MERSEY DOCKS AND HARBOUR [MONEY] (Hansard, 27 April 1971)

HC Deb 27 April 1971 vol 816 cc371-83 371

§ Queen's Recommendation having been signified—

§ Motion made, and Question proposed,

§ That for the purposes of any Act of the present Session providing for the reconstitution of the Mersey Docks and Harbour Board as a Company and the reorganisation of the capital of the Board it is expedient to authorise any loss to public funds arising from the making of provision by that Act for:—

(a) the conversion of the existing mortgage securities for loans made to the Board before 27 November 1970 under section 11 of the Harbour Act 1964 or otherwise into new debenture stock secured by a floating charge upon the whole undertaking of the Company, so that the said conversion be effected in manner similar to the conversion into new debenture stock of other securities issued in respect of moneys raised by the Board;
(b) the postponement of the dates of redemption of, and the reduction of the rates of interest payable on, the new debenture stock during a moratorium period applicable in a similar manner to all such new debenture stock;
(c) the alteration (by a scheme made under the Act so as to be binding on the Company and each of the holders of such new debenture stock to secure, so far as practicable, the financial viability of the Company) of the rights and privileges attaching to the new debenture stock in a manner equitable to all such holders of new debenture stock, including the writing-down of the nominal value thereof, the postponement of the dates of redemption thereof and the reduction of the rates of interest payable thereon; and
(d) the allotment (in accordance with the said scheme) of share capital to the holders of such new debenture stock in a manner equitable to all such holders of new debenture stock;

(2) providing security for loans so made to the Board on or after 27 November 1970 as priority borrowings secured by a floating charge upon the whole undertaking of the Company, similar to the floating charge provided as security for the new debenture stock, but taking effect for the purposes of section 322 of the Companies Act 1948 as if created at the time of, and in consideration for, each such loan, being borrowings ranking as to interest and capital pari passu one with another and in priority to all other borrowings of the Company, whether made before or after any such priority borrowings, subject to such alteration of the rights and privileges attaching to such priority borrowings as may be agreed by the Secretary of State with the approval of the Treasury;
(3) the discharge of the appointment by the High Court of a Receiver of rates of the Board on behalf of the Crown.—[Mr. Patrick Jenkin.]

§ 10.10 p.m.

§ Mr. Edmund Dell (Birkenhead)
The Minister will have heard the hon. Member for City of Chester (Mr. Temple) say that an Amendment would be proposed to the Bill in accordance with which the Government could subsequently renounce their priority. The right hon. Gentleman was unable to say earlier whether such an Amendment would be acceptable to the Government; he evidently did not know the answer. Perhaps he knows the answer now. Is such an Amendment in order within the Money Resolution, or would the Money Resolution itself require amendment to permit of the proposed Amendment?

§ Mr. Hugh Jenkins (Putney)
On a point of order, Mr. Deputy Speaker. My right hon. Friend the Member for Birkenhead (Mr. Dell) has asked a question about the Money Resolution. I have tabled an Amendment to the Money Resolution: At end add— (4) Notwithstanding anything in paragraph (1) of this resolution, all existing bondholders or stockholders holding £1,000 or less in value and who have reached the age of 60 years shall be repaid in full at such times and in such manner as stated in the certificate issued with the original bonds or stock. Should my right hon. Friend's question be answered before I move my Amendment, or should my Amendment take priority?

§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
I think that I can clear up the hon. Gentleman's difficulties. I should have told the hon. Gentleman earlier, or Mr. Speaker before he left the Chair should have told the hon. Member, that it was not Mr. Speaker's intention to call the Amendment.

§ Mr. Jenkins
Further to that point of order, Mr. Deputy Speaker. I had some suspicion that you might say that. I take it that it will be in order for me to speak on the Resolution, even though my Amendment is not selected.

§ Mr. Deputy Speaker
Undoubtedly, so long as the hon. Gentleman catches my eye, which is not all that difficult.

373

§ 10.12 p.m.

§ The Minister for Transport Industries (Mr. John Peyton)
Perhaps I can help the House by answering the questions asked by the right hon. Member for Birkenhead (Mr. Dell). I am unwilling to give authoritative rulings about what is in order when I have not seen the Amendment in writing, but so far as I know it will be in order. I cannot see that it would be objectionable from the Government's point of view.

