§ Order for Second Reading read.
5.10 pm§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton)I beg to move, That the Bill be now read a Second time.
I regret the need to stand at the Dispatch Box today to introduce a necessary Bill. Were it not for the survival of barbarism in the form of terrorist violence, there would not have been any need for such a Bill. It is a melancholy reflection on life in the latter part of the 20th century that there are still individuals who, in modern democratic societies, being unable to achieve their objectives through the democratic process of the ballot box, are prepared to throw aside the conventions of civilised society and to bomb, maim and kill indiscriminately. One consequence is damage to buildings as well.
The Bill is in response to the spate of terrorist bombings which have occurred recently and which are merely the British facet of an international problem. I was born just after one of the worst wars that the human race has ever suffered, after which we all thought that we would not see such barbarities committed again in Europe in our lifetime. Regrettably, I have grown up against a backdrop of political terrorism in Europe through groupings such as the Baader-Meinhof gang in the 1960s in Germany. On both sides of the House we all deplore and regret that feature of our lives. I am happy that there is a bipartisan or indeed a multipartisan consensus to the extent that we are all united in our desire and, indeed, our determination to prevent such acts of violence from having an impact on our political decisions in so far as those decisions might be thought in any way to involve the bowing of the head or the knee to the achievement of the political objectives of the terrorists who are responsible for so much damage and tragedy.
The Bill is a short enabling measure. I do not propose to speak for very long, but I shall describe the arrangements through which Government reinsurance for acts of terrorism will be provided. I shall also say something about a number of issues which I know concern some hon. Members. A summary of the arrangements was tabled on Tuesday 11 May in response to a question from my hon. Friend the Member for Aylesbury (Mr. Lidington). I hope that that has been for the convenience of the House because, although I say so myself, I doubt that hon. Members will derive much profit simply from reading the text of the Bill. The meat which surrounds the skeleton is the way in which the reinsurance scheme has been constructed. That does not require us to deal with it in statutory form today.
Last November the insurance industry announced that, with effect from 1 January this year, it would cease to renew or to provide new insurance cover on industrial and commercial property which included provision for damage or loss caused by acts of terrorism. That withdrawal of cover was for prudent commercial reasons, following the loss of their own reinsurance protection predominantly from large European reinsurers, against the background of a sharp contraction in reinsurance capacity world wide and worsening claims experience in mainland Great Britain. It is a typical reaction of the international 970 reinsurance market that during its cyclical reductions in capacity it not only increases prices but declines the least attractive business.
That development was understandably of great concern to British industry and commerce. We received many representations from individuals who were concerned at being unable to insure their property, which meant that they would have to assume the full measure of risk against damage from explosions caused by terrorists. In those circumstances, the Government could not stand idly by and we joined enthusiastically in discussions with the insurance industry and with those who at the end of the day have to pay the bills for the insurance that benefits them. We have put together a scheme which we believe will be effective and which will for ever deny terrorists of all kinds the fruits of their satanic endeavours to bring the country and its commerce to a standstill through explosions, wherever they take place.
The Government concluded that it was necessary to ensure the continued availability of insurance cover for loss and damage arising from acts of terrorism. That cover could continue to be available only if the insurers could be reinsured themselves. On 21 December 1992 the President of the Board of Trade, my right hon. Friend the Member for Henley (Mr. Heseltine), announced that the Government would act as reinsurer of last resort to insurers of industrial and commercial property in Great Britain, with effect from 1 January this year. Since then, the arrangements necessary to give effect to the announcement have been developed to an advanced state. My right hon. Friend laid a minute before the House on 14 January explaining the reasons for entering into a contingent liability ahead of specific legislation.
A number of general principles underlie the Government's intervention. The Government seek to avoid disruption to industry and commerce which might be caused by lack of terrorism cover. The arrangements are to deal with the consequences of a market failure, but they are intended to minimise disruption of the insurance and reinsurance markets. The Government's involvement will last as long as is necessary to remedy that failure, but equally the arrangements are temporary and the Government will withdraw as soon as adequate sources of commercial reinsurance are available once more.
It is important to recognise that the arrangements are not a state aid. Over their lifetime, the arrangements are expected to be at nil cost to the taxpayer. The Government seek not to expose the insurers to undue risks which might threaten their solvency. Clearly, that would benefit no one and could cause a much wider collapse than would occur simply as a result of failure to insure or reinsure commercial and industrial property itself. If the solvency of insurance companies generally were adversely affected, the shock waves would go well beyong the centres of cities and would affect the whole country.
The arrangements are to cover the consequences of a market failure, but our aim is to maintain the insurance and reinsurance markets in effective operation and to fund the scheme ultimately from the premiums charged to those who derive the benefit of insurance and reinsurance for industrial and commercial property which is under threat of damage from terrorist explosions and the like.
The arrangements contain a number of necessary restrictions on the behaviour of the policy holder. Where such measures exist, they are the minimum consistent with the protection of the taxpayer who in a sense is the 971 ultimate reinsurer. It is in the nature of commercial insurance that sophisticated policy holders will endeavour to be selective about the risks that they transfer to insurers, but the cardinal principle of insurance is the spreading of risk. In conditions of some market failure, risk needs to be widely spread if the interests of the taxpayer are to be protected.
I should make it clear that this is a reinsurance scheme, not compensation. If insurers do not buy the proper insurance cover, the Government will not entertain claims for compensation from them in the event of loss or damage. Although the Government have intervened, the solution that we have put together is fundamentally a market one.
The structure and operation of the arrangements are described in the summary tabled on II May, to which I referred a few moments ago. Briefly, insurers wishing to offer property insurance, including terrorism cover, will become members of a mutual reinsurance company, Pool Reinsurance Company Ltd. That company will reinsure all terrorism risks situated in Great Britain borne by its insurer members and for which an additional insurance premium has been paid by the insured. In turn, the Secretary of State will reinsure Pool Reinsurance Company Ltd.
The company will take an entirely commercial approach to applications for membership. In principle, all insurers operating in the United Kingdom will be eligible for membership, including Lloyds syndicates and overseas insurers. Conversely, membership will not be compulsory if insurers do not wish to join. An important feature for smaller firms is that their basic property damage policy will provide £100,000 of cover for buildings, contents and business interruption automatically and without the need to pay an additional premium. The insured will have the choice of buying extra terrorism cover beyond the £100,000 per section as an addition to their property insurance policy for which an additional premium will be paid.
§ Mr. Tim Smith (Beaconsfield)Can my hon. Friend clarify what he means by membership? He said that membership will not be compulsory but voluntary. Is he referring to membership of the company in a technical sense? Who will be the shareholders, and will they be fixed?
§ Mr. HamiltonThe shareholders of the company will be those insurance companies that are reinsuring through the company. Consequently, membership of the company—as with any company—will be fluid over time as it will be a company limited by guarantee.
The aim of this scheme is for the Government to stand behind the insurance industry that wishes to provide the service of insurance cover for terrorism risks to ordinary members of the public who would otherwise be without the opportunity to take advantage of that service. I shall say a little more about the structure of the company in a moment.
As I said, the insured will have to pay for extra terrorism cover beyond the £100,000 per section. Consequently, we shall reinforce the market, rather than destroy it. That is why our ultimate aim—if that proves possible—is to withdraw again so that there is a reinsurance market capable of taking up the reins without 972 the need for any Government assistance. Ultimately, we hope that all terrorist groups will draw a conclusion from a quarter of century of failure, in the case of the IRA, to move the British Government an inch towards the realisation of their objectives. I hope that the Bill will receive a warm welcome in such terms that anyone who might seek to change the political system in the United Kingdom by the bomb and the bullet will not derive any superficial advantage.
§ Mr. Nirj Joseph Deva (Brentford and Isleworth)The key to the success of the scheme relates to how soon the Government wish to withdraw from it. If the Government want an early withdrawal, higher premiums may have to be paid to get the money back.
§ Mr. HamiltonMy hon. Friend perhaps misunderstands what I am saying. We do not seek to be involved permanently in the scheme, but I must make it absolutely clear that the Government will stand behind insurance companies for as long as is necessary. We shall not in any way be deflected from the achievement of the purposes which lie behind the Bill by considerations of cost. Clearly, the cost to the taxpayer of the collapse of the commercial economic system of the United Kingdom, without having some mechanism of this sort to preserve stability, would be incalculably greater than whatever sums might have to flow from the taxpayer in the short term to iron out the fluctuations in income and expenditure of Pool Reinsurance Company.
Although we have tried to construct a scheme whereby there is a commercial involvement of the companies that provide insurance cover and of the Government—in certain circumstances we intend to charge a premium for the service that we provide—we hope that, ultimately, there will be no cost to the taxpayer and that the cost to the industry and, indeed, the insured will be a small portion of the total outgoings. The spreading of the risk as widely as possible, as we envisage through the scheme, will mean that a large number of individuals who are paying into the scheme will have to pay a sum which, admittedly, will be more than they have paid in the past. In the past, terrorist cover was thrown in with a policy at no extra charge and no one had to consider the matter because we were never subjected to significant risks.
It is inevitable that costs will be greater than they have been because the cost in the past has been zero to the insured. We hope and expect that such costs will be modest and easily absorbed, especially—to follow the points made by my hon. Friend the Minister for Local Government and Inner Cities in the previous debate—as the economy is beginning to recover and the gross national product will rise with it. That will tend to more than offset any increased costs from the insurance sector. I do not wish to turn this debate in any way into a cause of controversy, so I will not pursue those dangerous lines of argument any further.
To return to the points that I was making earlier about the nature of the scheme that Pool Reinsurance Company will operate and the membership of the company, the insurer will be required as a condition of membership to remit all additional premiums to the company, which will hold and invest those premiums. The company will be reinsured by the Government, who will charge a premium —payment of which will be deferred until such time as the company has built up a stabilising fund of £1 billion. The 973 premium charged by the Government as reinsurer will normally be 10 per cent. of premiums received by the company, unless what I might call an experience premium equivalent to the claims paid by the Government is greater. The deferred premiums charged on either basis will bear interest until they are paid.
When there are claims, the insurers will bear the first £100,000 under each section of the basic property policy and recover claims beyond that amount from the company. Such claims will be paid out of the premiums received. If those resources are exhausted, the company will raise a levy on its members of up to an equivalent of 10 per cent. of the premiums that they have remitted. If the levy and any investment income is also fully used, the company will claim on its reinsurance contract with the Government. The scheme is simple and can be broken down into segments of insurance, reinsurance and retrocession of the insurance agreement.
§ Mr. Peter Viggers (Gosport)My right hon. Friend and other hon. Members will know of my interest in this matter as a member of the council of Lloyd's and an underwriting member of Lloyd's of London. My right hon. Friend explained that the scheme is simple. He has made it clear that the scheme will not apply to Northern Ireland, where there is a different scheme. Can he explain why it is appropriate that there should be a separate scheme for the United Kingdom other than Northern Ireland?
