COURT LINE LIMITED (Hansard, 30 July 1975)

§ The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore)
With permission, Mr. Speaker, I would like to make a statement. As the House will recall, following the collapse of Court Line I appointed inspectors on 22nd August 1974 under Section 165 of the Companies Act to inquire into all the circumstances relating to the collapse of that firm. Subsequently, following the approach by individual MPs on behalf of their constituents, the Parliamentary Commissioner decided to undertake investigations of allegations of maladministration arising from the statements made by Ministers prior to the firm's collapse. Both these reports were published at 3 o'clock this afternoon and are now available in the Library and the Vote Office.
I would like to take this opportunity of expressing the Government's gratitude to Sir Alan Marre and the inspectors and to pay tribute to the thoroughness of both reports.
Neither report makes any criticism of the decisions taken by the Government in the handling of the issues. Indeed, the reports pay tribute to both officials and Ministers for the speed and sense of responsibility with which they reacted to the situation as it developed.
Both the PCA and the inspectors do, however, criticise in certain respects the statements made to Parliament on 26th June and 1st July by the then Secretary of State for Industry on behalf of the Government. They accept that the statements were made in good faith and reflected the confidence which the Government genuinely felt at the time about the prospects of the business based on a careful assessment of the best information available to it, but they consider that the statements went further than was justified in reassuring the public about 1813 the continuation of the company's operations for the rest of the summer season last year. The Government note and respect the criticisms made in both reports, but the Government considered then, and still believe, that the statements made were right in the difficult circumstances at the time.

§ Mr. Brittan
Shame.

§ Mr. Rost
Arrogance.

§ Mr. Shore
The Government have carefully considered in the light of the reports whether any further measures to assist those affected are called for. This is not a case in which any legal liability arises. The Government's statements were not phrased or intended to give a formal guarantee, and did not do so. Furthermore, the House will recall that the Government decided last September to legislate to compensate those Court Line and other holidaymakers who had a reasonable expectation that they were protected by adequate bonding arrangements but who nevertheless suffered loss as a result of the failure of their tour operator. The Air Travel Reserve Fund Act 1975 has accordingly established a fund to which the Government have offered a £15 million interest-free loan and from which the Court Line and other holidaymakers to whom I have referred are being reimbursed and future holidaymakers will benefit. The Government have, therefore, concluded that no further payment out of public funds would be justified.

§ Mr. Adley
Disgraceful!

§ Mr. Heseltine
Will the Secretary of State understand that we on this side of the House think that it is totally disgrace- 1814 ful for the Government to reject the Ombudsman's report in this way? Will he understand that this report by the Parliamentary Commissioner fully vindicates our request last year for a full inquiry? Will he understand that it fully supports our view that the Secretary of State for Energy misled the House and the wider public at the time of the announcement last year, and that we on this side of the House unreservedly support the Ombudsman's conclusions in paragraph 87 of the report that the statements were liable to leave a misleading impression with the public"? Will the right hon. Gentleman specifically explain whether any Government have ever rejected a report of a Parliamentary Commissioner before? Does he agree that in the circumstances the loan made under the Air Travel Reserve Fund, which must be repaid by future holidaymakers, should now be turned into a grant from the Government, and that the responsibility for that grant must lie at the feet of the Secretary of State for Energy?
When the right hon. Gentleman says that the statement was made in good faith, is he aware that in paragraph 79 of the report it is specifically made clear that the Minister was briefed to take a more cautious view of his civil servants, and that he ignored that advice? Will he understand that what the House needs is not a debate next week, not a statement by him, but an explanation and apology from the Minister responsible, the Secretary of State for Energy?

§ Mr. Shore
The hon. Gentleman's remarks were entirely predictable and once again reflect his over-rapid response to reports which I doubt whether he or other hon. Members have yet had much opportunity to examine.
The hon. Gentleman has made a number of attacks, thinly disguised as questions, on the Government. Very tendentious pieces have been taken from the report. The hon. Gentleman has made points which I believe should rightly be taken up in the debate, which I very much hope we shall be able to hold shortly.
As the hon. Gentleman mentioned my right hon. Friend the Secretary of State for Energy, I can tell him that my right hon. Friend looks forward to an opportunity to speak for himself.

§ Mr. Richard Wainwright
Is the Secretary of State aware that the unanimous and firmly worded criticisms made by the three distinguished inspectors, drawn from different professions, cannot be brushed aside with a perfunctory gesture of respect? Is he also aware that what is said about a debate will be welcomed, because the whole unhappy incident raises yet again the question of the quality of commercial information available to Ministers?

