless of party, from Merseyside. If we had been able to take a closer interest in the internal affairs of the Board over the years, the present situation might not be quite as bad as it is.
There may well be a case for appointing a Merseyside Member of Parliament 347 to serve on the Board full time or part time. I am not volunteering for the job. There are others in the House who have a much closer knowledge, much more experience, than I. It would have to be an almost full-time occupation, for an hon. Member would need a great many "pairs" to do that job. At times we are told slightly different things by the users, the workers and the management. We are asked to act as honest brokers, but we are not given any right to intervene. That is something which the Minister might consider.
The new management and the Bill are concerned mainly with the financial structure of the Board, yet that is only part of the total problem and challenge facing Merseyside. My impression of the new chairman and his deputy—they have said nothing about this to me, but it is the impression I have gained—is that they will do their three-year stint to get the Board on its feet and solve the problems, and then they will move on to other things. After three years in that job, they will need a rest and a break, for the challenges and difficulties will be many.
There are continuing problems for users and management, above all trying to ensure that those who manage and use and work in the port—putting that in any order of priority—work in partnership, work for "our" port of Merseyside, for "our" total benefit, have responsibilities for each other. The financial reorganisation must be part of the basic changes in the port. I do not think that the present executive council would claim to be port's managers, and the different financial structure following reorganisation will only allow the port to be operated by those doing the day-to-day work.
There has been some attempt to get consultation among users, operators, workers and management, but it is still at the stage where decisions are taken and then disclosed. Mainly because the Board is not yet master in its own house. That will be achieved only after the Bill has gone through. Those in the new organisation will then be able to answer some of the questions the workers are asking. It is not the job of Members of Parliament to become involved in day- 348 to-day management, but there is great pressure that we should.
The bond holders have been referred to. Perhaps I should declare an interest, as I am a sponsored member of the National Union of Mineworkers and my union has 10,000 shares.
The question of investment by local government has been mentioned, but on any view that must be three years ahead. Local government cannot invest until the new organisation is on its feet.
I ask the Minister to comment on the future availabilility of port modernisation grants. Doubt is being expressed about the Government's intentions in this regard, apart from the basic scheme at Seaforth.
The hon. Member for Surrey, East spoke of land sales. I do not wish to do the hon. Gentleman an injustice, but if he was suggesting that the land assets should be automatically disposed of over a short period to increase the capital—
§ Mr. William Clark indicated dissent.
§ Mr. Ogden
I am glad to see that the hon. Gentleman did not mean that. It would be bad policy to sell off land assets, because land is investment; land is wealth, and we are concerned about future port development.
My hon. Friends and I are involved in this emotionally. It is not just a financial exercise with us. We are concerned about jobs and about all that the port has meant in the past and all that it might mean in the future. I have a dream of a port on Merseyside being the finest port in Europe, being linked with the Channel ports. In a container age that would not solve all our problems, because there would still be the question whether ships unloaded on Merseyside or on the continent. However, if we could get the Board on its feet again we would have a chance of making Liverpool that finest port.
I say now less bitterly than I did when we last debated the matter that the Government decided that they would go for a policy of disengagement. They destroyed the I.R.C., an organisation which could have helped. I contrast the help which was forthcoming to Cammell Laird with the lack of help here. I contrast the campaign put up by the shareholders 349 in the Manchester Ship Canal, when the Labour Government proposal was to compensate at full market value, with the treatment of bond holders and investors here.
Our reasoned Amendment offers an alternative solution. It means in the short term Government aid and intervention—not out of charity, but out of necessity as an investment and as something which should come from the Government. We do not accept that anything that happens tonight is our responsibility. This Bill in everything but name is a Government solution to a problem to which they are imposing their own temporary solution. The long term future of the port must be decided at the next General Election.
§ 9.3 p.m.
§ The Minister for Transport Industries (Mr. John Peyton)
It may he for the convenience of the House if I intervene now and attempt to explain the Government's attitude to this very difficult problem and make one or two comments on the debate.
I congratulate my hon. Friend the Member for City of Chester (Mr. Temple) on his remarkable, skilful and persuasive speech. The Board must be grateful to my hon. Friend for his skilled advocacy of its case.
One of the two particular points which my hon. Friend raised was on the question of pensions for the Board's staff. One of the less satisfactory features of this sorry business was that a large amount of the Board's pensions were unfunded. At an earlier stage in this saga I said that I believe that the receiver would have power to pay unfunded pensions out of the rates. He has done so. I gladly add to that assurance and say that, if any difficulties should arise during the receivership with the continued payment of pensions, it is the Government's intention to ensure that the interests of pensioners are adequately and properly protected.
§ Mr. Peyton
I think that thereafter the Board itself will be in a position to pay pensions, but I think that I have said enough to make clear the Government's concern for this matter.
§ Mr. Ian Percival (Southport)
What my right hon. Friend is saying is that so long as the pensions can be paid out of moneys which otherwise might go to pay the interest due to bond holders, and to repay the bonds, that is all right, and when that runs out the Government will step in. Can that be right? I am as interested as anyone in these pensioners, but why should they be given priority over bond holders?
§ Mr. Peyton
I must leave my hon. and learned Friend to make his speech later. I think that I have gone as far as I should at the moment.
