GENERAL BUSINESS EXPENDITURE AND LONG TERM BUSINESS EXPENDITURE (Hansard, 30 October 1975)

§ Mr. Deakins
I beg to move Amendment No. 23, in page 18, line 18, leave out 'incurred by them'.

Mr. Deputy Speaker
With this it will be convenient to take Government Amendments Nos. 24, 25, 42 and 43

§ Mr. Deakins
These amendments are linked. I assure the House that these are purely drafting amendments to make the wording of Clause 17(3) and of Clause 21(2) consistent with that in subsections (1) and (2) of Clause 17.

§ Mr. Tim Renton
I accept that these are intended to be only drafting amendments. However, I should like to ask the Minister one question on Amendment No. 23. This amendment, which refers back to a new clause moved earlier by my hon. Friend the Member for Faversham (Mr. Moate), relates to administrative expenses incurred by the Board.
The hon. Gentleman will recall that the clause moved by my hon. Friend sought to establish that when the Board incurred administrative expenses they should come before Parliament for approval. We were told that the administrative expenses of the Board were to be covered in the early stages by the BIA or that it had volunteered the assistance of back-up staff, and so forth. Is the intention that, until such time as the Board has to use its statutory functions for the purpose of a rescue operation and thus become involved in other general or long-term business expenditure, the BIA will be stepping in and bearing the administrative expenses? This is somewhat unusual.
It is then intended that the administrative expenses of the Board shall be allocated in part to general business expenditure and in part to long-term business expenditure. Only at that stage will payment be made effectively by the levy on the policyholders.
That seems to be a matter requiring clarification. In an earlier debate the provision covering administrative expenses within Clause 17 was not mentioned. I think it will be helpful to the 1872 House if the hon. Gentleman will explain how the administrative expenses will be handled.

§ Mr. Deakins
The amendments are directly concerned not with administrative expenses but with alteration to the wording so as to define more clearly the powers of the Board. The difficulty that the amendments were designed to overcome is concerned with the total expenditure of the Board, covering administrative expenses and the general nature of the Board's operations. The wording in one part of the clause is slightly different from that in another part. That difference could give rise to some considerable doubt whether the Board is able to impose levies in Clauses 18 or 19 to finance expenditure.

§ Mr. Tim Renton
I thank the hon. Gentleman for giving way. I do not think he can get out of the matter in that way. The fact is that Amendment No. 23 alters a sentence that at the moment reads: any expenditure incurred by way of administrative expenses". It alters the sentence to read: any expenditure incurred on their administrative expenses". The amendment, whether or not it is intended to be a drafting amendment, deals with the question of the Board's administrative expenses. It is on that matter that I should like some clarification in view of the comments that were made earlier this evening.

§ Mr. Moate
Before the Under-Secretary of State answers that point—

Mr. Deputy Speaker
It is unusual and untidy to have two interruptions before a Minister answers. No one who occupies the Chair likes that to happen. However, I call the hon. Member for Faversham (Mr. Moate).

§ Mr. Moate
Thank you, Mr. Deputy Speaker. I wish to seek clarification on the same point as that raised by my hon. Friend the Member for Mid-Sussex (Mr. Renton). It seems clear that the clause comes within the heading of: Levies on the insurance industry to finance the performance by the Board of their functions". Furthermore, it limits expenses to Clauses 15 and 16, which relate very much to the 1873 exercise of the Board's functions in the context of a rescue operation in the broad sense of the term. Nevertheless, any expenditure incurred by them by way of administrative expenses in performing their functions under this Act seems to open the field once again. I hope that the hon. Gentleman will be able to reassure us that it is not possible for the Board to incur general administrative expenses which can subsequently be recovered by levy except in the context of an insurance company and a rescue operation being mounted.

§ Mr. Deakins
The British Insurance Association will undertake expenses for the time being. The Board will be able to come to a convenient arrangement with the BIA for repayment if the Association should require it. That is a matter for the Board to work out with the BIA. In this context we should remember that the people who finance the BIA are largely the same people who will be paying the levy.

§ Mr. Moate
That is not a very satisfactory situation. The Board does not have powers to borrow except in the context of its powers subsequently to raise a levy. It is not right to suggest that it has the power to enter into an agreement with the BIA to repay subsequently any expenses that may be incurred. It must be clear that any expenses incurred by the Board will be lost by the BIA. The BIA will have no power to recover them and the Board has no power to concede them.

§ Mr. Deakins
Whatever arrangements the BIA comes to with the Board are a matter for the BIA. I am assured that the Board would not be deprived of the powers it has in this measure in coming to that sort of arrangement.

§ Mr. Higgins
I feel that the Minister is getting into something of a tangle. Perhaps he might like to consider whether a more comprehensive statement should be made on this matter on Third Reading. We can then consider our position between Third Reading and when the Bill goes to another place. At the moment I am not happy with the Minister's reply. This matter did not arise in Committee and it is assiduous of my hon. Friend the Member for Faversham (Mr. Moate) to have raised it now.
1874 As I understand it, the Government are proposing that the Board shall be effectively provided with resources by the BIA. First, is that the position if there is no failure of any sort? Secondly, is it still the position if there is a failure? The position would seem to be that if the finance is to be provided by the BIA it has no powers to claw it back from anyone by borrowing and rolling it over or by raising a levy.
I should be grateful if the Minister would intervene and tell us a little more about this. I think that his hon. Friend the Member for Farnworth (Mr. Roper) is getting increasingly unhappy, and I think that a few explanatory paragraphs in the Third Reading speech might be helpful. I was surprised not to find a Money Resolution to the Bill in the first place. The arrangement now negotiated seems somewhat curious.

§ Mr. Roper
I apologise for not being here when the hon. Member for Faversham (Mr. Moate) moved the amendment in which he uncovered this relationship with the BIA which we are considering again. Whatever we think about the Association—and I suppose I have said some unkind things about that august body on other occasions—and in spite of its expertise, there is here a problem about which the House should hear a little more.
I hope that on Third Reading the Minister will be in a position to say rather more about this relationship, how far it will ensure that the Board is at arm's length from a body that is a trade association in the industry, and whether there is any precedent for a statutory body having this sort of relationship with a trade association.

Mr. Deputy Speaker
The Question is—

§ Mr. Higgins
rose—

Mr. Deputy Speaker
Does the hon Member wish to speak again?

§ Mr. Higgins
I do not think that I am entitled to speak again. I merely wanted to ask whether the leave of the House would be given if the Minister wished to reply to what has been said. It is unsatisfactory for us not to receive a reply from the hon. Gentleman.

Mr. Deputy Speaker
We have been rather untidy in our debate for some time, and I give the Minister leave to reply if he wishes.

§ Mr. Deakins
On a previous Bill I incurred the displeasure of the Chair, quite rightly, for speaking three times. I take the point that has been made, and a fuller explanation of the matter will be given on Third Reading.