§ Order for consideration, as amended, read.
§ Motion made, and Question proposed, That the Bill, as amended, be now considered.
§ 7.26 p.m.
§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
Order. Before I call the hon. Member for City of Chester (Mr. Temple) to move his new Clause, may I say that in the debate on the consideration it will be quite in order for the hon. Member for Nottingham, West (Mr. English) to discuss the terms of his reasoned Amendment, which I have not selected.
§ Mr. Eric S. Heffer (Liverpool, Walton)
On a point of order. You said, Mr. Deputy Speaker, "Before the hon. Gentleman moves the new Clause". Surely at this stage we are debating consideration?
§ Mr. John M. Temple (City of Chester)
On a point of order, Mr. Deputy Speaker. Did I understand you to say that the new Clause would be debated with the consideration or subsequently?
§ Mr. Deputy Speaker
Order. I am sorry that I misled the hon. Gentleman. We have not come to the new Clause yet. We are on the consideration of the Bill.
§ Mr. Leslie Spriggs (St. Helens)
On a point of order, Mr. Deputy Speaker. May I draw to your attention that interested Members who have constituents seriously affected by the Bill have not been able to obtain the relevant documents relating to the Committee proceedings and other documents? I wonder whether you can help us, Mr. Deputy Speaker.
§ Mr. Deputy Speaker
Order. I believe that the hon. Gentleman is under a misapprehension. I believe that the documents are available and have been available for some little time.
§ Mr. Edmund Dell (Birkenhead)
Further to that point of order. It is true that the documents are now available. I understand that they have been available since last Thursday, but they were not made available following each session of the Committee in what is the ordinary 1074 procedure on a Public Bill. As a result, hon. Members had, first, to be aware that at that late date the documents were in the Vote Office, and, second, have had to read a bulky volume of evidence over the weekend in order to be ready to debate the Bill today. Whether or not that is in order in a Private Bill, it is a totally intolerable way of conducting the business of the House.
§ Mr. Deputy Speaker
Order. Whether or not what the right hon. Gentleman says is true is not for me to say. But I can tell him that we are within the rules of order on a Private Bill.
§ Mr. Dell
I understand that on the Motion, That the Bill be now considered, it is in order to speak on the Bill as it returns to the House amended. I would like, first, to express thanks to the Select Committee, which obviously put in a great deal of work on the Bill, which presented a somewhat more intractable problem than it may have thought when it began. It considered the Bill at nine long sessions, and although I must disagree with its members on some points, I would express thanks to them for the considerable and detailed work they put in.
I would also like to thank two of the petitioners against the Bill—Mr. Washer and Mr. Collins—two private persons who petitioned against the Bill, conducted their petitions without legal advice, cross-examined witnesses produced before the Select Committee, and made statements on their own behalf, in circumstances which must have been very unusual to them. In both cases the petitioners spoke with ability, clarity and, in my view, with the rights of the case very much on their side. It may be that on some other occasion the House should consider the difficulties into which private persons are put when they petition against private Bills in these circumstances.
The House should also consider the difficulties it is put in because of the failure to produce the Minutes of Evidence until the last minute. Hon. Members have not been able to get hold of the evidence until a few days before the Bill is considered in this House. I wrote a letter to the parliamentary agent early in the proceedings asking for copies of the evidence. I got a curt letter saying 1075 that I could not have them. I approached the Leader of the House and, with his help and that of the officials of the House, I managed to get early copies of the evidence. But it is an intolerable situation to put hon. Members in. If a Bill of this importance is to be brought before the House under Private Bill procedure, the least the Government can do is to ensure that hon. Members have access to the Minutes of Evidence as they come forward.
The Select Committee and my hon. Friend the Member for Nottingham, West (Mr. English) say that this should have been a Public Bill, and I entirely agree. If it had been a Public Bill, the Government would have been able to whip their supporters in the usual way instead of relying on the payroll vote which, I imagine, is now lurking about the House against the possibility of a vote on this Motion or on a later Amendment. If the Government wish to force through this disasteful policy, they should do it honestly and on the basis of a Public Bill. It should have been a Public Bill, but I do not dissent from the procedure of using a Select Committee on a Public Bill in these circumstances.
Everything that has happened in the proceedings of the Select Committee, all the evidence brought forward and the decisions of the Committee itself, justify everything said about the Bill from this side of the House on Second Reading and before then. I think that only two Members of the House, given the opportunity impartially to consider the Bill in the judicial or semi-judicial capacity of a Select Committee, would have left it unaltered. They are the Minister for Transport Industries, who allowed this policy to be imposed on him, and the Prime Minister, whose policy it is. I do not think that any other hon. Member sitting on this Bill in a judicial or semi-judicial capacity could have done other than drastically alter it.
I congratulate the Select Committee on having altered the Bill, although its Amendments do not go far enough. The Bill is totally unjust. It was pointed out by Mr. Collins, when he made a statement at the invitation of the Chairman, how little had been done even to meet the points which the Chairman of the Select 1076 Committee put to the promoters of the Bill in session 7—points which, if met, would make the Bill more tolerable. I regret that the Select Committee when it came to the point went back even on some of the points which the Chairman had said were unalterable minimum demands.
Among the points which we raised on Second Reading was that the Bill created a conflict of interests between the Port and the future interests of the security holders. That there is such a conflict of interest we shall be discussing later, but it is worth referring to it now on the basis of the evidence. At the ninth meeting of the Committee, Mr. Fay, speaking on behalf of the Board, said:It is indeed a Board which one would expect to have primarily in mind the interests of the security holders.That is on page 2 of the report of the ninth meeting. On page 3 he again referred to the Board as being one… which, one would assume again, reflected the interests of the security holders.Here we have a Board, and we are setting up a company which, according to the lawyer speaking for that Board before the Select Committee, will have primarily in mind the interests of the security holders. I have great sympathy with the position of the bond holders, which I have expressed many times, but the priority interest of this statutory company or of the Board should be the future of the port of Liverpool.
The Government, by this Bill, are setting the interests of the port of Liverpool against the interests of the security holders. There is a national interest—and this the Government have recognised by the money they are giving to the Sea-forth Docks—in maintaining and developing the port of Liverpool. That interest can in certain circumstances be inconsistent with the interests of the security holders. Owing to the manner in which the statutory company is being set up, it is apparently primarily the interests of the security holders and not the national interest—not the future of the port of Liverpool—which are being promoted. For that, we have the word of the lawyer who was speaking in Committee about the policy of the Board and the subsequent statutory company.
The second point that we made in Committee was that the Bill leaves the future of the port in grave uncertainty. 1077 This can be illustrated also by the evidence presented to the Select Committee. One of the propositions put to the promoters by the Chairman of the Committee at its seventh meeting was that there should be a maximum possible write-down of capital written into the Bill. But no such Amendment has been written in and the Committee allowed itself to be argued out of the proposition by arguments presented to it at the following meeting by Mr. Baring.
§ Mr. Martin Maddan (Hove)
The Select Committee was unanimously argued out of that by the arguments put forward.
§ Mr. Dell
I am prepared to accept that the Committee was unanimously argued out of it. I am drawing attention to the implications of the fact that the Committee did not feel able to write into the Bill a maximum write-down of 50 per cent. Let us bear in mind that in the original Bill there was a maximum write-down of 30 per cent. On considering the evidence and arguments of Mr. Baring the Committee concluded that it could not even put in a maximum of 50 per cent.
§ Mr. Michael English (Nottingham, West)
The Bill as drafted provides for 100 per cent. of a security holder's capital to be written down as to 50 per cent. and that 50 per cent. gives the security holder an equity entitlement. He rates 50 per cent. of his former non-equity security.
§ Mr. Dell
I follow that argument but what I am doing now is to refer to the argument which Mr. Baring used on this point before the Select Committee as showing the uncertainty which, in my judgment, continues regarding the future of the Port of Liverpool despite the organisation of this statutory company. Mr. Baring said:It is not possible at this point in time to forecast what the situation will be in 2, 2½ or 3 years' time, and the reasons why it is not possible have been aired at length in this committee If it turns out when we get to the definitive scheme that the situation if, shall we just say, much less good than one would have hoped, the promoters of the scheme may find that they are forced by statutory limitations of the sort I am referring to to produce a scheme which results in a second insolvency.That is the possible future as seen by Mr. Baring. In other words this Bill 1078 does not provide any guarantee for the future of the port. The uncertainty continues at any rate until the scheme is brought forward and accepted either by the security holders or by the courts. This uncertainty which it should have been the object of the legislation to end will continue and can only mean a slow erosion of the port's prospects. There is only one way of removing uncertainty and that is a clear statement of intention by the Government as to the future of the Port of Liverpool such as I called for in the debate on Second Reading.
During that debate I had an exchange about pensions with the Minister for Transport Industries. I had understood, apparently mistakenly, from correspondence with him that he had given an assurance about pensions to the effect that in all circumstances the Government would guarantee payment of pensions. It was noticeable that on Second Reading the Minister limited his assurance to the period before the statutory company was set up. As a result I wrote to him again and he has repeated the limitation that the Government's assurance in respect of pensions relates only to the period until the statutory company is set up. If the right hon. Gentleman wishes to intervene and correct me, I will be glad to give way.
§ The Minister for Transport Industries (Mr. John Peyton)
I do not wish to correct the right hon. Gentleman but I am sure that he would not wish to add unnecessarily to the anxiety of a very vulnerable section of people. There is no reason whatever to believe that the Board will not, after reconstruction, be able to pay the pensions. I have, perfectly properly, limited the obligations of the Government throughout.
§ Mr. Dell
I note what the right hon. Gentleman says and I can assure him that when I have spoken to pensioners I have said that in my judgment their pensions were secure because I do not believe that in any real circumstances the Government would let them down. Nevertheless I hope the right hon. Gentleman appreciates the significance of the limitation which he has given explicitly in correspondence and again in the House in the light of what Mr. Baring said in Committee. To the extent that there is an assurance, I welcome it.
1079 There is one point I would like to make about one Amendment and here I should emphasise that I speak as an ordinary Member and not officially on behalf of the Opposition. I want to express a personal view about the Amendment in the Special Report of the Select Committee Paragraph 3, No. 7 which deals with the exclusion from the Board of persons who have been directors of bodies which have failed to fulfil their financial obligations, unless the Secretary of State so consents. In Committee the Chairman made various strong statements about the behaviour of the Mersey Docks and Harbour Board. During the debates on this I have not concealed my views about the behaviour of the Board. Nevertheless, I must say that no member of the Board as it was before November gave evidence on his own behalf before the Committee.
What that amounts to is that individuals have been judged, unheard, by the Select Committee. I have criticised this Bill primarily for two reasons; first because it gave no guarantee in respect of the future of the Port of Liverpool and secondly because it is totally unjust to a large number of people who have invested small sums in the Mersey Docks and Harbour Board. I believe in justice and I believe that people should not be condemned unheard. Because of that I do not think that any such provision should be written into the Bill.
§ Mr. English
This is an important point and it is desirable that it should be made clear, in defence of the remarks of the Chairman of the Select Committee. A Select Committee of this House considering a Private Bill, strangely enough, has no power to call witnesses. It may hear only the witnesses called by the parties. In this case the promoters initially proposed to call only the present Chairman, whom no one holds responsible for the past situation. It was only under pressure from the Committee that the promoters called additional witnesses. The fact that none of the members of the old Board was called is not something that can be laid at the door of the Committee.
§ 7.45 p.m.
§ Mr. Dell
That may be. But the fact of the matter is that the Committee did not hear any member of the old Board in his own defence. Maybe the Committee 1080 could have suggested that such persons should be called. I cannot believe that it is right to do a thing like this to people who have not been heard. It is a simple principle that before being condemned people should be heard in their own defence and it is one to which I adhere.
The Government have continued the fundamental error which they have made from the beginning in their judgment of this matter, at any rate from the time of the Cabinet meeting which, I believe, turned down the right hon. Gentleman's original proposals. That error is to believe that the national interest in the survival of the port of Liverpool should be sustained at the sacrifice of the bondholders. Unfortunately, even with that sacrifice, the future of the port is in no way guaranteed by the Bill, which, as amended, is totally unsatisfactory. It is a cause of shame that a Bill such as this is forced by this Government on to the House of Commons.