§ 10.13 p.m.

§ Mr. Hugh Jenkins
The Amendment which stood in my name before it disappeared from the Order Paper sought to recommend that the Government should take preferential action in the Money Resolution so as to enable them to favour small bondholders and stockholders. I was not wedded to the strict terms of the Amendment. What I sought to achieve was that those who had less than £1,000 invested in the Board's undertaking should receive preferential treatment in the repayment of their money in full.
It was suggested in the earlier debate that it was wrong to select certain shareholders for special treatment. I therefore suggest that the proposal for which my Amendment would have paved the way should be amended so that the first £1,000 of any investment should receive preferential treatment, which would mean that all shareholders should receive for the first £1,000 of their investment the ability to receive payment in full.
It will be immediately apparent to hon. Members why I make this suggestion, although it is unusual for hon. Members on this side to be over-concerned about investors. But this was a trustee security, in which large numbers of small people invested. Since it has been known that I took an interest in this matter on behalf of a constituent I have received letters from all over the country. The largest holding of anyone who wrote to me was £2,300—the entire life savings of a man invested by his widow in the Board in November 1969, when it must have known that it was running into difficulties. The smallest was £200.

§ Mr. James Wellbeloved (Erith and Crayford)
My hon. Friend said that we are not interested in investors; I am sure that he will want to qualify that. We 374 are interested not only in the Mersey Docks and Harbour Board investors but also in the Pinnock Finance Company investors and above all in the investors in Vehicle and General, which has foundered because of the incompetence and perhaps even worse of the Government.

§ Mr. Jenkins
I said that it was perhaps unusual for us to take a primary interest in investors. I agree with my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) that the primary interest must be the future of those whose lives are spent in the docks. But it is not wrong for us to be concerned with people who have saved some money. I am therefore worried about those who thought that they had a Government-secured investment and who, as a result of the Government's failure to back this trustee security on the basis of some doctrinaire proposition, will lose their money.
The right solution to this problem is public ownership. We are not dedicated to any particular form of public ownership and we have no objection to municipalisation, provided that it is genuine. If the Government changed their minds and decided to rewrite the Bill in Committee to provide municipalisation, I am sure that the House would give the necessary instruction. The Government's credit would emerge better after that procedure.
They are saying that the proposal to meet the first £1,000 cannot be agreed to, but meeting these small claims would not abrogate their ideas about organisations standing on their own feet. It would be doing something which they know they should do. In the Budget, they gave away about £35 million to surtax payers who do not need it. I know one surtax payer in particular—

§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
Order. The hon. Gentleman is straying rather wide of the Money Resolution.

§ Mr. Jenkins
I accept your guidance, Mr. Deputy Speaker. I was offering the Government ways and means whereby they could find money to meet the requirements of the Money Resolution. One suggestion was that they might modify, by a penny or two, the surtax proposals which they have made in order 375 to leave them with a few million pounds for this necessary purpose.
I hope that my hon. Friends, and perhaps some hon. Gentlemen opposite, will feel that there is merit in this proposal and that they would like to do something for the people they represent. Many of these people who have put these small amounts into this trustee security are supporters of the Government. Here are some of the widows and orphans about whom we used to hear. It used to be suggested that the only shareholders were widows and orphans. In this case there are genuine widows and orphans involved, and the Government are depriving them of 30 per cent. of their investments, according to the Board's estimate. Some of these people expected to have their money back in January, but it is not there.
This is a serious matter for people of small means. If the Government are serious about their concern for people living on small fixed incomes, they will not reduce their capital by 30 per cent. Surely they want to help these lame ducks. Some of these ducks are lame. Some of the widows need the money. Are these the kind of lame ducks which the Government want to throw away?
If the Government do not change their mind, they will not merely lose credibility with this side of the House—they need not worry about that, because they have never had any credibility with this side of the House—but they will lose credibility with their own supporters. This may be a serious matter for the Government. It may turn out that tonight this small Measure will identify the point at which the Government began to lose the confidence of the country and in themselves. If a Government fail to be true to the people they should be representing, they cease to be worthy to continue to govern.
I hope that the Government will think again about what I was proposing in my Amendment, which you, Mr. Deputy Speaker, did not select. I hope that my hon. Friends will vote against the Money Resolution if the Government do not give me an assurance tonight on the lines which I have been suggesting.
I hope that I shall receive a reply to what I have been saying. I hope that 376 the right hon. Gentleman will say that he will think seriously about these people for whom they are supposed to be concerned and not dismiss the matter. I ask the Minister to think carefully about what I have suggested. If he does, we shall not press the matter. However, if he decides to take no notice of these people, if he does not care about them, why should we vote for the Money Resolution?

