§ Order for Second Reading read.
§ 8.8 p.m.
§ The Minister for Overseas Development (Mr. Reg Prentice)
I beg to move, That the Bill be now read a Second time.
I would ask the House to consider this motion in relation to the statement that I made on 16th October, which had the following main purposes—first, to describe the current situation of the Crown Agents, coincidentally with the publication of their accounts; second, to reaffirm what my predecessor had already told the House, that the Government stood firmly behind the Crown Agents; third, also to reiterate the confidence that we feel in the new Board of the Crown Agents under the energetic and enterprising chairmanship of Mr. John Cuckney; fourth, to explain to the House the basis of the future relationship between the Government and the Crown Agents and the future status of the Crown Agents, on which I hope to lay a White Paper before the House within a few weeks.
But, fifth, I want to explain to the House the necessity for the short Bill which is the subject of this debate. Its purpose is to establish that the Moneylenders Acts do not apply and have never applied to loans made by the Crown Agents for overseas Governments and administrations either directly or through companies wholly owned by them.
1140 The Bill involves no public expenditure and does not affect public service manpower. The loans whose status the Bill is designed to clarify were made over the years since 1967, in some cases directly by the Crown Agents and in others through a wholly-owned nominee company.
As I told the House on 16th October, I was informed in August by the Chairman of the Crown Agents that the loans could be contested as irrecoverable and any securities relating to them as unenforceable on the grounds that the Crown Agents were neither licensed moneylenders under the terms of the Moneylenders Acts nor a bank for the purposes of those Acts. It has always been thought that those Acts did not apply to the Crown Agents as servants of the Crown and they have been advised that if this matter were brought before the courts they would have a good defence.
However, if there were a challenge in the courts, for example by the liquidators of companies to which they had lent money, particularly in relation to loans made through the nominee company, the matter might take a long time to resolve. Assuming that a judgment favourable to the Crown Agents were made on one loan, it still might not cover all the other loans. In the meantime the Crown Agents' financial position, which is already a serious position, could be significantly worsened by the withholding of loan payments and interest due, and possibly in other ways.
My predecessor and I have already given an assurance that the Government stand behind the Crown Agents, most of whose activities are carried on directly or indirectly for Governments and other public bodies overseas. The amount of lending that would have to be underwritten by the Exchequer—that is, in the circumstances I have just mentioned—and ultimately by the taxpayer cannot be stated with any precision, but I am advised that it could exceed £400 million, without taking future interest payments on the loans into account.
The main beneficiaries of this would be those property companies, secondary banking companies, and other companies to which the Crown Agents had made loans, or in the case of insolvent companies, their other creditors.
1141 Until the point was raised recently, it was always believed that the Moneylenders Acts did not apply to the Crown Agents. But their position is unique. They were established at a time when the prerogative was more often exercised and their status has never been dealt with in legislation or tested in the courts.
We have, therefore, prepared this Bill to place the position of the Crown Agents and their wholly-owned companies in this limited respect beyond doubt.
As I mentioned a moment ago, I shall be publishing a White Paper shortly to deal with the more general aspects of the status, structure and functions of the Crown Agents with a view to introducing subsequent legislation to confer independent legal personality on the Crown Agents by incorporating them.
§ Mr. Peter Rees (Dover and Deal)
Before the Minister leaves the point of the debts to which the Bill might apply, will he tell the House how many of the debtors to whom this defence might be open are themselves in liquidation, so that obviously people beyond the immediate relationship between the Crown Agents and the debtors are likely to be affected?
§ Mr. Prentice
I cannot give precise details of that. The categories may be difficult to define. I spoke of a figure of over £400 million, which represents a total of a wide variety of situations with varying degrees of risk. I was deliberately putting the highest figure on the total. I shall ask my hon. Friend whether, when he replies, he can give further details on this point.
The legislation that will follow the White Paper will deal with the long-term future. Here we are simply concerned with the current day-to-day activities of the Crown Agents. Until the doubt about their moneylending status is cleared up the Crown Agents may suffer serious loss of income and may be unable to recover capital owing to them—a risk we cannot afford to run.
In submitting this Bill we are not in conflict with the original intention of the Moneylenders Acts, which was to protect individual borrowers against harsh and unconscionable bargains on the part of moneylenders. Licensing and other formalities were introduced to control their operations and to ensure that borrowers 1142 were aware of the terms of the loans. Legislation to repeal the Moneylenders Acts, that is, the Consumer Credit Act 1974, has already been enacted. The present Bill will cease to have effect at the same time as the Moneylenders Acts cease to have effect through Orders to be made to replace them by provisions of the Consumer Credit Act. However, its remedial effect in relation to past loans will continue.
The main aspect of the Bill which may be controversial is its element of retro-activity. But this does not involve overruling cither a decision of a court or a clear legal proposition. Nor is there anything sub judice to be affected. It is not a retrospective provision in the sense that the House so often finds objectionable.
Prior to my statement on 16th October, no legal proceedings had been started to challenge the loans, although a liquidator of a company had questioned the application of the Moneylenders Acts to a loan on behalf of the Crown Agents, but he has neither accepted nor rejected the proof of debt.
§ Mr. George Cunningham (Islington, South and Finsbury)
Will my right hon. Friend say whether that questioning by one liquidator was the trigger that led to the Bill being introduced today?
§ Mr. Prentice
It could be described as the trigger, although the whole situation was one that we have had to look at in relation to this point. This is an area of uncertainty which could be damaging to the Crown Agents over a period of delay during which the matter was before the courts. It would not be right to think of this case as being the only case which would necessitate this legislation.
Some other interested parties have also raised the point in correspondence.
§ Mr. Dennis Skinner (Bolsover)
I was intrigued by my right hon. Friend's reference to the fact that this was not a question of retrospective legislation in the sense that there had been a court judgment which was being reversed, as was the case with some other references that have been made—for instance, one of the oil companies. Is it not a fact that if this legislation is passed, a court will be prevented from making a decision on the matter? In my judgment that would be just as bad.
§ Mr. Prentice
I am sorry that that is my hon. Friend's judgment. It is certainly not mine. The purpose of the Bill is to clarify the law on a point about which there is a possible area of doubt. I have submitted to the House a short Bill to ensure that the intentions of the Moneylenders Acts, as we have always interpreted them, will apply in a way that will avoid the public purse being liable for possibly very heavy sums. I do not understand why my hon. Friend objects to that, but no doubt he will explain why if he catches your eye, Mr. Deputy Speaker.
I do not believe that any of the borrowers in question would have had it in mind at the times the loans were made to avail themselves of the technicality which is the subject of the Bill in order to avoid having to repay what they have borrowed. Indeed, had some borrowers not run into difficulties, the problem facing us now might not have arisen.
I recognise the House's extreme dislike of retrospective legislation. But I do not believe that so small an element of it will find disfavour with hon. Members when they appreciate that the cost of an uncertainty, to repeat my hon. Friend's point, in the application of legislation would be so heavy a contingent liability on the taxpayers of this country.
The Bill has only two clauses. Clause I provides that the Moneylenders Acts shall not apply and shall be deemed never to have applied to loans made by the Crown Agents either directly or through their wholly owned companies. It also declares, in subsection (3), that this exemption shall not prejudice any status, privilege or immunity of the Crown Agents or such a company as servants or agents of the Crown.
As I stated earlier in my speech and in my statement of 16th October, the future status of the Crown Agents will be clarified in the forthcoming White Paper and the legislation that will follow.
Clause 1(1) is framed so as to cover any period when there was only one Crown Agent, when in order to comply with the requirement that a company needs more than one shareholder the other shares in the companies wholly owned by the Crown Agents were held in 1144 trust for them by a member of their staff acting in his official capacity.