§ Mr. John Tilney (Liverpool, Wavertree)
I do not often agree with the right hon. Member for Birkenhead (Mr. Dell) or with the hon. Member for Nottingham, West (Mr. English) but I do agree, and I have said so several times, that this ought to be a Public Bill. I also feel that the Private Bill procedure needs examining. I fully agree with what the right hon. Gentleman has said that no member who did not give evidence should be judged in his absence. I accept that there are many things which past members of the Board might have done but that, automatically, those who have served on the Board whether 10 years ago, 15 years ago, or recently should be excluded seems to be quite wrong. I have received a letter from Mr. Oliphant, the past Chairman of the Mersey Docks and Harbour Board, whose views as far as I know have never yet been heard. He writes as follows:I was Chairman of the Mersey Docks and Harbour Board from December. 1964 until June, 1969. In my last statement with the Annual Report and Accounts dealing with nationalisation I made the following remarks:'Nearly all the large ports are Public Trusts already: as such the Minister of Transport has a very large measure of control over them. They cannot build major works without his consent, they cannot raise their charges without his consent, and they cannot raise money without Treasury consent. No more control is necessary or 1081 desirable in the interests of competition, either between themselves, or with Continental ports'.Mr. Oliphant continues:In 1964, 1965 and 1966 the Dock Board made a net surplus of nearly £3½ million. It was only after that that things began to go wrong and those reserves dwindled again.It was after 1966 that the Board set-up was reorganised under the Labour Government. Mr. Oliphant goes on to say:The reasons for the present troubles stem largely from the Labour Government's actions in regard to the raising of capital and to port charges. When I became Chairman of the Dock Board its borrowings were of the order of £25 million of long-term debentures and £40 million of bonds due for repayment in five years or less. All this was invested in long-term capital works; in other words, borrowed short and lent long—the bankers' classic recipe for the road to ruin. We determined to try and change this and in 1965 we made two debenture issues, one for £5 million and one for £15 million. This reversed the position so that at least two-thirds of our borrowings did not have to be repaid for a good many years. Seaforth was building, a lot of money going out and none coming in until it was able to start earning.Presumably, interest had to be paid on the money borrowed. Mr. Oliphant continues:It was obvious that it would be wise to get more of our short-term borrowings covered by long-term debentures. In 1968 we wanted to go for a further £25 million of debentures. We were told that this was too much and, at the Ministry of Transport's urging, we used borrowings from the Ministry to the tune, I think, of some £13 million towards Seaforth. We therefore reduced our proposal for long-term debentures to £15 million. After months of argument we heard through Barings who were handling this for us that the Bank of England, the Treasury and the Ministry of Transport would not let us borrow long-term in the market as we have done in the past because of the existing high rates of interest and because the industry was going to be nationalised. We were, therefore, forced to go on—and this, too, had to have their sanction as usual—borrowing short-term bonds which would have to be repaid before Seaforth was earning.All the more reason that the Government, instead of bothering with an old-age pensioner who is not paying the full rate of income tax getting repayment of up to £500, should accept the equity of up to, say, an investment of £2,000. I realise that this matter cannot be put right now, but it might be considered in another place.
Mr. Oliphant goes on to say:Secondly—port charges. Again and again we asked for the necessary permission to raise 1082 port charges and again and again it took months before sanction was forthcoming. In a period of constant inflation it does not take much imagination to see what the effect was on the Dock Board's revenue. I have no means of knowing what happened after I left the Board, but these factors which were totally outside our control played a large part in laying the foundations of the present position. It may be that I, and perhaps my colleagues, ought to have resigned, but looking back I did not see how this would have helped and I cannot now see how it would have helped.I believe that past Governments, and particularly the last Administration, are very much to blame. I think that, although the Bill will have to be passed, the House will be considering another Bill in a few years. The onus should be shifted to where it belongs. The right hon. Member for Birkenhead said that uncertainty continues. It certainly does, as long as the local authorities on Mersey-side are denied the power to buy debenture bonds or even take the equity of the port on which our prosperity depends. My plea is that my right hon. Friend the Secretary of State for the Environment will, when we discuss local authority reform, give those of us who live on Mersey-side the power to bring back morale to our port.
§ Mr. English
There are certain objects of the Bill to which neither I, nor, as far as I know, anyone else, has any objection. One of them is to alter the unusual structure of the Board, which dates primarily from an Act of 1857. One reason that it is unusual is that that Act was passed five years before there was a general company law in this country.
One of the most important points on which I hope the Minister for Transport Industries will comment is that if there are any other bodies of this type, as I believe there may be, they should be looked at forthwith by the Government. One reason that the Bill should be a public Bill is that the Government must accept a measure of responsibility for bodies which are so-called public trusts whose securities are put on the market as trustee securities with, as in this case, double indemnity provisions, which have an archaic structure and which are not doing a modern job to protect anyone, whether it be workers, security holders or anybody else. I hope that this example will be taken to heart.
1083 It is all very well saying that the Government will not look after lame ducks, but I hope that if their legs seem to be in danger of breaking so that the ducks become lame remedial measures will be taken. It is different to say that they should ignore the existence of all these bodies until they become lame ducks, and continue to ignore them afterwards.
§ Mr. David Steel (Roxburgh, Selkirk and Peebles)
I agree with what the hon. Gentleman says, but does he accept that the confidence of small savers who have invested in the Board and similar bodies who are not skilled investors has been shaken because they do not draw a distinction between public boards of this kind, local authorities and Government stock?
§ Mr. English
I was coming to that point. The Bill affects far more than merely security holders in the Docks Board. It affects the asset values of every security holding in any public trust of this character. I hope that the Minister for Transport Industries will bear in mind that this point goes much wider than his sphere of responsibility. It is a question not simply whether there are any other dock boards or dock trusts of this character but whether any water companies or other institutions with trustee stock guaranteed by nobody are affected.
I do not think that any hon. Member disagrees that something must be done about the financial situation of the Mersey Docks and Harbour Board. He would be stupid if he did. The composition of the Board is unusual. It does not represent the security holders. It primarily represents the shippers and port traders of the Port of Liverpool and, to a minority extent, the Government. Neither the present Government nor past Governments are wholly responsible for what the Board did. The Government, with a minority representation on the Board, are partially responsible.
The reorganisation mentioned by the hon. Member for Liverpool, Wavertree (Mr. Tilney) merely reduced the size of the Board by about half without altering the principle that I am talking about—that the majority of members of the Board are interested parties in the sense that they specifically represent, and have been elected to represent, shippers and port traders of the port of Liverpool.
1084 8.0 p.m.
Given that unusual composition the Board has a very unusual capital structure as well. For one thing it is not like that of a company in two respects. It borrowed its money as a fixed interest security. It had no equity at all so that whatever the trading conditions of the Port of Liverpool, whatever its profitability, it was impossible to reduce interest payments even if the port temporarily declined or if its trading situation wholly changed. That is something being put right by the Bill.
The second respect in which it differed—and this I do hold the old Board responsible for—is that although it was borrowing money as a fixed interest security and was really a perpetual borrower, whether long term or short term in the financial sense, it never repaid any part. It simply borrowed to repay the former security holders, notwithstanding that it made no adequate provision for depreciation of its assets at all. Now, not even docks last for ever. I am not suggesting that the Mersey Docks were unusual in that respect though the docks were criticised in 1962 for precisely this point. It was a point then made by a Committee which enquired into all decks. It was one of the reasons for the former structure of the board being looked at by the last Labour Government. It was not in fact operating its business in the normally accepted ways of business. It was assuming that assets never died. This is not true in the real world we live in.
A local authority is, perhaps, nearer in form to the capital structure of the old Board, and indeed local authority loans are very comparable—or they were comparable—in financial market terms to the stock of this Board. Unfortunately all the investors—and we cannot merely blame the ignorant small investors, because Barclays Bank was the biggest investor and when I say all the investors, I speak of some of the highest financial authorities in the land—but a local authority does not assume that even with great assets of long life they will never cease to exist, and when it borrows money to build, say, a school, or houses, or even a town hall, it borrows it for usually 60 or in very exceptional cases 80 or 100 years, and it amortises its capital, although it does not do it like a company, and assumes that at some time its assets will cease to exist.
1085 Neither of these two things were being done by the old Board. Whatever anybody likes to say, that cannot be regarded as good financial practice. In fact, some modest change is now being made. There is additional provision, after depreciation on a cost basis, for obsolescence.
Nobody is suggesting that the constitution of the Board should not be changed. Nobody is suggesting that its capital would not be altered. The whole question is, who should suffer? There I would claim that there is an intimate connection between the existing constitution of the Board and the capital reduction proposed in this Bill, and the intimate connection is this, that the people responsible for the Board from 1857 until now were in the greater part shippers and port traders of the port of Liverpool. They were not security holders. Shareholders in a company can elect their Board and if it finds its way into liquidation it is not totally unjust that the equity shareholders, who elected the Board in the first place, who knew they were taking a risk, should bear some of the resultant capital loss. That is not totally wrong if their risk goes the wrong way. This is common practice under the Companies Acts. In this case it is just the opposite. They did not think they would be equity holders, although they are now to a certain extent—and the extent is one of the uncertainties—although they are now to be equity holders, and thought they were investing in a fixed interest security which was backed by somebody, and indeed it was a trustee security.
One thing I am firmly convinced of is that there simply should not be trustee securities without guarantee by somebody, ultimately the taxpayer, be it the local authority taxpayer or the national taxpayer. But these are the very people, who did not have one single representative on the Board, who are the people who are to suffer. The shippers and port traders are not going to suffer. Not at all. The Government are not going to suffer. Not at all. The people who were represented on the Board, who were responsible, are the very ones who are not going to suffer, and the people who were not represented on the Board, and who did not want to be equity holders in the first place, are 1086 going to suffer. This is what is unjust about this Bill. Let us make it plain that it is seriously unjust.
§ Mr. Temple
The hon. Member says that this is what is unfair about this Bill, but this Bill is to reorganise the capital and give to those people he is speaking of power to elect the directors in future.
§ Mr. English
There is an Amendment which I know is not going to be called, but if the hon. Member for the City of Chester (Mr. Temple) will look at it as it is on the Paper he will see a new Clause in my name. This Bill could equally well apply to getting money by precept from the shippers and port traders, if that had been wished. An Act of Parliament, the hon. Member knows perfectly well, can do anything which Parliament chooses it to do, and money could have been got from the people responsible.
Let me make it plain that these people as well as the Government were approached for bridging finance when the financial position became clear—bridging finance from those self-same people, and they refused.
§ Mr. English
May I explain the current financial situation of the Board and how it got into this mess, because this follows on very logically, and it may satisfy the hon. Member?
Although I recognise that certainly in the sense of being uncreditworthy the Board is insolvent, in a certain sense of the word "insolvency" the peculiar thing is that the board is in many ways not insolvent.
To start with it was a non-profit-making organisation. It was not supposed to be making a profit in the way a company is supposed to. Until 1966, as has been indicated by the hon. Member for Wavertree, it was in fact making a profit. In every year but two since 1945 it made a profit—a modest one, but, for a non-profit-making organisation, that seems not a bad record. Then came 1967. I must beg leave to point out that there is some significance in the date 1967 and some significance in the later date of 1970: interestingly enough, they happen to be dates between one General Election and another.
In 1966 the Board started to make a loss, and the hon. Member for Wavertree 1087 has said that, although it was making a substantial loss by 1968, the Board still borrowed money. Yet the situation in 1968 was not very different in financial terms from the situation in 1970, when the Board decided that it could not borrow money and ought not to go to the security holders without revealing the situation it was in. So if the Board felt in 1970 unjustified in going to the market to re-borrow, to redeem securities, as it always had done, it seems to me that in 1968 it should also have felt that way.
The only significant difference was the Government in power at the time. In 1968 the Board knew perfectly well that it was making a loss. In 1968, however, it thought that eventually someone would dig it out of the mess by nationalising the industry. In 1970 after the Election, the Board went to the new Minister and found out that the Government were not prepared to dig it out of the mess.
Let us consider the nature of the mess. The then Minister for Transport Industries suggested that the Board should get a set of independent accountants to assess the position, and the Board did so. A mere two weeks after those independent accountants had been in—and it is a triumph for the accountants if they totally understood the business in that time—on 10th September, 1970, the accountants were forecasting a £27 million loss over 1970 and the five following years.
§ Mr. Frank Marsden (Liverpool, Scotland)
My hon. Friend has said that it was a "mere fortnight", but I think he will find that it was actually eight days, from 10th to 18th September.
§ Mr. English
I thank my hon. Friend for strengthening my point. I was referring to 10th September as the date of the letter of the accountants to the Board, as a result of which the Board made various announcements on 18th September. After this exceedingly short time, the forecast was of a £27 million loss. By 10th February, 1971, the accountants were suggesting that there would be a surplus, not only an operating surplus, but a surplus after the payment of interest and depreciation, from 1971 to 1975, ranging between £1.6 million and £2.9 million.
1088 Something has changed in that period. The new executive committee has replaced the old Board—and again the old Board cannot shelve all its responsibilities—and for the first time a full-time executive of the Board is allowed to sit on it, whereas the old practice was never to allow such an executive to be a full-time member of the Board. Various changes have taken place which began to produce a different financial picture from the one on which the old Board acted in September, 1970, and before. There are different bases of working this out, but one can say with fair confidence that, to put it at a reasonable figure, from 1973 onwards the Board will be making a profit. So, what is required is bridging finance, a measure of support between one situation and another, whilst the "lame duck" is convalescing. This the Government refused to give, and that is where the Government are totally open to criticism. They were not required to lose any of the taxpayers' money. After nationalisation did not take place, and after realising that it was in this financial situation, the Board panicked. It announced that it was uncreditworthy and, as a result, as everyone who has dealt on the Stock Exchange knows, it became uncreditworthy. The one person to whom one does not lend is the man who states that one should not lend to him.
The present forecast is that, after the Seaforth dock and the present investment are completed the Board should be making a profit. Not only are the Board's accountants saying this—the independent accountants the Ministry advised them to get, but there is also another independent set of accountants presumably saying it—the accountants who advise the Ministry. What was really required was finance over this interim period, and that is what both the Government refused to give—although the Government had four representatives on the Board—and what the shippers and port traders refused to give although they were represented by a majority of the Board. That is a responsibility which they could have borne, instead of asking the security holders to bear all the results of the situation that the Board was in.
