HC Deb 10 December 1975 vol 902 cc597-611

10.31 p.m.

Mr. Peter Rees (Dover and Deal)

I beg to move Amendment No. 1, in page 1, line 7, after 'applied', insert 'except in cases where litigation was commenced and a defence under the Moneylenders Acts 1900 to 1927 or the Moneylenders Acts (Northern Ireland) 1900 to 1969 pleaded before 20th November 1975'. However much the Minister may have tried to disguise this unattractive fact on Second Reading, this is a Bill designed to have retrospective effect—that is to say, it is designed retrospectively to affect transactions entered into between a variety of people and the Crown Agents. This is a factor which will not commend the Bill to the Committee. The Minister was disposed to say that it was a "clarificatory or declaratory" Bill, but that is only a smokescreen to conceal this unpalatable fact.

The Minister assured the House that no persons had actually started litigation against the Crown Agents, so to that extent the Bill was unobjectionable. The amendment is designed to meet that point, and I am sure that the Parliamentary Secretary will therefore feel able to accept it.

The sole point of the amendment is to exclude from the retrospective operation of the Bill any actions which were started in which a defence under the Moneylenders Acts had been pleaded before 20th November 1975, when the Bill was laid before the House. If it be the fact—I will accept any assurance that the hon. Gentleman may give—that no litigation has been started, no defence pleaded, I am sure that the Government will feel easily able to accept the amendment. Therefore, on that short and simple basis, I hope that my amendment will commend itself to the Parliamentary Secretary and, more importantly, to the Committee.

The Parliamentary Secretary to the Ministry of Overseas Development (Mr. John Grant)

I made it clear on Second Reading on 27th November that although certain inquiries had been made by the liquidator of a company and by other companies, no legal proceedings had been started in respect of any loans made by the Crown Agents. I should add also that the Crown Agents have not commenced litigation against any company or person to procure the repayment of a loan or the payment of interest. I can, again, confirm what I said to the hon. and learned Member for Dover and Deal (Mr. Rees) on 27th November.

Despite what the hon. and learned Gentleman said, with commendable brevity, his proposed amendment is quite unnecessary. It adds nothing essential to the subsection. Indeed, it rather tends to suggest a state of affairs that does not exist. The amendment is rather cumbersome and repetitious.

I appreciate the concern of the hon. and learned Gentleman that the Bill should not pre-empt or be seen to pre-empt any litigation or defence which might have been started or pleaded before the Bill was published. However, that point does not arise. I fail to understand the purpose of his amendment and I hope that the hon. and learned Gentleman will feel able to withdraw it.

Mr. Peter Viggers (Gosport)

I am very disappointed with the Minister's reply because retrospective legislation is always abhorrent. I confess that I was uncertain how to phrase the manner in which the retrospective element in this legislation could be removed. I congratulate my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) on the elegant way in which he has done it.

The Government are becoming punch-drunk on retrospective legislation. They fail to realise how important it is that, where humanly possible, we should avoid this type of legislation. It is disappointing that the Minister has not felt it possible to accept the manner in which my hon. and learned Friend has tabled his amendment. I shall certainly support the amendment.

Mr. Peter Rees

If the Minister will give the Committee the categoric assurance that, should he have been wrongly briefed by his advisers and should it turn out that litigation has been started and that such a defence is being pleaded, he will make an exception in favour of those litigants and those who have brought an action against the Crown Agents, I shall be happy to withdraw the amendment. Will the hon. Gentleman give that assurance?

Mr. John Grant

I do not think I can go so far as to give that assurance. The hon. and learned Gentleman seems to be suggesting that there is some litigation of which he perhaps knows something. I am beginning to wonder why he is so anxious about this matter. Perhaps he can help us on this.

As I said on 27th November, we have no knowledge of any litigation and no reason to suppose that any litigation has been started. I cannot give him the kind of undertaking that he wants. If I find that I am wrong, we can look at the matter again. There will still be time in another place to do that. However, I cannot give him that undertaking now.