§ Mr. HamiltonI shall certainly do that. An interesting fact that I discovered about the situation in Northern Ireland as a result of background work for the Bill is that compensation arrangements have existed there for 300 years to cover the loss and damage caused by what might be called terrorist activity. We did not think it sensible to apply the same kind of scheme in Great Britain, which differs from Northern Ireland in many respects. It is a matter of horses for courses. The Northern Ireland compensation arrangements have worked very well during the current emergency, but we foresee no circumstances in which we would need such a scheme in the rest of the United Kingdom.
The extent to which we shall need to draw on the arrangements laid down in the Bill remains to be seen. We naturally hope that the terrorists will draw the logical inference from our readiness to act and will give up the struggle. I suppose that it is rather too much to expect psychopaths to think in a logical way, but they should be in no doubt that we will not allow the country to grind to a halt as a result of their activities in the city centres or anywhere else.
We shall react accordingly in any circumstances which may arise in the future, but for the time being we think that the scheme for which we now seek statutory authority will be effective in meeting the challenge presented to us in Great Britain. As I have said, we have designed a separate scheme to meet the different circumstances in Northern Ireland, although those circumstances arise from the same cause. Let me add that Northern Ireland will never be detached from the United Kingdom without a democratic vote by the majority there, freely given. The bomb and the bullet will never achieve that objective, certainly so long as the present Government remain in office, and I am sure that I also speak for the Labour party—should it ever be 974 favoured with the opportunity to govern this country again—when I say that this bipartisan policy will be maintained.
If the Pool Reinsurance Company achieves an underwriting surplus in any year, after deducting the Government premium due for that year, it can distribute 10 per cent. of that surplus to its members in proportion to the premiums that they have remitted.
Clause 1(1) of the Bill empowers the Secretary of State to make payments in fulfilment of the obligations into which he has entered under the agreement to provide reinsurance cover. The clause also empowers the Secretary of State to make payments under guarantees that he may give. It is envisaged that he might wish to give guarantees to lenders, to ensure that the Pool Reinsurance Company could make prompt payment of claims from its members. Entering into the agreement and any guarantees would be subject to Treasury approval.
Clause 1(2) requires the agreement with the Pool Reinsurance Company to be laid before the House after the passing of the Bill, and as soon as it is entered into. Clause 1(3) requires Government premiums from the company to be remitted to the Consolidated Fund. Clause 2(1) defines the reinsurance arrangements to which the Act would apply: they involve risks of damage to property in Great Britain arising from acts of terrorism. Clause 2(2) defines the acts of terrorism concerned, and clause 3 provides that the Act does not extend to Northern Ireland —where, as I have explained, separate arrangements operate.
I want now to comment on a number of matters which have aroused concern in some quarters. Buyers of insurance are naturally anxious to minimise costs. The premium increases appear large in some cases as a proportional increase over the premium charged last year. As I said to my hon. Friend the Member for Brentford and Isleworth (Mr. Deva), however, insurance premiums will still represent a very small proportion of total business costs and will represent good value overall.
Some illustrative examples may be helpful to the House. First. I take the example of a city centre office block insured for £10 million. The extra terrorism premium is typically £8,000 per year, up to a maximum of £12,000. Away from city centres, that would fall to £1,600 per year. By contrast, a typical annual maintenance charge would be £165,000 and the rent on such a block would be up to £2 million a year. In other words, the terrorism premium is equivalent to less than two days' rent.
The logic of that, for those who seek to bring the country to a halt by means of terrorist action, is that although those extra costs are unwelcome and an irritant —at a time of recession any extra cost is unwelcome and could have undesirable effects on employment, disrupt business, and so on—their chances of achieving their objectives in any meaningful way by means of explosions and damage to commercial buildings are so small as to be almost infinitesimal.
Equivalent figures for a £100 million block are a terrorism premium of £50,000, rising possibly to £75,000. On such a block there will typically be a maintenance charge of £1.3 million and an annual rental of up to £19 million. So the extra premiums that I mentioned, even in cases of that kind, are quite modest compared with other costs.
Work has also been undertaken to gauge the point at which increases in insurance premiums would distort 975 location decisions. It is certainly not the Government's wish to make insurance premiums themselves a cause of businesses moving from one location to another. On the other hand, premiums will also need to follow the normal insurance principle of being related to perceived levels of risk. Premium rates are being reviewed now, and will be reviewed thereafter at least annually. In the present circumstances, the next price movement is almost certain to be upwards, but I would expect the price structure to evolve over time and prices to go down as well as up. Commercial buyers of insurance should bear in mind that —as I believe some already recognise—their premiums were about to rise sharply in any event, following a period in the insurance cycle when many insurers were losing money heavily on commercial lines.
The arrangements envisaged have a number of other advantages. By charging a premium for the reinsurance cover, the Government are both protecting the taxpayer and enabling the business community to carry on as usual despite terrorism. If no premium were charged, the arrangements would be permanent, as no commercial reinsurer could ever compete with reinsurance that was provided free of charge. The arrangements will create headroom which will allow commercial reinsurers to re-enter the market and, over time, allow the Government to withdraw. That is fundamental to our conception of the scheme. By deferring the paying of the premium until a sizeable fund has built up, the price should eventually settle at a lower and more stable level than would be the case if no buffer were ever created.
Furthermore, adapting an insurance solution to what is essentially an insurance problem means that the expertise of the insurance industry can be harnessed in settling claims speedily and fairly both for claimants and for those who bear the costs. If we were to introduce a compensation scheme, there could be greater delays and more inconvenience to those who, following damage and loss, want to get back to business as quickly as possible. In general, the market is likely to be more responsive than Government to spasmodic convulsions of that kind.
A number of groups have come forward seeking relief from the premiums being charged. I know that that worries many hon. Members. Of course, it would be nice to be popular with them by telling the Pool Reinsurance Company to accede to those requests as they arise and to let the taxpayer foot the bill but, as my hon. Friends know, it is no business of the Government to seek to be popular. Consequently, we have designed a scheme which may constitute a hard road, but which we believe in the long-term to be in the best interests of the entire country.
§ Mr. John Greenway (Ryedale)My hon. Friend advances his argument extremely well. There is a cost that should reasonably fall on commerce and business—as my hon. Friend knows, I have advanced that argument forcefully in recent days—but does my hon. Friend agree that it is also crucial that all businesses should take advantage of the pool reinsurance facility and that the premium charged should not be a disincentive for them to do so?
§ Mr. HamiltonI entirely agree with the second of my hon. Friend's two points. The premium charged should not be a disincentive against taking advantage of the 976 scheme placed before potential insurers. Naturally, I hope that all people who feel themselves to be at risk from such damage or loss will take advantage of the insurance opportunity that exists. It is not the Government's intention to force people to take out insurance. If they choose to assume the risk themselves, that is a commercial decision that they must take.
I shall risk saying that it would certainly be in someone's commercial interests normally to take out such insurance. I am a great believer in insurance, but everyone has to make his own calculations. Clearly, companies expose themselves to significant risk in the event of an explosion. If the premium is modest, it should not prove a disincentive—it would be in people's interests to take advantage of the insurance.
We could make ourselves popular by acceding to the requests that have been made and let the taxpayer foot the bill. The logic of such an approach is that there is such upward pressure on public expenditure for the indefinite future that the same individuals, in their capacity as taxpayers, might find different reasons to place us in an unpopular light at times of greater political sensitivity—for example, when our seats are up for election at the next general election, whenever that may be.
I do not think that there is an easy answer to the problem. Apart from the implications for public expenditure, there is the question of how the insurers can explain special treatment for one group of policy holders to the remainder of their policy holders. There will also be the increased cost of operating a more complex scheme —success for one group is likely to encourage others, which could lead to a further erosion of premium income and the need for more premium increases for those taking advantage of the service. Such narrowness of scope runs counter to the insurance concept of spreading the risk and would also lead to problems of definition and qualification. As Minister with responsibility for deregulation, when designing the scheme I sought to reduce the amount of bureaucratic obfuscation and the cost of administration, and to make the scheme as simple as possible, as widely available as possible and as cheap as possible.
There has been only one amendment to the price tariff since it was introduced—to deal with the problem of blocks of flats. The insurers' original intention was to exclude private policy holders from the scope of their exclusion so that they would continue to receive terrorism cover for no extra charge. Although flat dwellers normally regard themselves as private policy holders, blocks of flats are commonly insured by service companies and property-owning companies, and thus treated as commercial customers. Individual private residents were therefore having an extra terrorism premium passed on to them. After further consideration of the costs and risks, the Pool Reinsurance Company reduced the premiums charged for blocks of flats and the move was announced in a written reply by my right hon. Friend the President of the Board of Trade on 4 March. Blocks of flats with a sum insured value of up to £2.5 millions will be covered by the insurer for no extra premium. Above that level, the premium has been reduced to about one ninth of the rate for industrial and commercial premises in London and one quarter of the rate elsewhere, so no individual policy holder should face a premium increase of more than £10 to £20 for the normal range of property values.
977 I should like to clear up some confusion about the availability of cover for churches, which are eligible to be covered by the arrangements. It is for the individual church authorities to decide whether to cover specific churches by paying an additional terrorism premium. It so happens that the chief executive of one of the insurers specialising in covering church property is a member of the board of the Pool Reinsurance Company. Therefore, special arrangements were made some time ago to permit another specialist insurer of churches to remit its premiums to the Pool Reinsurance Company.
§ Mr. David Trimble (Upper Bann)The Minister is explaining the distinction between the insurance of commercial operations and the insurance of private operations. What would be the position of those taxi drivers who lost their vehicles through terrorist operations at the time of the Bishopsgate bomb? Are they classified as commercial operators and thus covered by the scheme, or as private ones? I believe that, at the time, they were classified as private and thus not covered by insurance. To take the argument one stage further, what about the private citizen whose car is commandeered in that way? Will he be covered by the scheme?
§ Mr. HamiltonThe Bill seeks to deal with the problem of insurance cover not being available in the market for damage to commercial buildings. It has never been the case that cover for terrorist risks was not available when cars were damaged—as in the case referred to by the hon. Gentleman. It is not the Government's purpose to prevent the market from providing a solution. If it were proved that such cover was not available, we would be prepared to consider representations on the subject. However, I understand that at present such insurance cover is available and that no one has been refused it. As insurance premium rates have been rising for a variety of reasons, which will be known to the hon. Gentleman, larger amounts of money may be involved. However, the insurance business is a competitive one—a large number of companies provide a variety of products and it should be perfectly possible for individuals who feel that they are at risk to obtain insurance protection against that risk.
§ Mr. Bernie Grant (Tottenham)Minicab drivers can obtain either comprehensive or third party insurance for their cabs. Drivers with third party insurance are unable to claim compensation from the insurance companies in such cases because third party insurance relates to someone other than the insured. Later in the debate I hope to raise cases which have occurred recently in my constituency. Will the Government consider examining such cases, which involve people's livelihoods?
§ Mr. HamiltonThe short answer to the hon. Gentleman is that the drivers should buy comprehensive insurance and they would then be covered. It is up to each individual to decide for himself the level of insurance cover that he wants and to bear in mind the risks that he runs by not taking out cover. We all have to take such decisions. I have one car that is insured comprehensively and another car that is covered under third party, fire and theft insurance. I have taken that decision bearing in mind the car's value and whether I would seek to replace it if it were damaged as a result of an accident for which I was responsible. It is up to each individual to determine his requirements.