The requirements of the Port of Liverpool are that the Board needs to be 1089 reconstituted, the Board needs bridging finance and there needs to be a measure of capital reorganisation. The Board would have been reconstituted, the Board's finance would have been provided, and there would have been a measure of capital reorganisation, had the industry been nationalised. It still seems to me that would have been the best solution, but it is hardly a solution that the present Government can adopt, so this supposedly Private Bill reconstitutes the Board, produces the capital reorganisation and, very grudgingly, the Government are providing the bridging finance. The Government are currently financing the port, making themselves a priority creditor and at the same time basically saying to the Board that they will do this only if the Board produces a Private Bill that reconstitutes the Board and—this is where it is unjust—only if the Board produces a Private Bill that affects all the individual security holders who were not responsible. This supposedly Private Bill, in which the Government have had a large share of interest, does not come before the House in the normal way of a Public Bill, where the Minister can be forced to reply—although I realise he may in fact reply—and where he can be cross-questioned in Committee.
I will answer the hon. Member for Wavertree. When I use the shorthand words "the old Board" I and, indeed, the whole Committee recognise that not every member of the Board over a long period of time is equally responsible. I was surprised that a supposedly reputable journalist in a Sunday newspaper said that that was the position the Committee had taken up. He must have got his information from an interested party and not looked at the amendment which we made. We have not said anything as stupid as that. What we have said is that no such person—not merely members of the old Board but members of any corporation that has failed to fulfil its financial obligations—should sit on this board except with the consent of the Secretary of State. We are perfectly well aware that there are different measures of responsibility.
We are equally aware that some people must have been responsible. I have no intention of naming names on the Floor of the House; it would be most unjust 1090 to do so; but it is clear that somebody was responsible, and it is not unjust that anyone who holds a position of this character—it was regarded as a great honour in Liverpool to be a member of the Board—should realise that it is not merely an honour but that it carries with it a function that should be performed with responsibility and, if he does not, there may be possible consequences of his actions. No financial consequences will follow other than possibly the modest loss of a director's fee.
The real problem of the old Board illustrates that there must have been, at the very least, incompetence. I have mentioned the capital structure of the old Board and how it was borrowing in effect in perpetuity to invest in assets that obviously had a limited life. Its labour relations were hardly among the best. We have endeavoured as a Committee to improve the situation by having some facilities provided for a trade union member of the Board.
I turn to the question of port charges, a matter raised by the hon. Member for Wavertree. I have never suggested that the Labour Government had no responsibility in this matter. The Labour Government, as well as the present Government, have some responsibility for the situation of this Board. When I talk about "the Government" I mean the Government of the day. We cannot get away from the fact that nobody ever asked the Labour Government to raise the port charges by as much as the new management has raised them. Nobody came along to the Labour Government and suggested a 20 per cent. increase, which is what the charges were increased by on one occasion. The board can blame the Labour Government for cutting its applications, but it cannot blame anyone but itself for not making applications in the first place to make the port viable. If it thought it could be made viable, it should have put forward an application and then have left the matter to the Government of the day.
§ Mr. English
As the hon. Member for Holland with Boston (Mr. Body), who was the Chairman of the Committee, points out, the Board should have warned 1091 the security holders. Clearly, there are fairly recent members of the Board who cannot in any way be regarded as responsible. There are other members of the Board—and one, an ex-Chairman, is now dead—who must have borne a measure of responsibility. It is a significant fact that there were only two members of the Board—and I do not wish to quote any names—who saw fit to invest their own money. The other supposedly competent businessmen had not very great trust in the organisation they were running. Quite a number of others invested money for which they were trustees. If any did this personally, I have much more contempt for a man who invests other people's money in such an organisation than I have for the individuals who do not even invest their own money.
It is impossible to say that every single member of this Board was spotlessly white. Some of them were in my view incompetent scoundrels and to that extent I support the chairman's remarks in the Committee. I do not mean the present executive committee or the more recent members of the Board, but we want every single person on that old Board to be investigated to determine his exact share of responsibility before he goes back on the Board. Their organisations, the shipping companies and the port traders are regarded in Liverpool almost as "the establishment" of the city. These very people, as well as the Government, have refused in any way to assist this organisation for which they were at least morally responsible. The Government have taken the same attitude, but to a lesser extent.
I find it an extraordinary precedent for a Conservative Government to put forward under the cloak of a Private Bill the proposal that security holders who were not responsible in this way should have their capital assets devalued. The Labour Government would not have done that. A Labour Government which nationalised the port would have given them their money. The old Board was entirely right to believe that. Even though it had been making a loss, they would have got their money back. I would have been as pleased to see Barclays Bank get back its £2 million as I would have been to see Mr. 1092 Collins and Mr. Washer get their money back. That is what would have happened if the election had not gone the way it did.
The Conservative Government are deliberately saying that what a Labour Government would have done would have been wrong. This is a precedent upon which Opposition Members will reflect. The next time Labour is in power and our Government propose to nationalise an industry that is making losses, we shall reflect on this principle and will say that it will be unjust to charge the taxpayer with the cost of a lame duck. This is the precedent which the Conservative Government are putting forward. It is a precedent that can be followed by hon. Members on this side of the House. It is a precedent that says that if an organisation is making losses and if we can claim that its asset value ought to be less than it is, we should allow security holders to suffer the consequences.
My main feeling about the Bill is that it is unjust to all the security holders. I believe that the people who were responsible, including the Government and private corporations, should have borne the loss. I do not believe that Barclays Bank should have borne this loss, which after all represents other people in a financial sense, and I certainly do not believe that the Collinses and the Washers of the world, the old-age pensioners, the Methodist Church, the co-operative societies and private companies, small and large, should have shouldered this burden. They were not responsible. In that respect the Bill is unjust and is put forward by a body which does not represent those people, but which represents the people whose financial faces are to be saved at others expense.
§ 8.30 p.m.
§ Mr. Maddan
Like the hon. Member for Nottingham, West (Mr. English), I was a member of the Select Committee. Apart from the political passion of the hon. Gentleman's closing phrases, his account of the facts laid before the Committee and the Committee's attitude to them is one with which I do not quarrel. For that reason, I shall not say all that I had intended, since to do so would be to repeat what the hon. Gentleman said very clearly already.
1093 It is true that the two hon. Members on the benches opposite divided the Committee on the Preamble and on one or two other points. However, in general, not much else divided the Committee. We had nine long sittings, we heard a great deal of evidence, and we gave the matter a great deal of thought. It is worth while recording that fact.
Apart from the difficulties of the Port of Liverpool, the main problem lies with those who invested in securities of the port of Liverpool assuming that their money was safe since they were investing in trustee stock. However, the Committee learned that it was trustee stock of the second class and not really a guaranteed bet at all. I did not know that there were different classes of trustee stock, but I now know that to be the case. That was the position, and it underlines the fact that all investors should be careful to read the small print and seek advice about these matters. The investors in the port of Liverpool were taking a risk, as the present position shows.
Had this Bill not been brought before Parliament, and had the Port of Liverpool gone into liquidation, the break-up value of its assets would have been derisory, and the amount that the security holders would have received would have been a drop in the bucket compared with what they will get by keeping the port running as a going concern and carrying out the financial reconstruction provided for in the Bill.
The hon. Member for Nottingham, West said that this was a terrible precedent in that it suggested that, when lame ducks were nationalised, the owners would not get what the hon. Gentleman described as "full compensation". I have a very simple remedy for that. Let us not nationalise anything ever again.
§ Mr. Maddan
I can do my best to procure it. If any of my electors think of voting for the Labour Party in the next election because it might introduce a nationalisation measure, I shall warn them of the terrible events that will follow, assuming that they are sufficiently misguided to do it.
§ Mr. Maddan
There will be this assurance: if a Conservative Government are forced to remedy a situation which they have inherited from their predecessors, they will at least be fair in the circumstances. Whether what the hon. Member for Nottingham, West suggests will be fair in the circumstances is another matter.
§ Mr. J. T. Price
The hon. Gentleman is trailing his coat a little too far. His argument depends upon the thesis that the Mersey Docks and Harbour Board, which is in this deep trouble where the investments of bona fide parties are at risk, is a nationalised concern. It is nothing of the kind. The Board has never been nationalised. It is no use the hon. Gentleman trying to make party political capital out of that kind of situation.
§ Mr. Maddan
It appears that the hon. Member for Westhoughton (Mr. J. T. Price) has not followed the point of his hon. Friend the Member for Nottingham, West, which was simply that the board operated as a private statutory one and that this Bill provided a precedent for future nationalisation measures by the Labour Party without full compensation to the owners. However, it is not necessary to pursue the point, because it does not fit into what the hon. Member for Nottingham, West said.
The hon. Gentleman made one point with which I take issue. He said that the Government will not suffer. They will, of course. All the Government's pre-November loans, amounting to some £15 or £20 million, will suffer exactly the same capital write-down as other securities issued by the Board.
§ Mr. Maddan
No. I think that I ought to continue my speech. I am certain that the hon. Gentleman will have an opportunity to make his points.
It was said that the Private Bill procedure was a difficult one for unrepresented private petitioners. However, I 1095 am sure that the hon. Member for Nottingham, West will agree that my hon. Friend the Member for Holland with Boston (Mr. Body) leant over backwards to see that the lay petitioners knew exactly what was happening, how the proceedings were going, and that they had every opportunity to make their points to the Committee, which they did with both grace and effect.
§ Mr. Dell
I join the hon. Gentleman in paying tribute to the way the Chairman conducted the Committee. He clearly did exactly what the hon. Gentleman says and assisted these private petitions in every possible way. However, that is not an adequate defence of the position. It is clear that most private persons affected by the Bill had no hope of petitioning against it.
§ Mr. Maddan
That is not one of the matters before us.
I turn now to one of the main matters which has arisen concerning what I may term the old directors. I do not want to quarrel with the considerations put forward by the hon. Member for Nottingham, West. It is a moot point, as every politician knows, when one should resign. My hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) read a letter from a distinguished former director in which he said that he did not think that resigning would do any good. As Members of Parliament we perhaps have a lesson to teach directors of public boards: that sometimes one has to resign, even though it is not thought that it will do any good, because it is the only way that one can make one's point effective for the benefit of others.
During a difficult time, when the profits of the port have plunged and losses are mounting, it is a moot point whether it is right for the Board to continue in office and to continue to borrow from the public. I am prepared to give the directors the benefit of that doubt in the sense that, if the Secretary of State considers that their contribution was such that they should be made members of the Board in future, they should be eligible for appointment. That, indeed, is what the Amendment provides.
When a Bill is brought before Parliament to write down debts, or to relieve a corporation of debts which it owes, then 1096 Parliament has to consider whether this is something which it can swallow easily, whether it is something which it can allow to be made an easy precedent, or whether it must make that road difficult to travel. One of the strong reasons for the Amendment about directors was to make clear the distaste felt by the Committee, because there was no alternative owing to the situation which had arisen, in having to deal with the Bill. But certainly the majority felt that it was a necessary Bill.
The right hon. Member for Birkenhead (Mr. Dell) said that the Committee initially made certain proposals and subsequently these were modified. In a complicated financial matter it is essential to get the best result. There was a good deal of to-ing and fro-ing of position between the Committee, the promoters, and other interested parties. The Committee did not feel that it could legislate financial plans upon the promotors. It had to make proposals and see what the reaction would be to see how far it was practical to go in certain directions. That is what happened when the detailed Clauses came to be considered. Had that not been done, I believe that the outcome would have been much worse for the security holders.
The right hon. Gentleman referred particularly to no maximum write-down being incorporated in the Bill. There was no floor to the amount of write-down. The reason is clear from the evidence. The witness to whom the right hon. Gentleman referred, Mr. Baring, made it clear that there were three factors, all of which were interdependent. There was the amount of write-down, the amount of interest payable, and the length of postponement of the redemption of the debt. It is like a bath with three plug holes. Unless all three are stopped up, one might as well not stop any one at all because in the end all the water can escape through that one.
Since it seemed unreasonable for Parliament, with a Bill of this sort, to shackle the Board in all respects, it was foolish to shackle it in any particular respects. We could not possibly foresee which were the important factors under which to put a floor—the amount of write-down, the amount of interest, or the length of postponement of redemption—for the simple 1097 reason that it is only as the port develops over the next few years, as the financial situation of the company changes, as rates of interest in the market change, and as many other factors change, that it will be possible to see what can be done in the best interests of the security holders.
I make no apology whatsoever for not accepting the Amendments which the promoters brought to us to implement what the Committee, through the Chairman, had said, because, on hearing further evidence, it seemed that the interests of the security holders would be better preserved by other provisions, such as the shortening of the moratorium period, the way in which the classes of security holders had a chance to approve the scheme, the appointment of a court to arbitrate in the event of dispute, and so on.
I do not believe that the future of the Port of Liverpool is uncertain. From all that I have heard, under its present management, and with the opportunities that it will now take, I think that the port's future is good. I believe that trade will increase with Seaforth and other measures. I believe that the marketing of the services of the port will be improved, as will its financial management, and that it will not be long before the new Board will find it possible to go to the market and borrow again.
I reject utterly the thought that the Committee's position was founded on the future of the Port of Liverpool being uncertain. It was not. The long-term future of the port of Liverpool is rosy, and, because I believed that, it seemed right to leave the maximum latitude to the Board to secure the best interests of those who had invested in it.
Having said all that, I must say that the Committee, the House and Parliament have been confronted with a bad job, for reasons which the hon. Gentleman explained, and that we have tried to make the best of it.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I do not think that a Labour Government, when dealing with the nationalised Port of Liverpool, or when dealing with any other industrialised industries, would act in the way in which the Government are acting over the Bill. I do not think that they would be so 1098 heartless. Even if they gave less compensation to some of the larger holders of stock, they would pay full compensation to the old-age pensioners and those who stopped below £2,000. This aspect of the Bill, apart from anything else, is deplorable.