Mr. Peter Rees

What exactly does the Minister mean when he says that he will look at the matter again? Should it turn out that he has been wrongly instructed by his Department and that an action has been started—perhaps I should state that I am concerned neither personally nor professionally—what does he mean when he says that he will look at the matter again? Will he clarify the situation?

Mr. Grant

I was trying to assist the hon. and learned Gentleman. I am trying to meet his point with an open mind, but I cannot go any further on this point now.

Mr. Eldon Griffiths (Bury St. Edmunds)

I may be able to help the Minister and my hon. and learned Friend if I refer to a question which I put to the Minister for Overseas Develop- ment on Second Reading. I put this precise question to him: Does the Bill cut across any legal proceedings that have already commenced … or of which notice has been given …? Hansard records: Mr. Prentice: It does not."—[Official Report, 27th November 1975; Vol. 901, c. 1147.] I think that we must accept that assurance, although I should like to underline the fact that my hon. and learned Friend is entirely right to draw attention to the problems that retrospective legislation could cause if legal proceedings were to have been undertaken.

I think that it would be sufficient for us if the Minister were to say that he will make quite certain that the assurances that he and his right hon. Friend have given are accurate, and that if they were not to be accurate he would put the matter right in another place.

Mr. Grant

Put in those terms, I can give that assurance.

Mr. Peter Rees

The assurance was wrung out of the Parliamentary Secretary like blood out of a stone. It was not a very satisfactory assurance. The hon. Gentleman must appreciate that he cannot treat the Committee in this rather cavalier fashion. This may seem to the hon. Gentleman and those sitting behind him to be a small point, but to my hon. Friends it is a matter of some importance. If the hon. Gentleman treats the Committee in this fashion he will find that his legislation will take a great deal longer to get through this House.

I do not want to sound churlish on this point. I am prepared to accept the assurance. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr. Eldon Griffiths

I shall be very brief because I know that that is the wish of the House as there are other important matters to follow.

Clause 1 is the heart of the Bill. In accepting the proposal that it should stand part of the Bill, I should like to ask the Minister three questions. First, will he say how the Crown Agents are getting on? His right hon. Friend, in his statement, gave the impression that things were going along rather well. It would be for the benefit of the House if the Minister could give us his judgment of how things now stand.

Secondly, will the Minister tell us, in terms, that in planning the future legislation which has been promised he will be very careful to protect the continued freedom of action of the Crown Agents vis-à-vis their overseas customers? The overseas customers place great store by that and so do the Crown Agents. We should like to support them and I should like to have that assurance from the Minister.

Thirdly, can the hon. Gentleman give us some idea of when the White Paper which his right hon. Friend has promised to publish—I think he said "shortly"—will be available?

The Opposition find the Bill painful and disagreeable. We wish that we did not have to have it, but we understand why the Government have felt it necessary to bring it forward and we appreciate that very large sums of public money could be at risk. Without any enthusiasm at all, therefore, we reluctantly agree that the clause should stand part of a disagreeable Bill.

Mr. John Lee (Birmingham, Handsworth)

The hon. Member for Bury St. Edmunds (Mr. Griffiths) regards the Bill as being somewhat disagreeable. I share that regard in the sense that I think that it is unsatisfactory that this matter should be dealt with as a piecemeal exercise.

In regard to this whole business, I get the impression that the Crown Agents are getting rather more generous treatment from this House than they might reasonably have expected. Having regard to all that has happened and to the fact that the committee of inquiry has yet to report on its deliberations, I should have thought it more satisfactory in many respects if the Bill had been deferred until the inquiries had been made and we knew whether proceedings were to be taken against those who we believe have been perhaps more than negligent in the conduct of their duties. It would have been more to the point if we had been able to have sight of a White Paper on the structure of the Crown Agents as they are likely to be when they have been reconstituted.