I know that my hon. Friend the Member for the City of Chester, and my hon. Friend the Member for Liverpool, Waver-tree (Mr. Tilney) are interested in the landing stage. I was in Liverpool the other day, and I was informed by the Chairman of the Passenger Transport Authority that he was in touch with the Board. I am now informed that they have reached a basis for agreement, and that there are only one or two points of detail to be settled. I understand that when the agreement has been finalised it is the Board's intention to seek leave to remove the repeal provision and replace it with an obligation to provide a landing stage, to dimensions agreed with the Passenger Transport Executive. I know the interest which my hon. Friend the Member for Wavertree has in this matter, and I hope that what I have said will go some way towards satisfying him.
The right hon. Member for Birkenhead (Mr. Dell) made a certain essay into melodrama, into which I do not wish to follow him. I appreciate that we can throw these epithets from one side of the House to the other. We can talk about calculated pettiness and about dishonesty being the trade mark of the Government. I do not believe that that sort of thing helps in what is—[Interruption.]—The right hon. Gentleman made his speech. He was listened to without being interrupted, and I am merely saying that that kind of utterance does not help to solve the problem.
§ Mr. Peyton
The hon. Gentleman is free to express his opinions, and they will be listened to with the respect they deserve.
There is one point which I particularly wish to take up with the right hon. Gentleman. He said that no protests had been made from the City. As the recipient of many of the protests, I am in a position to offer the right hon. Gentleman a firm denial of what he said, and to add that there have been times when I have wished that what he has said was correct.
My hon. Friend the Member for Surrey, East (Mr. William Clark) has been a persistent advocate of the cause which he eloquently put forward tonight. He asked me whether the bonds are still trustee securities. The answer is that they are not. Because they are no longer being quoted on the Stock Erchange, they are not eligible.
I was grateful to my hon. Friend when he said that it would be wrong for any Government to pump money into an undertaking without regard to the taxpayer, because that is what I have found we are relentlessly being asked to do by the Labour Party in dealing with every problem that we face, and heaven knows there is a quantity of them. Although the hon. Member for Liverpool, West Derby (Mr. Ogden) may wash his hands quite calmly and say, "It is nothing to do with us," the last Government left us a fairly substantial legacy.
My hon. Friend for Surrey East asked whether some equity shares would be issued after reconstruction. While I believe that that question will probably have to await the reconstruction itself, I have no reason whatever to believe that the Board has set its face against it. My hon. Friend appeared in the later stages of his speech to contradict himself. Having remarked, with some truth, that there were no grounds for distinguishing between different types of investors, he went on to observe that the Government could wait for their money. If they did so, it would mean that the Government would be forced to go to other taxpayers in order to supply the need.
352 The hon. Member for Liverpool, Walton (Mr. Heffer) gave the House, as though he had discovered some new pearl of wisdom, the suggestion that the answer was public ownership and subsidies. We have tried these specifics for many years now and they have solved no problems and created many. He went on to make the accusation—a joyous one, coming from him—that the Government were being merely dogmatic and doctrinal. These adjectives have been happily tossed to and fro in the House before now, and I shall not worry to throw them back at him tonight.
My hon. Friend the Member for Wavertree mentioned the possibility of municipal ownership. I certainly have no closed mind on this subject. What would be no solution to the problems of our ports is excessive centralisation. But that is not to say that some degree of municipal ownership or control could not in certain cases be very helpful.
The hon. Member for West Derby passed me a poisoned chalice in the tribute which he so kindly paid me. I deny his allegation that the Bill has no friends, as I also firmly deny that this is a Government Bill. It is a Bill of the present Mersey Docks and Harbour Board, which is fully responsible.
He also asked me about the continuation of port grants. This is a very important and not particularly simple matter. I hope to make an announcement on it in the fairly near future.
§ Mr. Peyton
The Board has been in pretty close consultation with the Government ever since it produced the rather nasty piece of news at the end of July last year that it was in deep trouble and needed many millions of public money. Of course there has been anxious consultation—not unnaturally—but this Bill, I repeat, is a Bill of the Mersey Docks and Harbour Board.
It might help if I reminded the House of some of the salient facts of the matter, without delving too far back into history. The port has a capital debt of between £90 million and £100 million. Of that debt, 27 per cent. is in bonds. Last year 353 it became clear that the port could not earn a surplus, was facing mounting losses, and was unable to pay the interest on its due debt or renew its short-term borrowing when it fell due.
The Board is an odd animal, as hon. Gentlemen opposite have pointed out. It is a statutory trust and as such not accountable to anyone. It has a duty to run the port, saddled with a constitution ordained by nineteenth century Acts of Parliament, though slightly amended by the last Administration, a constitution which can be altered only by Parliament.
With 16 part-time members—not an ideal recipe for management—comprised of six shipowners' representatives, six other users and four Ministerial nominees—I hasten to add, none of them mine—how could it have remained in the mind of the Labour Party, when in Government, that this was a tolerable state of affairs? Yet they allowed it to continue. It was, comparatively speaking, only at the last minute that they rushed back to the old specific of nationalisation. This was chucked at us, only to have—
§ Mr. Simon Mahon
The right hon. Gentleman said that none of the members of the present Board is his nominee. Is it not a fact that one of the present nominees was a member of the previous Board?
§ Mr. Peyton
I was referring to the 16 part-time members of the Board prior to the time when I had any part in this exercise. None of them was my nominee. Since then there has been some slight change. If the hon. Gentleman will contain himself in patience I will come to that point.
It became clear in the summer of last year that it was urgently necessary for the Board to raise its charges at least to a point at which they would cover costs, eliminate loss-making activities and get rid of surplus assets—in short, to stop the calamitous outflow of cash.