The hon. Member for Liverpool, Wavertree (Mr. Tilney), as usual, put forward a vigorous defence of the Conservative Party's position, and called in aid the words of Mr. Oliphant who was at one time the Chairman of the Mersey Docks and Harbour Board. The House should know that I, like the hon. Member for Wavertree, know Mr. Oliphant very well. I sat on a committee with him—not on the Mersey Docks and Harbour Board—and at every committee meeting I had a clash with him, for the simple reason that he was a dedicated supporter of the Conservative Party. It is therefore obvious that he would blame this situation on a Labour Government. He would not be putting forward his party point of view if he did anything else. So that is not necessarily the best evidence on this point.
Mr. Oliphant is also a leading figure in the Liverpool Chamber of Commerce. It is well known that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who recently put forward a scheme for the butchering of U.C.S., also came to Liverpool during the period of the Labour Government and wrote a report on the future of the Mersey Docks and Harbour Board, in which he completely rejected nationalisation and said that the answer to the problem was that the Board should be a private company. So these are not necessarily the best witnesses to call in aid.
The Report from the Committee—I am not talking of the Special Report—says:A Report by the Minister for Transport Industries was considered by the Committee. The Report stated the Government's support for the Bill and in particular recommended that the provision relating to the conversion of capital should be accepted.The operative words arethe Government's support for the Bill".In this debate, as in previous debates, we are going through a pretence. We are pretending that this is a private Bill, 1099 when everyone knows that it is basically a Government Bill, that it could not even get to this stage without the definite support and, in a sense, sponsorship of the Government.
The Bill does precisely what the hon. Member for Cirencester and Tewkesbury wanted; it transforms the Board from a public trust into a private enterprise company. Because this is basically a Government Bill, the Government must accept full responsibility for the future of the port and also for the present situation.
In Committee, Mr. Fay, Q.C., counsel for the Board, said that a number of people would be making sacrifices:I may also and in this context mention the reduction which is proposed in the number of employees in the Board: there is to be a slimming of the Board's undertaking, particularly in the headquarters staff and engineers' department, which means that there will be a reduction of the numbers employed and to that extent those persons are being asked to face a disagreeable fact inherent in the situation in which the Board finds itself.Redundancies, in other words, unemployment, will occur. I have said that basically this is a Government Bill and that means that the Government are responsible for the unemployment which will occur.
We already know that over a period of time the Board has allowed certain jobs to go and has not replaced certain workers, so that by natural wastage there has been a considerable reduction in the numbers employed. But here we are to have further redundancies in an area which already has 42,000 unemployed. Those workers will have little prospect of employment in an area with such a high level of unemployment. This is particularly true of those who are 45 or over. I have workers of that age coming to my surgery, as my hon. Friends do, and some have been unemployed for six months and some even longer, and some have considerable skills.
The Bill is before Parliament because the Government refused a bridging loan. This was brought out in the evidence of Mr. Cuckney, the present chairman of the Board, and others in the Committee stage. It was also shown that by the middle of 1972 one-third of the Liverpool docks could be closed. That is the proposal now before us—that the 1100 whole of the South End docks of Liverpool could be closed by August, 1972.
§ Mr. Heffer
The hon. Gentleman does not come from Liverpool and does not know that my friends and I have been arguing for the extension and development of Seaforth for the last 20 years, that we pioneered the whole of this docks system. If the hon. Gentleman will contain himself, I am coming to the Seaforth aspect.
The Director-General, Mr. Edwards, in the course of evidence said:We were proposing to close the south docks gradually over a period of years and we have now set a target date for August, 1972 for the closure of the south docks.All of us from Merseyside knew that the South End Docks were to be closed over a period of years, but it is now proposed that one-third of the Liverpool dock system should be closed by the middle of 1972. This is the point which I wished to bring home to the hon. Member for Hove (Mr. Maddan). We also understood that the South End Docks would not be closed entirely until Seaforth was a going concern, that one thing would be dependent upon the other. That will not be the position now. I again quote Mr. Edwards:We had hoped that we should phase them out gradually after the opening of Seaforth. We shall now have to accelerate it in order to save primarily on the maintenance which is extremely high.I digress here for a moment on the question of maintenance. I worked for the Mersey Docks and Harbour Board for many years. Before somebody says, "Perhaps that is why it got into difficulty", I would mention that I worked for the Board when it was making a handsome profit. It could have made an even higher profit because there was a time when I, as a senior shop steward, suggested to the then management that we should introduce a maintenance system which would be much more mobile and effective than the one we had then. I did not get very far. I was told that the men would not wear it. I said, "You leave that to me. Let us talk about the system, and then we can talk about getting the men to wear it. It will also mean that the men will be 1101 able to earn higher wages but you will get higher productivity." This was not accepted. I merely give that as an example of the fact that there could have been better and more efficient management in the past.
§ Mr. Marsden
Before we move away from the South End Liverpool Docks, is my hon. Friend aware that the figure for redundancies has been quoted as 1,195?
§ Mr. Heffer
Yes. My hon. Friend has given the figure which I was about to give and I am grateful to him.
Under one-third of the income from the Liverpool Docks now comes from the South End Docks, but certainly a few years ago one-third came from South End. The closure of those docks will cause enormous problems. At present it is estimated that 1¼ million tons of cargo goes through the South End Docks. This was brought out in the evidence before the Committee. When those docks are closed that cargo will have to go elsewhere. But if it cannot go elsewhere in Liverpool, where will it go? That is a point we have to consider seriously, because the flooding of the Seaforth docks will begin in July of this year but the first berth will not be open until January or February, 1972. The entire complex of the Seaforth docks will not be available, and that means that we shall be faced with the problem of where to put 1¼ million tons of cargo, and how it is to go through the port of Liverpool.
Yet everybody knows that today Liverpool is primarily a cargo port. We have lost most of the passenger trade, through circumstances beyond our control; in any case, it was almost inevitable that we would lose it. One-third of the docks, catering for 1¼ million tons of cargo, will be lost because we shall not have the replacement by next year. There is an old but true saying that if the port of Liverpool is prosperous the whole of Merseyside is prosperous, but if it is not prosperous and is in a difficult position the whole of Merseyside is affected.
I put it to all hon. Members who are interested, and particularly to the Minister: what will happen during that interim period? I do not think that anyone knows. It could mean a permanent loss 1102 of trade to the Port of Liverpool unless the problem is overcome.
I agree that Seaforth offers immense opportunities for development and for the future of the Port of Liverpool. As I said, over the years, many of us have pressed for that development to take place. But what I fear is that the very fact that we have a receiver of rates in the Port of Liverpool has done untold harm both to the present situation and to the future prospects for Liverpool. Traders who would have come to Liverpool are now not so certain that they will come. Again, I quote from Mr. Cuckney's evidence—page 30, Day 1—Since September it has been publicly known at home and abroad that the port faces a financial crisis. This is a great discouragement to foreign exporters or shippers to use the port. In order to make the best use of Seaforth we need to turn a number of expressions and letters of intent into firm contracts, firm commitments, to invest in the port and to build facilities there.That statement by Mr. Cuckney is absolutely right. I blame the Government primarily for the state of affairs which has existed in the port over the past nine or ten months.
I am not against the Board being reorganised. In my view, the old Board, in some respects, left much to be desired. On the other hand, people should not be attacked unless they have an opportunity to defend themselves. I take the point which has been made by my right hon. Friend the Member for Birkenhead (Mr. Dell) and by others. I know many members of the old Board, some in my party and some not, whom I regard as reliable, good people who have done a first-class job, as they have seen it, in the port of Liverpool over the years. I think it regrettable that that statement was made by the Committee in its Special Report.
I am in favour of better management. Past management was too heavily weighted in favour of the ship owners and the traders. But the Government could have laid down that the bridging loan was conditional upon the reorganisation of the Board and the replacement of some parts, if not the whole, of the management by a more efficient management system. That is what the right hon. Gentleman could have done, and it is what I think a Labour Government, if we were not to nationalise the port, would have done. If they had 1103 not done it, I should certainly have run into criticism myself.
Because my hon. Friends and I do not want the uncertainty to continue, we shall not oppose the Bill. We believe, however, that the workpeople are getting a raw deal. We are not in favour of the redundancies which are being proposed. Equally, we consider that smaller investors, in particular, are getting a raw deal under the Bill. It was a public trust and not a private enterprise company. Those people who loaned their money to it believed, like anyone lending to a local authority, that it was pretty well copper-bottomed. Then they found out that it was not. They must have had a somewhat traumatic experience, particularly the small investors.
§ Mr. J. T. Price
Would my hon. Friend also care to mentioned some of the institutional investors who were trustees of pension funds on which the future welfare of thousands of pensioners depend, funds which relied on the security of that trust?
That is absolutely true. The co-op has been mentioned, and some unions have money invested as well. The Transport and General Workers' Union has a certain amount invested, as has the Union of Shop, Distributive and Allied Workers.
What did the Board want? It wanted a bridging loan of about £6½ million. Then it wanted a further £20 million over a period of four or five years. An hon. Member opposite has said that the Government will lose, as a result of the Bill, about £40 million to £50 million. It is common sense that if one is to write off £40 million to £50 million, one might as well lend the £27 million over the six years. There was evidence that both in 1971 and 1972 there would be a deficit, but that from then onwards there would be a definite surplus. There have been defiicits in the Board before, and they have been got over. In my view they could have been got over again.
There was the famous letter from Slaughter and May—an appropriate name in this context—dated 18th September, 1970. I cannot quote the whole letter, but the Board had come up with certain proposals for reorganisation, modernisation and more efficient management. The letter said: 1104We further understand that although on these calculations it is expected that a substantial deficit will be incurred in 1972–73 the Board can foresee an operating surplus in subsequent years.I should like to quote again what Mr. Edwards said in his evidence to the Committee:What we put to the Ministry was that either they should stand surety for our renewal, back it although not necessarily lend us the money, but that they should stand as guarantors, or else they should provide us with a substantial bridging loan to enable us to refine the action that we had already initiated to raise charges, and to streamline our organisation so that we did not, in fact, have to ruin the creditworthiness of the Board's bonds.I put the blame squarely on the Government. They could have helped the Board and they refused to do so. To that extent they are responsible for the situation which the Board is in, and for the fact that we have this Bill before the House. They are responsible for the fact that there will be redundancies in the port of Liverpool, redundancies which in my view are premature. Those redundancies could have been dealt with by wastage over the period. We are not saying that there should not have been a smaller labour force in the Board. It could have been dealt with in the way the Board was proposing. The Government are responsible for this increase in redundancies in a high unemployment area. They are also responsible for the fact that the bondholders are to lose their money.
Since 1857, there has been a statutory obligation to operate the port. As far as I read the Bill, that obligation disappears. Clause 8 says:It shall be the duty of the Company—(a) to take such action as it considers necessary or desirable for or incidental to the maintenance, operation and improvement…The operative words are "necessary or desirable". If the company decides that the operation of the Port of Liverpool is neither necessary nor desirable, then the operation of the Port of Liverpool will not go on. I ask the Minister why he is backing a Bill that does not make it a statutory obligation on the Board to ensure that the operation of the port of Liverpool continues. We would like to strengthen the Bill and will certainly support an Amendment later in the name of my hon. Friend the Member for Nottingham, West (Mr. English). I hope 1105 we do not have to vote on it; I hope that the Minister will give us a clear assurance on this point.
The answer to the problem of the port of Liverpool is not this ramshackle Bill. It is the same answer that applies to the whole of the ports industry. We need a nationally planned ports industry. We need an efficient and modern ports industry. The way to get that is not by a ramshackle Bill like this but by public ownership at the earliest possible moment. I can give this pledge to the House, if nothing else—that once the Labour Government are returned, we shall bring the ports under public ownership. We shall nationalise them and we shall certainly pay proper compensation and not do the dirty on the bond-holders in the way the Government are doing by this Bill.
§ 9.15 p.m.
§ Mr. Peyton
It might be to the advantage and help of the House if I intervene at this stage. The right hon. Member for Birkenhead (Mr. Dell) was of the opinion that the Government should pay. The question is, "Should the Government pay?" In other words, should the other taxpayers be responsible for the Board's capital debt? The answer preferred by the Opposition is "Yes, they should". The Government's reply is to the contrary.
I make it clear that neither the Government as a whole nor I as an individual are in any way unconscious of the serious—sometimes worse—results for people who have put moderate volumes of savings into a security which they regarded as virtually gilt-edged. The fact that there was no justification for that opinion does not diminish the hardship upon them and I take this opportunity, as I have taken others, of saying that I am not unaware of the consequences for them.
The basic point here is that as the Government have refused to find the money because they thought it right, and the Board is unable to find funds from any other source, this Bill is clearly essential to the Board's future and the operations of the port. That fact does not make it a Public Bill. The Board faces a situation when it must restore its own finances. It must ensure the future operation and development of the port. It has, incidentally, to do all that it can 1106 to safeguard the interests of the security holders. No greater disservice could be done, either to the port as a whole or to security holders, than by continuing with the present uncertainty.