One of the difficulties with this situation is that the Government have had very little power over the Crown Agents. We all know that. But until we know the form in which the Crown Agents are to be restructured and incorporated we cannot really be satisfied that the kind of situation caused by Mr. Challis will not occur again. I was somewhat surprised when my hon. Friend told us that there are no proceedings in prospect against the Crown Agents in respect of which a defence might be pleaded. That is the point that has been raised by the hon. and learned Member for Dover and Deal (Mr. Rees).

I want to know why the Crown Agents are not taking steps to recover the moneys owed to them. Has my hon. Friend been told whether proceedings are in contemplation? The miserable story of the secondary banks, which was extensively discussed on Second Reading, leaves one in no doubt that several banks behaved not only disreputably but in a way which would make it not impossible to prove negligence in the way in which they handled their funds.

10.45 p.m.

I am interested to know whether the Crown Agents will move in quickly. Some of the banks that were mentioned on Second Reading—for example, London Counties and Cedar Holdings—are in a ropey condition. It may be that if litigation is deferred for some time we shall find the Crown Agents faced with several examples of insolvency. The sooner they take steps to recover the money, the sooner they will ward off any risk of possible action being taken against themselves.

I think we are all relieved that there has not been a furore from the numerous independent Governments who use the services of this peculiar and anomalous organisation. I am surprised that there has not been an attempt to withdraw funds. It may be that the measures taken by my right hon. Friend the Member for Lanark (Mrs. Hart) and the present Minister to cope with the situation have done something to restore confidence, but unless measures are taken pretty soon on the part of the Crown Agents to recover the funds it is reasonable to suppose that that confidence will again be on the wane.

Mr. Marcus Kimball (Gainsborough)

We have now had two speeches saying that the Bill is unsatisfactory. There are many hon. Members who wish to have an opportunity in the short time that is left to pray against the Road Traffic Order. Would it not be simpler for the Parliamentary Secretary to say that he will take no further step with the Bill at this stage? There is no support from behind him and there is no support from the Opposition. Unless he is prepared to say that, we shall have no alternative but to vote on the first possible issue. That opportunity must come up shortly, and I doubt whether the Government would have 100 Members present. That would enable us to get on to the next business in the short time that is available, giving us an opportunity to pray against the iniquitous speed limits now in force.

Mr. John Grant

I am surprised to hear the hon. Gentleman say that. I do not know whether the hon. Member for Bury St. Edmunds (Mr. Griffiths) will have anything to add. If the hon. Member for Gainsborough (Mr. Kimball) wishes to pursue that course, we shall have to meet it when it comes. I hope that the British taxpayer will take careful note of what he says. It is the British taxpayer whose interests we are trying to protect by introducing this legislation.

Mr. Lee

What is being asked for may not be unreasonable in all the circumstances—namely, that the matter be deferred so that we can avoid a late night sitting. There is £400 million at stake. I agree that it is necessary that this measure should go through quickly. I take issue with the suggestion of the hon. Member for Gainsborough (Mr. Kimball) that there is no support for the Bill. I think it is important that a measure of this kind should not be dealt with in a spatchcocked or hurried way.

Mr. Grant

I do not know whether my hon. Friend was present on Second Reading. Most of these points were raised then and were answered. If my hon. Friend had read Hansard, he would have known that to be the case.

Mr. Viggers

I am not sure whether the hon. Member for Birmingham, Handsworth (Mr. Lee) is aware that on Second Reading—I do not know whether he was present—a number of hon. Mem- bers said that they would seek to raise a number of issues in Committee when the Committee stage was reached. One of my colleagues said he hoped that the Leader of the House would give reasonable time for this issue to be discussed at a reasonable hour of the day. The Government Chief Whip said that if the definition of "reasonable" was that it would come on immediately after 10 o'clock, that would have been more acceptable.

Two items are tabled for their remaining stages tonight. They are issues of great importance. The Order on speed limits comes after this Committee stage and must be completed by 11.30 p.m. The Minister should not say that all these matters were dealt with on Second Reading, because there are a number of points that need to be made in Committee. I do not think one can make those points constructively within the present time limit.

