VEHICLE AND GENERAL INSURANCE COMPANY (Hansard, 27 April 1971)

§ The Prime Minister (Mr. Edward Heath)
With permission, I wish to make a statement about certain matters related to the Vehicle and General Insurance Company.
As the House will be aware, my right hon. and learned Friend the Attorney-General received this morning a final report from the Metropolitan Police of their investigation into the unauthorised disclosure of information from the Department of Trade and Industry in respect of the affairs of the company.
After consideration of all the evidence at present available and after consultation with the Deputy Director of Public Prosecutions and Treasury Prosecuting Counsel, the Attorney-General has decided not to institute any criminal proceedings under Section 2 of the Official Secrets Act, 1911.
This decision having been taken, the Government have concluded that it would be in the public interest that a tribunal should be established under the Tribunals of Inquiry (Evidence) Act, 1921, to inquire into wider issues in relation to the circumstances leading up to the cessation of trading by the V. & G. Insurance Company, namely—

(a) Whether and if so by whom the contents of certain documents or other information in the possession of the Department of Trade and Industry relating to the affairs of the company or any of its subsidiaries were improperly disclosed or obtained between 4th and 18th November, 1970, and whether, should this be shown to be the case, any use was made of such information for the purpose of private advantage.

(b) Whether there was negligence or misconduct by persons in the service 239 of the Crown directly or indirectly responsible for the discharge, in relation to those companies, of functions under the Insurance Companies Acts, 1958–67.

(c) Whether there is any evidence that the interests of policy holders or shareholders of those companies were adversely affected as a result of any impropriety, negligence or misconduct found to have occurred.
The necessary Resolution for this purpose will be tabled today; and the House will be asked to approve it tomorrow.

§ Mr. Harold Wilson
The House will welcome the right hon. Gentleman's announcement of this, as far as we can tell, thorough-going inquiry.
Is the Prime Minister aware that the whole House will agree that it must be for the right hon. and learned Gentleman the Attorney-General to decide whether to institute criminal proceedings? The House will have been prepared for this announcement by the fact that his decision was foreshadowed in the Press this morning, the information being attributed to Ministers.
Is the right hon. Gentleman aware that, on the first study of what he has said, the terms of reference would appear to be adequately wide, as we have pressed? They will include, not merely the circumstances of the "leak" and the possible misuse of any "leak" for personal advantage, but also, if we interpret the right hon. Gentleman's reference to "persons in the service of the Crown" correctly, Ministers as well as civil servants, I am not talking about the "leak", which we all assume is not in question, but the manner in which the Government handled it and, as the right hon. Gentleman said in his projected terms of reference, the position, interests and rights of the policy holders. Will the Prime Minister confirm that Ministers as well as other servants of the Crown are intended to be covered by the terms of reference? Finally, since the tribunal has been set up under the 1921 Act, will the right hon. Gentleman confirm that the decision as to whether the tribunal should sit in public or private is a matter for the members of the tribunal to decide, but that convention in recent years and the recommendations five years ago of the Royal Com- 240 mission on the 1921 Act indicate that in all possible circumstances the hearings should be in public except when there is an overriding reason for holding them in private? Will the right hon. Gentleman confirm that that is his view and that it will be for the tribunal so to decide?

§ The Prime Minister
Yes, the right hon. Gentleman is quite correct that the terms of reference which I have quoted this afternoon to include Ministers both in this Administration and previous Administrations. As to whether the tribunal will sit in public or in private, the position is exactly as the right hon. Gentleman has described it.

§ Sir D. Walker-Smith
In view of the doubts, confusion and difficulty which arose in respect of the tribunal of inquiry into the Abervan disaster, could my right hon. Friend say whether, in the context of this tribunal, there will be applied the recommendation of the Lord Justice Salmon Committee in regard to contempt in these proceedings, so as to make clear the question of legitimacy and propriety of comment on matters under inquiry by the tribunal?

§ The Prime Minister
As my right hon. and learned Friend knows, the recommendations of the Salmon Commission were very wide-ranging. I believe it is true that the Abervan tribunal took account of the great majority of them, and I think it is to be assumed that any tribunal in future will also do so. There was one particular recommendation that the Attorney-General should not take part. The then Attorney-General, I believe at the request of the president, did take part, and it is the intention of my right hon. and learned Friend the present Attorney-General that he should discuss with the president of the tribunal what his wishes are.

§ Mr. Richard
The Prime Minister said that the second of the terms of reference was to consider whether or not there had been any negligence or misconduct by any servant of the Crown or any Minister and whether the interests of the shareholders or policy holders were thereby affected. In the event of finding of evidence by the tribunal—I am not commenting or prejudging anything—but in the event of the finding by the tribunal that there was some kind of negligence or misconduct as a result 241 of which the interests of policy holders or shareholders were affected, do the Government accept any obligation to reimburse those shareholders and policy holders?

