HC Deb 04 May 1971 vol 816 cc1173-5

Mr. Ford (by Private Notice) asked the Secretary of State for Trade and Industry if his Department was kept informed of the situation regarding the Tulketh Group, if he was asked for guidance, and if he will make a statement.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)

My Department has had the insurance interests of this Group under careful scrutiny and the conclusion was reached last week that the companies did not have the solvency margins required by the Insurance Companies Acts. Notice was issued last Friday under Section 68 that I was considering making a restriction under Section 68(1) which would have the effect of prohibiting the companies from taking on any new business or renewing existing business.

Close contact has been maintained by my Department both with these companies and with the insurance industry and I was fully aware of the intention of the Phoenix Assurance Company to negotiate to acquire the Bradford and Pennine Insurance Companies.

I am sure the House will be glad that as a result of the efforts of all concerned the interests of the policyholders should be protected in full.

Mr. Ford

While thanking the right hon. Gentleman for that vaguely reassuring statement about motorists, may I ask whether he is aware that the people of Bradford will not be at all reassured in other directions? Is he aware that precipitate action by the banks in putting in a receiver for this group has caused grave concern in Bradford and will possibly cause declining confidence in the trade? Does he realise that this adds to the concern of the people of Bradford over mounting unemployment in their area? As he has destroyed many of the instruments which can deal with these matters, what does he and his Department intend to do to direct employment to Bradford and the surrounding areas?

Mr. Davies

The action of the banks in appointing a receiver has nothing whatever to do with the action taken by my Department in relation to the insurance interests concerned. The remainder of the question is not therefore germane to the Private Notice Question.

Mr. Darling

In view of the fact that the insurance companies were only a small part of this group in relation to the assets, could I ask the right hon. Gentleman whether he will consider inquiring further into the ownership of insurance companies of this kind? Does he think it desirable that small companies should be part of large conglomerations when the conglomeration can go bankrupt without any reference to the insurance companies and drag the insurance companies and their policyholders into difficulties? In this not something which his Department should be examining?

Mr. Davies

I have no evidence to support the belief that the other activities of this particular group did draw the insurance companies into difficulties, so it will be difficult on this premise to start investigations of the kind the right hon. Gentleman suggests.

Mr. Wilkinson

Is it not a fact that it was merely the textile part of this commercial activity that was in difficulty and that my right hon. Friend's wise and timely action has put the affairs of those insured in good secure hands? Does he realise that the allegations of hon. Gentlemen opposite are quite beyond any reasonable degree of anxiety?

Mr. Davies

I am glad that the interests of the policy-holders are likely to be protected. The situation of the two insurance companies was not sound, which was the cause of my making a warning under Section 68.

Mr. Ford

On a point of order, Mr. Speaker. May I point out that the terms of the Question do not mention insurance companies?

Mr. Speaker

I do not think that is a point of order.

Mr. Arthur Lewis

Is the Minister aware of the fact that last week I put Questions on the Order Paper—which are still there—about this and that there is correspondence in his Department relating to this? Will he explain why it is that as far back as 4th and 5th March the Press knew all about this but his Department appeared to know nothing and took no action until, as he said, last Friday? Then, strangely enough, everything he now says was reported in the Press. Can we have another investigation into how these leaks took place?

Mr. Davies

I am sure the hon. Gentleman realises that the action taken last Friday did not suddenly arise in the course of 24 hours. It came as the result of prolonged study.

Mr. Carter

When did the Department first suspect the affairs of this insurance company?

Mr. Davies

It is impossible to be precise about the date when one becomes suspicious, but the date on which it seemed necessary to take positive action was as recent as within the last six weeks.