§ 10.24 p.m.

§ Mr. Ted Leadbitter (The Hartlepools)
One of the disturbing features about the proceedings tonight is that there is no full financial statement of the Mersey Docks and Harbour Board before the House. Indeed, the full accounts to December of last year are not available to hon. Members. Yet we are aware that specific letters of instructions and advices have been sent to the stockholders.
I have come to the conclusion, in dealing with the Money Resolution, that if there is no information about the true financial state of the Board, then the House may be misled into thinking that the situation is either less serious or more serious than it is but that in any case there is doubt about the true position. The matter must disturb any hon. Member seeking to put before the House propositions such as that which my hon. Friend the Member for Putney (Mr. Hugh Jenkins) has put and which I want to describe now.
I have a constituent who has worked a full life. Part of his superannuation money was provided to him in a lump sum and was lent to the Mersey Docks and Harbour Board. He is a retired man with no other means than his pension. He is justified in making the point that when he loaned that small sum of money —about £3,000—the Board was well aware of its financial state. If stockholders have been given advice about the future postponement of the payment of their loan and reduction in the rate of interest, it is wrong that a Member should be deprived of the financial armoury with which to argue on their behalf the case concerning their disturbing position. The Minister for Transport Industries can use the lack of knowledge, saying that the Government must await a full report before they can commit themselves precisely, even if they were inclined to be generous in this respect, and they are not.
377 The Bill was put forward as a Private Bill. The Minister said that it was not a Government Bill. But it did not escape our notice that in the voting a few minutes ago there were the Chancellor of the Exchequer, the Solicitor-General, the Minister of Agriculture, the Secretary of State for Trade and Industry—practically the full Cabinet, except the Prime Minister; and I suppose that this is the second occasion on which he has not been told what is happening. This means that Conservative hon. Members cannot get away with a pronouncement that it is a Private Bill, when there is a strict Government interest, with the representation of Ministers from every Department.

§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
Order. We have finished with the Bill. We are discussing the Money Resolution, and the hon. Gentleman must keep to its terms.

§ Mr. Leadbitter
As on previous occasions, Mr. Deputy Speaker, the telepathy between us is remarkable, and I was finishing what I had to say on that point. I accept what you say, and will return to the Money Resolution and put one or two pertinent points.
The Minister said that the Government are not prepared to feather-bed even the port of Liverpool. We on this side do not accept the expression "feather-bedding". It is wrong for the Government to take over the small amounts of moneys and investments of people up and down the country and put them in a newly-formed company, which is what is happening. The Minister cannot support his prejudices against the nationalised ports, and make his plea as a corollary that financial support from the Government would be feather-bedding, if he is prepared so loosely to use other people's money to help create a new statutory company which, in the language of the advices sent to the stockholders, will operate as a commercial company. The country should be disturbed about this.
The Minister, when he voices his prejudices about public ownership, should be careful not to neglect the fact that he is responsible for a high proportion of the ports which are publicly owned and financially healthy. He cannot deny 378 that. He should not run down the ports of which he is in charge on the basis that we advocate nationalisation.

§ 10.31 p.m.

§ Mr. John M. Temple (City of Chester) rose—

§ Mr. Eric S. Heffer (Liverpool, Walton)
On a point of order. I take it that there will be sufficient time for me to make my contribution before the debate is concluded.

§ The Chairman
I am sure that the hon. Member for the City of Chester (Mr. Temple) does not wish to speak for the rest of the debate.