§ Mr. Shore
The hon. Gentleman is on to a very serious point, certainly at the end of his question, when he spoke about the quality of information available to Ministers and what Ministers can and should say in public about that information. That is one of the really serious issues which I hope that we shall debate.
We did not brush aside the conclusions of two reports. What we did, as we had the right to do, was to come to the genuine conclusion, in the face of the obvious difficulties, that we disagreed with the finely balanced judgments reported by the two inspectors. We look forward to an opportunity of explaining exactly why.

§ Mr. Roy Hughes
Does not my right hon. Friend agree that the Opposition's criticism is ill-founded, bearing in mind that the Government's measures were the means of saving many jobs, particularly in Appledore in North Devon, and that the financial compensation to holidaymakers fully justified the public expenditure incurred?

§ Mr. Shore
It is right for my hon. Friend to remind the House of two of the major background features of the whole affair—first, that the Government's main rôle in relation to Court Line was to take measures which would safeguard the jobs of many thousands of shipbuilding workers, and, secondly, that—as I think the whole House will in the end agree—the major problems with Court Line were the problems that arose out of its own financial mismanagement.

§ Mr. Kenneth Lewis
Is it not extraordinary that the Minister should come to the Dispatch Box and treat this report from the Ombudsman in such a way as to make the public believe that it is useless for him to produce any reports? 1816 Would the right hon. Gentleman have accepted the report if it had been favourable to the Government? Will the right hon. Gentleman say whether he believes that the fund ought to have a direct contribution from Government since at present it is being built up by the public for the benefit of the public?

§ Mr. Shore
I entirely repudiate the idea that the report is useless. On the contrary, the whole value of reports of this kind is that the Parliamentary Commissioner is afforded full access to all the documents and all the reports. He gives his best judgment on all the facts. Let me put this point to the hon. Gentleman in return: if the report had been marginally in favour of the Government as it is marginally against them, would that have silenced him and his right hon. and hon. Friends on the Opposition Front Bench? I do not think so for a moment.

§ Mr. John Mendelson
Is my right hon. Friend aware that judging from my correspondence from people directly affected as customers of Court Line, and from conversations with hon. Friends, what people seem to be primarily concerned about is not that this should be a cockpit of political in-fighting but that there should be the right to compensation for losses? Will my right hon. Friend address himself to this problem and give the House the assurance that those who sometimes had saved for a considerable time for their holidays will be fully compensated so that those who approve of the prudent housekeeping shown by the way in which this arrangement will be financed, and their constituents, will be satisfied?

§ Mr. Shore
My hon. Friend will know that the whole purpose of the Act we introduced some months ago was to make sure that holidaymakers, not only with Court Line but with a number of other travel firms that failed in the special circumstances of last summer, received monetary compensation. I am glad to say that that compensation will shortly begin to be paid. In addition, what we have tried to do is to make provision for the future so that if and when such collapses occur again they do not lead to the kind of appalling loss and mess with which we were faced last summer.

§ Mr. Donald Stewart
Leaving for the debate those matters suitable for it and referring to the Ombudsman's report, may I ask the right hon. Gentleman whether he does not believe it to be a serious situation when bodies and people such as the Ombudsman, whom we have come to regard as an independent arbiter, have their reports brushed aside by the Government? Is the right hon. Gentleman aware that we saw this yesterday with the report of the Civil Aviation Authority? Surely it is not beyond the Government to say in an honourable way, "We admit that we made a mistake."

§ Mr. Shore
I repeat that we did not brush aside this criticism. It is right that the House and the Government should have the opportunity to put their side of the story. We shall do that. We have no doubt that the House will then be in a much better position to make a judgment.

§ Mr. Fletcher-Cooke
Does the right hon. Gentleman appreciate that the report of the Parliamentary Commissioner is a report to Parliament not to the Government? Is he aware that it was available to Members only at three o'clock although for the Government it was evidently available much earlier? Does the right hon. Gentleman further appreciate that this is not the first time that the Government have pre-empted the Select Committee on a Parliamentary Commissioner's report before the Select Committee has had an opportunity to consider it? If the Government are to treat reports which they do not like in this way, the whole purpose of the Select Committee will be defeated.

§ Mr. Shore
I understand the difficulties to which the hon. and learned Gentleman refers. We felt that as we were receiving not only a report from the Parliamentary Commissioner but also the report of the inspectors, it was right for us to give our reactions and state our conclusions on them at this time and thus to prepare the way for a debate before the recess overtakes us.