§ The Prime Minister
I think it would be wrong for me to attempt to anticipate any findings by the tribunal, or at this point to make any policy statement about any decision the Government may reach as a result of them.

§ Mr. Thorpe
May I ask the Prime Minister whether he is aware that there will be a widespread welcome for the appointment of this tribunal as the only way of restoring public confidence in the confidentiality of Government information? May I ask three questions? Can he say what he has in mind about the president of the tribunal, or will that await the outcome of the debate tomorrow? Secondly, the statement says that there will be no criminal prosecution on the basis of evidence at present available. Do we take it from that that the Government are reserving their position on this matter, awaiting the outcome of possible further evidence? Thirdly, do we take it that the inquiry will be sufficiently wide to consider why it took two months for this matter to be referred to the D.D.P. and five months for this tribunal to be appointed?

§ The Prime Minister
As for the membership of the tribunal, it was one of the recommendations of the Salmon Commission that no names should be announced before the debate on the Resolution had been concluded. That procedure we propose to follow in this case. We shall ask the House to approve the Resolution, and when both Houses of Parliament have done that my right hon. Friend the Home Secretary will announce the names. As to the second point, that is a matter for the Attorney-General, who is completely independent in all such matters. As to the third point, that does fall within the terms of reference of the tribunal.

§ Mr. Kenneth Baker
Can my right hon. Friend say whether the tribunal will investigate the fact that the executives and directors of Vehicle and General over the years have been a prime source of leaks about the fortunes of that company, and in view of item (c), will the 242 tribunal be able to establish whether the collapse of V. and G. was in any way due to leaks or, as financial commentators picked up in 1968 and 1969, to financial imprudence of the management?

§ The Prime Minister
What the tribunal investigates is a matter for the tribunal to decide within the terms of reference which I think are very clear.

§ Mr. C. Pannell
I draw the Prime Minister's attention to a statement made by the Secretary of State for Trade and Industry last Thursday when he said: "… but I must say that from the departmental point of view it would not have seemed a matter which would have benefited greatly from revelation."—[OFFICIAL REPORT, 22nd April, 1971; Vol. 815, c. 1375.] From the departmental point of view "it "—that is the situation of V. and G. "would not have seemed a matter which would have benefited greatly from revelation". From that opinion sprung the terrific procrastination and pressure and the desire for an inquiry. Will the pressures on Ministers be looked at, if not by the tribunal by the Prime Minister, and what sort of advice he accepted as to whether the departmental point of view was put before the public interest?

§ The Prime Minister
The timing of these matters can obviously be investigated by the tribunal and it is better today that this should now be left to the tribunal.

§ Mr. Darling
As I understand it, the inquiry is to deal with the possible wrongful disclosure of information. Would the Prime Minister agree that there is another aspect of this matter which requires investigation, and that is why no action was taken by the Department of Trade and Industry under Section 80 of the Companies Act, 1967, which gives the Department authority to intervene immediately in the affairs of a company where there is a possible risk of the company going bankrupt? Surely we require now an investigation into why action was not taken by the Department when it should have been taken, quite distinctly apart from this question of disclosure. Would the right hon. Gentleman not agree that the best way of conducting that inquiry is by a special Committee of this House?

§ The Prime Minister
The statement I have just made is a detailed one, and the proposed terms of reference of the tribunal have been drafted closely as well as clearly. If the right hon. Gentleman studies it I think he will find that his point is fully met, because one part of (b) says quite specifically whether there was negligence or misconduct by persons in the service of the Crown directly or indirectly responsible for the discharge, in relation to those companies, of functions under the Insurance Companies Acts, 1958 to 1967. On the question of a Select Committee, if the hon. Gentleman will refer to the Salmon Commission he will see the very strong, in fact overwhelming, argument set out why a Select Committee should not be used.

§ Mr. Speaker
This is a matter which can be debated tomorrow.

§ Mr. Harold Wilson
Whether this is a point of order or not, I think the right hon. Gentleman at the end of his statement mentioned that this will come up for approval, that an Order will have to be tabled for tomorrow, and, of course, it is then subject to debate. I do not know whether, Mr. Speaker, you regard it as a point of order—

Hon. Members
It is not a point of order.

§ Mr. Wilson
Hon. Gentlemen, if they will listen, in a moment can form their own view, and so will Mr. Speaker. This point is concerned with helping the progress of business in the House tomorrow. If it is not a point of order—

Hon. Members
It is debate.

§ Mr. Wilson
If it is not a point of order, may I ask whether the right hon. Gentleman is aware—

An Hon. Member
Get on with it.

§ Mr. Wilson
I will get on with it—

§ Mr. Molloy
On a point of order.

§ Mr. Speaker
Order. I called the right hon. Gentleman the Leader of the Opposition. I ask hon. Members that he may be allowed to put his Question.