Clause 1(2) is more involved than might otherwise have been necessary because the titles of the appointments made to the Crown Agents by successive Ministers have not been identical. As I have already explained, Clause 2(2) is included because legislation to repeal the Moneylenders Acts has already been enacted.
I am convinced that we must clarify without delay a situation which could rapidly increase the potential call on the Exchequer for financial support to the Crown Agents to a degree which I feel sure would be quite unacceptable to the House, and the Government have concluded that only legislation such as this Bill will have the necessary effect.
§ 8.20 p.m.
§ Mr. Eldon Griffiths (Bury St. Edmunds)
The Opposition's attitude to this Bill is that it is a most disagreeable little document—but it has been moved by a very agreeable Minister. We are very glad to see him present tonight. He has had his difficulties recently. I think that presenting the Bill to the House tonight is not the least among them.
I should like to start by making it very plain that the Opposition regard the Crown Agents as one of our great British commercial institutions, and that while the Crown Agents have had their difficulties, and may still have their difficulties, we join with the Government in seeking to maintain public confidence in the Crown Agents, at home and abroad. We go along with the Government in continuing to commend the services of the Crown Agents to any and all overseas clients who wish to do business in this country. I make that very plain at the outset.
I should also say at the beginning that we for our part have a great deal of confidence in the Chairman, Mr. Cuckney, who has been a colleague of mine at the Department of the Environment and with whom I have gone through some difficult times—in the Mersey Dock and Harbour Board legislation and during his period at the PSA. We have much confidence in Mr. Cuckney. I say again that we wish to see confidence maintained in the Crown Agents at home and overseas.
1145 Secondly, we join the right hon. Gentleman in wanting to protect the public purse and the taxpayer from any unintended raids that might arise from a technicality—namely, the technicality that the Crown Agents may not have, or may not have had, the status either of moneylenders or of a bank for the purpose of the Moneylenders Acts. We wish to protect the taxpayer and the public purse against raids that might arise from that unintended technical loophole.
I appreciate that there is no certainty that the Crown Agents would in fact be unable to recover their outstanding loans, and I also appreciate that they might be able to claim exemption from the Moneylenders Acts on the ground that they are Crown servants. But I accept from the right hon. Gentleman that there could be some doubt about this, and in view of the very large sum involved—no less than £405 million, if I am not mistaken—I give general support to the Government's decision to ask the House to do something which is rather painful—namely, to provide a retrospective declaration that the Agents are not and never were at risk on this particular account.
Having said that, I know that the right hon. Gentleman will not be surprised if I say that there are a number of aspects of the Bill and, indeed, the surrounding experience which we have had which are unappealing, and that there are a number of others which are disquieting.
I start with the amounts involved. I wonder whether the Minister who is to reply to the debate would be so kind as to confirm that there are five principal sources of risk. The largest of those is about £200 million, or a little less, to overseas banks and institutions. The second largest is doubtful debts being written down in the 1974 account. The third largest is loans to banks and other institutions in the United Kingdom. The fourth largest is overdrafts of and commitments to overseas principals. The fifth largest is interest received which could have to be repaid if judgment went against the Crown Agents.
I believe I am correct in saying that the totality of these five outstanding areas of risk is of the order of magnitude, as the Minister very fairly said, of £400 million.
1146 I will state the question that I should like to have answered. As far as the right hon. Gentleman can tell, is that the end of the road? Is there any more to come? What is the position, for example, in respect of the Crown Agents' commitments in Australia? Can we be sure, as a House, at least in respect of the legal technicality with which we are dealing tonight—I make no comment on the broader issue of reorganisation that is yet to come—that this is the end of the road, or are there other areas of risk that may yet also have to be dealt with under this particular loophole?
I turn from the problem of the very large sums involved to the question of retrospection, which was very fairly raised by the hon. Member for Bolsover (Mr. Skinner). I go along with the right hon. Gentleman all the way. It is always difficult for the House to accept a measure that is retrospective. But it is not the first time. I think that the most exact parallel was probably the Ship Mortgage Finance Company measure which provided retrospective exemption from the Moneylenders Acts from 1900 to 1922—or so I am advised—and of course, most of us will remember the Burmah Oil affair, though that is quite different from the point with which we are dealing now.
I thought that I understood the Minister to say that he justified the retroactive nature of the Bill on the ground that it was just a very small element—rather like the housemaid's baby; just a little one, so it did not matter very much. Of course, it is not a very small element. A sum of £400 million at risk is by no measure a small element—to use the right hon. Gentleman's phrase. My judgment of the painful necessity of accepting the retrospection here turns not so much on the fact that it it is a small matter as on the question of who may get hurt and whether anyone who had a reasonable and lawful expectation of benefit is to be denied that benefit as a result of the Bill. In other words, who would benefit if the Bill were not passed?
If there were to be a large number of people, I would not find it so easy to accept it, but I rather suspect—I hope that the Minister will confirm this—that in practice there will be remarkably few, if any.
§ Mr. Prentice
Perhaps I may clarify this point. The hon Gentleman said that I had attempted to justify the retroactive change by saying that it was a small matter. My view was that the House would not take so serious a view of the retroactive element in a case such as this, where we are simply clarifying the law along the lines that most legal advisers would say was its meaning already, as against a situation in which we might be overturning a legal judgment.
§ Mr. Griffiths
I accept that what the Minister had in mind was that it was the smallness of the legal shift that he was talking about rather than the sum of money.
§ Mr. Skinner
Notwithstanding our respective stances on matters such as these, does not the hon. Gentleman understand that we are not overturning a court decision? We are laying down instructions. If there had been a challenge, a decision could have been reached in the courts contrary to that which will be the case if the Bill becomes law.
§ Mr. Griffiths
The hon. Gentleman anticipates me, because I was about to put a point of that kind to the Minister. In any event, the hon. Gentleman will appreciate that it is the Minister's Bill, not mine, so I do not feel compelled to answer that point.
§ Mr. Griffiths
My welcome was qualified, to put it mildly, and I have a number of other qualifications to make yet.
I wish to put this precise question to the Minister. Does the Bill cut across any legal proceedings that have already commenced—I think he has dealt with that—or of which notice has been given, or of which the Department may be aware?
§ Mr. Griffiths
I am grateful to the Minister for giving me that precise assurance at this stage. I turn from the question of retrospection, having said plainly that we do not like it, to deal with a third set of doubts. These arise from what can be described only as a lack of information.
On 23rd April last the right hon Gentleman's predecessor as Minister gave the House what I can describe only as a 1148 somewhat bowdlerised account of the report by the chairman. Some of the items which were not included were critical of the Government. The right hon. Lady said at that time that there was to be an independent inquiry into past events which would be carried out by Mr. Justice Fay, Sir Edmund Compton and an accountant. We greatly welcomed that. The right hon. Lady said that a White Paper would be presented dealing with the relationship between the Crown Agents and the Government. We have supported all these actions—the right hon. Lady's request to the chairman for a full report, the establishment of the Fay inquiry, and the promise of a White Paper.
We have not yet had the Fay Report. I understand that these things take time. We have not had a White Paper. Therefore, we do not know tonight, when we are asked to make a judgment on the Bill, what the reasons are which caused things to go wrong at the Crown Agents. We do not have the benefit either of the Fay Report or of the report by the chairman. Nor do we have any indication in the shape of a White Paper of the Government's conclusions or of their future intentions for the reorganisation of the Agents, although I acknowledge that the right hon. Gentleman made a full statement several weeks ago.
I understand that inquiries of this kind and of this complexity take time and that this one is unlikely to be completed before June or July. I am rather concerned that the right hon. Gentleman has not been able to bring forward the White Paper or at least to tell us a little more than he felt able to tell us tonight about the Government's attitude towards reorganisation of the Agents as a whole, because that is very material background against which alone we can judge the Bill.