In great haste the Board produced a Bill last November, which I understand was never intended as a final Measure. The Bill met with a considerable volume of protest. The Board, I believe wisely, bowed before the storm, but subsequently was able to obtain leave from the House to introduce the present Measure.
354 Throughout the whole of this unhappy story the Government have been faced with two main questions. First, whether to lend money to the Board to enable it to redeem bonds as they became due, or to take what seemed to many people the much harsher and uncompromising line of saying that they would make no funds available for such a purpose. This was with the full knowledge that many small investors, and others, who had come to regard the bonds as having Government backing, would lose at least some of their money.
With great reluctance the Government took the latter course, believing that the adoption of yet another pain-killing solution would put an unjustifiable burden upon the taxpayer and would, moreover, encourage people to believe that the port's future was reasonably assured in all circumstances without having to worry too much whether it could give an efficient service at reasonable prices to its customers. Do not let any of us conceal from ourselves that that is the criterion which will decide the future of the port of Liverpool.
The second question which has deeply concerned the Government throughout is whether to continue grants and loans for the half-completed Seaforth project. The Government recognised, of course, the great importance of the port to our trade and its bearing upon the whole of Merseyside, and concluded, I am sure rightly, that it was a project upon which the whole future of the port depended, and that it should therefore continue.
The Government accept that the moneys advanced by them for Seaforth before 27th November should be treated in the same way as other capital debts owed by the Board at that time. I can also tell the House now that it is accepted that after a satisfactory capital reconstruction has been carried out loans made by the Government after 27th November shall rank pari passu with the reconstructed debt. I do not believe that the Government would have been justified in continuing to finance the project without some assurance as to the port's future viability.
§ Mr. Dell
The right hon. Gentleman has just said that once the reconstruction has taken place the Government loans made after 27th November will rank 355 pari passu with the reconstructed capital debt. I take it that that does not mean that such loans made after 27th November are being written down. He will have heard the proposed Amendment mentioned by his hon. Friend the Member for City of Chester (Mr. Temple) about the possibility of writing down Government loans made after 27th November. Would such an Amendment be acceptable to the Government?
§ Mr. Peyton
I have said what I meant to say, and I have nothing to add to it. Throughout the affair the right hon. Gentleman has completely shut his eyes to the significance of the Government contribution to the Seaforth project. It is admitted that Seaforth is crucial to the whole of the future of the port. The money the Government had lent before 27th November will suffer the same fate as all other capital debt owed by the authority at that time. I think that the right hon. Gentleman understands that. The Government were under no obligation to go on making the loans available. What I am saying is that the money being put in since 27th November will, after reconstruction, rank pari passu with the reconstructed debt. I think that the right hon. Gentleman perfectly understood that.
§ Mr. Dell rose—
§ Mr. Peyton
It is time I came to the end of my speech. I have given way to the right hon. Gentleman a number of times.
I was saying when I was interrupted that I do not think that the Government would have been justified in continuing to finance the Seaforth project without some assurance of the port's continued viability. The Bill gives that assurance, or at least it holds out a hope. In my view it is an essential Measure.
To those who challenge me with refusing all help, I can only ask why they have so persistently disregarded the aid to Seaforth which I have just mentioned, without which it is common ground the port would have no future.
To those who advocate public ownership, that dreary old specific so dear to the hearts of the Labour Party, I would only say that it has never solved anything yet.
§ Mr. Peyton
To those who say that the Government are careless of the port's finance, I say that they should look back at their own recent past, that they should not be quite so ready in so slippery a manner to shed their responsibilities.
§ Mr. Peyton
This is not melodrama. It is very sober fact. During the period of the last Government—and it is time that this was said, and said clearly—the port's earnings were kept at a meagre level. The Board was obliged to borrow at short-term rates, which meant that, if ever there were a moment of truth, there would be trouble. The threat of public ownership produced that curious aura of stagnation which I shall always associate with Socialist financial and industrial policies.
In the view of the Government, this is an essential Bill. It is a necessary step in the path which the port of Liverpool must take in order to get back to the prosperity which I am sure it can regain, given the co-operation and good will of all concerned. I am profoundly sorry that the right hon. Gentleman showed so little sign of it.
§ Mr. Dell
I am grateful to the right hon. Gentleman for giving way. [HON. MEMBERS: "He has sat down."] I took it that he had given way. I asked him a simple question, to which he evidently does not know the answer—whether an Amendment on the lines proposed by the hon. Member for the City of Chester would be acceptable to the Government. Why has he not answered that question?
§ Mr. Peyton
I had sat down. I have made the position clear. I have spelt out the situation and I have nothing to add.
§ Several Hon. Member rose—
§ Mr. Speaker
Order. I still hope to call several hon. Members to speak in the debate and I ask those I do call to be brief.
§ 9.27 p.m.
§ Mr. Simon Mahon (Bootle)
I shall try to obey your injunction, Mr. Speaker.
357 The right hon. Gentleman chided me for my lack of patience. I remind the House that he was not greatly renowned for his patience when he was a backbencher. As one who started work on Liverpool dockside at the age of 14, I have learnt that patience is a genuine virtue. If anyone learns patience, it is generally in that sort of industrial experience.