978 I hope that I have answered the question posed by the hon. Member for Upper Bann (Mr. Trimble), whose presence today I welcome. Although the Bill relates to Great Britain, the hon. Gentleman's presence turns this into a United Kingdom debate. I always welcome the presence of Northern Ireland Members in debates in the House as it serves as a practical expression of this country's unity. That, in itself, is an act of defiance against the IRA and others who seek to detach the Province from the United Kingdom by their undemocratic methods.
I believe that the Bill and the scheme that we have developed represent a clear and unmistakable signal both to business and to terrorists of all persuasions. To business in London and throughout the country, the Bill is a signal that the Government are determined to ensure that the normal insurance mechanism will continue to work, so that business assets destroyed or damaged for whatever reason can be reconstructed or replaced without delay. To overseas investors in the United Kingdom I say the same. To the terrorists, it is a signal that business and Government together will not permit wanton criminal damage, whatever its cause, to interfere with normal commercial life for a moment longer than is necessary.
I have pleasure in commending the Bill to the House.
§ Mr. Stuart Bell (Middlesbrough)I shall pick up where the Minister left off. We fully agree that terrorism cannot impose its will on the British people by acts of violence against property or person. The great tragedy of recent disasters has been the loss of life, for which we grieve and which creates widows or orphans, not a political solution. Unfortunately, that message has not penetrated elsewhere; but one message that can penetrate is that the people of the United Kingdom will not bend the knee or bow the head to terrorism in any guise. The problems of the people of Northern Ireland are, like all other problems, subject to a political solution which, as the Minister said, can come only by the ballot box and by majority vote. We are entirely in agreement with the Government on that.
The Bill must be seen in the context of how insurance markets are coming to terms with many of the disasters that struck at the end of the past decade and which affected the so-called London catastrophe market—to which reinsurers refer as the non-proportional excess of loss market. It has suffered a dramatic shrinkage of capacity —a shrinkage to which the President of the Board of Trade referred when he made his original statement on the Government being the reinsurer of last resort.
This dramatic shrinkage has also affected premium rates. The shrinkage resulted from a series of catastrophes which, with our short memories, we may already have forgotten: the Piper Alpha oil rig explosion of July 1988; hurricane Hugo; the Philips Pasadena refinery explosion; and the San Francisco earthquake. They all had an impact on the reinsurance market and showed how we live in and are part of a global market. They also had an effect on the retrocession market, as it came to be called, and they combined with the losses suffered by Lloyd's of London.
Before 1987, an insured loss of about $1 billion occurred only once every few years; now it occurs each year. The reinsurance market reacted to the events which brought about the general shortage of capacity and led to some reinsurers withdrawing from the scheme at the end of last year.
979 I welcome the fact that the Bill is retrospective as far back as I January and thus covers the niche left in the market by the withdrawal of those reinsurers. I also echo the Government's hope that, as a result of the mechanisms put in place by the Bill, some confidence will be restored to the reinsurance market. European reinsurers must understand that it is for them to come back into this type of risk, thereby, at first, providing competition for the Government and in the end allowing the Government to withdraw.
I agree with the idea that the Bill is a mechanism designed to help the reinsurance markets of the world, which should be big and confident enough to return to this sector.
On a lighter note, I was struck by the use of the word "retrocessionaire" as a description of the Government's role as a reinsurer of the last resort. I had hoped that hon. Members, having read "The House Magazine"—this week's issue contains an article by me on France—would come flooding into this debate from the bars and corridors of the House. I see the Government Whip shaking his head —he is probably right. Still, the idea of pro and anti-Maastrichteers and marketeers, of Europhobes and Europhiles, coming to the Chamber to debate "retrocessionaire" tickled my fancy.
As for the debate on Maastricht next week, I should like to be here in person to abstain—but I will not be. [Interruption.] I am told that an abstention is the same as a vote one way or the other. The Bill lays down no geographical restrictions on the location of the head office of an applicant, which means that membership of Pool Reinsurance will be open to continental Europeans as well as offshore Europeans.
It pleases the Opposition that the Government are indulging in some intervention. We remain an interventionist party, so when we see the Government intervening we are moderately gratified and encouraged. Often enough, we have sat here and seen the Government, like Pontius Pilate, wash their hands. Sometimes they have wrung their hands like Scrooge; but on this occasion they have taken a firm grip on the problem. They have taken action and in that they have our full support.
The Minister rightly balanced the mechanisms needed in respect of the margin requirements. In the past three or four years, the insurance companies have faced difficulties in this area because of the massive claims made against them. The Minister did not, however, mention article 85 of the treaty of Rome, relating to competition. He may have seen comments in the press to the effect that the Bill may have implications for EC competition law.
The Minister will know that when a number of competing insurance undertakings enter into an agreement under which they will provide cover only through an agreed mechanism, and when this mechanism enables them to defend uniformly higher premiums in such a way as to minimise risk to themselves and to decrease cover for the insured, that arrangement may fall within the scope of article 85.
It can be argued that the Government have laid down what premiums Pool Reinsurance should collect from the insurers. Once the premiums have been set, however, companies may be minimising the risk to themselves and that may give rise to matters that the DTI will have to 980 work out with the Commission. My view is that, as the reinsurance cover is not available at the moment, this measure acts to increase cover. There are thus difficulties ahead for the Government with the European Commission. As Harry Truman said, perhaps the buck stops here, with the DTI. In this case, I prefer the words of Dean Inge, who once said that, although he had had a great many problems, most of them had never happened. I hope that the same will apply to article 85.
I am convinced that the Commission will not want to intervene to prevent the Bill from being fully operative or to prevent the gap in the reinsurance market from being closed. There is another difficulty for the Government, who are setting the premiums for the insurance companies through Pool Reinsurance. The hon. Member for Brentford and Isleworth (Mr. Deva), who has left the Chamber, asked the Minister about that. [Interruption.] I am sorry. For those who read Hansard assiduously, let me make it clear that the hon. Gentleman is still in the Chamber. He asked the Minister about the impact of premiums. The danger for the Government would be if they set the premiums so high that the pool did not grow sufficiently to fulfil the purpose for which it was created. However, if the Government set premiums high, that would encourage competition from other reinsurers and bring them back into the market place.
§ Mr. Tim SmithThe hon. Gentleman said that the Bill was retrospective to 1 January. That is my understanding, but I can see no reference anywhere in the Bill to 1 January, or indeed to any commencement date. In those circumstances, my understanding is that the Bill commences when it receives Royal Assent and not before.
§ Mr. BellI am grateful to the hon. Gentleman for bringing that to my attention. However, all the guidelines that I have received from the Department of Trade and Industry say that the Government's intention is that the Bill, when enacted, should be retrospective to 1 January. That will cover the niche in the market place caused when the reinsurers withdrew their cover at the end of last year. That is my understanding and I hope that the Minister will confirm it.
As far as I can tell from the Bill, the Minister has eschewed a policy of a compulsory levy on companies in designated areas. Having listened to the Minister with care, I would subscribe to that view. It is a matter for those involved to take out insurance as and when they wish, and how they wish. I am glad that my hon. Friend the Member for Tottenham (Mr. Grant) is in the Chamber. No doubt he will elaborate on that from the point of view of his constituents if he catches your eye, Mr. Deputy Speaker.
It is right and proper that the Government should not, through their ultimate reinsurance cover, pick up the tab for looting, about which we have read a great deal in the newspapers. The Labour party has always believed, and still believes, in value for money. We have no intention of disbursing taxpayers' money gratuitously or abundantly in such a situation. What is remarkable is the number of people who come forward with a claim on insurance, and certainly on Government insurance, if they feel that they can. However, compensation for looting should be covered by general insurance policies. I am sure that, if those involved were to make a proper claim to their insurance companies, they would find that that was the case.
981 The Bill covers both damaged property and consequential losses arising from the interruption of business, so is not limited simply to the former. I agree with the Government on the point raised in the other place on 15 February this year, through a written question at column 62. The question was whether that cover would include premises closed as a result of the threat of terrorism.
§ Mr. John Bowis (Battersea)I seek clarification—perhaps from the hon. Gentleman, perhaps from the Minister—about compensation for looting. Looting is a risk that is not due to terrorism. If the building were left open, a claim for compensation for looting might be subject to question. If it were left open as a result of terrorist action, might not terrorist action be joined to the insurer's defence when resisting any such claim? There may be more complications here than meet the eye.
§ Mr. BellI am grateful to the hon. Gentleman. I had anticipated that point. One of the great things about speaking from the Dispatch Box is that one can sometimes anticipate interventions. The answer is that, in law, the claim would lie against the security firm rather than the insurance company. Victims of looting can make claims, but compensation does not necessarily lie through the route of the insurance policy.
I agree with the Government's view about the vacating of premises under threat, as expressed in the other place. They are also right to have the insured deal only with the insurers and to keep themselves at arm's length. That is sensible.
The scheme has the merit of keeping the Government's commitment to the minimum required by reinsurance. It places the burdens upon the insurance companies, when working out policies for commercial and industrial companies, and enables them to add on to the premium cover specific loss arising out of terrorist action. The Minister was right to say that that has been part of general insurance policies in the past. It will now be an add-on —to use a computing term—and provide for an additional 10 per cent. from insurance companies that are members of Pool Re and also for the realisation of investment income before there is a charge on the Exchequer.
The balance of the scheme is such that it should encourage other reinsurers to come into the field. It permits the insurance world to show the flexibility that is required in a fast-moving world with a fast-moving insurance market. It also gives the insurance world an opportunity to assist those in the community. One of the themes that the Opposition are developing is the role of insurance companies within the framework of the community. Rather than withdrawing from the community by withdrawing cover for such claims, the insurance world will come back into the community, with the Government as last-resort insurers. That means that business will be as usual in the complex world in which we live.
I would not wish to bore the House too much with technical detail, but I noticed the convoluted manner in which the total premium to be paid to the Government as the reinsurer of last resort will be calculated. It is a relief that the Government would not normally be entitled to require Pool Re to make premium payments unless the surplus in Pool Re exceeds £1,000 million, and that the 982 sum paid at any time will be limited so that the surplus remaining in the fund will not be reduced to below £1,000 million.
I have seen a number of pessimistic forecasts in the press as to how much premium income the pool is likely to attract, but I am confident that the framework and the guidelines of the scheme will rectify a weakness that has developed in the reinsurance market, caused, as I have said, by a shortfall in capacity. This modest Bill involves the Treasury in modest terms and will show our determination that it will be business as usual for the City of London, as it will be elsewhere.
I shall end my remarks where I began. The Minister said that there is an infinitesimal likelihood that terrorist attacks will succeed. The Opposition say that there is a non-existent prospect that they will succeed. The message we give to the terrorists is the message with which we began—death and destruction may follow from their actions, but political decisions will not.
§ 6.8 pm
§ Sir John Wheeler (Westminster, North)I am glad to follow the hon. Member for Middlesbrough (Mr. Bell), and to support what he has said. It is a particular pleasure that the House should be attended by hon. Members from all the component parts of the United Kingdom—Northern Ireland, Scotland, England and Wales. It is also a pleasure that the House is in whole-hearted agreement on the necessity for the measure, for the reasons given so eloquently by the hon. Gentleman.