§ Mr. Prentice
The statement I made on 16th October made it clear that we envisaged for the Crown Agents a relationship with the Government roughly analagous to that of a nationalised industry. The details of that are being worked out and will be published in the White Paper. The House wanted to know the basic decision, and I gave that on 16th October. I hope that the House will agree with me that it is better to wait a few more weeks for the White Paper so 1149 that careful study can be devoted to the details rather than that we should rush it. There is no hurry to know the details now that the basic decision has been announced.
§ Mr. Griffiths
I appreciate what the Minister says, but I think that he himself would have preferred not to have to bring the Bill forward without the White Paper. I think that he would have much preferred, if the financial pressures upon him had not been so great, to have the White Paper and to deal with the Bill then. The Bill is an emergency. That is why we are having the Committee stage next Tuesday. I have an awful feeling—although the official Opposition will not seek in any way to delay the Bill, because we understand what is at stake—that we are to some extent being asked tonight to legislate in the dark and to buy a pig in a poke, because we have not got the full background that a White Paper and the Report of the Fay inquiry can provide and should have provided. The problem is that we have an emergency and we have to deal with it. I understand that, though I very much regret it.
§ Mr. George Cunningham
It is very difficult to control oneself when one recalls the total difficulty that everyone in this House, myself included, encountered in trying to extract the least scrap of information from the Conservative Government about the Crown Agents. They would not even tell us how much they had invested on behalf of this or that territory. For the right hon. Gentleman now to be complaining about the activities of the present Government when they are responsible for first exposing and then putting right what had gone wrong during three and a half years of lack of supervision by the Conservative Government is going too far.
§ Mr. Griffiths
The House may have observed that I was trying to avoid any polemics. I think I am entitled to say tonight that without the surrounding background, we are in a difficulty in making a judgment on this Bill covering a matter of such great importance.
However, I merely make the point, and I move on to what I consider to be a third set of questions to the Minister who, at least, I hope, will take them seriously. We are entitled to ask which are the firms, or it may be the liquidators, 1150 which are inclined to take advantage of a loophole in the law and to refuse to pay back that which they have borrowed and that which the Crown Agents have loaned in good faith to them. Which are these firms? The Minister had a phrase in which he referred to fringe banks and property companies. We are entitled to ask who they are. Against whom is it that the Bill is guarding us? Are there any foreign firms or overseas Governments among them? I believe we are entitled to ask those questions and I hope that we shall have an answer.
We should also ask why it is, under any Government, that the legal advisers to the Crown Agents did not pick up this problem before. One regrets that they did not. Why has it suddenly arisen? I think the hon. Member for Islington, South and Finsbury (Mr. Cunningham) was on to the point. He asked what was the trigger, and the Minister acknowledged fairly that there had been a recent case with which some of us may be familiar which triggered this off. Since we have gone that far, we had better know who or what precisely this trigger was.
What worries me about the whole matter is that there is a curious double-standard. Any private bank which had got into such a jam as a result of a technicality, it may be, would have been required to face the music of full public exposure in detail. The directors concerned would undoubtedly have been named. Some of them might well have been sacked. There would have been little hope for any private bank or agency to have had retrospective protection and even exculpation by virtue of an Act of this House. There is a double standard. I think it is only fair to say that.
Therefore, I put further questions to the right hon. Gentleman and his colleagues. Which of the Crown Agents' companies are covered by the Bill? Does it cover the activities of Millbank Technical Services? Second, against which outstanding loans is the Bill safeguarding the taxpayer against the non-payment of debt? We need a little more precision. To whom were the loans made, for what purpose and on whose advice? It is a question not least of accountability to this House.
Finally, I ask the Minister one technical question relating to Clause 2. I 1151 must tell him that I do not like this clause. In my experience in this House, it is of a most unusual construction. It says:This Act shall cease to have effect…and incidentally ought it not at this stage to say "Bill" and not "Act"? After all, this is the Second Reading of the Bill.
The hon. Member may be right, but I am not sure that he is.
Clause 2 says:This Act shall cease to have effect on the first day on which, by virtue of one or more orders under section 192(4) of the Consumer Credit Act 1974, all of the provisions mentioned in section 1(1) above have been repealed.But an Order under the Consumer Credit Act is subject to parliamentary procedure. We have all been in the hands of drafters of Bills, but what happens if the House rejects such an Order, as it is entitled to do? It is not right to predicate some future action on the assumption that the House will do whatever the Government judges to be wise. That is a most unusual construction and we shall want to come back to it in Committee.
This is a disagreeable Bill, and the Minister's task is not easy. Reluctantly, we feel that we have to support it, but we do so because we wish to protect the public purse and the taxpayer from any liability that was entered into without the willingness or knowledge of the Crown Agents. We also share the Government's desire to underpin public confidence in the Crown Agents at home and overseas.
§ 8.42 p.m.
§ Mr. Dennis Skinner (Bolsover)
The hon. Member for Bury St. Edmunds (Mr. Griffiths) suggested that we should have had a White Paper before the Bill was presented, and I tend to agree with him. I am not sure that there would be anything in the White Paper that we did not know already—a lot of newsprint has been used in reports of this matter—but I tend to suspect the Establishment and maybe there is something we ought to have read first in a White Paper.
1152 I do not expect the Fay Committee to report just yet. I have been pressing the Government for an investigation into a not indistinct matter with which the Leader of the Liberal Party is involved, and that has been going on for a considerable time. I do not expect the Fay Committee to report yet, but no news is good news.
My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) has made the key point in this debate. There is reason to believe—I put it no higher than that—that if he had been able to extract information on these matters from the previous Government, several of the directors involved in this scandal might have been sent hurrying and scurrying about and some aspects of this business with which we are involved today would not be before us now.
It could be argued that it is only a small matter and that this is only a small Bill dealing with a small number of isolated incidents, but a hell of a lot of money is involved. It has been one of the most outrageous of the many scandals in the City in recent years.
Not only has this institution been involved in speculation, competing with many other murky organisations in the same activity, but the people who were behind it in Crown Agents were doing so in such a way that it now appears that they were breaking the law. In the Bill we are seeking to prevent the courts from making a judgment on this matter in respect of any of those people, whether it be Mr. Kenneth Cork of the Stern group or those in the other companies involved whose behaviour could well have resulted in a court case. Dress it up how one may, that is the size of the situation. When Mr. Cork, on behalf of the Stern group, decided to make a few noises about this issue, when the deeds of arrangement were being pushed through on behalf of William Stern, that could have led, had this Bill not been introduced, to a court decision that those involved in this exercise had broken the law because they changed the character of the servicing facilities of the Crown Agents.
As I see it, the Crown Agents were responsible for servicing territories abroad on the basis of facilities which could be developed in this country on 1153 behalf of institutions operating within the old Empire. The Crown Agents took advantage of the property boom during the period of the last Tory Government and turned into speculators. The secondary banks were making fortunes at that time and the Crown Agents directors decided to do the same. They changed their character, their rôle and their responsibilities. They invested in what my hon. Friend the Member for Islington, South and Finsbury described as slum empires, many of them in London.
One of my hon. Friends who is on the Front Bench and who comes from Hackney reminded me today that the Crown Agents invested in many of these properties in and around his constituency. I believe that the people concerned should pay the full penalty for their activities at that time.
§ The Under-Secretary of State for Trade (Mr. Clinton Davis)
I had no discussion with my hon. Friend on this topic today, and I am the only Member on the Front Bench to represent a Hackney constituency.