This nation is divided socially, commercially and industrially. Merseyside contains the greatest docks in the world, right alongside the new Seaforth project. On behalf of the people of Merseyside whom I have the honour to represent, I say to the House that there are places in this country which are more favoured. As you, Mr. Speaker, know, from your intimate knowledge of Merseyside, we have grave social and industrial difficulties and we seem to be having to bear them for longer than the rest of the country. In my constituency, there are 40 vacancies in two major labour exchanges, and the unemployment level is 5.6 per cent. So anything that concerns Liverpool dockside at the moment and the possibility of redundancy is of the greatest importance to me.
When I was a boy, still at school, Chesterton said that the hearts of the people of Liverpool were in their boots. With one passage excepted, after the speech of the Minister we on Merseyside can rightly feel that our hearts are in our boots. I appreciate what has been said about Seaforth. Without it, Merseyside would go under. But there are vast maritime undertakings on Merseyside in addition to Seaforth. The present Government have washed their hands of major responsibility towards Merseyside—and if my own Government had done that I would have told them the same thing.
In the council chamber of Bootle, where I served on the local council for many years, there is the flag of Walker, R.N., and it was through the port of Bootle that he and those whom he served kept the gateway to the Western Approaches wide open. I would be saying the same to a Labour Government. Considering the way in which the people of Merseyside have suffered over the years, they are worth £27 million of any Government's money. I therefore appeal to the Minister to re-think this whole matter.
358 I remind the right hon. Gentleman that above all he has a major interest in the industrial peace of the nation. Though some of us have been chided, even ridiculed, by him for our views on this issue, I assure him that in a modest and responsible way we have been, and still are, trying to improve the situation on Merseyside. We want to get away from the standby system and turmoil we inherited. We want to have better housing and education so that ultimately the ports provide a better standard of living for the workers in them.
There will be grave disappointment on Merseyside at the right hon. Gentleman's speech. We have been wondering where we went wrong. After all, we were never part of the Mersey Docks and Harbour Board. Men like me were kept well and truly outside the Board's doors, and I was telling the Board this only last week. We were never represented on it and we will not be so represented now. The people who made Merseyside and this nation great and who kept Britain alive in very dark days are not, even now, to be brought into the magic which we are told will put the Port of Liverpool on its feet.
With respect to the bankers, they do not even know whether the tide is running, let alone how to put the Port of Liverpool on its feet. Without the full co-operation of the Merseyside workers, nothing will be achieved, and apart from the remarks of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), nothing has been said about the need for co-operation in this respect. Mr. Lionel Storrs is one of the best authorities on the port industry. He has said that the Liverpool docker is among the finest in the world, and that is the truth.
This is not simply a financial problem. It is a problem involving human beings who have invested their whole lives in this industry. What the right hon. Gentleman has said will be treated with some distain by them, particularly considering the background of unemployment in this area. When I speak about these matters I sometimes see a look of puzzlement on the faces of hon. Gentlemen opposite. Perhaps I should not blame them. After all, I live in a totally different world from them.
359 I am grateful for this opportunity to express, albeit it in inarticulate language, the feelings that exist in Liverpool about a Government who are prepared to count as nought everything that the people of this part of the country have done for the nation; of a Government who are prepared to reduce to digits on a balance sheet or economic signs and symbols the human beings who make up the port industry.
Often in the past the people of this area have listened to me. Sometimes I have spoken on particularly difficult wickets and, with my hon. Friend the Member for Walton, I have tried to maintain peace in the port, which is a particularly important factor. My advice to the people of Merseyside is to take the first opportunity to do what they did at the last election, and get rid of the remaining Tories in the area who support the Government. We did a good job on 18th June. It is obvious that we shall have to pull ourselves up by our own boot straps, for we can expect no help from this Government.
§ 9.35 p.m.
§ Mr. Eric Cockeram (Bebington)
It will come as no surprise when I say that I join hon. Members on both sides of the House in deriving no pleasure from the fact that the Bill is before us, any more than I derive pleasure from the fact that the Mersey Docks and Harbour Board finds itself in its present situation. But we must face facts. The losses started in 1966 and they have been steadily mounting ever since. Clearly we have reached the stage at which something must be done.
Reference was made by the hon. Member for Liverpool, West Derby (Mr. Ogden) to the fact that we were conducting this debate in a partial vacuum because we have not had the acounts for the year ending 31st December last. That is true. But there is a perfectly reasonable reason for it. The new management of the Board is particularly anxious to ensure that the accounts for that date are drawn up in a proper, workmanlike manner, with a proper valuation of all the assets stated in them. It has commissioned independent accountants to report to it on many matters, including the amount of depreciation which should be provided for many of the assets. 360 Secondly, it has had to commission professional valuers to value many of the fixed assets. Thirdly, it has had to commission actuaries to report to it on the precise position of its pension funds—both the funded and unfunded pension funds. It is entirely appropriate that those figures should be absolutely correct before the accounts are produced.
But the Board found itself on the horns of a dilemma. Ideally it and we would have preferred to have accounts before this debate. But such is the position of the port, with a liquidator sitting in the Board's offices, that it was presented with the problem of removing the liquidator and turning over a new leaf for the port. Tonight we are taking the first step in doing just that. We are being asked to give it a new constitution.
I believe that within the three-year period set out in the Bill we shall find in the port of Liverpool, not only a modern, progressive undertaking with modern progressive management, but a revitalised approach to the docks system. We shall by then, I hope, have the virtual completion of the Seaforth system. We shall have one of the most modern dock systems in the Western world. Both of our tunnels will have been completed, giving easy access from one side of the river to the other.