The Bill is, in one sense, interventionist, but it comes from a Government who are pragmatic in the way that they administer the governance of the United Kingdom. The principal reason for the Bill is to underline our determination that illegal acts of terrorism shall not be the means by which political changes occur. It is important that the House is united in that endeavour, since that will lead inevitably to the defeat of terrorism in the United Kingdom.
I am also glad to welcome the speech of my hon. Friend the Minister and to comment upon some of its aspects. First, however, I shall refer to the report of the commissioner of police for the City of London, published a few days ago, which makes it clear that, despite the incidence of terrorist attacks in the City—St. Mary Axe in 1992 and, sadly, more recently the Bishopsgate bomb—the fact of the matter is that the City of London police force has achieved what few police forces in the United Kingdom have so far achieved, in that its overall recorded crime figures show a decrease of 10.6 per cent., which, as the report says,
is very much against the national trend and a greater decrease than any other Force in the country, many of which are in fact showing an increase.The report says that the City of London, despite those isolated and horrific bomb incidents,is still a relatively safe and civilised area in which to live, visit or do business. It is important to keep that perspective as, given the hundreds of thousands of people who frequent the City daily, the statistical chance of being harmed by criminal or terrorist activity is still extremely low.We should bear that point in mind.I take this opportunity to commend the City of London police, a small but special police force that has rendered exceptional service under difficult circumstances and has built up a remarkable expertise in dealing with the problem of terrorism. For example, although the St. Mary Axe 983 bomb blew the bomb car to smithereens, the City of London police scene of crime officers managed to scour through every fragment to discover sufficient evidence to identify the vehicle, which in turn led them to a suspect, and an arrest and charge have been made. Terrorism can be defeated, and one of the purposes of the Bill is to emphasise our support for the police service in that determination.
During the recent outrages, both in 1992 and this year, the citizens of the City of London, in common with the whole country, I believe, have greatly admired the leadership of both the previous and the present lord mayors of the City of London, and the determination of the corporation as a whole to rally and organise the commercial community so that the people who commit terrorist outrages do not succeed in their primary endeavour.
The proposals before us are necessary and welcome. I know that the Association of British Insurers was greatly concerned about the difficulties that it faced, to which my hon. Friend the Minister rightly referred. The mechanism that we propose to put in place will be both fair to the taxpayer and reasonable in its objective.
I thank my right hon. Friend the President of the Board of Trade for the way in which he has responded to my concerns on behalf of my constituents in the city of Westminster who live in expensive blocks of flats which, as the Minister has explained, would have been treated as commercial properties, on which there would have been an especially high premium to pay. Many elderly people and people on lower than average incomes would have found the additional premiums hard to bear, and it was important that they should not become the victims of terrorist outrages by virtue of a substantial increase in their insurance premiums.
I am grateful to my right hon. Friend for his practical and sensible response to that problem. As my hon. Friend the Minister has explained, for many people living in blocks of flats in my constituency, the additional premium, on a flat rate basis, may be no more than about £14. That is indeed bearable and, on behalf of my constituents, I am glad to thank the Government.
As for the commencement of the Bill, it is right on this exceptional occasion that the House should depart from its regular objection to retrospective legislation and ensure that the measure be made effective from 1 January this year. We breach no precedent in doing that; this is an exceptional measure to deal with a particular situation, and it is right that we should allow an element of retrospective legislation.
The Prime Minister responded to a question that I asked him after the Bishopsgate bomb by saying that the House would have such a measure before it at the earliest opportunity. My right hon. Friend has honoured that pledge in bringing the Bill before the House, and it is a matter for great satisfaction to us all that both sides of the House should be united in the endeavour to take the Bill speedily on to the statute book in the interests of defeating terrorism and supporting the British people.
§ Mr. Malcolm Bruce (Gordon)I am certainly glad to add my voice and that of the Liberal Democrats to welcome the proposals, especially as they end a degree of uncertainty that needed to be resolved in a constructive fashion. As a Member who represents a Scottish constituency and who believes that the United Kingdom needs some fundamental political changes, I must also say that such changes must be brought about by the democratic process.
There is no doubt that such a measure was essential, because there was a danger that the terrorists might have been given another target, in the sense of being able not only to maim and injure people but to seek to bring down corporations, too, and thus to create more economic disruption than the mere disruption of offices that results from the damage that they inflict.
The Government were right to seek a balance. We could not have witnessed too prolonged an exchange in which the Government were saying, fundamentally, that it was the responsibility of the insurance industry to take the risks, and the insurance industry was saying that it would withdraw altogether from that risk area. That gap could not have been allowed to continue for long, and we welcome the fact that the Government have understood that, and have introduced a scheme that seeks, in a sense, to go back into partnership with the industry and to ensure that the industry and the ultimate buyer of insurance make their contribution in terms that appear fair, balanced and reasonable.
There are people far better equipped than Ito rake over the details and raise concerns and anomalies. The Minister said that the measure had been carefully thought through, but that the Government were willing to consider any representations that might be made. In view of the spirit in which the Bill has been introduced, I am sure that any such representations will be welcomed and accepted constructively.
There is justice in what the Government are trying to do. I cannot calculate exactly whether they have got the balance completely right, but the thrust is certainly right. Making the Government the insurer, or reinsurer, of last resort is the right approach, rather than providing blank-cheque compensation. The Minister made it clear that the virtue of that approach was that it retained the inherent merits of continuing to operate a proper insurance scheme that will probably function on normal commercial lines, with the consequent speed of response. Clearly that was necessary, and one hopes that it will eliminate wrangling.
I welcome the fact that the Minister made it clear that, while the objective of the Government's scheme is ultimately to achieve no cost, the guarantee is absolute, and the objective of no cost will not lead to any possibility of their failing to honour their reinsurance obligations. That is absolutely crucial, because the Government are the last resort, and if those obligations are not honoured there is nowhere else to turn.
The hon. Member for Upper Bann (Mr. Trimble) mentioned taxi drivers, and the Minister responded robustly and in a constructive way. Although the hon. Member will pursue his case, and I encourage him to do so and hope that he will secure a sympathetic response, it is very important that it is understood that, when this Bill becomes law, nobody is absolved of the obligation to make 985 the calculation of insuring or not. It must be made very clear to people that, while it is regrettable that the climate in which we live has increased the costs that we have to bear, that calculation must be made. One cannot be foolhardy and try to cut corners, consequently leaving oneself exposed.
Nobody can be in any doubt that anybody who fails to take that necessary step will not be entitled to seek compensation from outside. It is important, and I am sure that the Government will make it clear, that that is fully understood as widely as possible.
The different scheme in Northern Ireland may be interesting as a comparison, because it is troubles arising from Northern Ireland that have made this scheme necessary. It unites all Members in the commitment to ensure that neither by commercial nor by physically violent means can terrorism prevail. I believe that some practical common sense and ingenuity has been shown here, and that the insurance industry has responded.
I spent a day at Lloyd's a few weeks ago, when I was made very well aware of the concern there about the fact that 3,000 people have effectively been ruined by that operation, and that many jobs will now be lost. It was made clear to me that, in addition to the large risks which the hon. Member for Middlesbrough (Mr. Bell) has already identified, the consequences of climatic change have had a serious effect upon Lloyd's, because it has led to a number of violent wind storms, for which Lloyd's was the reinsurer.
It may well be that, in its heyday, Lloyd's could have taken up the risk with which the Government are now faced. However, in the circumstances in which it is now placed, it would be very foolhardy indeed to add that risk to those from which it is still trying to recover.
I therefore welcome the fact that, after what might be described as initial spats—perhaps understandable and justifiable—between the Government and the insurance industry, the position taken by the Department of Trade and Industry in this Bill has prevailed, uncertainty and anxiety have been laid to rest, and a properly orchestrated scheme on a proper insurance basis will now be put in place to fill the gap from the day the insurance company withdrew the original cover.
I hope that the Bill can make speedy progress and that it will be noted outside the House that it had total all-party, all-Member support.
§ Mr. John Greenway (Ryedale)I begin by declaring some interest as having been involved in insurance for 20 years, as an adviser to the Institute of Insurance Brokers and as an elected member of the Insurance Brokers Registration Council. Perhaps more important on this issue, although it is not an interest to declare, we have an all-party insurance financial services group, which I chair and which has been very active in discussing with the Government and the industry how to deal with this dreadful problem of terrorism cover.
I pay a tribute to my hon. Friend, the Under-Secretary of State and to my right hon. Friend the President of the Board of Trade. They will know how difficult it has been for all of us, given the sensitivity of this issue, to discuss—I think that this will be taken in the right way—how to bring pressure to bear on the Government to recognise that something needed to be done. It was very late in 986 December before we finally reached agreement on how to proceed, but the reception that our approach received was not just extremely courteous, but very understanding. The fact that this Bill and the scheme that it underwrites so closely reflect the general principles that we put to my hon. Friend and his colleagues and officials at the DTI clearly indicates that they listened very carefully to the representations of the industry.
I have said that I am a member of the Insurance Brokers Registration Council. Our office has been affected by both bombs. I was in Bishopsgate last week and I have seen the devastation caused by the second explosion. It left me with very mixed feelings. Above all, it strengthened my belief that, when we stand up in the House and say that terrorism will not prevail, that the bullet and bomb will not change the course of British politics or politics in Northern Ireland, it is not just because that has to be the way, but also because it is an absolute outrage that such acts should be perpetrated. I was moved by the way in which the people who work in the City, the police and the contractors putting right the damage carried on. They deserve the highest possible praise and support.
We have all said, in the wake of these two outrages in the City of London and others elsewhere throughout the United Kingdom, that the terrorists will not win; life goes on. This measure is designed to ensure that life can go on, that businesses can be up and running as quickly as is humanly possible.
In the discussion that we have had already, some concern has been expressed about whether the Bill as drafted can be retrospective to 1 January. I am in no doubt about that. As I understand it—perhaps my hon. Friend will confirm this in winding up—the Bill gives Parliament's approval to the Treasury paying out of public funds the money needed to underwrite Pool Re: in effect, to pay out money to support any agreement entered into by the President of the Board of Trade. He made that agreement at the end of last year, so what we are doing here is providing the funding for the agreement that he has already freely entered into.
Again, I pay a tribute to the Government for the way in which they so quickly made clear after the recent outrage in Bishopsgate that moneys would be forthcoming and that there would be no difficulty with this scheme because we had not yet passed the Bill through Parliament.
In his introductory speech, my hon. Friend talked about all those who consider themselves to be at risk and said that it was in their commercial interest to insure. I suggest that we should go further. I believe that we should discourage selection on the basis of whether people ought to have terrorist cover. It is a simplistic argument, but one does not say to one's insurance company that flood damage should be excluded because the house is on the top of a hill.