§ Mr. Skinner
Indeed, it was my hon. Friend the Member for Tooting (Mr. Cox) to whom I was referring. He told me that some of these investments took place in his constituency. As we all know, quite apart from the speculation in property empires, slum landlordism and the investment overseas, the net result, following the fall in property shares and the world recession, was that the Crown Agents got their fingers burnt.
One of the commentators on this matter at the time said that the Crown Agents were the softest touch in the City. Any cheapjack organisation which wanted money during the period of the last Conservative Government would simply go along to the Crown Agents, who would provide it. At that time the amount of money the Crown Agents were handling had escalated considerably.
That growing amount of money was there to be exploited, and along came London and County, with which the 1154 Leader of the Liberal Party was involved, and the London Capital group. We all know what has happened to that company, the company of my right hon. Friend the Member for Walsall, North (Mr. Stonehouse). The Crown Agents were described in the Investors Chronicle as the softest touch in the City. They were using money supplied to this country to provide services of one kind or another, and they were engaged in speculation of the shabbiest possible sort.
Now we are rescuing those people. I naturally find it more than a little galling when I compare what is happening under the Bill with the situation developing in the town where I live, where my brothers and nine colleagues are being dragged through the bankruptcy court because our Government refuse to introduce retrospective legislation to remove surcharges, other penalties and disqualifications arising from the desire of my brothers and their colleagues to carry out the Labour Party programme as envisaged at the 1972 Labour Party conference. That is why I feel even more strongly about the matter than perhaps my hon. Friend the Member for Islington, South and Finsbury does.
As I am not against retrospective legislation per se, I must examine the consequences of passing the Bill. My right hon. Friend the Minister is correct in saying that if we do not pass it, the taxpayer will lose a certain amount of money. He is right to say that there will be some money at stake, but I think that he will agree that it is not very much, or that the prospect is that there will not be much. For example, one cannot expect the Stern group to deliver many of its millions of pounds. One cannot expect London and County or the Stonehouse bank to deliver anything. But I am told that there are some investments which could result in a return of some kind.
Therefore, I tell my hon. Friends who think as I do on these matters that they must consider the subject of retrospective legislation together with their desire to help the taxpayer. We all know who the taxpayer is. It is not companies such as those involved, because they can provide themselves with chartered accountants who can avoid the major excesses of taxation. By and large, those who contribute the taxation are those who 1155 have to work by hand and brain for a living.
I know that my story is not the same as that told by my right hon. Friend and the hon. Member for Bury St. Edmunds. I may have coloured it in a different way, but I have told it as I see it. Here was a firm of brokers, no more and no less, which was able to go gladly on its way doing as it liked, partly as a result of the fact that we had a Tory Government and we were unable to extract information. These brokers were saying "To hell with the law. We shall carry on and make money." They did so in the knowledge that, so they thought, the property boom and everything associated with it would last for ever.
What we are now witnessing is a further de-escalation of that. It is a tragedy that my right hon. Friends—not necessarily the Minister present tonight, but all of them collectively—are propping up the system once again, giving it a fresh tank of oxygen so that it can breathe a little longer. That is what this is all about. It is part of the excesses of the system within which we live, a part that is right out of the sewer.
Some parts of the capitalist system can be held up and be shown to be in bright, starry colours. Other parts, the worst excesses, will be found beneath the benches, underneath the stones. That is what this Bill is. It is one of the worst excesses, the most ugly of the faces of capitalism. It should not have been an exercise like this at all. It should have been one in which people merely used the money to provide services. That is what makes it ever worse.
I am not attacking my right hon. Friend. I understand that he inherited this job. There have been a lot of stories about how he got it, but he is there. It is not at that level that I make my comments. My references are related to the analogous matters I raised when the Bill was introduced a few weeks ago. I hope to be able to say a few more things in Committee. We shall be constantly faced with this situation. I say to my hon. Friends that if we have to make a decision, we must make it in the knowledge that we cannot be fundamentally against retrospective legislation.
1156 If we want to change society—not as in this Bill—there will have to be many occasions when, if we are to make much progress, we shall have to introduce a lot of retrospective legislation, as we should have done in connection with the Housing Finance Act. This business has been a long tragedy and scandal. Some of those who have left as directors of companies have suddenly appeared as directors of investing companies—a quite amazing spectacle.
I hope that the White Paper clears up some of the doubts. I also hope that those who have been involved will be brought to justice for the way in which they have handled this matter. I trust that we shall be able to examine this in greater detail in Committee. Despite all the outrage and scandal, we are still faced with deciding whether we should accept retrospective legislation in the knowledge that we may be able to recoup some money for the taxpayer.
§ 8.57 p.m.
§ Mr. Peter Viggers (Gosport)
It is so easy to criticise the Crown Agents although not so easy to do it with the eloquence and individual manner of the hon. Member for Bolsover (Mr. Skinner). I do not know whether he was speaking for the Government—
§ Mr. Viggers
—when he said that it was the intention of himself and his right hon. and hon. Friends to tear up the rule book. I was worried by his cavalier references to retrospective legislation. I am sure that they will have been noted in the country.
The Press and politicians have tended to concentrate on the more dramatic side of the fall in the value of the Crown Agents' investments over the past year or so. The Crown Agents are a unique organisation. Last year they purchased goods worth £157 million for their overseas clients, placing three-quarters of this business in the United Kingdom. They manage nearly £1,000 million for overseas Governments and institutions and provide purchasing services for nearly 100 overseas Governments.
It would not have been out of order, it might even have been expected, for the Minister in introducing this Bill to 1157 pay passing tribute to the important work done by the Crown Agents. I am happy to associate myself with the remarks made by my right hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths). The goods ordered through the Crown Agents in the United Kingdom provide employment here. The funds they manage are an important part of the complex financial structure that makes up the City of London.
It would be quite wrong to allow this debate to pass without further tribute being paid to the importance of the work of the Crown Agents and of the skill and expertise of the staff. The respect in which they are held is evidenced by the growth in the use which overseas institutions make of the Crown Agents, and that is important from the country's point of view.
The Crown Agents have been heavily criticised for investing in property situations. If the Almighty had wished us to have the benefit of hindsight, he would have placed our eyes in a different part of our anatomy. Only one person present is entitled to say that he had the benefit of foresight, and that is the hon. Member for Islington, South and Finsbury (Mr. Cunningham). One notes the perspicacious comments which he made and the Questions which he tabled many years ago. If what he said then had been followed, it would have been of great value to the Crown Agents and to the country. If I may say without appearing to be patronising, it is only right that tribute should be paid to him.
Property investments were made by the Crown Agents on a large scale, and history has shown that loans and investments were made in speculative operations. However, at the time of the loans property was widely accepted as being a sound investment, substantially backed by tangible assets—that was what distinguished property as an investment from manufacturing industry—and it was thought that it provided potential exciting capital appreciation. This is why one can, with the benefit of hindsight, believe that an investment in property was not the speculative investment which other investments might have been.
Anyone who seeks to criticise the Crown Agents' investments in property should ponder whether the Crown Agents should instead have invested in 1158 manufacturing industry—perhaps in Rolls-Royce or British Leyland.
Out of interest, I looked at the comparative figures of the Financial Times index on 24th November 1972 and 24th November 1975, being roughly comparable figures over three years. It fell from approximately 500 to approximately 374—a depreciation of 25 per cent. The Financial Times all-shares index fell by 27 per cent. The property sector fell from 302 to 166, a depreciation of 45 per cent., but the electronics sector and other sectors fell more. The electronics sector, in which I am particularly interested, fell from 246 to 128—a depreciation of 48 per cent.
It is not fair for anyone, with the exception I have indicated, to say that the Crown Agents were unduly foolish in their investment policies. It is not fair to mount too heavy an attack on them.