§ Mr. Blenkinsop
Is my right hon. Friend aware that there is overwhelming support for the Government in constituencies such as mine where large numbers of men work in the shipyards affected and where many people were also affected through their holiday plans? Does he 1818 realise that there is overwhelming support for the action taken by the Government to protect people from the effects of the private financial take-over that was the cause of all this trouble?

§ Mr. Shore
I am glad that my hon. Friend has made that point. I said earlier that it is all too easily overlooked in the general discussions that have taken place and the comments that have been made, particularly last summer by the hon. Member for Henley (Mr. Heseltine) and some of his hon. Friends, that the major result following the Government's intervention in Court Line, or the Government's response to Court Line's approach to them, was the saving of thousands of jobs in the shipbuilding industry.

§ Mr. Eldon Griffiths
As the Member who raised this matter with the Ombudsman, may I remind the House of the statement by the present Secretary of State for Energy to me to the effect that he would await the Ombudsman's report with confidence? Is not the position now that the right hon. Gentleman has been found guilty of misrepresentation to this House and to the country, against the advice of his officials, in seeking to strike a posture as the saviour of the holidays? Is it not also the case that he has been shown beyond peradventure to have cost thousands of our fellow citizens their money and their holidays last year? In those circumstances—the Government having accepted a referee in the form of the Ombudsman and having kicked that referee in the teeth—is not the Government's action a disgraceful exhibition of misrepresentation and capricious disregard of the Parliamentary Commissioner's report in which the public at least repose more confidence than do Labour Members?

§ Mr. Shore
The hon. Gentleman has disregarded not only the Parliamentary Commissioner's report but also the report of the inspectors. I do not know on what other basis he can establish the point he has made that my right hon. Friend was guilty of misrepresentation. He is not in the least guilty. The whole judgment of the inspectors and the Parliamentary Commissioner turned upon whether there might have been included a reply to a supplementary question that was not raised. That is the fact of the matter. The significance of that will be debated properly next week.

§ Mr. McElhone
Is it not the case that responsibility for the collapse of this company rests fairly and squarely on the shoulders of the directors of the company? Talking about misrepresentation, is it not the case that the financial and legal advisers of that company and the board misled the Government when they applied for assistance in June 1974? Is is not a fact that if the Secretary of State had not saved the shipyards and the jobs then, this company would have collapsed much earlier?

§ Mr. Shore
My hon. Friend is on a central point. If the Government had not made money available to save the shipbuilding industry, the whole company would have collapsed and it would have collapsed slightly earlier, involving more holidaymakers in loss than was the case when it went down in August.

§ Mr. Whitelaw
Does the right hon. Gentleman appreciate that the Government's attitude to the publication of this report raises serious issues about the relationship between the Government and the reports of the Ombudsman? Does the Minister realise that if the Government try to slide or manoeuvre themselves away from the report, after the Ombudsman has made it, that will raise serious long-term issues? All Ministers—I include myself—from time to time make errors of judgment. To put it at its lowest, the report shows that the Secretary of State for Energy made an error of judgment. When we make errors of judgment, an apology to the House costs nothing. I hope that my remarks will be regarded seriously by the right hon. Gentleman.

§ Mr. Shore
When the right hon. Gentleman has had an opportunity to study both reports he will find that they both emphasise the fact that my right hon. Friend spoke on behalf of and with the authority of the Government. Therefore, there is no point in trying to single out my right hon. Friend for Opposition censure.
We accept that the issue of the relationship between the Government and the reports of the Parliamentary Commissioner is very important. We do not lightly disagree with those reports, but this not an unheard of occurrence in the history of Parliament. Although we must 1820 give due credit and pay proper respect to the reports brought before us, we cannot accept that they are infallible.

§ Mr. Speaker
Order. The House will have an opportunity of debating this matter.

§ Mr. Les Huckfield
On a point of order, Mr. Speaker. I heard the hon. Member for Henley (Mr. Heseltine) say that paragraph 79 of the Parliamentary Commissioner's report referred to the then Secretary of State having deliberately ignored the advice of his civil servants. I have read paragraph 79—

§ Mr. Speaker
Order. This is a matter for argument. It is not a matter for the Chair.

§ Mr. Sedgemore
On a point of order. Mr. Speaker. Is it not customary in the House, apart from calling the old favourites to ask supplementary questions, to allow those with a constituency interest—that includes my hon. Friend the Member for Luton, East (Mr. Clemitson) and myself—to put questions? Is it not disgraceful that that has not been done in this case?

§ Mr. Speaker
If the hon. Member is describing my conduct as disgraceful, he must do so by a motion. There is to be a debate on this matter. I shall consider the prospects for hon. Members in that debate.