The whole principle of insurance is one of mutual cover, mutual risk and mutual funding. What we have seen in the past year or so must tell us all that no one can be sure where terrorists will choose to strike. Yes, there are some potential targets—we all acknowledge that—but I feel strongly that it is the duty of the House to discourage selection. I take my hon. Friend the Minister's point that there should not be compulsion, but I think that we should encourage businesses to avail themselves of the Pool Re facility. The Minister gave a vivid example of the fact that, 987 in the full context of the overall picture of business costs, the costs of taking advantage of Pool Re in extra premium terms are very small.
There are two principles that business men ought to acknowledge: first, that it can happen to them, and, secondly, that, if it does, it will not affect their ability or the resolve of their businesses to continue. That means that every business needs a strategy for management of the risk that terrorism represents. That strategy embraces three elements. First, it must mean increased vigilance. My right hon. Friend the Member for Westminster, North (Sir J. Wheeler) rightly paid tribute to the work of the police in the City of London. Indeed, the police throughout London have done a tremendous job in the face of terrorist activities and we ought not to forget that many potential bomb threats have been intercepted with tremendous skill and with the use of intelligence. We need to get across the question of vigilance to the public and to the business community. I do not want to dwell on that point today because I know that my right hon. and learned Friend the Home Secretary has made it clear that everything that can be done will be done in that regard.
Secondly, businesses must have an emergency plan. After the St. Mary Axe bomb, everybody was overwhelmed with admiration for the speed with which Commercial Union, the worst affected by the bomb, was able to respond. There has been no real impact on its business because it had an emergency plan ready to put into operation. Following that, many other businesses in the City of London did the same and those plans were put into effect speedily and with tremendous skill during the recent outrage in Bishopsgate. That is a lesson that businesses throughout the country need to take on board.
Thirdly, the element in the strategy on which I place the greatest reliance is the need for insurance. The Bill makes that possible. It is largely an enabling Bill and there is much detail still to be thrashed out. I know that the Department of Trade and Industry is approaching the Bill in a constructive way. I am sure that my hon. Friend the Minister acknowledges that if there are still some issues to rehearse in detail—issues that might have been rehearsed during the Committee stage of a similar Bill—such rehearsal would not be appropriate tonight. There will be an opportunity to raise concerns directly with him and his officials will be available at a later stage.
Will my hon. Friend think again about the need for a separate certificate of insurance for terrorism? I should have preferred us to deal with the issue in the following way. Everyone has made it clear that unless one takes advantage of the Pool Re facility or makes some other arrangement, one will not be insured. It is clear to the policyholder on the renewal documents, which have been sent out by insurance companies since the end of last year, that the £100,000 limit per item of claim is clear and that everything else is excluded. For that reason, we can perhaps avoid the need for a separate certificate of insurance for terrorism when people buy cover in future.
I was also encouraged by what my hon. Friend the Minister said about the need to contain bureaucracy and to make the scheme as simple as possible. There is a problem about the degree of information that has to be 988 provided to obtain quotations. However, I welcome the fact that the Department has agreed to review its requirements in that area.
Commission is another relevant point. When we put the scheme together and asked the Government to be reinsurers of last resort, I argued strongly that there should not be a commission element on the extra payment into the pool. With hindsight, I think that that was a mistake. I believe that there should be some element of commission for two reasons. First, it is important that businesses take up the cover, so we need to have some incentive. Secondly, brokers may try to seek alternative markets for cover which pay commission and that would undermine the viability of the Pool Re scheme. I shall come to the point about alternatives in a moment. There is a significant work load in relation to the scheme itself and in relation to claims. I believe, therefore, that we should re-examine the commission argument.
Other reinsurance schemes are being considered. The hon. Member for Middlesbrough (Mr. Bell) raised the point about potential problems with the EC over competition policy. We have agreed that there should not be compulsion. No one suggests that every business man is being compelled to insure through the scheme. Alternatives will be provided—indeed, I understand that that is happening already. For that reason, I encourage everyone to take advantage of Pool Re.
Over three to five years, there is no reason why the scheme should not be in equilibrium in terms of funding and there is no reason why the objective that we all sought to achieve at the beginning of the exercise—that there should be no ultimate cost to the taxpayer—should not be achieved.
I give a warm welcome to the Bill. I again thank my hon. Friend the Minister for his work so far and for the work that he will continue to do on this important matter.
§ Mr. Bernie Grant (Tottenham)I, too, welcome the opportunity to raise matters pertaining to insurance in this debate. It is clear from the number of hon. Members who have remained to take part in the debate that the subject is serious, especially because the problems of Northern Ireland are now transferring to the mainland. Many people are extremely concerned about what is happening. I have no time for terrorism, as I have stated in the past. What is happening will cause severe grief unless serious action is taken to try to resolve the situation in Northern Ireland. However, I am here to speak not about the position in Northern Ireland, but about insurance claims.
In the past year in my constituency and in my area, we have had several problems with terrorism. A bomb was left at White Hart Lane station in my constituency and a bomb went off in Wood Green shopping city in my area. Garages in Muswell Hill have been raided and explosives have been found. So the situation is serious and I for one am angry that the IRA should seek to use terrorist methods at all, but certainly not in working-class areas where the people are poor and must struggle to make a living. It is particularly in this regard that I wish to look at the question of insurance.
I welcome the Bill and I support what my hon. Friend the Member for Middlesbrough (Mr. Bell) said. I was interested in his point about the Government's intervention in this specific area. I, too, am pleased that they are 989 intervening. It is not usual for this Government to intervene—they talk about market forces taking care of everything—yet here we see them directly intervening. I believe that one of the reasons for their intervention is their moral obligation to look after the security of everyone —big business, my constituents and everyone else. So they feel that they must do something to protect people's security.
The Government must protect not only the interests and property of rich people in the City, but the interests and property of people in my area, working-class people. It is in this regard that I mention two of my constituents who were the minicab drivers involved in incidents on the same night as the NatWest tower and other buildings in the City were blown up.
One of my constituents was approached by two men, one of whom held a gun to his head. The second man got into the seat beside him and they ordered him to drive towards various destinations. The driver of one of the minicabs told me that the person sitting next to him was priming the bomb, putting the wires together, setting the timer and so on, right next to him in the same vehicle. After they had been going some time, they placed the bomb, now live, underneath his seat and, with a gun to his head, told him to drive to 10 Downing street. They took away the wing mirrors and inside rear mirror and told him that they would be driving behind him and that if he tried to stop or leave the vehicle they would shoot him. Then they got out.
My constituent then set off for Downing street, but after he had gone about 50 yards he stopped his cab, got out of it, hailed a bus driver who was passing and, with his help, contacted the police. He himself stood in the road, waved people down, told them that there was a bomb in the car and stopped other people being injured. After some time the police came, the place was cordoned off and the car blew up. Roughly the same thing happened to my second constituent whose car stopped somewhere in the King's Cross area.
I mention these points because this was not just a case of people abandoning their cars and running for their lives. The two people concerned acted in a very public-spirited manner and saved not only their own lives but the lives of others in the vicinity. In doing so they were able to prevent any destruction of property as well as of lives.
Since the incident my constituents have experienced a number of problems. First, they are unable to claim compensation. This is where we come to the question of the insurance. I understand that, for various reasons, these drivers took out a hire and reward insurance third party only, which means that if they have an accident and the other party suffers damage they are covered for that, but their own vehicles are not insured and they get no compensation from the insurance company for them.
That is what concerns me because, while the Minister may say that they have the option of going for comprehensive insurance, which would have given them compensation, the fact is that when my constituents look out insurance they did not expect that the IRA would hold a gun to their heads, put bombs in their cars and blow them to bits. It is not, therefore, a normal, everyday risk, and that is my argument. They acted properly in getting third party insurance as required by law. They had no idea that they would be in this situation. It is not an everyday occurrence. It may be that in Northern Ireland, where such things happen fairly regularly, minicab drivers will accept 990 the possibility of being forced to take on board a terrorist bomb and will see the need to insure against it specifically. But here on the mainland it is not a regular occurrence, so we cannot expect drivers to take on such liabilities. Now that it has happened on at least three occasions, minicab drivers will be well advised in future to take out comprehensive insurance, but at the moment, because such things have seldom happened, they feel it unnecessary to take out the full insurance.
On that basis, I appeal to the Minister to find some way of getting compensation for these drivers. They are self-employed people whose livelihood has been totally destroyed, and because they cannot claim compensation they cannot work.
I asked the Library to give me some advice on compensation. I was told that if the drivers' cars had been burnt during a riot or looting or something like that, under the Riot Act they would have been compensated. If a person's car is set on fire by a bunch of football hooligans, for example, he can get compensation from the police, but if it is blown up by the IRA and set on fire he cannot claim compensation.
§ Mr. Neil HamiltonThe hon. Gentleman has answered his own point. The purpose of the Bill is not to provide compensation but merely to provide at a commercial premium rate an insurance service which otherwise would not be available. Similarly, in the case of damage to real property, in circumstances where an insured had not taken out an insurance policy covering it for the particular kind of damage which was suffered, the provisions of the Bill would not provide retrospectively compensation to pay for the damage suffered. So we are not treating the owners of commercial real property in any way differently from the owners of motor cars, as in the case that the hon. Gentleman has brought before the House this afternoon. We are seeking to plug a gap in the market, although the Bill will apply to contracts of insurance entered into as from 1 January. We are not bringing in a compensation scheme.
§ Mr. GrantI thank the Minister for that. I understand and support what the Bill is doing. What I am demonstrating to the Minister is that there is a loophole in insurance law generally. I do not say that an amendment could not be tabled—I do not know how things are done —but, although I support the Bill, I am suggesting that this is something else to be looked at. Not only have problems arisen about compensation and loss of livelihood, but the men concerned have been offered no protection. One suspected person has been identified and arrested and, at some stage, my constituents will be called on to give evidence against the people concerned, but no protection has been provided for them.
Those men are totally traumatised, but have had no counselling. One of my constituents is a refugee from Ethiopia. He told me yesterday that he had run away from a traumatic situation there only to arrive in Britain and find himself in another traumatic situation. Perhaps it was because of his experience of dangerous situations in Ethiopia that he was able to act in a public-spirited manner and prevent a further tragedy.
The hon. Member for Ryedale (Mr. Greenway), who spoke for the insurance groups, rightly talked about how brave the City workers were to go back to work and about the good work of the fire brigade and the police. I agree 991 with him, but my constituents have also had a very traumatic experience. No one has said that they are brave. No one has been to see them; the Prime Minister has not written to them to thank them for not delivering the bombs that they were ordered to deliver. When we give praise to people like the workers who turned up for work the next day, I hope that the people in high positions will also think about my constituents who also had a very traumatic experience.
I hope that there are no more incidents, but, being pragmatic and the situation being what it is, I suspect that there might be. I would like the Government to consider whether there is a way in which my constituents, who have only third party insurance, can be helped. People in my constituency are working for £80 per week; they have to struggle to pay the insurance premium before they can go out and earn their living. I am not talking about people who have a lot of money and can afford to pay £2,000 for comprehensive insurance. One of the cars which was blown up was worth only £1,500, so paying £2,000 for comprehensive insurance is just not worth it. I would be very pleased if some arrangement could be made whereby the Government make an ex gratia payment in recognition of my constituents' actions.