Those who have confidence in the future of Merseyside and of our port, as I have, support the Bill because it is the first step in this rejuvenation. I am sure that Amendments will be necessary in Committee, but I share the view of the Bill summed up in the editorial in the Liverpool Daily Post a couple of days ago which concluded with this sentence:Amendments in Committee there may well have to be, but it must be hoped that the basic framework of this Bill is left intact.I support that view.
§ 9.39 p.m.
§ Mr. Hugh Jenkins (Putney)
I think that the Bill is so bad that it does not lend itself to amendment in Committee. It seems to me that the right course to follow is that advocated by my right hon. Friend the Member for Birkenhead (Mr. Dell), who suggested, in moving the Amendment, that the Bill should not be given a Second Reading in its present form.
361 The Minister's speech clarified the issue. Before he spoke, some of his hon. Friends said that they would support the Bill with reluctance. I hope that, having heard him, they will decide not to support it. One fact which clearly emerged from the right hon. Gentleman's speech was that the Government accept full responsibility for the present situation. It is their responsibility and the Government make it clear that it is their responsibility.
I have a constituent who put money into this business, as other people have done, believing it to be a trustee security. A constituent of mine expected to receive £500 this year. The money has not arrived, and my constituent, not unnaturally, is concerned, because £500 happens to be the only money he has. This is why I put down an Amendment to the Money Resolution. In that Amendment I suggest that some preferential treatment should be given to small investors—people with small holdings. That seems to be a perfectly reasonable thing to do.
As for responsibility in this matter, the Board has made it quite clear that it places the responsibility on the Government. It says in the circular which it issued that the Government announced that special financial assistance would not be made available to the Board. Everything stems from that point. From that point of the Government's decision not to make special financial assistance available the whole trouble has arisen.
It is no use hon. Members opposite putting the blame, or trying to put the blame, on some mythical actions in the past. They have a thoroughly bad case and, though they try to escape responsibility, they cannot escape the printed word which has been circulated to every Member of Parliament and in which the Board itself has little comfort to offer for the investors' future. With commendable honesty, if nothing else, the Chairman has circulated this statement:I should also like to make it clear that while the Board's proposals involve deferment of a definitive scheme of capital reorganisation until some future date, the Board have no reason to believe that the definitive scheme for debenture holders will be any less drastic than that outline to security holders on 27th November, 1970.The Board itself is saying in effect, "We may be putting off the evil day, but it is likely to happen all over again".
362 How can hon. Members opposite pretend that this is a Bill for which they can accept responsibility, even with reluctance? I should like to think that, even were I on that side of the House, I could not bring myself to vote for this Measure. No hon. Member opposite has shown enthusiasm for the Bill. The only Member who has brought himself to support the Bill 'with any degree of enthusiasm is the Minister. He is the only Member of the House who has suggested that the Bill is of a sort which one can support happily.
Before the two parties changed sides in this House, we often used to hear hon. Members opposite—the Opposition as they were then—talk about the widows and orphans, and we on this side sometimes thought that the only shareholders in the country were widows and orphans—that all the shares in the country were held by widows and orphans. "These widows and orphans", they said, "are living on fixed interest and the Labour Government are not concerned with those people on fixed incomes. Why do not the Government pay more consideration to the plight of those people?" We used to hear pitiful tales about them. What happens when the two parties change their positions in the House? The Conservative Government are quite content to reduce the capital of these people on fixed incomes by 30 per cent. When it comes to practice, as distinct from talk, these people, many of whom are supporters of the Government, are treated most cruelly. They are not compensated at a full rate of compensation. So far from compensating them properly, the Government are reducing their capital. Responsibility for this, hon. Members opposite know, lies fairly and squarely upon their own Front Bench. There can be no doubt about it.
I want to read a letter from a widow, not a mythical widow but a real widow. This is what she writes:I am a widow, aged 68, and invested my late husband's and my own life savings of £2,200, which we had worked hard for all our lives and been thrifty enough to save. This money was invested with the Mersey Docks and Harbour Board in November, 1969, on the assumption that it was a very safe security, in fact, as safe as any Government security. I asked the Board to send me a balance sheet for the previous year but was told that they had not issued one. On handing over the money which was a 363 warrant from matured development bonds…She refers to a member of the Board, but I will not take advantage of the privilege of the House to name him—…who happened to be in the dock office at the time assured me that everything would be all right and shook hands with me. What a Judas handshake. They took this money under very false pretences as they must have known at that time they were in financial difficulties. I only lent this money until 27th March, 1972, and it should then be repaid to me.I believe that it should be repaid to her, and that small investors should receive preferential treatment. The responsibility for her not getting all her money back rests fairly and squarely on the Government. There comes a time when a Government begin to lose their credibility with their supporters. The Government will look back to this day and rue it, and decide that this was when they began to lose credibility. This is the beginning of the end, and they will richly deserve it.
§ 9.46 p.m.
§ Mr. Ian Percival (Southport)
I disagree heartily with most of what we have just heard. I disagree with public ownership, and I am not one who says that the Government have not helped, because they have. The concession which my right hon. Friend has just made about the priority of the borrowings may be of great help, but my mathematics are not good enough to allow me to work it out. It may be of sufficient help to enable the Board to comply with the Instruction, which I hope the House will carry. Even so, with respect, I disagree with his conclusions. Unless this Instruction is carried, the balance will be wrong. The Instruction would mean that people would not have to wait so long for what little they will get.