I turn to the specific point raised by the Bill. The Crown Agents have a vague constitutional and legal position which has never been properly clarified. Their position vis-à-vis the Moneylenders Acts is uncertain. The proposal in the Bill is that the Moneylenders Acts shall not apply, and shall never have applied, to the Crown Agents. Nobody knows at present whether the Moneylenders Acts apply.
The Crown Agents have made many investments and loans over a number of years. The loans were made on a commercial basis between freely contracting parties. Neither the Crown Agents nor the people with whom they were dealing were under any constraint or compulsion. The loan arrangements were intended to be legally binding contracts. One of the loans was of £45 million to the property companies of Mr. Stern. The companies have not prospered and a liquidator has been appointed—a particularly capable and perspicacious accountant, Mr. Kenneth Cork of Cork Gully. I understand that he has questioned the status of the Crown Agents, with particular reference to the Moneylenders Acts. If it should be held that the Crown Agents are subject to those Acts, the loans to Stern could be illegal and therefore void and irrecoverable.
The point made by the liquidator is fair and valid. This is an issue which 1159 should properly be settled by the courts. That is what the courts are for. The Government have intervened because they have involuntarily become involved with the Crown Agents. On 18th December 1974 the then Minister for Overseas Development, the right hon. Lady the Member for Lanark (Mrs. Hart), quite rightly gave the Government's unequivocal backing to the Crown Agents. That means that if the Crown Agents should suffer further loss the Government must foot the Bill. If the courts decide that the Crown Agents were acting illegally and the Stern loan and the other loans are irrecoverable, the Government must make up the deficiency.
The Government are therefore interested in this legal question. But this raises a point of the deepest constitutional significance. The Crown Agents were acting freely when they entered into the contractual relationship. How can the House now seek to change the position of one of the contracting parties and thus cause loss to the other party?
I am deeply worried by the retrospective nature of this proposed legislation. Retrospective legislation should always be the subject of the most assiduous and suspicious scrutiny. But here we have a shabby little Bill shuffling through its Second Reading on a quiet Thursday night. It is for the courts to decide the issue of the applicability of the Moneylenders Acts to the Crown Agents.
In fact, The Times recently referred to the question, saying:Had the matter been brought before the courts it might have involved a lengthy legal battle. The present Bill—largely a formality—puts the matter beyond any doubt.I do not think this Bill is a formality, even though I express no sympathy or support for the general position of the Stern group, or any of the other companies concerned with the Crown Agents, or any of the other people who may benefit if this Bill is not passed.
It may be argued that logic, common sense and the public interest all require the Bill to become law because it will save the British people £400 million. The amount in question is very large and the arguments are powerful. But hard cases make bad law, and I do not believe that we should arbitrarily introduce retro- 1160 spective legislation yet again. It has been done before by this Government. There ought to be other ways of approaching the problem. While I shall not vote against the Bill, I cannot support it.
§ 9.7 p.m.
§ Mr. George Cunningham (Islington, South and Finsbury)
I am grateful to the hon. Member for Gosport (Mr. Viggers) for his kind remarks about my involvement in this matter over the last few years. I take this opportunity to say that my interest was not self-stimulated entirely, although I had had a bit to do with the Crown Agents in my previous professions.
I was moved to take an interest by several journalists who had, before anyone in this House took an interest, written questioning articles in the newspapers. I am thinking particularly of Charles Raw, then writing in The Guardian, in 1970 or 1971, a fine exposé of questions to be asked. I and my right hon. Friend the Member for Lanark (Mrs. Hart) were at that time also the recipients of representations from people in various institutions who felt that there were questions to be asked which ought to be pursued within the House of Commons.
I think that the hon. Gentleman was right to pay tribute to the invaluable work done by the Crown Agents in their traditional rôle as a purchasing agency in this country for any overseas Government or administration which wished to use them in that rôle. That was the rôle in which they earned their high reputation over 100 years and more until this business arose.
I do not think that their reputation in that rôle has been damaged at all by the fact that they have made an almighty botch of their involvement in the financial side. I know for a fact that some Western countries have been interested in the possible use of an agency like the Crown Agents as something associated with their aid programmes to developing countries, and that at that time they looked to the Crown Agents as a model to imitate in their own countries. They have been rather put off by what has happened in the last few years.
One difficulty in talking of the Crown Agents is that one has to distinguish 1161 between the old and the new. One wants to give the old Crown Agents—except in their traditional rôle—a very severe panning. But the new Crown Agents, the reformed Crown Agents, the controlled Crown Agents—self-controlled and controlled by the Ministry of Overseas Development—are a quite different institution under the same name. Therefore, one ought to distinguish between the old and the new institution. I have no criticism whatever of the activities of the new institution, but I think that hardly any criticism is too strong for the irresponsibility of the activities of the old institution in the financial sector.
The hon. Member for Gosport argued that there was nothing wrong at the time in placing speculative investment in property, that the Crown Agents made tremendous profits up till 1973 or so from those investments, and that they had a lot of that profit to lose before they started eating into the reserves that they did not possess. But what was really serious about their investment in property was the kind of property company with which they got involved.
I think, for example, of First National Finance Corporation, which then passed on some of that money to small fly-by-night companies whose names would not be recognised except, perhaps, in an area like my own where they brought misery to many thousands of tenants by winkling them out. The empire—the family—of small fly-by-night property companies in my area was centred on a company called Redsprings, which obtained money from First National Finance Corporation, which in turn obtained a large part of its loan money from the Crown Agents.
It was the involvement of the Crown Agents in that kind of property activity which was so reprehensible. They could have gone into not only safer but more respectable property than that, even if they were going into property.
The hon. Member for Gosport objected to passing what he called "retrospective legislation". It is important to distinguish between a declaratory Bill, which is what this is, and retrospective legislation proper. In the case of retrospective legislation proper, we make something an offence which definitely was not an offence before. In those circumstances, a person has acted on a certain assump- 1162 tion about what he thought was the law, and then we change it—
§ Mr. Cunningham
It is a perfect argument, and it distinguishes this situation completely from what my hon. Friend the Member for Bolsover (Mr. Skinner) wants the Government to do in respect of Clay Cross.
We are doing tonight roughly what we did three or four years ago in respect of the search of vehicles in Northern Ireland. There, as a result of a court decision—and in that case there had been a court decision which we were trying to undo—we were obliged to declare that the law was what it had always been understood to be. We did that by means of a declaratory Act. So I do not regard this as retrospective legislation of a reprehensible kind.
My capacity for surprise is diminished by long service in this House. Even so, the speech of the hon. Member for Bury St. Edmunds (Mr. Griffiths) takes the biscuit. He asked what the Crown Agents were getting involved with and lending their money to, as if the Conservative Party had no knowledge of what had been going on with the Crown Agents over the years. It was the Conservative Minister for Overseas Development who not only saw nothing wrong in the Crown Agents putting money into enterprises like First National Finance Corporation, but, on his specific authority, permitted the financial director of the Crown Agents to resign from that position and the next day, I think, to take up a position as Deputy Chairman of First National Finance Corporation, in which over the previous five years or so the Crown Agents had been investing—I speak from memory—to the tune of about £8 million.
The Chairman of the Crown Agents at that time cannot be blamed. He should not have put the suggestion to the then Minister. But he did. Therefore, the Minister took responsibility for permitting that to happen. He might not have been able to prevent it, because the man could have resigned and taken the job and ignored the provisions of Estacode. The point is that the Minister, in effect, let him do it with his blessing.
The Conservative Party has a great deal to answer for in neglecting pressure from newspapers and hon. Members over 1163 the years to look more fully into what the Crown Agents were up to, their relationship with the Government, and particularly the frequently posed question of who pays if they go broke. That question was posed by Charles Raw in his articles in The Guardian many years ago.