The owners of the minicab firm—Alan's Minicab Services—have set up a trust fund for the people concerned because they, other minicab drivers and the local people feel that something should be done for them. I hope that the Government can find a way in which to ensure that people who are caught, by poverty, with third party insurance obtain some compensation or relief from the problems that they have been forced into facing.
§ Mr. Tim Smith (Beaconsfield)I am sure that the whole House will have considerable sympathy for the two constituents of the hon. Member for Tottenham (Mr. Grant), both of whom acted in a completely publicly spirited manner.
I congratulate my right hon. Friend the President of the Board of Trade and my hon. Friend the Minister on introducing the Bill. Towards the end of last year they responded very quickly to the situation that arose, when it became clear that there would be no possibility of reinsurance in the market. I know that the way in which they responded to events in the market has been widely welcomed by insurance companies and insurance brokers. I am an adviser to the British Investment and Insurance Brokers Association and I can tell the House that it, too, welcomes the Bill.
We are all very conscious of the background against which the Bill is introduced. I reiterate what every hon. Member has already said—that a measure of this kind is essential if we are to demonstrate to the IRA our determination that they will not win under any circumstances.
I shall ask my hon. Friend the Minister one or two questions about the Bill. In some respects, the Bill could be described, I think he might agree, as a bit of a blank cheque. It does not have a date on it and I would like a date to be inserted, even if the agreement has the date 1 January 1993, which I understand to be the case.
992 When my hon. Friend responds to the debate, will he give some information about how he will report on financial progress? If we give the Government a blank cheque in this respect, we will need regular information about how the scheme is progressing. My hon. Friend described the Bill as a market solution. I welcome the fact that it is as near to a market solution as we can achieve, given that it involves Government intervention, as has been recognised. I believe that Government intervention is justified where there is market failure, as in this case, and I commend my hon. Friend's scheme. I take my hon. Friend's point that, in the long run, there will be no cost to the taxpayer. That is what we hope and believe.
It is just not the case that it is a market solution, with low costs and, in the end, no cost to the taxpayer. There may be considerable costs to the taxpayer in the interim period because of cash flow disadvantages. The Government may sometimes have to pay out large sums of money and be unable to recover them until some subsequent, unspecified time.
For that reason, it would be helpful if we could hear a little more about the arrangements for reporting on what happens to Pool Re, which is a company limited by guarantee, as my hon. Friend the Minister explained. Presumably, like any other limited liability company, it will, in due course, file accounts at Companies House. We will then be able to judge the position of the company, some months after the end of its financial year. Does my hon. Friend have other proposals in mind for reporting on how things go?
Perhaps my hon. Friend can tell us how things have gone so far, because we are now in month five of the new arrangement. It would be helpful to know about the extent to which, to date, people have participated in the new arrangement and the amounts of premiums that have been paid into the company. It would also be helpful to know whether my hon. Friend believes that it may be necessary to pay any claims arising from the Bishopsgate bomb.
Those factors are important when one reads the financial memorandum, which states—I understand why it could say nothing else—that "no precise estimate is possible" of the cost to the Government of the arrangements envisaged. Although my hon. Friend has said that the costs to the taxpayer will be low and that, in the end, the taxpayer will not lose out, I should like to hear about the arrangements for reporting on progress.
I reaffirm my support for the Bill, which has the universal support of the House. In the circumstances, the Bill is essential and I wish my hon. Friend every success in implementing it.
§ Mr. David Trimble (Upper Bann)In common with every hon. Member who has spoken in the debate, I support the Bill. Although it is not the right measure to deal with the issue, I accept that it is necessary that something should be done. The Bill and the scheme that it underwrites at least have the merit of being put into operation speedily. In an ideal world, however, I would suggest that the Government should adopt a different scheme.
The event that finally galvanised the Government into acting on the problem was the bombing last year of the Baltic Exchange. The subsequent events were not surprising, but at the time of the bomb, what struck those 993 of us who represent Northern Ireland were the incredible estimates of loss that were produced. People immediately produced estimates of £700 million and more. At that time last year the total bill for all the bombing incidents in Northern Ireland over 20 years, in terms of criminal damage payments, was significantly less than that. I do not have the precise figures with me, but I think £400 million to £500 million would be on the high side. Yet so-called insurance experts produced such incredible figures.
As Mr. McKittrick, The Independent correspondent, rightly said recently in a newspaper article, after the Baltic Exchange bomb the Republican leadership was "surprised and delighted" at what was said—surprised because, evidently, it did not expect the bill for damage to be so high, and delighted at the panic-stricken reaction. It was inevitable, in the light of that, that there would be more bombs in London. It is further inevitable following the reaction after Bishopsgate, for we saw the same degree of exaggeration. That applied to reaction in terms of estimates, with people talking straightaway about a bill of £1 billion, and making exaggerated comments about the scale of the damage.
I wish London journalists would learn to tell the difference between structural and superficial damage. There was serious structural damage to the church outside which the bomb was placed, but it was obvious to anybody looking at the huge photographs in the newspapers, which occupied far too much space, that the damage to the office blocks was entirely superficial. I was in London on that Saturday morning. I was travelling to Liverpool street station when the bomb went off. Lest people are curious about that, I should perhaps explain that I was travelling for the entirely innocent purpose of going to Essex for an Orange parade. The following day I was in Belfast and had a chance to catch up with the papers and look at the photographs. It was clear to me and my colleagues there that the damage was superficial.
I wish that people would be more restrained in that respect. They should also accept that businesses must learn from the regrettable experience of their counterparts in Northern Ireland, who have had to deal with the situation for far too long. It is possible to have contingency plans. Businesses should gear the way in which they operate to enable them to get back into operation quickly. Regrettably, we in Northern Ireland have had to get back to business quickly. It can be done. It is not the end of the world. Indeed, that is one way in which the man in the street and the ordinary business man can do his bit to beat terrorism. He can demonstrate that it is possible to get back to business quickly and without any undue fuss.
Although there have been two major bombs, Bishopsgate and the Baltic Exchange, the point must be made—this is why I said that we are debating a belated measure—that the danger of major incidents such as those has existed for a long time. That danger still exists and it is greater than people in England realise. For some time, the Provisional IRA has probably—I say "probably" because I cannot be precise—been putting greater resources into its bombing campaign in England than into its entire terrorist operation in Northern Ireland. By greater resources, I mean the commitment of skilled manpower, money and the rest.
Over the years, the IRA has built up an infrastructure in England which enables it to conduct a sustained campaign. Last year, more than 20 tonnes of home-made explosives were recovered in London alone—and every 994 last ounce of that was probably manufactured in London. I asked the Home Secretary a question about that in the middle of last year, and although he did not disagree with the estimate he did not do what he should have done and make the public aware of the position. Manufacturing home-made explosive takes time and a large number of people. If the public are properly alerted about what to look out for, it should be possible for them to play their part in suppressing the campaign, but they must be told how to be vigilant and how to assist the authorities. It does no good in the current situation to pretend that there is not a problem and thus fail to involve the public fully in the fight against terrorism. A tremendous resource is available in terms of potential public support, but it is not being fully utilised.
The Minister referred to comparable arrangements in Northern Ireland and said that legislation had existed both in Northern Ireland and in Ireland to deal with costs arising out of this kind of situation, and he is right—it has existed for not far short of 300 years. I should welcome the opportunity to dilate on some of the advantages of that 18th century legislation, which contains some interesting features. Any hon. Member who wishes to discuss the matter with me is welcome to do so after the debate.
The Bill applies to Great Britain and its provisions do not extend to Northern Ireland. May I be assured that in no circumstances will the provisions be extended to Northern Ireland, that the existing Northern Ireland legislation will remain substantially in place and that the cover and provisions for compensation will not be diminished by any temptation to extend provisions of this type to Northern Ireland? I want that assurance because I consider the provisions in the Bill to be inadequate. They are not good enough, and they are certainly not so good as the statutory provisions in Northern Ireland. I should hate to see the Northern Ireland position undermined as a result of the introduction of measures such as these. We in Northern Ireland do not want to be driven back into taking a market-based approach, particularly in view of the record of some English financial institutions in regard to the problems of Belfast over the years. Apart from that, I am referring to a matter of general principle.
Hon. Members may have gathered that I regard the provisions in Northern Ireland as better than those in the Bill. They are better because the statutory provisions in Northern Ireland are comprehensive. This reinsurance arrangement will not be comprehensive. Under the existing provisions in Northern Ireland, wherever property is damaged as the result of violence or terrorist activity there is provision for compensation. Under the reinsurance arrangement before the House, compensation insurance will be available only to people who first take out insurance to cover the terrorist risk.
I made that point in an intervention in the speech of the Minister, and it was made by the hon. Member for Tottenham (Mr. Grant) when he referred to people who lost out in the incident of which he spoke. He paid tribute to those people, and I underwrite that tribute. They behaved in a highly responsible and brave way, but even if they had not behaved so bravely I should have thought that they would still have a good claim on the public purse for compensation. And it is not just taxi drivers—the same could happen to anyone. Any driver could find his or her car being hijacked and used for a similar purpose. Must every person who owns a car in Britain stop and think about the risk? The Minister said that people who felt 995 themselves to be at risk should take out additional insurance. How can the man in the street or the ordinary business man assess the risk that he may be facing?
It is wrong to think that the risk exists only in the City of London. We know how adept the Provisional IRA is at switching from one area to another. As soon as it is anticipated that the IRA will do one thing, it switches and does the unexpected. That is the way terrorist organisations operate—the risk could be anywhere. We have reason to suspect that there is a significant terrorist infrastructure in London. There is also reason to suspect that there is a significant terrorist infrastructure in the north-west of England. There may be others elsewhere. We do not know what structures have been set up. We do not know what sleepers there are elsewhere. The risk is not confined to certain geographic locations or to certain categories of persons. The risk is more general.
It is inadequate to say to the public, "You should take action only if you feel yourselves at risk." The reason why legislation was originally introduced for Ireland in the 18th century, which was not a period of Government interventionism, was that it was recognised—correctly—that there is a particular responsibility upon Governments to maintain public order. That is one of the primary purposes of Government. What we are dealing with here are the risks and the damage which affect people as a result of a failure to maintain public order. That is why there is compensation for riot damage, and that is why there ought also to be compensation for damage caused by terrorists.
The primary advantage of the legislation in Northern Ireland is that it is comprehensive. Another of its advantages is that there is a degree of governmental control. Because the compensation scheme is administered by the Government, they have a measure of control over its operation. After major terrorist incidents, one serious danger is that there will be fraudulent claims. What measures will be taken, in terms of the Pool Reinsurance agreements, to cover that? Will the Government just rely upon the insurance companies to detect fraud? Will the insurance companies have an economic interest in detecting fraud, or will they be tempted to pass on the risk to the insurer of last resort, the Government?
Under the criminal damage legislation, there is a statutory framework within which one can determine the extent of consequential loss. What will be the position under these arrangements? Will the extent of cover for consequential loss differ from one insurance company to another, with the Government merely picking up the tab through the pool, or will policies contain standard terms to ensure equal cover?