In moving the Second Reading, my hon. Friend the Member for City of Chester (Mr. Temple) said that the object of the Bill was to reorganise the port for the benefit of port users and employees, and the hon. Member for Bootle (Mr. Simon Mahon) stressed this. Of course that is important, but at whose expense? Under the Bill, too much expense will fall on the bondholder.
My right hon. Friend said how glad he was that the receiver could pay the pen- 364 sioners, and that if he ever could not, the Government would do something. It is right that the pensioners should be paid. I am delighted that the pensioners in my constituency will have their pensions paid, but I also have in my constituency people of humble means who will not get their dividends because the money will be used to pay the pensioners. We can all agree on what should be done, but the question is who should pay for it and how should the cost be spread.
My hon. Friend the Member for City of Chester said that the idea was to revitalise the port. Of course it is, but who should pay? He also said, as did the hon. Member for Bootle, that we must consider the national interest. Of course we must. What I cannot stomach about it all is the apparent readiness of the Board, the Government and some of my colleagues on this side of the House to make the bondholders pay so largely for those things.
It has not been sufficiently stressed that what we are talking about is the obligation of the Board to repay money to lenders. That money can be called loan capital or debt capital, and if the Bill goes through debenture stock will be issued instead of bonds, but at present people who have lent money to the Board have a clear right in law to have that money back. The question is whether they should be put in an entirely different situation and given debenture stock as a preliminary to having an unspecified amount written off.
It is necessary to see how the Board has got into this situation. It appears that the directors, four of whom have been nominated by the Government for a considerable number of years past, failed to make provision for repaying the money which was clearly due to be repaid. It may be that there was no way in which they could have avoided that, though I do not know that that is the case. We have heard a good deal about bad management.
My second criticism is that the Board gave no warning of the situation until as recently as last July. A good many of my constituents have lent money since the time when the Board should have known how bad the situation was. I refer to the bond holders who when the sums of money were due were asked to leave that money in at a new rate of 365 interest. Somebody should look at the propriety of the actions of the Board which should have known how bad the situation was when inviting somebody to leave money with the Board. I merely draw attention to this fact as something which the House should have in mind.
It is clear that the previous Government also had some responsibility for not discovering the situation or, if they did discover it, for not making public some information about it. Certainly the one group of people on whom no blame can possibly be laid at all are those who had lent money which enabled the Board to keep going as long as it did. These are the people who will suffer under the Bill.
I appreciate that if my Instruction were carried the Board could not comply with it without some assistance from the Government.
§ Mr. Percival
No, I am not referring to subsidies. I am saying that it could not comply without some assistance. The assistance which would be needed would be for the Government to put up the money for a short period of time instead of my constituents having to wait to get what is due to them. I think that it is the taxpayer who should do this waiting. At the moment the Government will get money in preference to many of my constituents—at least they would benefit to the extent of 50 per cent. of the nominal value of the bonds.
I recognise that if my Instruction were agreed to it would put an obligation on the Government. I would justify this for four reasons. First, I believe the Government have some responsibility in this matter. Secondly, the national interest is involved, and that interest lies in keeping the Port of Liverpool alive and healthy. Those are two reasons why the Government should be generous rather than the contrary.
Thirdly, I do not believe that the Government's "lame duck" principle, with which I agree, has anything to do with this case. In fact, Parliament are stepping in here to help the lame duck; the lame duck in this case is the public trust. That trust cannot survive and will be in a sad state unless it is given some money to enable it to repay its debts, or unless Parliament enables it to write off those 366 debts. Parliament set up this public trust and Parliament and Government have failed—I am not seeking to make any political point—have failed to ensure that it remained in a sufficient strong position to meet its obligations to the persons from whom it had borrowed money.
The question now is whether Parliament should permit that undertaking, which has got into that situation, to write off a substantial and undefined proportion of its debts to make its position viable. If ever there was a case of helping a lame duck, this Bill is it. It is helping the lame duck at the expense of bond holders rather than the taxpayer. We have to ask whether that is something which Parliament should properly do. The Government have to ask themselves whether Parliament should be permitted to do this and whether they ought not at least to advise Parliament that it should accept this Instruction so as to ensure that the bond holders are at least treated that much less shabbily.
§ Mr. Percival
No, the time is too short. I am saying nothing contrary to any principle for which the Government stand or upon which they have taken a stand. They have accepted that they are involved in this case. They have accepted an obligation to provide some financial assistance. The only question is the degree of financial assistance. Under this Bill we have a new situation, a situation that without a floor to the reduction these stocks are unquotable. So our poor constituents, who will lose money anyway, will, if they wish to sell in the next year or two—some of my constituents will have to sell because they rely on these stocks to supplement their income—have to take whatever any buyer will give them. That is a new situation which affects the balance as it was when the Government made their previous decisions as to help. It is a situation which calls for a redressing of the balance by this little bit of assistance which would be necessary if this Instruction were carried. I stress that this is not asking the taxpayer to pay out any more money to make good the losses. It is merely letting the taxpayer bear the waiting time and letting the taxpayer come in and, at his expense, carry that 367 waiting time, giving bond holders at least 50 per cent. at the time it is due.
Even at this late hour, I hope that the House will wake up to what it is doing and, if it gives a Second Reading to the Bill, will follow it by carrying the Instruction which I shall hope to move.
§ 9.58 p.m.
