§ The Minister of State for Overseas Development (Mrs. Judith Hart)
With permission, Mr. Speaker, I should like to make a statement on the Crown Agents.
I think it is right that I should inform the House that the Government have recently received new advice to the effect that for many years, and possibly ever since the Crown Agents were established in 1833, revenues which they have been receiving should have been treated as part of the hereditary revenues of the Crown and should have been paid into the Consolidated Fund. It follows that the expenditure of the Crown Agents should not be met from those revenues, but out of money voted by Parliament.
On this recent advice we have received, that is the strict position in law. It is now also the view of our advisers that, constitutionally, borrowings by the Crown Agents should not have been made without the authority of Parliament. All this clearly gives added force to the need to regularise the legal basis on which the Crown Agents operate. This will be the purpose of the Bill to incorporate the Crown Agents to which reference was made in the Queen's Speech. Meanwhile, I hope the House will agree that there is no practical alternative to allowing the Crown Agents to carry on as before, and in particular to continue to borrow as necessary.
As I informed the House on 3rd May 1977, I agreed to their entering into arrangements with a consortium led by the Midland Bank under which they can borrow up to 220 million United States dollars mainly to finance their Australian investments.
§ Mrs. Hart
It has been necessary to embody in letters to the Crown Agents, in connection with this facility, the substance of our assurances that the Government stand behind them. Token provision to cover any payments which might become necessary as a result of these assurances was included in my Department's Votes for 1978–79. But the subhead narritive in the winter Supplementary Estimates for 1978–79 will be expanded to make this point clear.
I should emphasise that these questions are quite distinct from that of financial assistance to the Crown Agents from my Department's Votes. I do not now foresee any need for further assistance of that kind.
§ Mr. Luce
I acknowledge that the right hon Lady, on receiving this fresh advice about the Crown Agents, has taken the earliest opportunity to come to the House and give us the information. However, will she agree that she has in fact revealed—through no fault of her own—a most bizarre, almost Alice-in-Wonderland situation? It seems to boil down to the fact that since the inception of the Crown Agents nearly 150 years ago they have, with one recent very major blot on their history, been serving their clients successfully, but, nevertheless, unconstitutionally and illegally.
Will the right hon. Lady tell us why, after seven years of several investigations —the Fay report, the Stevenson report and the White Paper—this essential information about the Crown Agents was not discovered or produced? What has happened in recent months to lead to this revelation, and who is the genius who actually made the discovery?
As all of us are very concerned to ensure that there is a proper system of regularisation, to which the right hon. Lady has referred, and accountability of the Crown Agents to Parliament and the country as urgently as possible, can she tell us when she proposes to introduce the Bill?
§ Mrs. Hart
I hope that it will be introduced very soon. May I leave it like that for the moment? The Bill is in the final stages of drafting.
I agree that this is a somewhat bizarre situation. It struck me as such when I first received this new advice. As to why 1353 that advice was not available before, I can only say that events affecting the Crown Agents and the need to prepare the Bill led various people to look a little more deeply into matters which perhaps ought to have been looked into in greater depth earlier.
§ Sir G. de Freitas
Is my right hon. Friend aware that 1833 is not widely known for a lot of other things, though everyone knows that it was the year in which we acquired sovereignty over the Falkland Islands? Is there any other magic in that year which made it particularly appropriate for the direct foundation of the Crown Agents? Will my right hon. Friend at all times do everything appropriate to emphasise the very good work that the Crown Agents have done and are doing for overseas territories which many of us have seen in the field?
§ Mrs. Hart
I am most grateful to my right hon. Friend for his final comment. Everyone agrees that, bizarre or not, this legal point does not bear on the relationship of the Crown Agents with their principals.
My right hon. Friend the Lord President has reminded me that 1833 was also the year when we abolished slavery. The year lies between an Act of 1831 and an Act of 1837. Section 2 of the 1837 Act refers to revenues which were surrendered by His late Majesty King William IV for his life. Section 2 of the 1831 Act refers to "all other casual revenues". We go back to those Acts in the interpretation of the law as it stands.
§ Mr. English
Before we get involved in history, can my right hon. Friend confirm that this episode shows that the Expenditure Committee and the Procedure Committee, which approved every word of the Expenditure Committee on the subject of the audit, were correct? What proposals will the Government bring forward for the revision of the Exchequer and Audit Department Acts of 1861 and 1920, because, as Dr. Normanton, the academic expert on the subject, has said, we have the weakest system of audit in the Western world?
§ Mrs. Hart
Those Acts are not within my responsibility as Minister of State for Overseas Development, but my right hon. Friend the Lord President has heard what 1354 my hon. Friend has said, and I am sure that he will take full account of it. I shall make sure that my right hon. Friend the Chancellor of the Exchequer is also made aware of what my hon. Friend has said. The question of the Exchequer and Audit Department in relation to the Crown Agents will be included in the Bill that we are about to produce.
§ Mr. Ridley
Will the right hon. Lady ask all her colleagues in the Government to go through all their quangos to see how many others have been operating illegally hitherto?
§ Mr. Skinner
May we be assured that the latest episode in the long-drawn-out saga of the Crown Agents, especially as regards events of recent years, is the final episode? May we be assured categorically that no more taxpayers' money will be used in this operation? Can we expect that this new examination of the matter by another set of elitists—civil servants such as the present chairman of the Midland Bank—will ensure that nothing else will be discovered and that no more skeletons will be found in the cupboard? Can we also expect that the tribunal dealing with other aspects of the Crown Agents' work will be fully informed of what has happened in this episode?
§ Mrs. Hart
The tribunal has access to all papers relating to the Crown Agents, I think that I can say with absolute confidence that all the skeletons in the cub-board were revealed when I told the House about the need for financial assistance. That is largely due to the work of the board that I appointed and its chairman. We are now clearing up, but I think that there are no more skeletons to be found.
§ Mr. Speaker
Order. I propose to call the last two hon. Members who wish to question the Minister, and then we shall have to move on.
§ Mr. Moate
Can the right hon. Lady clarify the present legal position of the Crown Agents in their ordinary trading activities? It is obviously essential that the matter should be regularised as soon as possible, but it seems that, in the meantime, they have no lawful funds of their own and that all the expenditure they incur is Government expenditure. Is the right hon. Lady satisfied that they are trading lawfully, that the money they are spending is being spent properly, and that no more urgent step is necessary to regularise their position?
§ Mrs. Hart
I do not think that such action is necessary, provided that the House agrees with me that, in the short interval before the Bill is approved by Parliament, it is right for us to allow the Crown Agents to conduct their affairs as they have since 1833—at least in terms of their relationship with Parliament and the Consolidated Fund.
I agree that it is a difficult legal situation, but the best we can do is to proceed as rapidly as we can to regularise matters through the Bill and just accept, I fear, that since 1833 we ought to have been doing things slightly differently.
§ Mr. William Hamilton
Can my right hon. Friend say precisely where this information came from and how it became known? What would have happened if it had not become known?