What will happen about betterment? That is a significant problem. When there is damage of this nature, the person whose property is destroyed gets new for old when he rebuilds, and in some respects is better off. One suspects that some businesses in Northern Ireland have prospered because of the number of times that they have been blown up. I am thinking of hotel businesses. The result is that now they have much bigger and better hotels than they ever had to begin with. An ironic consequence of the campaign is this question of betterment. What provision will be made by insurance policies to deal with it? There may be other factors, too.
996 I will say no more about the Northern Ireland legislation. I merely say that I believe that the Northern Ireland scheme is superior to this one. It may have been thought necessary to introduce this legislation because it is speedy and setting up a proper compensation scheme would take longer, but the best thing to do in the long run is to have a proper compensation scheme.
This last-minute measure, which the Minister says is temporary, smacks to some extent of the Government's whole approach to the problem of terrorism—a little half-hearted and a little too late. The Government are not committed to dealing with the problem. I detected that approach in the Minister's final comments. He referred to the underlying problem and said that terrorism would not succeed because the IRA had failed to move the Government an inch. That ought to be the position—I wish to God it were—but everyone knows that it is not.
Terrorist operations have moved the Government quite a considerable distance in terms of compromising the integrity of the United Kingdom, in terms of eliminating the democratic process in Northern Ireland, in terms of giving the parties which share the objectives of terrorism a say in the government of Northern Ireland, and sometimes in terms of appearing, as the Government did in the recent talks, to be neutral about the Union. The way to defeat terrorism is to be positive about the Union and to demonstrate clearly that the Government oppose not just the means that the terrorists adopt but also their objectives.
§ Mr. Peter Viggers (Gosport)The House has listened with keen interest to the speech of the hon. Member for Upper Bann (Mr. Trimble). Having served as a Northern Ireland Minister, I understand the points that he made. I agree with him completely that Great Britain has a great deal to learn from Northern Ireland in terms of its response to terrorist incidents and in terms of showing its determination not to be overwhelmed by terrorist pressure.
The fact that sometimes the media get over-excited may lead to a misinterpretation of the public's attitude to terrorism. The hon. Member for Tottenham (Mr. Grant) spoke movingly on behalf of his constituents. He showed in his graphic speech, to which we listened with keen interest, just how widespread the damage done by terrorism can be and how completely universal is the revulsion against terrorism.
To follow up one point that was made by the hon. Member for Upper Bann, it is not for me to answer on behalf of the Government, but the hon. Gentleman said that there is a significant difference between the Northern Ireland and Great Britain schemes. He praised the benefits of the Northern Ireland scheme and asked what would happen about betterment in the Great Britain scheme.
As I understand it, the scheme for Great Britain which we are now discussing walks around that problem. The initiative for sorting out the problem will remain with insurance companies. The Government will merely stand behind them and prevent insurance schemes from being blown aside by the present lack of reinsurance. The detailed problem relating to betterment will not arise under the Great Britain scheme, because control over that matter will remain with the insurance companies.
997 I asked the Minister to spell out the difference between the proposed scheme for Great Britain and the scheme that operates in Northern Ireland. I thought it appropriate that it should be on the record that there is a difference between the two schemes; I thought it appropriate, too, that the Government's explanation of why there should be a different scheme for Great Britain should be on the record. When I asked that question, I was not seeking to suggest that the Great Britain scheme should be comparable to the Northern Ireland scheme. The two situations are different. Therefore, I warmly welcome the scheme that the Minister has laid before the House today. I believe it to be the right scheme for Great Britain.
I declare an interest, to which I referred during my intervention. I am an elected member of the council of Lloyd's of London, and since 1973 I have been an underwriting member of Lloyd's. I declare that interest in much the same way as a house owner might declare an interest when the value of his mortgage exceeds the value of his house. It is a negative interest this year. Nevertheless, I declare my interest in Lloyd's with pride, for it has been the focal point of insurance in the United Kingdom for the past 300 years. It is a crucial part of the success of the City of London in making London the centre of the insurance market.
Lloyd's leads in most major insurance risks and is now fighting valiantly, in my view, to put its house in order so as to win back the confidence that has certainly been prejudiced and lost as a result of the terrible losses of recent years. I am confident that Lloyd's will fight its way back. In parentheses, may I say that Lloyd's very much appreciates the interest and the understanding of its situation that has been shown by the Minister and the staff of the Department of Trade and Industry. Having said that, however, I must point out that I do not in any sense speak on behalf of Lloyd's. My speech is entirely on my own account.
It was necessary that a scheme such as this should be brought before the House. Late in 1992, it became apparent that the reinsurance interests—the big continental and American reinsurance companies and groups, through which much of the insurance of the City of London and other parts of the United Kingdom is frequently placed—had been destabilised and that they were not confident about continuing their reinsurance arrangements. The result was that the insurance market was destabilised. Therefore, it became necessary to introduce a stabilising element.
I believe that I was the first to raise this issue on the Floor of the House, late in 1992. I did so with diffidence, because I was sad to think that a stabilisation measure should be necessary. Nevertheless, it was necessary. Industrial interests made this very clear to the Government. The insurance industry was not making the point that it required support or subsidy; it was spelling out in clear terms the fact that insurance would not be available if reinsurance were not available and that if insurance in the City of London were not available it might be impossible for companies to continue to operate there. Thus the position of the City as a world capital market might be under threat.
There is no question of insurance interests seeking support subsidy in that sense. What they need is stability. In urging the Government to act, they were not speaking on their own behalf. It is quite clear that they were pushing at a door that was ready to open. The Government were 998 looking carefully at the whole issue and Ministers were quick to come forward with an appropriate measure. I repeat that there is no question of this Bill's representing a subsidy for the insurance industry. The medium-term intention is that it should be a stabilising measure and that it should be neutral in terms of Government cost. I suspect that in the short term there will be an element of subsidy. A number of matters will have to be explored very carefully in Committee. These days, every Bill states whether there will be an additional demand by way of public-sector manpower. I see that in this case two additional posts in the Department of Trade and Industry will be required. I am afraid that the two people appointed will have to work extremely hard in the next year or two.
Of all industries, the insurance industry is international and is responsive to market forces. I have already referred to the fact that, although London is the centre of the insurance world, it uses extensive overseas reinsurance facilities. As the industry is so international and so responsive to market forces, premiums will respond quickly to perceived risk. I believe that the situation will stabilise rapidly, thanks to the measures that are being taken.
I welcome the Bill. It will stabilise the industry and, in due course, enable the Government to withdraw. As I have said already, many points will have to be raised in Committee. I am sure that hon. Members look forward to making their points at that stage. In the meantime, I thank the Government for introducing the measure, which I thoroughly welcome.
§ Mr. Harry Barnes (Derbyshire, North-East)The hon. Member for Beaconsfield (Mr. Smith) referred to the memorandum on the financial effects of the Bill. I should like to quote part of the explanation:
The costs to the Government of the arrangements envisaged will depend on the level of terrorist damage suffered by properties covered by the arrangement, and therefore no precise estimate is possible.That arises from the peculiar circumstances of the measure, and I do not want to argue against it in any way. Essentially, what we are dealing with is an IRA bombing campaign in this country. However, the Bill is general and will apply to any type of terrorist activity. Clause 2(2), in defining an act of terrorism, does not refer simply to acts intended to overthrow Her Majesty's Government or to influence them by force or violence. Other Governments are included. I am thinking of the embassies of other countries, whether the Governments of those countries are de jure or de facto. Presumably, if an attack were made on the mission of Eritrea—a country that has not yet been formally recognised but is likely to be recognised on 24 May—it could be dealt with as would be an attack on a subsequent embassy. We are dealing with a general legal situation, although it has its origins in IRA activity.Businesses can take certain action to contain the cost and lessen the impact of terrorism. In this regard, they ought to direct their attention to the moral, political and financial support that can be given to organisations—many of them in Northern Ireland—that try bravely to face up to terrorist activity, whether of the IRA or of Protestant paramilitary organisations such as the UDA. It should be recognised that there are people who seek to undermine bodies such as the IRA and to remove the 999 conditions in which they can develop. This is a matter to which commercial interests would do well to pay some attention.
The Peace Train organisation was formed as a result of the disruption of rail services, especially between Dublin and Belfast. The purpose of disruption is to have traffic moved from the railway to other types of transport that are susceptible to rackets. In addition, the British troops who have to clear railway lines that have been tampered with are vulnerable. Although there has recently been some similar IRA activity, the Peace Train organisation has been quite successful. Following deaths at railway stations and explosions on railway lines in this country, the Peace Train people organised a run from Belfast, through Dublin, Dun Laoghaire and Holyhead to Euston. People from 17 political parties in Northern Ireland, the Irish Republic and Britain were involved, and the President of the Republic, Mary Robinson, gave her support.
It is important that businesses should support such activities. Obviously, many people who have no party political connections are involved. I refer in particular to a group called Families Against Intimidation and Terror. In Northern Ireland, the IRA and the UDA try to operate no-go areas in which they take charge of law and order. When there is lawlessness in an area, such people try to move in and take over from the proper authorities. Knee-capping is one manifestation. The IRA shoots up Catholics, and Protestant paramilitary organisations shoot up Protestants.
It is good to have an organisation in which Protestants and Catholics unite against such activities. A very impressive meeting, involving three Protestants and two Catholics from Ireland, took place in this building. The common experience of those people obviously affects businesses in Northern Ireland. These are moves with which we ought to be associated. There are many community organisations and bodies such as the Irish Association, Co-operation North, Glencree, Women Together, Lurgan Interfriendship, the Peace People—and Peace '93 which emerged after the Warrington bombing and held a massive rally in Dublin. Business needs to be aware of those organisations because they could have an impact on how the legislation operates.
I am associated with one such group, New Consensus, which operates in Ireland and in Northern Ireland; there is also a group in Britain. I am privileged to be one of its presidents, together with the hon. Member for Eltham (Mr. Bottomley) and Lord Hylton, who is a CrossBencher. I hope that that shows what needs to happen here and in Northern Ireland on a cross-party, cross-community basis. The people whose names appear on the letterhead of that organisation are from different parties, as are the vice-presidents—my hon. Friend the Member for Western Isles (Mr. Macdonald), the hon. Member for Southwark and Bermondsey (Mr. Hughes) and the hon. Member for Staffordshire, Moorlands (Mr. Knox). Not only do the presidents and vice-presidents represent different parties but my hon. Friend the Member for Western Isles and I represent different wings of the same party. Such activity should be encouraged—
§ Mr. Deputy Speaker (Mr. Michael Morris)Order. The hon. Gentleman's remarks should relate to the Bill.
§ Mr. BarnesI am grateful that you have been so generous, Mr. Deputy Speaker, on the points that I have made so far. I think that they were relevant to the measure because of the expenditure that the Government may be involved in due to acts of terrorism. What is needed is action that begins to undermine the development and the growth of terrorism. There are things which business can do to assist that. That was the logic of the points that I was making.