Mr. Peter Rees

I join the hon. Member for Birmingham, Handsworth (Mr. Lee) and my Conservative colleagues in saying how outrageous it is that the House should be asked to debate this important measure, involving a sum of £400 million of taxpayers' money, in less than half an hour so that we should enable many of my hon. Friends to raise an equally important matter concerning speed limits. This is an abuse of the procedures of the House—

The Deputy Chairman

Order. I must call the hon. and learned Gentleman to order in that he must relate his remarks to the clause we are discussing.

Mr. Rees

Had you permitted me to continue, Mr. Murton, I was about to explain why I was being compelled to truncate my argument—namely, because I wish to leave to my hon. Friends the opportunity to raise important points on speed limits. However, in the limited time available to me, let me try to make a few short points.

The Parliamentary Secretary is asking the House to consider in Committee an important Bill involving £400 million of taxpayers' money. He has not explained—nor were we given an explanation on Second Reading—many important constitutional points. For example, I should like to know the status of the Crown Agents. Are they a partnership body or are they an emanation of the Crown? We cannot be asked to give them a blanket immunity without knowing their status.

I took the opportunity to turn up "Halsbury", Fourth Edition, Volume 6, on this point, and I read the following definition: They act as commercial and financial agents in the United Kingdom for all dependent territories and, by special arrangements, for certain other governments overseas, both within and outside the Commonwealth. They act on direct instructions from their principals, though subject to the general supervision of the Secretary of State and, as regards requitions from independent governments, to the rules laid down in Colonial Regulations". Does that definition relate to transactions in respect of which we are now asked to give immunity to the Crown Agents acting under direct supervision of the Secretary of State?

More important, were the Crown Agents acting as agents for foreign Governments? I imagine that they were acting as agents of foreign Governments because Clause 1(2) of the Bill says: In this section 'Crown Agents' means the Crown Agents for Oversea Governments and Administrations, that is to say the persons from time to time appointed (whether by that or by any other name) to act as agents or trustees for oversea governments and administrations by a Minister of the Crown. There is no reference to the fact that they might be acting as agents for a dependent territory. We know that our once-glorious empire has gone and that the "dependent territories" are scattered across the globe.

If it turns out that the Crown Agents were acting as agents for overseas Governments and administrations, I have always understood it to be a great constitutional principle that this House does not on the whole legislate in favour of or to protect foreign administrations. What kind of transactions are we considering? What if it turns out that the money loaned by the Crown Agents is to be loaned by them as agents for the Shahanshah of Iran? If that were so, why should we be protecting him? This would be a matter for him, his advisers and the Crown Agents. It might be a matter of great delicacy and embarrassment to all concerned, but is this Parliament to be asked to protect the Shahanshah? Of course, it might not be him, in which case I apologise. It might be some other foreign sovereign, but should we be protecting people of this kind?

Ministers have told us nothing about these transactions. If the Crown Agents were acting as agents and not as principals, why should we be asked to protect them and their foreign principals?

These are all points of profound constitutional importance involving huge sums of money. It is wrong that we should have to compress the debate in order to allow our hon. Friends to raise a matter of equal importance in a mere 30 or 35 minutes.

Mr. John Grant

It appears that I have quite a lot of time at my disposal, despite the speeches made by Opposition Members, though no doubt some of them may wish to come back later.

We discussed the purpose of the Bill in great detail on Second Reading. I do not want to go over all that detail again and I do not think hon. Members would wish that. We are introducing this legislation to save the taxpayer from the risk of having to pay up to £400 million as a result of a fine point of doubt in the interpretation of the Moneylenders Acts. That is a complete justification.

This is not, as my hon. Friend the Member for Birmingham, Handsworth (Mr. Lee) suggested, a piecemeal exercise. It is complete in itself, though there are other matters to follow, including the White Paper and the committee of inquiry.