The hon. Member for Bury St. Edmunds suggested that if a private institution found itself in this situation, the House of Commons would not come along with a declaratory Bill to get it out of difficulty. I do not think that is so. If we discovered tomorrow that, as a result of a doubt about a provision in the law which no one had anticipated, the clearing banks were unable to recover their overdrafts from customers, does the hon. Gentleman suggest that the Government would sit by and not introduce legislation to correct the situation? If we discovered that the building societies could not recover the loans that they had made, would we stand by and say "You knew the law. If not, it is your fault for not doing anything about it"? Of course not. We would take the action that we are now taking concerning public institutions. Therefore, that point is not well founded.
The hon. Member for Bury St. Edmunds screws up his face as if to disagree. I question whether he would say that, if either of those events occurred, we would not come along with a declaratory Bill to put the position right. We are not doing it because this institution's losses would have to be borne out of the public purse.
The hon. Gentleman posed one question which I also was minded to ask concerning the effect of the Bill on any actions which might be taken outside our jurisdiction. The Crown Agents have had considerable activities in Australia, probably in Singapore, and elsewhere. If the Crown Agents had to take any action outside the English jurisdiction—for example, in Austraila or Singapore—would they be able to rely upon the Bill against objections raised in another jurisdiction? I hope that the Minister will be able to answer that question when he replies to the debate.
Am I right in thinking that the £400 million, the right to recovery of which we are at least notionally safeguarding 1164 by the Bill, constitutes almost half of the investment funds which the Crown Agents have had in their hands during the last two or three years? The figure frequently quoted was £900 million—just short of £1 billion. If £400 million is at risk if the Bill is not passed, we are talking of approximately 40 per cent. of the investment funds which were in the Crown Agents' hands.
The Crown Agents' status has been vague for a very long time, but the House of Commons has from time to time—too infrequently—gently poked its nose into the matter. There was a report in 1909 by a committee—not a House of Commons Committee, strictly speaking—on which some hon. Members served. If some of the conclusions and recommendations of that committee had been more robustly followed up, we might not be in this situation now.
I want to draw one lesson from what has occurred. Blame attaches to those who were in charge of the Crown Agents during this period. Blame attaches to Governments—it is Governments—who over the years could have done something, because they appointed the Crown Agents and had all the legal powers necessary to intervene if they wanted to do so.
When a botch of this magnitude occurs in an institution for which, in the end, the House is responsible, the blame lies with the House. If the House had organised itself properly, with a proper committee system, over the years it would have monitored the activities of an organisation such as the Crown Agents and, by questioning, exposed the position long before it was brought to light.
In the end, with great difficulty, it was possible to persuade the Select Committee on Overseas Development to take time off from its academic studies of rural development, and so on, to investigate this institution, and we spent two sittings investigating it. The evidence that we took on those two occasions has never been made public, and a few months later, I am sorry to say, the Select Committee decided that because the Government, acting through my right hon. Friend the Member for Lanark, were making governmental investigations, the House of Commons Committee ought to suspend its activities of investigation.
1165 I regard that as a serious reflection on the will of the House of Commons to do the job that only it can do. Too many of our Committtees see themselves as doing quasi-academic jobs which would probably be better done by academics, and not doing the job which only a House: of Commons Committee can do—summoning witnesses, making them answer questions, bringing secret matters to public notice, or at least to the notice of a Committee of this House, if necessary behind closed doors, and so on.
I remember the occasion on which the Chairman of the Crown Agents, having been hauled before that Committee, refused to answer a question. Imagine what would happen before a Congressional committee if the chairman of an institution such as that refused to answer a question! There would be a motion before the House and he would be at the Bar of the House in no time at all. What happened here? The matter was glossed over. It was regarded as something about which we should not make too much of a fuss.
If the House of Commons does not do its job of carrying out investigations, we cannot but expect scandals of this kind to occur, so when blame is being distributed among the Crown Agents and successive Governments since 1967, which is when the financial activities principally began, I do not think that the House of Commons can entirely escape responsibility.
§ 9.23 p.m.
§ Mr. Peter Rees (Dover and Deal)
The hon. Member for Islington, South and Finsbury (Mr. Cunningham) raised many points of great and general interest. Whether, with respect to you, Mr. Deputy Speaker, and the hon. Gentleman, they are entirely relevant to the Bill is perhaps open to question. None the less, they are points that are worth taking up.
When the hon. Gentleman, with his customary lucidity, was analysing the transactions of the Crown Agents he evoked some sympathy from me, although I thought that my hon. Friend the Member for Gosport (Mr. Viggers) analysed those transactions with a little more perception and sense of the commercial realities of what has happened. When the hon. Gentleman went on to try to apportion blame, I felt that perhaps he 1166 went a little wide. I do not think that the purpose of this debate is to conduct a post mortem into the affairs of the Crown Agents. There may be occasions for that, but I doubt whether this is one of them.
No doubt the hon. Member for Bolsover (Mr. Skinner) would love to rake over these matters. He has a well-known propensity for raking over muck and, if I may say so, a little bit occasionally sticks to his fingers.
§ Mr. Skinner
Will the hon. and learned Gentleman explain precisely what he meant by that last remark? Unlike him, I have no business interests whatsoever.
§ That is a different question.
§ Mr. Deputy Speaker (Mr. Oscar Murton)
Order. The hon. and learned Member must avoid personalities.
§ Mr. Rees
This again shows the difficulties into which we are being led by the interesting points that the hon. Gentleman raised, but I doubt whether a Select Committee, however constituted and equipped, would have been able adequately to supervise the activities of the Crown Agents. If it were, I doubt whether it would be possible for the Crown Agents or any other governmental agency or nationalised industry to conduct a sensible commercial policy.
We certainly have a rôle to play, but I doubt whether it is to monitor or check the commercial judgments of those whom 1167 Governments of the day entrust with responsibility for governmental agencies. But these are interesting points and perhaps on another occasion it may be possible to develop them in greater depth.
However moderately the right hon. Gentleman introduced the Bill and however persuasively he argued its merits—and he was both moderate and persuasive—like my hon. Friend the Member for Gosport I nevertheless find the Bill extraordinary, shameless and shabby. I also find it rather grotesque that the ugly and unacceptable face of local government, as represented by the hon. Member for Bolsover, should reprove the ugly and unacceptable face of capitalism as represented by his right hon. Friend, but there are always curiosities in our debates.
§ Mr. Skinner
It so happens that I do not adopt double standards in this place. I am prepared to acknowledge that when I advocate retrospective legislation because I believe that it is in the best political interests of myself and my party to do so, I do not run away from that advocacy of retrospective legislation if it happens that I do not like, exactly as much, the contents of that legislation. I understand the general purposes here. All that concerns me is that those who were responsible for this outrage are brought to book.
§ Mr. Rees
I have said hard things about the hon. Gentleman and he has said hard things about me, but I would never accuse him of running away from anything. Let me pay him that tribute unreservedly.
But the hon. Gentleman has said, with perfect frankness, on this as on other occasions, that there are no constitutional principles which concern him. He is concerned to achieve his particular economic, political and social objectives by whatever instruments come to hand. That is a point of view that I find singularly unattractive, although on one or two of the points made by him to-night—not many, but one or two—I am in sympathy with him. Particularly was I delighted and surprised to hear his observations on the true rôle of the courts. Perhaps he and I may find ourselves for once in agreement on one or two points of debate.
At first sight, the Bill appears technical and of limited interest, but, as many hon.