Above all, it is essential that the Chairman and the Board should be able as soon as possible to know the size of the problem facing them and free to apply their considerable abilities to the management problems of the port. The right hon. Member for Birkenhead said that there was a national interest here, and I agree that there is. He claimed that the mere fact that the Government were supporting the Seaforth dock was an acknowledgement by the Government of this national interest. This is true, but the interest is limited as it must be in all other port undertakings supported by the Government. Because the Government contribute powerful aid to the Seaforth Dock it does not mean that they are necessarily giving a blanket guarantee to the whole operation of this or any other port in similar circumstances.
§ Mr. Heffer
Would the right hon. Gentleman not agree that the national interest here lies in the fact that a quarter of our exports and imports go through the Port of Liverpool?
§ Mr. Peyton
That is a point I have made in this House and elsewhere. I must remind those who have the interests of the Port of Liverpool at heart that it is surely a national interest that the port should survive but that the Government are only one of the parties involved in that national interest. There are many others. The hon. Gentleman knows this and implied a good deal of that in his thoughtful speech. There are others who must help to sustain the national interest in the port.
There is one point about the bond holders which I should like to make and it refers to one sentence from Mr. Cuckney's report when he says:It would be totally irresponsible if my colleagues and I had not the plight of the security holders constantly in mind, which indeed we have. The best way they can be helped is by the port returning as quickly as possible to profitability and in the same way the prospects of those employed in the undertaking will be improved. All involved have a common interest.I should like to say how much I appreciate the fact that in such a debate as this, when opinions are divided, Mr. Cuckney 1107 has not been brought into a party battle. I take this opportunity of saying how grateful I am to him and those who have worked with him for what they have tried to do to restore the situation. I think that I take the House with me when I say that the problems of the Port of Liverpool have not been easy. It took a very courageous man to come in from outside and take them up. He has done wonderfully well in securing local support and good will to an extent that had not been previously available from all concerned with the port. I take this opportunity of saying how much what he has done is appreciated and how much we on this side of the House, and I believe hon. Members opposite, wish him well in his efforts to put the past behind him and to put the future of the Port of Liverpool on a sounder foundation than has been possible for many years.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
I think that the whole Committee was impressed by Mr. Cuckney and his attitude and the manner in which he gave evidence. I am sure that the docks have as good a chance under his control as they would have under anybody else's. I agree with the Minister that Mr. Cuckney's good intentions for the bondholders are manifest. Would not the right hon. Gentleman agree, however, that because of the age of some of the bondholders, who will not get their money for several years, it would have been a much better plan if the Government had agreed a bridging loan or made it possible under the Money Resolution for the Committee to provide for such people?
§ Mr. Peyton
It would be better if I dealt with that point later. I have been charged throughout with having obstinately refused the bridging loan which was asked for.
My hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), in a short but extremely effective speech, called attention to the reactions of former members of the Board to some of the blanket charges, expressed in very strong terms, against them. I should like, without adding heat to the debate, to express agreement with my hon. Friend. There is something very unfair about people who do not deserve it being condemned and not having any opportunity of answering the condemnation when it is 1108 gratuitously bestowed upon them. [Interruption.] I am obliged. The right hon. Member for Birkenhead said something of that kind. I am concerned to say from the Government side how serious the matter is and how important it is that we should refrain from spreading blame over a class of people without even naming a person as being accused and causing them considerable injury. This also gives rise to a considerable reluctance among people ever again to take part in such undertakings.
§ Mr. English
Will the right hon. Gentleman bear in mind that, in my view, it is unlikely that had any of them wished to be called as witnesses by the counsel to the Board promoting the Bill that wish would have been refused? Had the promoters refused to call a member of the Board who wished to be called, and had that fact been drawn to the Committee's attention, I should have thought that the Committee would have been only too willing to get the House, which, unlike the Committee, has the necessary power, to call him directly.
§ Mr. Peyton
I do not think that I had better follow that point. The answer to the hon. Gentleman's question must be given by the people principally concerned. People who are not politicians, faced with some of the words used about them, might be excused for feeling reluctant to exposing themselves to more of that sort of treatment. That would not be an unreasonable view to take.
The hon. Member for Nottingham, West (Mr. English) made the point that the status of trustee securities should be changed. That is a perfectly fair point for him to make, but the point which is equally true and which must be accepted is that trustee securities at the moment are not guaranteed in any way by the Government. The fact that a security enjoys that status does not put any obligation upon the Government whatsoever. Of course, this in no way takes away from the hon. Gentleman's right to put the argument that the status of these securities should be in some way enhanced by a Government guarantee. It would be very difficult to draw the line or to say exactly how it could be done, but that is not a point for me, nor one I should pursue now, but I am entitled to make the point, and I should do so, that trustee securities such as the Docks 1109 Board bonds were in no way guaranteed by the Government, whatever people may have assumed.
So the real question, as the hon. Gentleman said, is, who should suffer? Every now and again there crops up this question, who should suffer? There is a plain expression of desire that the Government should suffer. I have sat on those benches opposite long enough to understand what is meant by that and to know just how trenchantly it is possible to express the desire that the Government should suffer, that they should every now and again suffer some inconvenience for their actions, but what we are talking about here is not the Government suffering some peculiar agony or torture for what they do; we are talking about the ordinary mass of taxpayers, who have no choice in this matter if the Government decide to come to the rescue—of the bondholders in this case—when, indeed, it would be the general taxpayers who would suffer.
The Government have come to the conclusion, I believe rightly, that the general body of taxpayers in this country has been called upon to carry out too many rescue operations. The fact that the present Administration every now and again have to do just this does not weaken the argument in any way that it is undesirable, and wrong, in my view, that every time an operation is seen to fail the Government should, as I have said before, reach for the anaesthetic bottle and cure the pain at the expense of the taxpayers. I think I am entitled to make this point in passing—it was put in the hon. Gentleman's own speech—that 1966 achieved some significance. I leave the point at that.
He referred at some length to the possibilities of a future surplus, in 1973, as was referred to and indicated in the accountants' report; it was stated that the Board will be making a profit by 1973. Well, in my view, we have been given the possibilities for a very long time. What I should like to make quite clear is that if the Board is to make substantial profits in 1973 then this Bill will have done no great harm to the position of the bondholders. The bondholders will be in a better position to take advantage of the profit-making operation than they would be without the Bill.
1110 The point made by the hon. Gentleman was that someone was responsible for what happened. Undoubtedly someone was. I believe myself that it is very difficult and very invidious to attempt to single out Board members and say, "You were responsible", but one can fairly criticise the framework. For many years management consisted entirely of part-time members. To them the fact that they represented outside interests was in no way wicked; they were put there by those outside interests. This old nineteenth century framework of management was archaic and anachronistic, but that is not to say that those who took part in the management were entirely to blame for the consequences. Perhaps others could be brought in here. The hon. Gentleman said that labour relations in the port left something to be desired, and I believe that is very much so—
§ 9.30 p.m.
§ Mr. Heffer
I should like to correct a myth about labour relations and the Board. The Board's labour relations may not have been the best in the world but were by no means the worst. If I remember rightly, there have been two strikes by Board employees since the end of the Second World War. Labour relations in the port with the dock workers' employers were very bad. Only in the last 18 months has the Board itself employed any dockers—and only about 1,300.
§ Mr. Peyton
I do not dissent from what the hon. Gentleman says. All I have said is that the Board's labour relations left something to be desired, and the labour relations in the Port of Liverpool as a whole left a very great deal to be desired.
The hon. Member for Nottingham, West referred to incompetent scoundrels. I should like to think that those words were not carefully prepared but came out rather more strongly than he intended. The use of such phrases can do nothing but harm, and will be felt as a great injustice by anyone who has taken part in the difficult problems of managing the port. Perhaps the hon. Gentleman might take the opportunity to modify those expressions at a later stage.
My hon. Friend the Member for Hove (Mr. Maddan) made two points with which I express warm agreement. He said that the break-up value of the assets 1111 of the port would have been derisory. He also said that the Government will suffer under the Bill. Of course they will. As a result of writing down the capital value of the debt, the Government's share in that debt will suffer equally with that of others. My hon. Friend said that the resignation of members of committees or boards should from time to time be urged upon them by Members of Parliament. I leave the point with the observation that I wonder whether members or boards or committees outside this place would always be prepared to accept Members of Parliament as being the proper arbiters in such matters.
The hon. Member for Nottingham, West concluded his speech by expressing the confident opinion that the future of the port was rosy. I hope he is right, but we have a long way to go, and we in this country have been living for too long with possibilities and hopes and giving insufficient attention to the hard facts. If the hon. Gentleman were to consult the Chairman or the Board—and I do not speak for either—I think he would find them to be of the opinion that the problems they still face are fairly stiff and that at the moment there is no room for any too-easy optimism about the prospects.
Turning to the speech made by the hon. Membr for Liverpool, Walton (Mr. Heffer) I sympathise with him in his difficulties in reading his handwriting, because I feel sure that he deprived the House of an opportunity of receiving from him an unusual gem. He charged the Government with having refused a bridging loan. Mr. Cuckney has stated on other occasions that bridging finance would constitute, in the context of the affairs of the Port of Liverpool, a bridge to nowhere, and that is a view I hold, too. If the Government had made an immediate loan available, one wonders what would have been the consequences and where it would have led. What we must all be concerned to produce is a port that does not just look for loans, but a port that is able to pay its way in the difficult and highly competitive condition of the modern world.
The hon. Gentleman said he considered the receiver's presence to have been a disadvantage in the business of securing 1112 trade for the future. I do not believe there is any evidence of that. I believe that the receiver's presence there to receive the rates has been a marked contribution to the orderly affairs of the port during a difficult stage. I believe the hon. Member was wrong to suggest that the receiver's presence has been in any way a disadvantage.
§ Mr. Peyton
The hon. Member for Nottingham, West (Mr. English) must forgive me for not giving way. I have given way a good deal.
§ Mr. English
I hope that the right hon. Gentleman will forgive me for persisting, but this is an important point. The charge that the Government refused a bridging loan was not made by us, but by the accountants whom the board secured on the Minister's advice. That report was not originally put in evidence but, after some pressure from the Committee, it was put in evidence. Paragraph 1 of that report of 22nd December said:… although these forecasts "—those were the forecasts of the budget for 1971 and the estimated revenue accounts for 1972–75—were subject to a high degree of uncertainty and although the surpluses were little more than marginal, they did not indicate the need for a reduction of the Board's capital debt, provided that adequate bridging finance could be obtained to supply the cash requirements over the three years to the end of 1973.They then said:In these circumstances we recommended that an application for bridging finance should be made to the Minister for Transport Industries…which was refused—
§ Mr. Deputy Speaker (Sir R. Grant-Ferris)
Order. The hon. Gentleman ought not to read long quotations by way of intervention. Mr. Peyton.
§ Mr. Peyton
I am afraid that the hon. Gentleman has only convinced me of how right I was in my initial unwillingness to give way, and how wrong I was to change my mind. The simple point is that the Government refused a bridging loan, there is no doubt about that. Nobody wishes to avoid the point.
§ Mr. Peyton
The hon. Gentleman made that charge and I refute it. I do not believe that if we had made this loan it would have been of material assistance to the Board. I think that it would have just anaethetised or put to sleep the problem for a short time and I believe Mr. Cuckney agreed with that view.
The hon. Gentleman referred to the position of a public trust port. I think that I have made it clear that one of the tasks to which I hope that the new National Ports Council will address itself is the amendment of the constitutions of public trust ports. These are rather quaint, old-fashioned pieces of machinery which emanated from the last century. It is true that some of their members are elected and that others are nominated by the Minister, but they are in no way answerable to those who elected or appointed them, and they are under no defined financial duty. They seem to be strange creatures suspended in a trading vacuum. I hope very much that the National Ports Council will address itself to them.
A point has been raised about the statutory duty laid on the port authority. This is a matter which is raised in a later Amendment. But, as it was touched upon during this broad debate, I hope that I shall not be considered out of order if I reply to it shortly now.
I understand from the later Amendment that the Opposition are worried about the fact that there is not sufficient statutory duty laid upon the new Board to run the port. My belief is that the Amendment would put upon the authority a duty which the Opposition would not wish to impose, namely, to sustain the whole port operation as it is now.
Clause 8 of the Bill says:
(1) It shall be the duty of the Company—
(2) Particular powers conferred or particular duties laid upon the Company by the existing Acts shall not be construed as derogating from each other or from the generality of subsection (1) of this section.
§ Certainly this is not the last word that I wish to say on the matter but, in the Government's view, the duty in that Clause goes a very long way. If the Opposition consider that it does not go far enough, I shall be glad to look further at the point. However, I do not feel able to accept the precise wording of the Opposition Amendment. I hope that I shall be forgiven for raising the point now. It was raised very properly in the debate, and I thought that it might assist the House if I made the general point now.
§ Sir Arthur Irvine (Liverpool, Edge Hill)
Before the right hon. Gentleman resumes his seat, perhaps I might raise one point which it may be helpful to adumbrate before we come to the later Amendment. Is the right hon. Gentleman of the view that the duty imposed upon the company in Clause 8 is less than the duty formerly set upon the Board? It seems to me that there is a reduction of the duty in Clause 8 to one which is less than that formerly placed upon the Board.
§ Mr. Peyton
I speak with some reservations. The right hon. and learned Gentleman has the advantage over me with his knowledge of the law, so I shall be fairly careful before offering a detailed opinion on the construction of these words. However, I believe that there is no substantial lessening of the duty upon the company from that which existed before. Certainly I do not believe that that was the intention. While I would not and could not accept the words proposed in the later Amendment, I should be ready to have a further look at the matter to see whether the point ought to be cleared and a heavier duty put upon the Board to ensure the future management of the port. I take the right hon. and learned Gentleman's point and shall be glad to look at it before the Bill goes to another place.