§ Mr. Wilson
Which, Mr. Speaker, is a matter of not being interrupted by a certain number of hon. Members opposite 244 or by the St. Trinian's bench below the Gangway.
Is the Prime Minister aware that on past experience in relation to this it is profitable that the House as a whole should leave the job, once the announcement has been made by the Government Front Bench, to the tribunal and that it would be the hope at any rate of this Front Bench, and I am sure of the Government Front Bench, that instead of a debate tomorrow on a matter which has been referred for investigation we should proceed quickly to leave it to the tribunal to decide.

§ The Prime Minister
That is a point of view which I share and which I hope will be shared by the whole House.

§ Mr. Carter
On a point of order, Mr. Speaker. I rose immediately the Prime Minister had sat down—

§ Mr. Speaker
Order. If I may be allowed to get a word in, in view of what has just taken place I propose to allow one or two more supplementary questions.

§ Mr. Carter
Thank you, Mr. Speaker. I will be very brief. Most of the points I would have raised have already been covered.
I welcome the Prime Minister's statement. How long does he estimate the tribunal will take to reach a conclusion? That is a point which will bear very strongly on people's attitude towards the tribunal. How will the tribunal get on in terms of relationship with the inquiry at present being conducted by the Ombudsman and with the inquiry being conducted into the affairs of V. and G.?

§ The Prime Minister
It is not possible for me to say how long the tribunal will require to complete its labours. A point which was very strongly emphasised by the Salmon Commission and which was followed by the previous inquiry was that ample time should be allowed by the tribunal for those concerned to prepare the work of the tribunal. I presume that this will again be the case with this tribunal.
I understand that the inquiry by the Parliamentary Commissioner has already reached its preliminary stage. It is a matter for the Parliamentary Commissioner to decide whether he continues with his inquiry in present circumstances 245 or whether he uses the power granted to him in legislation either to suspend it or to withdraw it. The inquiry under the Companies Act will proceed.

§ Mr. J. H. Osborn
As well as the tribunal inquiring into possible misconduct and negligence, will my right hon. Friend ensure that the tribunal reviews the extent to which legislation by Conservative as well as Labour Governments has imposed an impossible task on Government Departments and civil servants, particularly on the question of defining whether a company, be it an insurance company or another company, is viable? This aspect should be considered by the tribunal if consideration of possible negligence and misconduct is within its terms of reference.

§ The Prime Minister
It is for the tribunal to decide whether it wants to investigate such a matter, but I do not think that it would be excluded under paragraph (b) of the terms of reference which I have read to the House.

§ Mr. English
The right hon. Gentleman has just said that it is entirely for the Parliamentary Commissioner to decide for himself whether to suspend or to continue his present inquiry. Is it not the case that the Parliamentary Commissioner is ultimately responsible to a Select Committee and that, had he continued with this inquiry and made a special report, it would have come to the House by that means? Do we gather that the Prime Minister has no intention, in the Resolution setting up the tribunal, to give any indication to the Parliamentary Commissioner as to what he should do?

§ The Prime Minister
The hon. Gentleman is quite correct in his last statement. I was merely stating a matter of fact, namely, that the Act empowers the Commissioner to discontinue his investigation of a complaint undertaken by him.

§ Mr. Benn
Can the Prime Minister tell the House why the date 4th November appears in his statement? As far as I know, this is the first time that date has appeared. Is there any significance in leak possibilities having been confined to those dates? Would these dates preclude inquiries into what might have happened earlier?

§ The Prime Minister
The reason for the reference to 4th November is that this is the date on which the document was drawn up, and the 18th was the date of the meeting at which it became known that unauthorised persons had had access to the document. In its general terms I do not believe that it excludes the tribunal from any other investigations that it may wish to make.

§ Mr. Rost
Might not this be an appropriate time to consider an even wider and more important issue which has been raised by this matter, namely, the function of the Board of Trade as watchdog in company affairs? Is it not time that we asked the Secretary of State for Trade and Industry to look into the role of the Board of Trade and give it some teeth as a protector of the public interest in these matters?

§ The Prime Minister
Anybody who has been a Minister at the Board of Trade will have knowledge of the difficulties which legislation poses for those who have responsibility there. An inquiry of the kind envisaged by my hon. Friend is much wider and further ranging than this inquiry. A further recommendation of the Salmon Commission was that a tribunal of inquiry should be set up only to look into a specific matter and not into wide-ranging general ones.

§ Mr. Ashton
Is the Prime Minister aware that outside the dates he mentioned on 26th November the Daily Express published a story to the effect that 25,000 V. and G. shares had been sold in one block? Will the tribunal have powers to ascertain who sold those shares and where he got his information from?

§ The Prime Minister
The tribunal has very complete powers to make inquiries of all kinds.

§ Mr. Speaker
I think that we must now move on.

§ Mr. Clinton Davis
On a point of order, Mr. Speaker. Ought not the Prime Minister to have taken this opportunity to have offered the thanks of the country and of the House to my hon. Friend the Member for Birmingham, 247 Northfield (Mr. Carter) for his perspicacity—

§ Mr. Speaker
That is not a point of order.