§ Mr. Richard Crawshaw (Liverpool, Toxteth)
This is a very important Bill primarily because it establishes an unfortunate precedent. I wonder whether hon. Gentlemen on the Government benches realise to what extent the Bill is likely to discredit our economic system. If people take the trouble to read some of the new unopposed Bills going through the House at present they will see that they are asking for permission to borrow money overseas. When questioned, the reason in this case is that, because the Mersey Docks and Harbour Board is
§ defaulting on its obligations, it has destroyed the trust of many British people.
§ Parliament should not pass a Bill which removes the rights of people who have invested in funds which they genuinely believed were trustee funds. We have heard where the rights and wrongs lie in this particular case. I made a request of the Minister on the last occasion that this matter was before Parliament—
§ Question, That the Question be now put, put and agreed to.
§ Question put accordingly, That the Amendment be made:—
§ The House divided: Ayes 118, Noes 155.369
|Division No. 351.]||AYES||[10.0 p.m.|
|Albu, Austen||Huckfield, Leslie||Palmer, Arthur|
|Allaun, Frank (Salford, E.)||Hughes, Mark (Durham)||Parker, John (Dagenham)|
|Armstrong, Ernest||Hughes, Robert (Aberdeen, N.)||Parry, Robert (Liverpool, Exchange)|
|Atkinson, Norman||Hughes, Roy (Newport)||Pentland, Norman|
|Barrett, Joel||Hunter, Adam||Perry, Ernest G.|
|Benn, Rt. Hn. Anthony Wedgwood||Irvine,Rt.Hn.SirArthur(Edge Hill)||Prescott, John|
|Bishop, E. S.||Jenkins, Hugh (Putney)||Rankin, John|
|Blenkinsop, Arthur||Jenkins, Rt. Hn. Roy (Stechford)||Rhodes, Geoffrey|
|Buchan, Norman||John, Brynmor||Roderick, Caerwyn E.(Br'c'n&R'dnor)|
|Campbell, I. (Dunbartonshire, W.)||Jones, Barry (Flint, E.)||Roper, John|
|Carmichael, Neil||Jones, Dan (Burnley)||Rose, Paul B.|
|Clark, David (Colne Valley)||Jones, Gwynoro (Carmarthen)||Ross, Rt. Hn. William (Kilmarnock)|
|Cocks, Michael (Bristol, S.)||Judd, Frank||Sheldon, Robert (Ashton-under-Lyne)|
|Cohen, Stanley||Kerr, Russell||Shore, Rt. Hn. Peter (Stepney)|
|Concannon, J. D.||Kinnock, Neil||Short,Rt.Hn.Edward(N'c'tle-u-Tyne)|
|Confan, Bernard||Latham, Arthur||Short, Mrs. Renée (W'hampton.N.E.)|
|Cunningham, G. (Islington, S.W.)||Lawson, George||Silkin, Hn. S. C. (Dulwich)|
|Dalyell, Tam||Leadbitter, Ted||Silverman, Julius|
|Davies, Denzil (Llanelly)||Lee, Rt. Hn. Frederick||Skinner, Dennis|
|Davies, Ifor (Gower)||Lewis, Ron (Carlisle)||Small, William|
|Davies, S. O. (Merthyr Tydvil)||Lomas, Kenneth||Smith, John (Lanarkshire, N.)|
|Dell, Rt. Hn. Edmund||Lyons, Edward (Bradford, E.)||Spearing, Nigel|
|Dempsey, James||McBride, Neil||Spriggs, Leslie|
|Doig, Peter||McCartney, Hugh||Stallard, A. W.|
|Dormand, J. D.||McElhorte, Frank||Stoddart, David (Swindon)|
|Douglas, Dick (Stirlingshire, E.)||McGuire, Michael||Stonehouse, Rt. Hn. John|
|Duffy, A. E. P.||McMillan, Tom (Glasgow, C.)||Strang, Gavin|
|Evans, Fred||McNamara, J. Kevin||Thomas, Jeffrey (Abertillery)|
|Fletcher, Raymond (Ilkeston)||Mahon, Simon (Bootle)||Thorpe, Rt. Hn. Jeremy|
|Fletcher, Ted (Darlington)||Marks, Kenneth||Tinn, James|
|Freeson, Reginald||Marsden, F.||Urwin, T. W.|
|Golding, John||Mellish, Rt. Hn. Robert||Wainwright, Edwin|
|Gourlay, Harry||Mendelson, John||Walker, Harold (Doncaster)|
|Griffiths, Eddie (Brightside)||Milne, Edward (Blyth)||Wellbeloved, James|
|Hamilton, James (Bothwell)||Morgan, Elystan (Cardiganshire)||Whitlock, William|
|Hamilton, William (Fife, W.)||Morris, Alfred (Wythenshawe)||Wilson, Rt. Hn. Harold (Huyton)|
|Hannan, William (G'gow, Maryhill)||Morris, Charles R. (Openshaw)|
|Hardy, Peter||Mulley, Rt. Hn. Frederick||TELLERS FOR THE AYES:|