§ Mr. Temple
I undertake to be extremely brief.
I have been provoked into making another speech because the speech of the hon. Member for The Hartlepools (Mr. Leadbitter) was an attack on the Bill and not on the Money Resolution. If hon. Members opposite had read the Resolution carefully they would have been in favour of it. It provides for the Government making good losses from public funds in order to help in every possible way the functions of the Mersey Docks and Harbour Board and particularly the situation of bondholders.
We have heard a pathetic story from the hon. Member for Putney (Mr. Hugh Jenkins) about widows and orphans who have invested in the Board. I realise that their situation is extremely tragic. But if the Resolution were lost their situation would be very much worse. I should have expected to hear Opposition speeches in favour of the Resolution, which is a concrete example of the Government giving assistance to the Board. I find the Opposition's speeches rather extraordinary.

§ Mr. Leadbitter
The hon. Gentleman is entitled to put his interpretation on what we have said, but our objection is that, although the Money Resolution might be acceptable to the hon. Gentleman as the mover of the Second Reading, it is not acceptable to us because it supports a Bill of which we disapprove.

§ Mr. Temple
That is a fair point. But I should have thought that the Resolution was drawn in terms which were acceptable to the Opposition.
379 I wish to clear up one criticism of the Board, namely, that the Bill has been brought forward at a time when the accounts for 1970 are not available. My hon. Friend the Member for Bebington (Mr. Cockeram) explained that the Board is faced with very great complexities in the preparation of the accounts for the year ending 31st December, 1970. Therefore, it has called in consulting accountants and valuers to advise it on important points which it would like to get absolutely clear so that when the accounts are presented they will convey a true picture of the Board's position. I give that explanation again only because it has been challenged. Not because I moved the Second Reading but because I believe that this is an example of the Government's good will, I hope that the House will give unopposed approval to the Money Resolution.

§ 10.35 p.m.

§ Mr. Eric S. Heffer (Liverpool, Walton)
If the Money Resolution were not before the House, the situation for bond holders would be very much worse. I am not proposing, therefore, that we should oppose this Resolution, though some hon. Members may wish to oppose it, and we shall have to see what emerges when, or if, a Division is called. Our position was made abundantly clear when we discussed our reasoned Amendment earlier.
Apart from the big and small personal investors, a number of trade unions have invested money in the Board. For example, co-operative and other organisations, representing trade unions and the Labour movement, have put considerable sums—the T. & G.W.U. alone has invested about £250,000 in the Board—into this sphere and they stand to lose considerable amounts. They are not particularly happy about the provisions of the Bill and the likely outcome of this Resolution.
I have never been an advocate or supporter of the capitalist system. I appreciate, however, that many people support the system and have invested money in the Board. I will quote from two letters which have come to me, and in each case the writer had invested in the Board. One wrote: I feel sure they could if they so wished redeem these bonds and save a lot of people 380 a great deal of hardship, especially those who have invested all their savings in what always seemed a gilt-edged proposition. That was written by a person living in Childwall, Liverpool. A resident of Heswall wrote: Upon my retirement at 65 years of age, in 1965, I invested, out of my superannuation money, £1,000 in debenture stock issued by the Board, as I wished to aid local industry and ensure, as I thought, over the long term, a moderate rate of interest for my twilight years. I am now horrified to learn that this same Board are seeking Government aid to confiscate the money of bond holders who assisted them in the past! I suspect that both writers supported the Conservatives and were passionate believers in the capitalist system. I also suspect that their support has been rather diminished by these events.
The Times has published a number of editorials, each taking a different line, about the Board. I will quote from only two of them.
On 11th January this year The Times said: It is clear to both industry and the City that this is the year in which the Government's policy of not providing support for lame ducks could take its toll on business and the stock market. Last week's developments in the case of the Mersey Docks and Harbour Board have made it equally clear, however, that that policy requires consistency and clarification. For emotional and practical reasons, the accident that the Mersey Board appears as an exemplar of the rigorous new stance for government towards the private sector is unfortunate. Investors in the bonds of the port placed their money for security—buying fixed-interest stocks in a public authority with their investment secured on its revenues. About a third of the board's bonds, some £23 million, is held by investors with amounts of less than £5,000 nominal value. The leader goes on: They may have been ill-advised to believe that these bonds were in effect Government-guaranteed. But the mistake was one from which the Government have previously profited in that such public authorities as the board have been able to borrow at favourable rates of interest because of it; and small investors in Mersey may feel, there is a contrast between their experience and the indirect assistance through government-supported intervention to the risk-taking ordinary shareholders of Rolls-Royce. The leader reaches the following conclusion: It is hard to escape the conclusion that the Mersey bond-holders are victims of irreconcilable political aims. For the Government to reconsider their position and assume liability 381 for bond repayment would not weaken their policy of insisting on commercial self-sufficiency. I could quote at length from another leader that appeared in The Times on 12th March this year. Since all the top people read The Times—it is the bible of the top people—and since the top people are supposedly on the other side of the House, I am sure they will take due note of what that newspaper said on this subject. Perhaps I will quote a short passage from that March leader. In talking of the Port of London Authority it said: The proposal is necessarily an imitation of the second and revised Mersey capital reconstruction scheme and inevitably if the P.L.A. is to be able to raise new money which it badly needs. Superficially such a scheme may be to the Government's liking since it would establish that the ports are commercial enterprises in which it is management's duty to see that capital is not lost and the investor's problem, as in other commercial enterprises, if it is. Then it continues in relation to the Mersey: But the enthusiasm for this plan seems misplaced. What it fails to recognise adequately is that the ports involved so far, Mersey and London, are statutory undertakings with a legal responsibility to provide port services—that they are in fact radically different in kind from a normal private enterprise. Those editorials from The Times are extremely revealing and instructive. If I were a passionate Member on the other side of the House, I would do what I have done in the past six years when our party was in government. When I thought the principles on which my party was based were being departed from, I was prepared to speak and vote against my own party. But that apparently is not the situation of hon. Members opposite. This legislation is a serious departure from the basic principles of conservatism, but they are not prepared—apart perhaps from one or two of them—to stand up and make their voices heard. The majority are prepared to let this go through without showing that it is contrary to their beliefs. The credibility of the Conservative Party is now at stake.
If I had been a defender of the capitalist system in the past I would have been brought to realise now, because of this Measure, as, I am sure, thousands upon thousands of investors in this coun- 382 try will also now realise, that investors got a much better deal whenever the Labour Government brought things under public ownership, because they were paid full and, sometimes, over-fair compensation from the Labour Government—much better treatment than they are getting from the Tory Government at present.