Mr. Lee

I was pointing out that it is unsatisfactory to deal with this rescue operation separately and in advance of an unspecified reconstruction of the Crown Agents which the Minister presumably hopes will avoid a fiasco of a similar kind happening again.

Mr. Grant

We dealt with this point very fully on Second Reading. We accept that this is an emergency operation. It is necessary not only to save taxpayers' money but because confidence in the Crown Agents is involved. I thought we had reached agreement across the Floor of the House on this point.

When the loans in question were made, the Crown Agents, as lenders, believed that they were made in good faith and that they would be repaid in good faith. I believe that the borrowers had the same intention. We are establishing the position in law as everybody thought it was at that time.

Some hon. Members have made rather more of this than they need have done. It was suggested that the courts should be left to interpret the law. Courts interpret legislation handed down by Parliament. Sometimes we do not define it with very great clarity, but when Parliament becomes aware of a lack of such clarity it is right that we should clear up the point. After all, we are the legislature. It might be different if there were litigation before the courts. That point has been dealt with and we should be careful about prejudicing any matter which is sub judice.

11.0 p.m.

We are dealing only with the possibility that in the future someone might take this matter before the courts. My right hon. Friend was asked who would benefit if the Bill was not enacted. The answer is that, if what we and the Crown Agents believe to be the law is upheld in any action before the courts, no one would benefit because the loans would be repayable by those who had received them from the Crown Agents, and the Crown Agents' claim on liquidators of certain companies would hold good. If the courts took the contrary view the benefit would go to the property companies, secondary banks and other companies to which the loans were made or to the other creditors of companies in liquidation.

The real worry is not so much that this might happen but that there might be several years of delay while the matter was decided in the courts. During that time the position of the Crown Agents would be worsening because they would be unable to recover either the principal or the interest, which is a necessary part of their income. We are concerned to avoid that uncertainty over the status of the Crown Agents.

I was asked whether the Crown Agents were acting under the direction or supervision of the Secretary of State or his agents for overseas Governments. In a sense, the hon. Member who raised this last point answered his own question. They were acting as agents for overseas Governments. The Bill seeks to protect the interests of the British taxpayer, and there is, of course, involved here the question of overseas confidence.

The hon. Member for Bury St. Edmunds (Mr. Griffiths) asked how things now stood. I cannot add much to what has been said tonight. Under the new board a great deal has been done to restore the position. The financial position is admittedly not very good—I would stress that it arises solely from past activities—and one might say that the chickens are still coming home to roost. Nevertheless the present activities are viable and are not leading the Crown Agents into further financial difficulties.

The hon. Member asked about freedom of action of overseas customers in future. I shall convey that point strongly to my right hon. Friend, who, I am sure, will take note of it. The hon. Member also asked about the date of the White Paper. I believe that my right hon. Friend's phrase was "very shortly", and the hon. Member can assume that to mean quite early in the new year.

I have outlined the reasons for the Bill and for the urgency that we attach to it. I do not think it is necessary to delay this legislation while we wait either for the White Paper on the future of the Crown Agents or for the report of the Fay Committee. We are considering the limited question about the ability of the Crown Agents to recover their loans. What we do about their future is another and much wider question. We want to get these matters right before we publish the White Paper, and we do not want to rush that. It will not be much longer in coming.

Mr. Peter Rees

The Minister said that in the transactions in question the Crown Agents were acting as agents for foreign sovereigns. If that is so, surely it must follow as a point of law that the people at risk are the foreign sovereigns and not the British taxpayer. I fail to understand the Minister's argument.

Mr. Grant

It is fairly clear that there is considerable risk to the taxpayer. The hon. and learned Gentleman seems to have disregarded entirely the whole question of overseas confidence.

Mr. Viggers

May I remind the Minister that the former Minister for Overseas Development said on 18th December 1974 that she and her Government would stand behind the overseas principals, and that it is that which has caused the Government to take this action? It has caused them to stand behind the agency agreement which has been referred to.