§ 9.45 p.m.
§ Mr. Richard Crawshaw (Liverpool, Toxteth)
I should not like this occasion to pass without making some contribution to this important debate, if only to pay tribute to the Committee and the hard work that it has done.
I has been said that one cannot make a silken purse out of a sow's ear. I do not think that the Committee, with the best will in the world, could make a just Bill 1115 out of something which was inherently unjust from the beginning.
From various remarks which have been made this evening, it is apparent that right hon. and hon. Gentlemen opposite have a completely different concept of what is just and unjust from that of right hon. and hon. Members on this side of the House. It is clear that things will be helped under certain circumstances. The Minister says that the Government's lame duck policy means that they do not bail out people, but in fact it is a matter of degree. They have the same policy, but it is a matter of degree which people they will bail out.
It has been said that the Labour Government—I might even subscribe to this view—have been most stupid when they have nationalised undertakings. They have given full value to the shareholders in those undertakings even when it has been known that they would have gone bankrupt had they not been taken over. They might have been stupid, but I doubt whether any right hon. or hon. Gentleman opposite could say that they have ever been unjust. The Government are allowing a Bill to go through which is not only unjust but stupid.
It is not for me to try to teach finance to right hon. and hon. Gentlemen opposite, but they know the repercussions which the Bill is having and will have on the financial structure of this country. Bills are already being put through by undertakings asking for permission for loans to be raised abroad. When asked why, they say, "Look at what has happened to the Mersey Docks and Harbour Board. We do not think that we shall be able to raise the money here."
It is a pious hope on the part of the Committee that circumstances here are so exceptional that this must not be taken as a precedent. It is being taken as a precedent that an undertaking which has always been viewed as as good as gilt stock is being discredited. This is why the Government are not only being unjust but stupid.
I wish to raise only one other point concerning the apparent wish of so many people to whitewash those involved. I do not subscribe to this view. I am not one who would seek to bring down another person without giving him every 1116 opportunity of stating his case. Mud is being slung, and innocent people are getting some of it. Each time that I have spoken on this subject in the House I have asked the Minister to hold an inquiry into who was responsible for this state of affairs. Even the people who are seeking to indulge in white washing say that somebody was responsible, and in my view it is not justice for the right hon. Gentleman to say that we must not be critical of those involved. Of course many of them were hard-working members of the Board who did not understand the full complexities of the situation, but there were on that Board people who understood fully the complexities of what was involved, and the financial difficulties of the Board, not only last year, but the year before, and the year before that.
I do not think that it does any good for us in this House to say that because some people might have mud stuck on them we should not have an investigation. An investigation would clear the innocent. The Minister knows that on several occasions I have asked for an inquiry so that the people who are not involved can be shown to be innocent. I know the hon. Member for Holland with Boston (Mr. Body) personally. I do not believe that he is the sort of person who, without giving due thought to it, would make the remark that he made about the borderline between incompetence and criminality.
I receive many letters from people who have invested small amounts of money in the Board. Last week I received a letter from someone who was due to receive back £500 that he had invested. He told me that he had received a letter urging him to reinvest his money with the Board, and then, a month later, it was dishonoured. I do not believe that we should be too squeamish about holding an investigation into circumstances such as that, because I am convinced that if the Board were not borrowing money on the market last year without breaking the criminal law, they were doing so the year before. What about the people who, for one, two or three years, have invested their hard-earned money in an undertaking but who, if the true facts had come out, would never have made that investment?
I should like an inquiry into the matter because, whether the Minister says that 1117 the Government will bail out this undertaking or not—and I do not believe that they will—it will show that over a period of time people have been urged to invest their money in an undertaking when one, two or three people must have known that they were being asked to put their money into an unsafe organisation. If that could be shown, not only would it absolve those who could not be expected to understand a balance sheet involving millions of pounds but it would put a further obligation on the Government to reimburse fully anybody who, during the time when the Board should not have been borrowing money, invested money in the undertaking.
There are hundreds of people in that category, and I again ask the Minister to institute an inquiry into this undertaking. It is only right that those who are not involved should be seen to be cleared. I am satisfied that if there were an investigation the Minister would find that not only last year were the Board not entitled to go to the market because of its financial position, but in previous years, too. Despite his refusal to do so, I again appeal to the Minister to investigate the situation.
§ Mr. Heffer
Before my hon. Friend sits down, would he take it from me that his point of view is perfectly acceptable to most of us on this side and that we think that a full investigation should take place? I should like the Minister to reply to his point. But as long as he has made it clear that it is not accepted that every member of the Board is not necessarily a criminal—there has been some suggestion along these lines—an inquiry is necessary to clear up the whole situation.
§ Mr. Peyton
I am delighted to answer the point. It would not be my intention to recommend to the House that an inquiry should be conducted. Such inquiries, to start with, are very loose affairs. No one is under any particular charge and everybody is under a very general one. The affairs of the Board have been fairly widely and deeply inquired into over the last few weeks by the Select Committee—
§ Mr. Deputy Speaker (Sir Robert Grant-Ferris)
Order. I am sorry to interrupt the right hon. Gentleman, but I think 1118 that we would be out of order in pursuing this question of an inquiry, since there is nothing about it in the Bill.
§ Mr. Richard Body (Holland with Boston
I thank the hon. Member for Liverpool, Toxteth (Mr. Crawshaw) for what he said. It would be even more appropriate if I were to thank my colleagues on the Select Committee for all they did in making my task much easier than it might have been. Moreover, both they and our clerk, who was good enough to help us considerably, were willing to work many hours beyond the Committee sittings. Because of the consideration which they gave to the work, we made much quicker progress.
We were unanimous on almost everything, barring one paragraph—albeit a very important one—of the Preamble. That considerable unanimity is of some significance. Our Special Report was completely unanimous. I realise that one paragraph of that Special Report has been criticised—namely, our desire to amend the Bill to prevent persons coming on to the Board in future who have in the past failed in their financial obligations. However, we have made it plain from the outset that, if that were to be inserted, we would wish exceptions to be made. We thought that the fairest course would be to accept anyone who met the approval of the Secretary of State.
It is wrong for anyone to say that individuals were condemned without being heard. No individual was condemned in any way. If any individual felt that he was being condemned, he had access to that Committee. It is worth emphasising that, at one stage, it was the intention of the Board to call only one witness, but that, because of some of our probings about the past, we heard further evidence about the past conduct of the Board—some of which mitigated our opinion and some of which aggravated it.
Of course, it is an elementary rule of justice that no one should be condemned in his absence, but we were concerned with a Board of people, and a Board has to make collective judgments and decisions. I accept what my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) said when he quoted a director of the Board who attributed much of the Board's downfall to the refusal of a past Government to allow the Board to 1119 raise its charges or to borrow money in the long term. If that is the explanation, it is an explanation, but what did the Board do about it having had that refusal not once, but over and over again, year after year, to use the words of that director?
Surely the Board as a whole should have met and considered its future. It should have asked itself, "Can we go on running the docks and all the obligations that go with that if we are not allowed by the Government to increase our charges or borrow on the long term?". Did the Board make that decision? If it came to the conclusion that the Government's refusal would put it into serious difficulties, or might take it to insolvency, what did it do about it—and on all the evidence that should have been the Board's view? So far as we know, the Board as a whole did not express extra strong or demanding complaints to the then Government. It did not ventilate its grievances and, above all, it did not warn the security holders.
Some of those may have been institutions, and we have heard about Barclays Bank being in for £2 million. But we who sat on the Committee also heard from people like Mr. Collins and Mr. Washer, people who were not sophisticated investors, people who took it on trust, who regarded them as gilt-edged securities. My right hon. Friend spoke about a blanket charge, but surely it was a blanket decision by the Board not to do more about it.
If any individual director felt that the decision of the then Government would drive the Board towards insolvency, or let down the bondholders, or those who worked in the docks, he should have resigned and made it plain that he could not go on exercising his obligations as a member of the Board. The Board as a whole should have taken that course and it is not an excuse, albeit it is an explanation, for members of the Board to say, "We will carry on; we will not make public our fears; we will carry on being a perpetual borrower", as they were.
The point not understood by those who have criticised the Select Committee is that this was a Board which had no equity capital of its own. It was a Board 1120 which borrowed and borrowed and had to go on borrowing whenever it had to repay. True, it was borrowing from certain large institutions, but it was also borrowing in the main from thousands of unsophisticated investors who were accepting a bond—not just a gilt-edged security, but something more than that, a body with a 100 per cent. penalty inserted, and anyone looking at this bond—and the Select Committee had an opportunity to look at a specimen—would have been driven to the view that here was something which was absolutely cast-iron.
None the less, the Board went on churning out these bonds to borrowers, to people like Mr. Collins and Mr. Washer, people in their seventies, some in ill health, some dependent on fixed incomes, people who were not looking for capital growth, who were not willing to undertake a risk with their savings. As we understood it, many of the bond holders were of that type, and that must have been known to the Board. Therefore, the Board owed them a particular duty to exercise care. If one chooses to borrow money knowing that one may not be able to repay it, one may not be a criminal—no one has said that—but one is getting very near to it. If the Board did that year by year, despite constant applications which it made to the Government at the time, it is an explanation as to what happened but no excuse.
§ Mr. Dell
The speech which the hon. Gentleman is making on behalf of the bondholders is one which many of us on this side of the House have made many times in our appeals to the Government not to do what they are doing. The question that I put to the hon. Gentleman is different. If what he says is true, if these responsibilities lie at the door of the Board collectively, rather than that individuals should be condemned unheard surely there should be an examination of the situation, such as my hon. Friend suggested, which the Government are refusing. That is the correct way—to hear what people have to say in their defence before they are condemned.
§ Mr. Body
No, I do not altogether accept that. The Board as a whole is responsible because it was making a 1121 collective decision. If one chooses to be elected to the Board, to receive the salary and, in this case, have the standing in the port of Liverpool that those elected to the Board were given—the hon. Member for Liverpool, Walton (Mr. Heffer) made this point—and a certain standing in the City of Liverpool, certain duties flow. If one chooses to be a member of a board, one must be bound by its decision because one is part of the decision made.
That suggestion is not particularly helpful. What is far more to the point is the future. I will not use the word "rosy" but I am optimistic about the future of the Board. The Committee was unanimous in its judgment of the new Chairman, Mr. Cuckney. We were all most impressed by what he said and how it came over to us. The Bill had a much easier passage through the Select Committee because of his evidence and attitude, and the faith that we were able to place in him for the future.
§ Mr. Crawshaw
Dealing with the point raised about the inquiry, would the hon. Gentleman agree, with his experience, that on all boards there are people whose advice on financial matters is taken by the board? If that is so, is it not unfair to spread this responsibility to people who have to rely on the word of these experts on the Board? Is not the hon. Gentleman being unfair to these others? Surely on this Board there are individuals who were advising the Board on its financial responsibilities, and surely an inquiry would disclose who they were and whether they should have given the Board the information that in fact they gave.
§ Mr. Body
Those who have complained about it are men of some distinction who ought to know all about a balance sheet and certainly ought to know about the dangers of remaining on a board when the prospective income was inadequate. An inquiry at this stage would not be helpful. I accept—I hope that the Special Report made this plain—that we looked upon the Bill with some discomfort, to use that fairly neutral word. I do not want to disturb the unanimity that was otherwise present at the meetings of the Select Committee. But given the assumption that the Board is insolvent and that the Port of Liver 1122 pool has to carry on, passing the Bill is the only step that the House can take to further the prosperity of the port and to safeguard the security holders.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
I had hesitated to take part in the debate because, plainly, many Merseyside Members wish to take part, but I will be brief. I am moved to speak largely because of the concluding remark of the hon. Member for Holland with Boston (Mr. Body). The hon. Gentleman believes that the Bill is the only way by which the Mersey Docks and Harbour Board could be helped.
The more I took part in the work of the Committee and the more I heard, the more I realised that the only way that the Mersey Docks and Harbour Board could be helped lay in the solution which would have been provided by the last Government, namely, to bring it into public ownership. There was no shadow of doubt that the running of its affairs and the interference—to call it that—of the previous Government regarding charges and so on was done in a manner which took account of the national interest or regional interest, and it was certainly done with much wider factors in view than purely the position of the Board itself. What I found outstandingly wrong about the whole argument, however, was that in order to provide for the future, the Mr. Washers and Mr. Collinses of this world had to shoulder what the Bill involved. I found this profoundly disturbing.
Having been selected to serve on the Committee, naturally I had to look up the Second Reading debate and found out what it was all about. I found this disturbing reading, too. The hon. Member for the City of Chester (Mr. Temple), at the close of his speech moving the Second Reading, said: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."—[OFFICIAL REPORT, 27th April 1971; Vol 816, c. 317.]The hon. Gentleman must have believed that when he said it, and I do not suggest otherwise, but the evidence as it unfolded before the Committee showed that it was just not so. The petitioners against the 1123 Bill had not been consulted. People representative of the Mr. Washers and Mr. Collinses had not been consulted. There had been next to no consultation save that which took place with the Government Department itself. It became clear that the only people who had been consulted on the issue were the Government, and this on the question whether they could or would provide a bridging loan.