§ Mr. Heffer
Further to that point of order, Mr. Speaker, and without entering into the previous discussion, some of us have intimate information about the events of that time. Surely it would be interesting for the House to know that we possess information which may well not be otherwise understood by the House? It is wrong for the House to arrive at a judgment on the basis of exaggerated statements made by the Opposition which can easily be repudiated by the facts of the situation.

§ Mr. Speaker
The Chair is in a difficulty on an occasion such as this. If in the statement it is said that there will be an early opportunity for debate, I must be entitled to bring the proceedings to a close. We have a heavy agenda for today. There is to be a Ten-Minute Bill. 1821 If there had not been the intimation of an early debate I should have allowed the supplementary questions to continue. I must be allowed to exercise my judgment, especially as it is now 3.55 p.m.

§ Mr. Buchan
Further to that point of order, Mr. Speaker—and I do not often raise points of order. It seems to me that my hon. Friend the Member for Nuneaton (Mr. Huckfield) raised an extremely important point which is not, with respect, a question of argument. He challenged an Opposition Front Bench spokesman with having uttered an untruth. Normally that is a matter for withdrawal in the House if the allegation is correct. I believe that the allegation is correct. All of us who have read the paragraph believe the allegation to be correct. I should have hoped that you, Mr. Speaker, might direct the hon. Member for Henley (Mr. Heseltine) to withdraw.

§ Mr. Huckfield
I recognise your difficulties, Mr. Speaker, in this situation. But is the House to have no protection when the hon. Member for Henley (Mr. Heseltine) deliberately and directly misleads the House by saying that certain words are contained in a paragraph of a report, which is before the House, when they do not appear therein?

§ Mr. Heseltine
Further to that point of order, Mr. Speaker. Although I do not want to trespass on your judgment, particularly as there is to be a debate next week. I must point out, however, that my remarks have been called in question. Serious points have been made. Would it be permissible for me to read four lines from the paragraph mentioned so as to clarify my remarks? That will take only a moment. It would explain the matter to hon. Members who may not so far have read the passage. The passage reads: the Department did not think that this had been or could have been absolutely guaranteed. This is clearly borne out in the notes for supplementaries which an official prepared for the Secretary of State and which made it clear that guarantees could not be given … I believe that I was entitled to assume that the Secretary of State for Energy therefore decided consciously to ignore the advice of his officials.

§ Mr. Speaker
These exchanges have made it clear that I was right. This is not a matter for the Chair. It is a matter for argument.

§ Mr. Huckfield
With the greatest of respect, and while I appreciate your difficulties, Mr. Speaker, can the House receive no protection when the hon. Member for Henley deliberately excluded half a sentence from the passage which he quoted?

§ Mr. Speaker
Frequently comments are made whether the remarks of hon. Members opposite are incorrect or inaccurate. Those are matters for debate. The Chair cannot possibly judge immediately whether an hon. Member has gone beyond the limit. I have not read the paragraph. I should have to check what was said from the Official Report. I should have to check on the point of order which was made. This cannot be a matter for ruling by the Chair. It must be a matter for debate—and there will be a debate.

§ Mr. Mendelson
Further to the point of order, Mr. Speaker. This raises the position of Front Bench Members and their relationship to back-bench Members.
The Secretary of State announced that the paper was available only at the moment when he spoke. Many hon. Members have not had time to read it. The hon. Member for Henley (Mr. Heseltine) was therefore under a special obligation to be more than careful in giving an impression of any part of that document.
It is against all honour and tradition for a Front Bench spokesman from either side to give a totally wrong and false impression about a Minister. But having done so, he is obliged to withdraw his statement and to enable that to be subject to debate. But now he must withdraw.

§ Mr. Speaker
Order. The hon. Member is on a slightly different point of order about the time at which hon. Members received a document. If I may say so with respect, it is a pity that all hon. Members did not receive it at the same time. That is not a matter for me. That is an obiter dictum, and I am careful not to make too many of them.
It is wrong to suggest that it is a matter of order when an hon. Member 1823 says of another hon. Member that what he has said is inaccurate, incorrect, ill-judged or a breach of this, that or the other. That is not a matter for the Chair. That is a matter for debate. I must insist on that. I have no power to order any hon. or right hon. Member to withdraw unless he has used unparliamentary language, and I do not think that any unparliamentary language has been used today.

§ Mr. Adley
On a point of order, Mr. Speaker. You have ruled that you have terminated this question time because there is to be a debate next week. May I put it to you that the debate next week will take place upon all the political events surrounding the Court Line affair, and that the statement today is concerned with morality and the moral principles involved—

Mr. Sneaker
Order. We must get on. Dr. Marshall.