§ 10.45 p.m.

§ Mr. Peyton
If I may, with the leave of the House, speak again very briefly in reply to some of the points which have been made, I should like to start by saying that, like my hon. Friend the Member for City of Chester (Mr. Temple), I am absolutely convinced—and I think, the hon. Member for Liverpool, Walton (Mr. Heffer) conceded his point—that the passing of this Money Resolution, whatever may be the difference of opinion on the Bill itself, is essential in the interests of everybody concerned, the Board and the bondholders alike.
I turn to the points which were made by the hon. Member for Putney (Mr. Hugh Jenkins). I am sorry not to see him in his place. I do not think that even if they were in order I could advise the House to accept them. To start with, they would have the very great disadvantage of prolonging uncertainty. Moreover, it would be very difficult to define the deserving people whom he has in mind. May I give one example of what I mean. If we judge a deserving person by the fact that he has £1,000 or less invested in the Board, that makes no reference to the size of his total wealth; it is a measure only of his investment in the Board.
I must advise the House that it is essential in the interests of clarity and certainty to adhere to what has been the Government's aim all along in what I readily admit is a very unhappy business, particularly for those who suffer—and that is that equality between all bondholders should be a fundamental aim of any settlement which is made, because to do anything else would be manifestly unjust.
To the hon. Member for The Hartle-pools (Mr. Leadbitter) I would say that I do not recollect having used the words "feather-bedded" for many years, and so I shall not follow him at length in his argument.
383 The hon. Member for Walton accused us on this side of the House of departing from our principles. Nothing could be further from the truth than that. The point here is perfectly simple, even though painful. It is that a great many people have had the misfortune to invest their funds, their savings, in an operation which, for reasons which I have already given, was ill run. It is an operation which, for various reasons—to many of which I referred in my Second Reading speech and which it would be out of order to repeat now—has fallen upon evil days. We on this side of the House believe that the Bill, with its unfortunate consequences for some, is an inevitable but necessary step on the road back to restoring the port of Liverpool. The Money Resolution is essential to that Bill.

§ Question put and agreed to.