§ Mr. Temple
I know that the hon. Gentleman wishes to be fair. When I said it, I meant exactly what I said. He must appreciate that it was impossible to consult the small bondholders. There was no association of small bondholders in this instance to consult.
§ Mr. Bagier
One could hardly say that Barclays Bank was not a bondholder; it had £2 million in the Board. The petitioners who came before the Committee said that they had not been consulted. It is a matter of fact. I accept that the hon. Gentleman meant what he said and he believed that people had been consulted, but the evidence, as it was examined by counsel before the Committee, showed that there was no consultation except with the Government, and the Government were being asked to bail out the Board or to provide bridging loan facilities for a port which, looking on the favourable side, would go into surplus in 1973 onwards.
Another factor which influenced us was that the Government—I think it a great pity—had not had the guts to face up to the responsibility of putting this Measure through as a Public Bill, as it should be, or even as a Hybrid Bill. That they are hiding behind the Private Bill procedure to keep a national asset going is to their discredit.
§ Mr. Bagier
The hon Gentleman may say that, but let us look for a moment at what the Minister had to say on Second Reading. This is the Minister for Transport Industries:The hon. Member for Liverpool, West Derby (Mr. Ogden) 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 1124 fully responsible."—[OFFICIAL REPORT, 27th April, 1971; Vol. 816, c. 352.]He said that it was not a Government Bill, but that was just about the only matter of fact which he could have adduced on that score.
In practice when a vote was taken on Second Reading it was very much a Government Bill. Out of a possible 14 Cabinet Members, no fewer than 11 voted for it. Out of a possible 21 Ministers not of Cabinet rank, 17 voted for it. Every one of the Whips, from the Chief Whip right down to the junior Whip, voted for it. Out of the payroll vote, 52 voted for the Bill—for a Private Bill at 10 o'clock at night. Then the right hon. Gentleman has the cheek to say that it was not a Government Bill. It is very much a Government Bill.
The main reason for the Government's introducing it in this fashion was to opt out of their responsibility for what is a national asset, dealing not only with Liverpool but with the exports and imports of this country. The charge against the Government is that they have failed to measure up to their responsibilities and deal properly with a national asset, in the way in which they were asked to do it by the chairman they appointed.
On the second day of the Committee hearings, Mr. Cuckney was asked, at Question 8 on page 8:Plainly, if the Government had provided the assistance you were seeking, that would have meant you would not have had to have a Bill in these terms, would you?He replied:It would have depended on the amount.9. But not in these terms? A. No.10. Obviously again that would have been preferable; that is why you were asking for it? A. Yes.Of course, it was much preferable to bringing in a Bill like this, making the Mr. Washers and Mr. Collinses suffer. It was introduced to dodge the Government's responsibility. They did not want to be seen to be bailing the Board out. They had Rolls-Royce around their necks, they had trouble with Harland and Wolff, and they had to provide extra money for the Yarrow shipyard. Here were a Government who were going to be tough. The end result of their toughness is to make people like Mr. Washer and Mr. Collins suffer.
1125 The Bill has been a most interesting experience for me. It has been one of the most controversial Private Bills the House has had for many years. I hope that the Government will see to it that no similar Bill is introduced because of the inaction of an extremely incompetent Administration.
§ Mr. John Wells
I will be extremely brief. I hope that hon. Members who served on the Select Committee will forgive me if I do not speak about their experience of the Bill. I want to direct my remarks to Clause 57, which crept in at a later stage, and sits somewhat uneasily in the main body of the Bill.
The history of the Clause, as I understand it, is that the British Waterways Board was somewhat perturbed about the intention in the Bill to close the Stanley Dock on the Leeds and Liverpool Canal, the dock had been in existence—as had the Canal—for many years before the existence of the Mersey Docks and Harbour. It goes back, indeed, before the Act of 1857.
The fear I have is that the new company will be empowered after 31st December, 1973 to close the Stanley Dock. If it does, it will mean cutting the last canal inland waterway trans-Pennine route and this, from the point of view of the Inland Waterways Board, would be a great national disaster. Due to the extremely efficient petition of the British Waterways Board, the Clause has been added to the Bill, and I must congratulate the Board on having got it in. But let us consider for a moment what the Clause means: it means that after 31st December, 1973 the new company can close the Stanley Dock—I only say "can". If there is no agreement with the British Waterways Board, it can go to an independent arbitrator.
As I understand it, the independent arbitrator will deal with cash and will negotiate cash—that is to say, a cash compensation—from the new company to the British Waterways Board, and that Board will be paid a sum of money—£1, £10, £1 million. It will be paid cash and this will be cold comfort to the boat-owner who wants to use the last trans-Pennine route. Hon. Members on both sides who represent that part of the country have many boat-owner con 1126 stituents, people from all walks of life, who like to use that route. If this last route is cut, the fact that the Waterways Board has been given a cash sum in compensation is no use to the boat-owners.
My only objective in raising this matter so late is to draw the attention of my hon. Friend the Member for City of Chester (Mr. Temple) to the extremely unsatisfactory wording of this Clause, which means simply what it says—that if there is a dispute, cash will be paid. This is not good enough. I do not expect him to provide any answer tonight but I put this as a warning shot across the bows of successive Secretaries of State for the Environment in future, that they must support the British Waterways Board in its lawful attempts to keep the waterways open for canal users.
I apologise for making what is apparently a very narrow point in this wide-ranging debate when so many of our constituents have suffered financially, but I hope that my hon. Friend the Under-Secretary of State will take on my underlying thoughts.
§ Mr. Spriggs
I want to say how much most of us on this side of the House welcomed the speech made by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who spoke from experience as an employee of the Mersey Docks and Harbour Board. I was also interested to hear the Bill referred to as having been presented to all interested bodies. Yet, according to the research I have done, those employed by the Board knew nothing about the Bill. They have not seen a single word of it. They have not been approached about it. It is incredible that, in this day and age, when both sides of the House talk about consultative procedures and are always ready to advise workers and managements to apply and adhere to consultative machinery, an important Bill like this should be introduced without the staff knowing anything about it although their livelihoods depend upon their employment on the Mersey Docks.
The Special Report of the Select Committee says:Your Committee did not consider that these amendments go far enough to protect the small security holders.Opinions about this matter have been, are being and will continue to be 1127 expressed. Not one of us enjoyed taking away the capital value of a person's life savings.
This has been looked upon as a trustee investment. If Parliament allows the Bill to go through without amendment, if we allow the Board to change or take away the real value of an investment, we are allowing legal robbery. Two or three constituents have written to me about 1128 their life savings. One is an old lady, an ex-teacher. She had £1,000 invested with the Mersey Docks and Harbour Board. She came to see me at my Parliamentary interviews, pleading for something to be done. I tell the Government that there are many Members on both sides of the House prepared to vote against this Bill passing through this House in a manner which will allow the Board to rob these people of their life savings.
§ Mr. Ian Percival (Southport)
I should like to echo the tributes that have been offered to the Select Committee for the care, time and thought that it put into its work on this Bill. I was able to listen to a little of its proceedings and anyone who listened to or read the proceedings would I am sure wish to pay a warm tribute to it, as I do.
I want to confine myself to one narrow point, followed by a number of observations on the general principle. The narrow point arises from something said by my right hon. Friend the Minister for Transport Industries about the position of these bonds as trustee securities. He said that bond holders were not entitled, because these were trustee securities, to treat them as though they were guaranteed by the Government. Strictly speaking, that is correct as a matter of law and as a matter of practice but there is another aspect to which he did not refer. This is a Board, four members of which have for a long time been appointed by successive Governments. The right hon. and learned Member for Liverpool, Edge Hill (Sir A. Irvine) would I am sure agree with me when I say that I hope we have not reached the situation when it may be said that although the Government may appoint directors to a board the public should not think that because they do so that gives any additional security.
I should like to think that when Governments take upon themselves the right and duty to appoint members to a board such as this, a board administering the affairs of an outfit the bonds issued by which are trustee securities, then the public is entitled to say that the Government are assuming some responsibility for the conduct of that outfit and for ensuring that the public is acquainted with the situation if anything is going wrong which may operate to the detriment of the bond holders and which might cause the kind of losses that we know many have suffered.
On the general principle I hope that the House will remember exactly what it is doing when it passes the Bill (because I am sure that it will since we have no real alternative)—I hope that we will face up squarely to what we are doing. In the Bill we are changing the law so that a particular debtor may be entitled to write 1130 off an unspecified part of its obligations in order to remain in business. I hope that every hon. Member will always feel that that is an odious and shameful thing to do, and that it should be done only in circumstances of the most extreme and clear-cut justification.
In this instance my right hon. Friend and his colleagues in the Government justify their actions by saying that the Government must stop helping lame ducks. I have always believed that this is a misunderstanding of this situation and a misapplication of a principle with which I wholeheartedly agree, namely, that the day has come when Governments must stop helping lame ducks indiscriminately. But helping a lame duck is exactly what the Bill is designed to do. The lame duck is the Mersey Docks and Harbour Board. The Bill is designed to help the Board to remain in business. It can be helped to remain in business by one of two ways: either by the general taxpayer finding the money to enable that to be done, or by cancelling its obligations to particular classes of creditors. The Bill enables it to stay in business at the expense of particular classes of creditors—because that is what the bond holders are. They are not investors. They have lent money to the Board. They do not have any share in any increased prosperity, if there is any, and, therefore, they are not expected to take the risk of matters going the other way. They are creditors who are entitled in law to get their money back.
My right hon. Friend the Minister said that they have a national interest like everybody else. So they have; I accept that. But, like everybody else, they are members of the general body of taxpayers, so that if the hardship were spread over the general body of taxpayers they would take their share of it. We have got the proportions wrong. This Bill is changing the law to enable this lame duck to stay in business by cancelling its obligation to particular people. In these circumstances, the general taxpayer should—and I think would be quite happy to—accept the burden instead of its being placed on the shoulders of particular people, many of whom are very poorly off. I do not believe that what I am suggesting would in anyway 1131 breach the Government's policy of not assisting lame ducks.
My right hon. Friend said that if the hopes of profits which are now held materialise the Bill may not do as much harm to the bond holders as was at one time thought. I beg him to realise that it has already done immeasurable harm to many of them. No relief for them is yet in sight. I am unable to discover anything in the Bill, even as amended, which would enable a sensible quotation in the bonds to be restored. I do not know how my constituents, who may now need to be selling them to maintain their standard of living, can sell them. I do not know how a market in them can be restored. There is still a large measure of uncertainty.
I hope my right hon. Friend will not think that those of us who have been urging the Government to do more are satisfied with the present situation. The amendments are an improvement, but I hope the Government will go on seeking for more improvements and not let the matter rest where it is.
§ Mr. David James (Dorset, North)
Before my hon. and learned Friend sits down, may I ask whether I am right in my understanding that these unfortunate people will not even qualify for capital gains relief to set this loss against any subsequent gain, because they are creditors and not equity shareholders.
§ Mr Percival
It is an awful admission for a lawyer to make, but I do not know the answer to that question. I want to stick to my train of thought. Let us not under-estimate the knock which these people, many of whom are ill able to afford it, have suffered and will suffer. I hope that my right hon. Friends will go on trying to find ways of alleviating that hardship, and I hope one day to persuade them that they can do so without breaching in anyway the policy which they have adopted and with which I agree. I hope also that the board will give the bondholders every opportunity to participate in such revival as there may be by ensuring that everything that is written off is made up in equity.
Lastly may I echo the tributes that have been paid to Mr. Cuckney. I have 1132 had several meetings with him, and he has been the essence of patience and courtesy. Many hon. Members have discussed the matter with him, and I am sure everyone has shared my experience, that he has answered every question put to him and seen us every time we wanted to see him. The one piece of brightness I am able to convey to my constituents is that, whatever may be said about the past, Mr. Cuckney has a great determination to put the future right, and I wish him well in his endeavours.
§ Mr. Simon Mahon
The hon. and learned Member for Southport (Mr. Percival), my parliamentary neighbour, has voiced the sentiments of hon. Members on both sides of the House. When I hear such universal condemnation of the Bill, I wonder who will vote for it. We are voting simply for an improvement, but morally I do not think that a single hon. Member could honourably support the Bill. I find great difficulty in supporting it, but I will support it in the hope that there will be an improvement and that justice will come soon to the poor people who put their life savings into the Mersey Docks and Harbour Board and trusted it as we all did. We trusted it as we trusted the Bank of England and to be a member of the Board was the height of a Merseyside man's ambition.
I have often criticised employers on Merseyside, and have had good reason to do so, but there is nothing more regrettable than saying something about a person which is obviously untrue.
When I hear these sad and sometimes bitter things being said about members of the Board, I remember other times and other men. Liverpool was not always in the state it is in today, and it will not always be in this state. I have trust in the people of Liverpool, despite all the hardships that we have had to endure. I believe that the Port of Liverpool will again become great. If I know this, surely the Government know it.
Bootle's civil motto is "Respice-aspice-prospice", which means "Look to the past, see to the present and look to the future". This is what the Government should do. They should not be talking about Liverpool and the Mersey Docks and Harbour Board as "lame ducks". We all know that people have a bad 1133 time occasionally, whether they be companies or individuals. I have been in public life for a long time and many like me have done all we can to help lame ducks and those who are unfortunate. I do not like the term "lame duck" and I like it even less when it is applied to Liverpool.
When considering the people of Mersey-side, do not smile at us or pass us by. We are the people of England and we have kept this place going when no other part of the country could keep it going. When we talk about lame ducks we should remember another great British gentleman who served his country as no statesman has ever served his country before, and he used the phrase "Some chicken, some neck". We should remember those words in the context of this great port.