|Harper, Joseph||O'Halloran, Michael||Mr. Richard Crawshaw and|
|Harrison, Walter (Wakefield)||Orme, Stanley||Mr. Eric Ogden.|
|Heffer, Eric S.||Oswald, Thomas|
|Alison, Michael (Barkston Ash)||Gurden, Harold||Page, John (Harrow, W.)|
|Amery, Rt. Hn. Julian||Hall, Miss Joan (Keighiey)||Peyton, Rt. Hn. John|
|Astor, John||Hall, John (Wycombe)||Price, David (Eastleigh)|
|Atkins, Humphrey||Half-Davis, A. G. F.||Prior, Rt. Hn. J. M. L.|
|Baker, Kenneth (St. Marylcbone)||Harrison, Col. Sir Harwood (Eye)||Proudfoot, Wilfred|
|Barber, Rt. Hn. Anthony||Hastings, Stephen||Pym, Rt. Hn. Francis|
|Bennett, Sir Frederic (Torquay)||Havers, Michael||Quennell, Miss J. M.|
|Benyon, W.||Hawkins, Paul||Redmond, Robert|
|Biffen, John||Heseltine, Michael||Rees, Peter (Dover)|
|Biggs-Davison, John||Hicks, Robert||Renton, Rt. Hn. sir David|
|Blaker, Peter||Higgira, Terence L.||Rhys Williams, Sir Brandon|
|Boardman, Tom (Leicester, s.W.)||Hiley, Joseph||Ridley, Hn. Nicholas|
|Boscawen, Robert||Hill, James (Southampton, Test)||Roberts, Michael (Cardiff, N.)|
|Bowden, Andrew||Holt, Miss Mary||Rossi, Hugh (Homsey)|
|Bray, Ronald||Hornby, Richard||Russell, Sir Ronald|
|Bryan, Paul||Howe, Hn. Sir Geoffrey (Reigate)||Sharpies, Richard|
|Campbell, Rt. Hn.G.(Moray&Naim)||Howell, David (Guildford)||Shaw, Michael (S'b'gh & Whitby)|
|Carlisle, Mark||Howell, Ralph (Norfolk, N.)||Smith, Dudley (W'wick & L'mington)|
|Carr, Rt. Hn. Robert||Irvine, Bryant Godman (Rye)||Speed, Keith|
|Channon, Paul||James, David||Spence, John|
|Chapman, Sydney||Jenkin, Patrick (Woodford)||Sproat, Iain|
|Chataway, Rt. Hn. Christopher||Jeesel, Toby||Sr.anbrook, Ivor|
|Clark, William (Surrey, E.)||Jopling, Michael||Stodart, Anthony (Edinburgh, W.)|
|Clarke, Kenneth (Rushcliffe)||Joseph, Rt. Hn. Sir Keith||Stoddart-Scott, Col. Sir M.|
|Clegg, Walter||Kaberry, Sir Donald||Sluttaford, Dr. Tom|
|Cooke, Robert||King, Evelyn (Dorset, S.)||Sutorlffe, John|
|Corfield, Rt. Hn. Frederick||Kirk, Peter||Taylor,Edward M.(G'gow,Cathcart)|
|Cormack, Patrick||Kitson, Timothy||Taylor, Frank (Moss Side)|
|Curran, Charles||Knight, Mrs. Jill||Tetobit, Norman|
|Davies, Rt. Hn. John (Knutsford)||Knox, David||Temple, John M.|
|Dean, Paul||Legge-Bourke, Sir Harry||Thatcher, Rt. Hn. Mrs. Margaret|
|Dodds-Parker, Douglas||Le Marchant, Spencer||Thomas, John Stradling (Monmouth)|
|Dykes, Hugh||Lloyd, Ian (P'tsm'th, Langstone)||Thomas, Rt. Hn. Peter (Hendon, S.)|
|Eden, Sir John||Longden, Gilbert||Thompson, Sir Richard (Croydon, S.)|
|Elliott, R. W. (N'c'tle-upon-Tyne,N.)||Loveridge, John||Tilney, John|
|Eyre, Reginald||McLaren, Martin||van Straubenzee, W, R,|
|Fenner, Mrs. Peggy||McNair-Wilson, Patrick (NewForest)||Vaughan, Dr. Gerard|
|Finsberg, Geoffrey (Hampstead)||Marples, Rt. Hn. Ernest||Waddington, David|
|Fisher, Nigel (Surbiton)||Mather, Carol||Walker, Rt. Hn. Peter (Worcester)|
|Fletcher-Cooke, Charles||Maudling, Rt. Hn. Reginald||Ward, Dame Irern|
|Fookes, Miss Janet||Meyer, Sir Anthony||Warren, Kenneth|
|Fortescue, Tim||Mills, Peter (Torrington)||Wcathcrill, Bernard|
|Fowler, Norman||Mitchcll,Lt.-Col.C. (Aberdeenshire, W)||Whitelaw, Rt. Hn. William|
|Fox, Marcus||Mitchell, David (Basingstoke)||Wiggin, Jerry|
|Gibson-Watt, David||Moate, Roger||Wilkinson, John|
|Cilmour, Ian (Norfolk, C.)||Monks, Mrs. Connie||Wood, Rt. Hn. Richard|
|Godber, Rt. Hn. J. B.||Monro, Hector||Worslcy, Marcus|
|Goodhew, Victor||More, Jasper||Wylie, Rt. Hn. N. R.|
|Gorst, John||Murton, Oscar|
|Gower, Raymond||Noble, Rt. Hn. Michael||TELLERS FOR THE NOES:|
|Gray, Hamish||Normanton, Tom|
|Green, Alan||Oshom, John||Mr. Eric Cockeram and|
|Griffiths, Eldon (Bury St. Edmunds)||Page, Graham (Crosby)||Mr. Harold Soref.|
§ Main Question put forthwith and agreed to.
§ Bill accordingly read a Second time and committed.370