Mr. Grant

My right hon. Friend has repeated that assurance. We continue to stand behind the Crown Agents. This has not been a matter at issue between the two sides of the House. The Opposition Front Bench has endorsed our view on that, and both the hon. Member for Bury St. Edmunds and the right hon. Member for Chipping Barnet (Mr. Maudling) have repeated their assurances that they support us on that score.

Mr. Peter Rees

The Parliamentary Secretary's answer is profoundly unsatisfactory. Inadvertently perhaps, he has done the House a gross discourtesy. He has not answered the points which have been put to him. I appreciate that he has probably been imperfectly briefed. I am not certain for how long he has held his present high office, but he has not understood the questions we have asked. These are, I know, points of great legal nicety,

Question accordingly agreed to.

and I speak as a lawyer and, therefore, with a fractional advantage over the hon. Gentleman in this matter, but this is precisely why Law Officers exist, to advise the House on such matters.

The hon. Gentleman has spoken about questions of confidence. He has been answered by my hon. Friend the Member for Gosport (Mr. Viggers). He does not understand the relationship between an agent and a principal, and I do not blame him for that because this is a matter of law, but I suggest that the Government would be better advised to withdraw the Bill and seek the advice of one of the Law Officers.

This is a matter of great difficulty. I do not blame the Parliamentary Secretary for not understanding it, but it is wrong of him to come to the House and attempt to dazzle us with science which he himself does not understand. The proper course is for the Bill to be withdrawn, leaving such time as remains for my hon. Friends to raise the important question of speed limits.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 73, Noes 9.

Division No. 14.] AYES [11.3 p.m.
Armstrong, Ernest Fernyhough, Rt. Hon. E. Rooker, J. W.
Ashton, Joe George, Bruce Rowlands, Ted
Bagier, Gordon A. T. Grant, George (Morpeth) Selby, Harry
Bain, Mrs. Margaret Grant, John (Islington C) Sillars, James
Bennett, Andrew (Stockport N) Hamilton, James (Bothwell) Small, William
Bishop, E. S. Harrison, Walter (Wakefield) Smith, John (N Lanarkshire)
Blenkinsop, Arthur Henderson, Douglas Snape, Peter
Boardman, H. Hunter, Adam Spearing, Nigel
Brown, Hugh D. (Provan) Jackson, Miss Margaret (Lincoln) Stott, Roger
Buchan, Norman John, Brynmor Taylor, Mrs. Ann (Bolton W.)
Buchanan, Richard Judd, Frank Thomas, Ron (Bristol NW)
Callaghan, Jim (Middleton & P) Lambie, David Tinn, James
Carmichael, Neil Leadbitter, Ted Torney, Tom
Cocks, Michael (Bristol S) Lyons, Edward (Bradford W) Urwin, T. W.
Cohen, Stanley McCartney, Hugh Walker, Terry (Kingswood)
Cook, Robin F. (Edin C) McElhone, Frank Ward, Michael
Cox, Thomas (Tooting) McNamara, Kevin Welsh, Andrew
Craigen, J. M. (Maryhill) Madden, Max White, Frank R. (Bury)
Davies, Denzil (Llanelli) Mahon, Simon Wigley, Dafydd
Deakins, Eric Marks, Kenneth Woof, Robert
Dean, Joseph (Leeds West) Maynard, Miss Joan
Dempsey, James Murray, Rt. Hon. Ronald King TELLERS FOR THE AYES:
Duffy, A. E. P. Noble, Mike Mr. James A. Dunn and
Eadie, Alex Ovenden, John Mr. Joseph Harper
Ellis, John (Brigg & Scun) Park, George
Ewing, Harry (Stirling) Roderick, Caerwyn
Beith, A. J. Penhaligon, David
Freud, Clement Smith, Cyril (Rochdale) TELLERS FOR THE NOES:
Johnston, Russell (Inverness) Steel, David (Roxburgh) Mr. Jerry Wiggin and
McCusker, H. Winterton, Nicholas Mr. Robert Boscawen
Paisley, Rev Ian

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

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