1168 Members have pointed out, in fact it goes a good deal wider than that. A constitutional principle of some importance is involved. The Bill, not only prospectively but retrospectively, alters the legal relationships between not only the Crown Agents but the Crown Agents' subsidiaries and those who have done business with them.
The right hon. Gentleman will, I hope, forgive me if I say that it was a little disingenous of him to say that the Bill is designed purely to clarify. The hon. Member for Islington, South and Finsbury, with a slightly Jesuitical argument, attempted to develop the theme that there was some difference between a declaratory Bill and a Bill with retrospective effect. This Bill retrospectively alters the legal relationships between the Crown Agents and those who have done business with the Crown Agents.
We have heard it described as a declaratory or clarificatory Bill. It is not the first time that I have heard Government spokesmen describe and justify a retrospective measure in those terms. We battled long in this Chamber over a so-called declaratory and clarificatory measure to alter the effects of a judgment of the High Court in relation to VAT, which then, by the chance of litigation, was subsequently reversed by the House of Lords. That demonstrated that we were quite right to defeat that measure.
Like my hon. Friend the Member for Gosport and the hon. Member for Bolsover, I believe that it is the rôle of the courts to clarify and declare. The Minister was wrong to suggest that any question of confidence in the Crown Agents is involved. The Government have said that they stand behind the Crown Agents and will indemnify them. Therefore, whatever the outcome of any litigation—and we accept that no litigation has yet been undertaken—it could not shake the confidence of those who might be contemplating business with the Crown Agents because the solid—if the right hon. Gentleman will allow me to use that word—the massively confident figure of the right hon. Gentleman stands four-square behind the Crown Agents. What more could anyone ask than that? His credit is behind them. There is no question of credit or confidence being involved. The Bill is purely to save a possible charge on the taxpayers of this country.
1169 I know—and to do him justice the right hon. Gentleman did not make a great point of this—that a defence under the Moneylenders Acts is unattractive. However, these questions should be decided—and perhaps even the hon. Member for Bolsover will agree this—as questions of general principle and not decided on one specific case. If the right hon. Gentleman believes that the time has come to clarify the whole question of moneylending transactions and if this has not been done in the consumer credit legislation, by all means let him or his right hon. and hon. Friends bring forward a general measure, but do not let us have this one, squalid little Bill to clear up one murky corner of the law.
If I may correct my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), this is not a loophole in the law but is something that has been recognised for many years and has been accepted because there are certain social and economic considerations to be taken into account when judging these matters.
§ Mr. George Cunningham
Is the hon. and learned Gentleman suggesting that the institutions which borrowed the money in fact borrowed it in the belief that they would not have to repay it?
§ Mr. Rees
Of course I am not saying that; far from it. It is not for me to look into the minds of those who borrowed. I do not even know precisely who they are. We have heard that they include the Stern group of companies. The Minister has been unable to tell us, though perhaps his hon. Friend the Parliamentary Secretary will be able to.
I have said all along that it is an unattractive defence, but it has been accepted over the years and centuries that this kind of defence should be available to people because there is another, general principle, namely, that some people should be protected from the consequences of their own acts. That is the theme which underlies the Moneylenders Acts. All hon. Members may feel that the time has come for a review of that whole area of law. We must not clear it up piecemeal in relation to a series of transactions involving just the Crown Agents and their subsidiary companies.
The Bill, if enacted, will not just affect the position of the Crown Agents, their subsidiary companies and those who do 1170 business with them, but it may also affect the creditors of those who have done business with the Crown Agents and their subsidiaries. Their moral position may be very different from that of those who did business directly with the Crown Agents.
As the right hon. Gentleman said, the point was first taken by the liquidator of one of the companies. In other words, therefore, it is not true that the Bill is of narrow effect and that it encompasses only a few people who have had transactions with a few Government Agents. The ripples may well spread outward. The Parliamentary Secretary would do a service to the House if he were to consider this aspect in winding up the debate. There may be many more involved than just the Stern group of companies. There may be a whole range of people who have done business with them and whose credit may be affected if the Bill goes through.
If there is any doubt in this difficult field of law—I recognise the obscurity—let us leave the courts to determine it. Indeed, this as I understood it, was the tenor of one of the points made by the hon. Member for Bolsover. I am very happy, across our mutual differences, to find common ground there. Perhaps the right hon. Gentleman might pause to think that if such disparate characters as myself and the hon. Member for Bolsover find common ground, just possibly there might be something in the criticisms that we are levelling at the Bill.
That is always a possibility. It is for the House and ultimately for the country to decide. However, as I understood the Member for Islington, South and Finsbury, he, too, had his reservations about the Bill, although perhaps he approached the problems from a slightly different angle from myself.
There are all too many precedents for retrospective legislation. I can recall that distinguished figure, the noble Lord, the Lord Chancellor, in debates under the previous administration referring, as he said, "with a blush" to legislation which sought to overrule the decision of the House of Lords in the Burmah Oil case. It may be that this Bill does not go quite as far as that because there is as yet no decision of the courts in favour 1171 of those who seek to resist the claims of the Crown Agents and their subsidiaries.
None the less, however, this is a short, squalid little Bill and it is, I believe, the product of those who believe that the Government and Government Agents must be protected at all costs. I happen to believe that that protection can sometimes be bought at too great a price. It is no part of the duty of this House to protect Governments or Government Agents from the consequences of their lack of judgment.
§ 9.38 p.m.
§ Mr. J. W. Rooker (Birmingham, Perry Barr)
I shall not detain the House for long, as I have only one point to make. Perhaps my hon. Friend the Parliamentary Secretary will allude to it.
As a relatively new Member, I have found this to be an interesting debate. The dilemma that faces us concerns £400 million of taxpayers' money. I would be the last person to want to oppose this measure for that reason. On the other hand, the point made by my hon. Friend the Member for Bolsover (Mr. Skinner) and the hon. and learned Member for Dover and Deal (Mr. Rees) is worthy of consideration. So far as I am aware, it is not the function of this place to interpret Acts. During the last three or four weeks, the Economist has been running a very interesting series on the British constitution, including the powers of this place and of the courts and the interchange between the two.
In opening the debate, my right hon. Friend the Minister said that the third line of Clause 1, the retrospective part,and shall be deemed never to have appliedwas not retrospection in the normal sense but stated what everyone had always understood the situation to be. There have been cases in the past when that has been the situation. One example was the Trade Disputes Act 1906, which was on the statute book for 60 years. Everyone thought that he knew the interpretation in various situations. Then in 1964 we were faced with the Rookes v. Barnard case. That involved a decision of the court which was then amended subsequently by the House.
That was a case in which an Act had been on the statute book and everyone 1172 assumed that he knew the interpretation of it, as in the situation we face tonight. The normal course of events was allowed to take place, in that the courts made the interpretation.
I would not argue that the sort of action we are taking tonight in retrospective legislation only strengthens the hand of those who seek to impose on this place a Bill of Rights and a constitutional code which would make this place less flexible. Obviously we must be flexible. This is a good example, where taxpayers' money is at stake. We have to weigh the dilemma with which we are faced.
I as a non-lawyer and a relatively new Member am not happy about the way in which the Bill can receive its Second Reading this week and come up for its Committee stage next week. Every Thursday afternoon at business questions my right hon. Friend the Lord President of the Council is asked to provide time for the consideration of various important measures. But here is one example of the House being able to act when it wants to act. Why must it always be on legislation such as this?
§ 9.40 p.m.
§ The Parliamentary Secretary to the Ministry for Overseas Development (Mr. John Grant)
Although this has been a short debate, a large number of points have arisen. I shall do my best to answer at any rate most of them, although some of them would perhaps be better raised at the Fay inquiry, and it may be necessary for others to be raised in Committee.