I knew this Board for many years. I wish Mr. Cuckney and his friends well in their difficult task. I say this sincerely. However, it is hitting below the belt to talk about people who are dead and gone. I do not believe that any member of the Mersey Docks and Harbour Board has ever had anything but the best interests of Merseyside at heart. I believe this sincerely. I know from personal knowledge that the last Chairman of the Board had nothing but the best will of the people of Liverpool. I have been in the Labour movement all my life and I joined with others in suggesting the setting up of a committee to try to improve many of the things on the docks and in the Pool. That committee was not to include merely trade unionists, but people from the Church and other sections of public life, and we wanted it to look at the labour relations and the conditions in the port.
It is wrong to impute motives to people when one is not sure about the situation. There is an obligation on the Government to undertake some form of inquiry. I do not wish the new Board any harm, but things have been said about the old Board which could be true or false. There is no doubt that nationalisation, which I believe in, had some effect on the policy carried out by the Board at that time. I will not go into details, but it has been said that there are 42,000 unemployed in Liverpool. I can remember when the dock force numbered 20,000. It is now down to 10,000. 1134 Job opportunity is going. Therefore, we want the new Board to look at these matters very closely.
I support my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), who spoke about the South End Docks, and he said that a third of the imports and exports of the port of Liverpool went through those docks. But they are three miles long. On our side of the river, there are seven miles of docks. My hon. Friend was talking about the South Docks. But they are not just a dock. There is a line of docks, with enough facilities probably to keep the country going. I can name them, one after the other.
The position needs consideration. The Minister referred to the national interest. Apart from the economic viability of the port, there is the national interest. Where do we put ships if we are in trouble? Anyone who has seen a jammed-up port knows that we must be careful not to take precipitate action.
I did not intend to speak in this debate, but I am glad that I did. Maidstone is a long way from Bootle. What is the interest of the hon. Member for Maidstone (Mr. John Wells) in the Stanley Dock? What was the hon. Gentleman saying about the Liverpool-Leeds Canal? The hon. Members for Liverpool, Kirkdale (Mr. Dunn), Scotland (Mr. Marsden), Exchange (Mr. Parry) and Bootle are right in one respect if they are wrong in every other: the Liverpool-Leeds Canal, over the seven miles between the Stanley Dock and my constituency, has not carried a single barge in the last 10 years. It is an open sewer which, in one period of five years, claimed the lives of 28 children in my constituency and those of other hon. Members. Today, we are told that it is the beautiful trans-Pennine chain to the Mersey. It is never used.
This Government could do with a little popularity at the moment. If they got together with the Board and used the powers contained in the Bill, they would make themselves a little more popular in Merseyside than they are at the moment. The canal is anything but a thing of beauty and a joy for ever.
Labour relations in Liverpool depend on the confidence that the new Board 1135 can establish. If the people of Mersey-side do not have confidence in the continuity of employment and improved working conditions, the new Board will be a failure. That is the very last result that my colleagues and I want to see.
§ Mr. Marsden
I represent a Liverpool constituency which takes in a long slice of the Liverpool docks. Many thousands of my constituents are Liverpool dockers. To protect their jobs and their livelihoods, I should not vote against this Bill, even if the opportunity presented itself. However, I want to place on record the fact that I dislike the Bill and consider it a bad one. As hon. Members have said, it makes no provision for the future of the port.
The Minister sought to reassure the House by quoting Clause 8(1)(a) and (b) which, he says, goes a long way to meeting our request for some provision for the future of the port. The Liverpool City Council does not think so. Its Policy and Finance Committee, at its meeting on 23rd June,will be considering particularly the nature of the duty of the proposed new Mersey Docks and Harbour Company to continue to operate its undertaking, and the methods whereby the company may be wound up and the disposal of its assets authorised.I sincerely hope that the Minister will comment on and look further into this matter.
§ Mr. Robert Parry (Liverpool, Exchange)
Like my hon. Friend the Member for Bootle (Mr. Simon Mahon), I did not intend to participate in the debate. I shall keep my remarks brief having regard to the lateness of the hour and the obvious hope of other hon. Members to take part.
The hon. Member for Liverpool, Wavertree (Mr. Tilney), who is not in his place, seemed to blame the Labour Government for the difficulties now facing the Mersey Docks and Harbour Board. If he has examined the minutes of the Committee he will have noted the concern expressed by the Chairman, his hon. Friend the Member for Holland with Boston (Mr. Body), about the responsibility of the previous Administration. I have not had an opportunity to study the minutes in detail, as I saw them only a couple of hours ago. I support the 1136 protest made by my right hon. Friend the Member for Birkenhead (Mr. Dell) about the availability of documents and information. I refute the allegation of the hon. Member for Wavertree about blame attaching to the Labour Government. I believe that a certain amount of responsibility lies with the previous board.
My hon. Friend the Member for Nottingham, West (Mr. English) pointed out the degree of responsibility which must be borne by certain members of the previous Board. It is generally accepted by hon. Members on this side of the House that, due to the vested interests of some of the Board members, port charges were deliberately kept low. Obviously those members were expecting the Labour Government to nationalise the docks. Following the election last June and the return of a Conservative Government, that hope disappeared.
It is no coincidence that the financial difficulties of the Board were first brought to public notice immediately after the General Election. In the annual report, published and presented in April, 1970, no mention was made of any financial crisis. Yet, less than three months later, Merseyside Members of Parliament were informed of the great danger of the Board going bust. I believe that the charge against some of the directors of culpable negligence is justified.
The real blame now lies with the Government. Their cynical attitude towards lame ducks seems to apply particularly to areas which have a strong Labour representation. We have had Mersey-side; now we have Clydeside. Through the Government's policies, these areas, which have always had their fair share of unemployment, distress and depression, will suffer further unemployment. I see nothing in the Bill which will do anything to help to solve permanently the problems for the future of the Port of Liverpool.
§ Mr. Michael Fidler (Bury and Radcliffe)
I shall find the greatest difficulty in supporting the Bill, for two reasons in particular. I am speaking for the many in my constituency, the elderly, the impecunious, the retired, those who had sufficient faith in the Board to imagine that, by lending their money to it, they were doing so with the same security with which they might have 1137 placed that money with local authority stock.
§ Mr. Fidler
The right hon. Member may know more about hypocrisy than I do. I am simply giving vent to an opinion which I have expressed in communications to the Minister; I have been consistent in expressing this view all along.
I agree with my right hon. Friend in wanting to see the Board's viability assured in the Government's plans, provided that he will try to ensure two things on behalf of the investors, possibly limited to those who have invested less than £1,000.
First, if there is to be any delay in paying bond holders, there should be an undertaking that, no matter how long that delay, the payment when eventually made will be 100 per cent. Second, interest payments throughout this extended period of repayment should be maintained at regular intervals on the basis on which the money was originally invested—money which in many cases represents life savings. I hope that my right hon. Friend will press these matters on the Board before deciding to support it.
§ Mr. Heffer
Will the hon. Gentleman follow the logic of his argument and actually vote against the Bill?
§ Mr. Fidler
I said that I hesitated to lend my support to the Bill, and for reasons advanced by some hon. Gentlemen opposite, my hesitation is due to the fact that I do not want to see any impediment placed in the way of the Board's continued operations. Before we make that possible, however, I should be grateful for the two assurances for which I have asked.
§ Mr. Temple
This is not a Second Reading debate, but a debate on the question of whether consideration of the Bill should now proceed.
The Mersey Docks and Harbour Board is an important national institution. I know that that is just the way in which 1138 the promoters of the Bill regard their obligations towards a continuance of its activities. I will confine myself to replying to those points which directly concern the Bill. My right hon. Friend has made the Government's position clear. On behalf of the promoters, I should like to thank the Chairman and members of the Select Committee.
On Second Reading, I said that few things about this legislation were strictly normal. I know that many of the events have been unprecedented, but that does not in the least mean that proposals by the promoters have been in any way out of order. Indeed, they have been particularly careful to keep entirely within the rules of the Private Bill procedure. It was only this procedure which was open to the Board to reconstruct the capital of the company.
The right hon. Member for Birkenhead (Mr. Dell) said that uncertainty over the future of the port is continuing. I am glad to say that that uncertainty was removed by the speeches of my hon. Friends the Members for Holland with Boston (Mr. Body) and for Hove (Mr. Maddan). Those two, and indeed, other hon. Members who served on the Select Committee, formed that view, I believe, because under the wise guidance of the present chairman there was more than a good chance of things improving very considerably.
We have listened to a high level of debate on this vital matter. I congratulate the hon. Member for Nottingham, West (Mr. English), who unfortunately is not in his place at the moment. He congratulated the promoters on particular things they have tried to do, with the exception of one thing. He criticised what the promoters were doing to existing security holders. I can assure the House that the promoters are equally concerned about the future welfare of security holders in the Mersey Docks and Harbour Board.
This matter was also referred to by my hon. and learned Friend the Member for Southport (Mr. Percival), who has been very solicitous in the cause of small bond holders. He and the hon. Member for Nottingham, West stated that in the reconstruction there is to be provision for issuance of equity capital. The outlook 1139 seems reasonably good, although I would not say that it is rosy. As I said on Second Reading, statutory companies such as the Felixstowe Company and the Manchester Ship Canal Company have proved satisfactory investments for equity shareholders. I know that it is the intention of the new Board to try its level best to bring about a situation in which a substantial proportion of the capital which appears to be lost may be recouped.
I shall briefly outline the way in which the promoters have endeavoured to meet the points suggested to them by the Chairman and members of the Select Committee. I know that the first point, recovery of quotation for the bonds, was very much in the mind of my hon. and learned Friend the Member for South-port. I think it has been admitted by the promoters throughout that a quotation for the bonds cannot be secured until the reorganisation scheme has been approved. It was a criticism on Second Reading that the scheme would not be approved until the end of 1974. I am happy to be able to inform the House that this first recommendation by the Select Committee, which was accepted by the Board, has been implemented and the moratorium period has been cut by a year so that in fact the scheme should be completed by the end of 1973.
This Bill is better than the first that was introduced by the Board. Alterations have been made. I mention this because of criticism of what I said about consultation. Consultation did take place with the big bondholders with reference to the first Bill. After criticism of that Bill, it was withdrawn. Because there was not the same objection to the second Bill, it was thought that those bondholders were more favourably disposed to it.
§ Mr. Dell
Surely this legend that the first Bill was withdrawn because of the lack of consultation cannot be sustained. It was withdrawn because it placed a maximum limit on the amount of writedown. The main difference between this and that Bill is that in this there is no limit. Perhaps the hon. Gentleman would address himself to that.
§ Mr. Temple
I entirely agree with the right hon. Gentleman. That is exactly why the first Bill was withdrawn. In the first Bill there was an absolute obligation to write down the capital by 30 per cent. and there was no provision for the issuance of any equity capital. Those reasons were considered by the promoters of the Bill and, I hope, it is agreed by the big bond holders that the second Bill is more satisfactory than the first on that ground.
The second criticism which was made by the Select Committee and which has been met by the promoters was that interest could be increased by the Board at any time during the moratorium period, but now certain stronger words have been inserted. Speaking on behalf of the promoters, I do not think that those stronger words are strictly necessary, but we have put them in to accord with the wishes of the Select Committee.
The third and fourth criticisms are linked. They concern the protection of the bondholders who will be issued with ordinary stock. When the scheme is produced, a form of procedure will be adopted which will be different from that which I outlined on Second Reading. Each different class of bondholder will have a special meeting convened for it, and it will require a three-quarters majority of the bondholders to be in agreement with that scheme.
If there is disagreement about the scheme proposed by the Board, that scheme will be referred not to an independent expert, but to the Chancery Court. I always preferred the independent expert because I thought that finality and precision would be brought to the determination rather more quickly than by recourse to the Chancery Court. With due reference to my legal friends, I thought that reference to the Chancery Court would result in the proceedings being rather more protracted, and that is why I could not give a specific undertaking that the moratorium period would end at the end of 1973. Albeit taking these things into consideration, the change has been made.
The fifth criticism concerned restricting the power to issue fresh stock. I do not think that this provision was strictly necessary, but the Select Committee wished this restriction to be included and 1141 the issuance of further ordinary stock will be only after approval by a special resolution.
The sixth criticism concerned the appointment of a trade union director. There has been a trade union director on the Board for a long time. The Board would always wish to appoint a trade union director, and the promoters readily agree to this proposal.
The seventh and last criticism concerned the exclusion from the Board of persons who had been directors of bodies which had failed to fulfil their financial obligations. This is a matter which has attracted a good deal of attention. The promoters made their position perfectly clear and they have objected to the Amendment. The new Board will be elected by the security holders who will have it in their hands to select their representatives. The promoters certainly had to accept what turned out to be the unanimous decision of the Committee, but they were unhappy about it. I deplore the extravagant language which has been used in criticism of members of the previous Board.
§ Mr. Temple
All I would say to my hon. Friend is that reconstructions have had to be made before in all kinds of companies and corporations. The Promoters look upon this as a reconstruction.
Having endeavoured to meet my hon. Friend's point by their proposals with regard to the issuance of equity capital at the end of the day, I hope very much that the explanations of the promoters will be acceptable and that we can proceed with the consideration stage of the Bill.
§ Question put and agreed to.
§ Bill, as amended in the Committee, considered accordingly.