In our recent debate on overseas aid, I was critical of some of the newspaper coverage of the subject. I referred particularly scathingly to the Daily Telegraph. In respect of this legislation, I should like to redress the balance somewhat. I quote from an article by Mr. Kenneth Fleet in the Daily Telegraph of Tuesday. The article was headedGrand chance to save £400 millionand Mr. Fleet said:It is not often that Parliament is given the chance to consider a Bill of just two clauses, which could save the taxpayer hundreds of millions of pounds without cutting defence spending"—as Mr. Fleet puts it—or the social services, and on which members can be wholeheartedly in agreement without breaching or even stretching party lines.1173 That is not quite the position, but it is broadly the position, tonight. Mr. Fleet went on:Just such an opportunity arises this week when the Moneylenders (Crown Agents) Bill comes before the House for its second reading.The Bill is really a device to regularise a situation already existing in fact but not in law…And it could save us the £400 million which the Agents has still to collect.That summarises the situation.
The question which has been discussed to a greater extent than any other tonight is that of retrospection. It is right that this question has been raised in case in its retrospective aspects the Bill, should be unfair to any of those who have been involved in transactions with the Crown Agents and who may have been considering challenging the Crown Agents to recover their loans. But we have here also to consider what is fair to the taxpayer.
As my right hon. Friend said, certain inquiries have been made by the liquidators of a company and by other companies, but no legal proceedings have as yet been started to challenge any of these loans. Thus there is no existing litigation for the Bill to affect. Nevertheless, the possibility of litigation is there and would remain if the legal position were not clarified.
This would bring uncertainty for the Crown Agents and for the recipients of their loans, possibly for quite some time. It could also affect the confidence of the overseas principals, despite what the hon. and learned Member for Dover and Deal (Mr. Rees) said. As the right hon. Member for Chipping Barnet (Mr. Maudling) said on 16th October, any legislation must ensure the confidence of the overseas principals in the Crown Agents. The hon. Member for Bury St. Edmunds (Mr. Griffiths) repeated that tonight. I believe that the Bill will in fact help to do that.
If loans were not repaid, there would be considerable implications for public spending bearing in mind the Crown Agents' current financial difficulties and the Government's ultimate responsibility for their acts. We cannot quantify these precisely, as there is a large number of loans at varying degrees of risk and a wide range of borrowers who would not dream of trying to avoid repayment. Of that we can be certain.
1174 However, at a time of utmost restraint on public spending, it would be quite unacceptable to have to take on what is, after all, an entirely avoidable burden by providing further financial support to the Crown Agents to overcome the results of prolonged delay in the repayment of loans or in the payment of interest. There would be a public outcry if property or other companies could delay or avoid repayment of loans made, and no doubt received, in good faith, causing adverse repercussions on public expenditure.
Let me say in reply to my hon. Friend the Member for Bolsover (Mr. Skinner), who has now left the Chamber, that we are not allowing by means of this legislation anyone who has been guilty of a criminal act to get away with it. As a matter of fact, the Director of Public Prosecutions has been considering this situation for some time. I cannot add to what I have said on that point, but that is the situation.
I now come to the speech of the hon. Member for Bury St. Edmunds, who described this as a disagreeable Bill. I do not think any of us finds it very agreeable. Perhaps we can agree on that anyway. On the other hand, he welcomed it in general terms and he expressed his confidence in the Crown Agents and in their present Chairman. I certainly subscribe to that attitude, as my right hon. Friend has done.
I should like to dispose of the point which the hon. Gentleman made about Clause 2. He suggested that it takes for granted orders to introduce the Consumer Credit Act. I can assure him that that is certainly not our reading of it. We do not believe that is so. If and when Parliament approves the repeal of the Moneylenders Acts, this Bill will cease to have effect. If Parliament withholds its approval, as it is entitled to do, the Bill will continue to be effective. That is the situation in respect of Clause 2.
I should like to pick up some of the hon. Gentleman's specific points. He read his list of sums based on varying degrees of risk. I was not able to take them down as he read them out, but in fact they are broadly true and his sums add up. The figure is £405 million. How much is at risk we cannot be sure at this stage, but we have to assume the worst. There may be other risks on other accounts.
1175 I must say that I was astonished by the hon. Gentleman's remarks about lack of information. He has waived his right of reply and I do not wish to make party capital out of this. My hon. Friend the Member for Islington, South and Fins-bury (Mr. Cunningham) has dealt more than adequately with that point.
I cannot understand why the hon. Gentleman should refer to the Fay inquiry and, one might almost say, the laggardly way in which it is functioning. That is not really so. It is not long since the inquiry was set up and it is working expeditiously.
§ Mr. Eldon Griffiths
It is not for me to suggest that the Fay inquiry is laggardly. I do not think it is. My point is that it is much more difficult to judge the merits of this Bill without the other information.
While I am on my feet, may I press the hon. Gentleman not to gloss over quite so quickly the possibility that there may be other problems? I should like to know whether this is the end of the line on this problem.
§ Mr. Grant
I am not glossing over it. The short answer is that we cannot be sure. We hope that it is. I think that is as much as I can say on that matter tonight.
I think that the hon. Gentleman was unfair in his reference to the White Paper. It is a complicated situation. My right hon. Friend said that the White Paper would be produced very shortly. I appreciate that it would have been better if we had had the information at an earlier stage, but the hon. Gentleman cannot lay the blame for that at the door of the present Government. The information will appear shortly, and when it appears it is essential that we get the matter right. It has been the actions of the present Government which to a considerable extent have exposed the situation. We are acting in a number of ways, including by means of this proposed legislation, to correct the situation.
The hon. Gentleman asked me which firms challenged the debts. The answer is that no company has yet done so, but the actual inquiry came from the liquidator of Vehicle and General Assurance.
1176 Another question asked by the hon. Gentleman was why the Crown Agents' legal adviser did not pick up the situation earlier. That is probably a point for the Fay inquiry, and I have no doubt that it will be looking into that matter. The hon. Member for Bury St. Edmunds asked about the Crown Agents' companies covered by the Bill. I understand there are only two—Four Millbank Nominees Ltd. and Four Millbank Holdings Ltd.
Tributes have already been paid to my hon. Friend the Member for Islington, South and Finsbury and I endorse them. There is an old saying that it is better to give than to lend. It generally costs about the same. In respect of the Crown Agents, it might have been cheaper to give than to lend.
In his pertinent and forthright contribution, my hon. Friend underlined the need for greater supervision. I agree that it is essential to ensure that there is no repetition of this unfortunate saga and, following a directive from the former Minister of Overseas Development earlier this year, the Crown Agents' lending policy is much more selective. They have withdrawn from property and secondary banking on a commercially prudent basis. They are turning away with a belated shudder from the unacceptable face of capitalism.
I am glad that my hon. Friend the Member for Islington, South and Finsbury drew a distinction between the old Crown Agents and the new. We have every confidence in the way their operations are now being conducted. As to past shortcomings and apparent financial permissiveness, the committee of inquiry will obviously report on these matters and my right hon. Friend has already made clear that he will report the findings to the House. Funds under management now total about £700 million and, in reply to my hon. Friend the Member for Islington, South and Finsbury who asked about actions overseas, I can say that the Moneylenders Acts do not have effect overseas.
I hope that I have dealt with most of the points raised in the debate. There will be other opportunities to come back to this subject quite shortly. I emphasise again that the crucial point is that the Bill's object is to put beyond doubt that 1177 the Moneylenders Acts did not and do not apply to the Crown Agents or to companies wholly owned by them. It is important in the interests of maintaining the confidence of overseas principals of the Crown Agents and of the British taxpayer that there should be no doubt about this. Any doubts can be dispelled only by a Bill such as this.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Stoddart.]
§ Committee tomorrow.