The debate has been fascinating. Quite often, hon. Members make similar speeches and have party briefs to speak to. Usually, different parties argue different positions. So far, the contributions to the debate have represented different interests. My hon. Friend the Member for Tottenham (Mr. Grant) made a telling contribution. If we were debating the politics of Northern Ireland, hon. Members might have different views on the way forward and on how to undermine the activities of terrorists, but hon. Members are united on the Bill.
§ Mr. Peter Bottomley (Eltham)I wish first to make two apologies and to pay one tribute. My first apology is to the hon. Member for Middlesbrough (Mr. Bell) for missing his speech. I heard the speech of my hon. Friend the Minister, but I had to leave the Chamber to pay a tribute to Robert Adley and did not hear the speech of the hon. Member for Middlesbrough.
My second apology is not to anyone in the House. When one of my constituents, Stephen Lawrence, was murdered recently, I would have liked to have had the chance to raise in the House the unprovoked racial attack which resulted in the murder of a fine young man who was black. There may be another occasion when I can do that, but I wish to say to his family that issues relating to terrorism are no more important than the incident which caused them such suffering.
My tribute is to my hon. Friend the Minister. There has been a general welcome for the Bill, in which I join. I also pay tribute to the way in which my hon. Friend introduced it. He did not give way to the temptations which were obviously present. The hon. Member for Upper Bann (Mr. Trimble) was right that avoiding exaggerated reaction to the aims of terrorists helps reduce what they achieve.
People who set off bombs and who carry out assassinations, whether they have picked out targets or are casual about whom they kill, seek publicity and public reaction. That public reaction may include what insurers feel that they may or may not be able to afford to provide cover for. The public reaction may include what the Government decide that they should properly do. Certainly, it includes what the Provisional IRA was trying to achieve in the mid-1970s and failed to do in the mid-1990s, which was to drive a wedge between the Irish and British communities.
It is becoming ever clearer that there is no wedge between the Irish and the British. The Warrington bomb helped to focus attention on a development over the past 10 years: that more and more Irish people are saying openly, "This is not done in our name." That is a very important thing for the Irish to say. It is important for those of us who are in part Irish, or in large part not Irish, to be able to stand with the people in the Irish community 1001 in Dublin, Belfast and London and say that we understand what the terrorists, the bombers and the killers are trying to achieve.
The hon. Member for Tottenham (Mr. Grant) made an impressive speech. His points could not properly be answered by one Minister. The Minister who will reply to the debate can only say that some of those points do not concern the departmental interest which he covers.
I do not believe that the Bill should be amended to cover the point, but when we think of all the interests involved—the insurance interest, the City interest arid the national interest—if we cannot enable the two heroic minicab drivers to carry on with their trade, by providing insurance cover and vehicles, we are not the sort of country that I believe we are.
Perhaps someone in the City of London corporation could find out whether, by passing round a hat or by applying to an existing fund, the minicab drivers could be put at least in the position that they were in before they were commissioned to take bombs to Downing street and elsewhere. When awards are being made for valour or gallantry, I think that most people would regard it as appropriate that they should receive such public recognition.
As to the points made by the hon. Member for Derbyshire, North-East (Mr. Barnes), it is important to reduce the costs of insurance, reinsurance and guarantees to Pool Reinsurance. There are different ways of doing that. Some, which are for another debate, are hard security measures. We do not want to turn the City of London, the city of Westminster or any other part of the United Kingdom into a no-go area because that is not what a free and open society is about. Part of the solution is to continue showing in various ways that the terrorists—this applies to disloyalists just as much as to the Provisional IRA—are not achieving what they are after. If we can understand some of the underlying grievances, and say so out loud, they will be less able to exploit them in recruiting people to their illegal criminal substitute for politics.
We must also recognise that bombs are set off and people are murdered to get publicity and public reaction. We must turn that against the terrorists. The hon. Member for Derbyshire, North-East made a passing reference to the Peace Train. When I was a Minister in Northern Ireland, I was responsible for railways. I leave with the House one experience. On most days, the rail service was interrupted by bombs, hoax bombs, calls and hoax calls. The IRA was trying to get the same publicity as that which followed a tragic level-crossing crash at Slaght outside Ballymena, which was not terrorist-related. The IRA knew that it was not possible, either in the City of London or on a railway line in Northern Ireland, for the security forces and the railways to be able to react almost perfectly to every incident. Therefore, it tried to cause the sorts of deaths and crashes that we saw outside Ballymena. For six weeks after that, there was no interruption to the railway service.
It is possible to turn the publicity and public reaction against the IRA. I hope that one memorial to Edward Henty will be a newspaper drive for understanding of what people want when they have the sort of explosions with which the Bill is partly designed to cope.
Without straying too far from the Bill, it is worth saying that, in my experience of working across the denominations in central America and South Africa, every group that would otherwise have turned to using bombs if they 1002 wanted to make a point, either in their own country or perhaps in London—I should say in passing that we still do not know who caused the bomb in New York; it could have been an IRA-related bomb or one linked to Yugoslavia—
§ Mr. Deputy SpeakerOrder. The hon. Gentleman is stretching it now. The Chair was patient with and understanding of the hon. Member for Derbyshire, North-East (Mr. Barnes), but allusions to New York and South Africa go way beyond the scope of the Bill. The hon. Member for Eltham (Mr. Bottomley) should either come back to the Bill or draw his remarks to a conclusion.
§ Mr. BottomleyI anticipated guidance from the Chair because I was about to say that, if we want people to understand why we need to control the public expenditure costs related to the Bill—I would not anticipate guidance that that was out of order—we need to understand that it is not done simply by a reinsurance pool. Establishing the pool or providing a guarantee if the pool is exhausted leads to increased public expenditure which it is the primary duty of the 651 hon. Members in the House, whether they are below the Gangway or occupy the Speaker's Chair, to reduce.
Reference has been made to the need to deliver public order—we were reminded of that by the hon. Member for Upper Bann and other hon. Members. The point is that other people have given up violence when they have the opportunity to vote. In the House, we have the opportunity of debate as well.
Those who are concerned about reducing their insurance premium—that is, for insurance up to £100,000 —and those who will pay extra to the pool should accept the invitation to consider other ways of reducing the background to the events against which they are protecting themselves and against which the House and the Government are trying to protect them. That does not simply mean understanding why it is wrong for people to let off bombs and bullets and why it is important to understand the words of the seven-year-old to her parents after the Baltic Exchange bomb, "Why are they trying to hurt me?" Such a question can draw a response from those around the disloyalists and the Provisional IRA. Effectively, the cross on which that girl is put becomes as important and as powerful as the cross on a ballot paper. In the end, those two forms of the cross will outfight the bombers and those using guns to intimidate or kill others.
I suspect that if people in the city—I do not mean simply the city of London, because the cities of Westminster, Warrington, Manchester, Leicester and so on are also important—understand that they can provide support to non-governmental organisations, which may be by small amounts of money but mainly by a degree of interest, we shall find that in the United Kingdom, as in other countries around the world, the terrorists will understand that they will not be successful with their present methods.
There are ways to increase understanding, but I recommend that people should not simply listen to this debate. When a book called "May the Lord in his Mercy be Kind to Belfast" by Tony Parker is published next week, people will get a greater understanding and be able to share in such debates inside the Chamber and outside.
§ Mr. John Bowis (Battersea)To follow the hon. Member for Derbyshire, North-East (Mr. Barnes) and my hon. Friend the Member for Eltham (Mr. Bottomley)— without testing your patience or tolerance, Mr. Deputy Speaker—they were talking about a reinsurance policy. It was not necessarily the reinsurance policy in the Bill, but, nevertheless, an important reinsurance policy for future peace in these islands.
It is a pleasure to follow the hon. Member for Derbyshire, North-East because earlier this week I followed him when we were talking about ending violence in another part of the world—in Africa—and seeing how the pieces can be picked up after a 30-year war and contributions made towards that. In this debate, we are talking about a similar period of violence and destruction and how we can help to ensure that the pieces are picked up.
This measure will not defeat terrorism, but it will help to ensure that the objectives of terrorism are not achieved. Terrorism has many forms, but the terrorism that we see, especially in this island, is aimed at a number of objectives. My hon. Friend the Member for Eltham paid tribute to constituents of the hon. Member for Tottenham (Mr. Grant), and we all share that. The spirit to which he referred is a British spirit, although it incorporates someone who came to the United Kingdom from Ethiopia. That spirit is the reason why the aim of killing and maiming cannot succeed.
In my constituency, I have had attempts to disrupt services—two bombs were placed on railway lines outside Clapham Junction. Neither of those attempts succeeded because the people who run and organise the services got going again. Within half an hour of my being on those sites, the trains were running and people were getting back to work. That is the way in which we prevent the objectives from being achieved.
Another objective is that of causing as much economic damage to the United Kingdom as the terrorists can manage. The Bill will ensure that the objective is not achieved. The economic damage may be damage to business premises or shops and jobs. It may be damage that is done to the financial base that underwrites the United Kingdom economy—in particular, the insurance industry. Attached to all that was the attempt to destroy a church in the City and the reaction and response to that. None of the objectives will be achieved.
This Bill, which my right hon. Friend the Minister of State introduced after some of the most able deliberations and consultations with the people most affected and the experts in the field that we have ever had, will go a long way to provide the collective response that we need to ensure that the terrorist objective fails. The measure is right and is welcome. It is right because it is the safety net —it plugs the loopholes. As my hon. Friend the Member for Beaconsfield (Mr. Smith) said, the costs will be monitored and regular reports will be made. Reference was made to the fact that we must ensure that fraud is not allowed to creep into the system.
We must stress that the measure is based on the principle that it will in no way assist the uninsured. People may have the impression that we have introduced a measure which will mean that they will not need to bother in the future—the Government will pick up the tab. The hon. Member for Tottenham should tell the minicab driver 1004 in his constituency that the Government have not done anything in the measure to discourage him from taking out full comprehensive insurance in the future. I believe that that driver suggested that such insurance might cost £2,000 for a £1,500 car. He should shop around: the only justification for such a premium would be a very bad record and, no doubt, no one with such a record would be driving a minicab. The hon. Gentleman's constituent can be reassured that affordable insurance is available; however, I take the point about compensation for any threat to his livelihood.
It is important not to distort the market and I believe that the Bill goes to great lengths to ensure that that will not happen. It provides a safety net, rather than competition with existing insurance facilities. Some legislation presents us with a temptation to step in, but this Bill does not: although it commits us to ensuring that the risk is underwritten, it will encourage neither high costs nor inefficiency in the system.
The Bill also requires everyone in the community, especially those running businesses, to take sensible precautions against terrorism. Firms in my constituency have expressed concern about structures that could be at risk—gas holders, for instance. We must ensure that such risks are tackled by the managers of the establishments concerned. A home owner does not simply rely on his insurance company to protect him once his home has been burgled; he must also rely on his initiative to make such damage less likely. It is crucial to take such precautions, with police advice.
I hope that my hon. Friend the Minister will clarify three points. When I intervened on the hon. Member for Middlesbrough (Mr. Bell) on the subject of looting, he responded fairly up to a point; that point involved the protection of an establishment by a security service or firm. Will the payment of insurance following a terrorist act be dependent on such protection, or will the protection be the norm in any event, regardless of whether an act of terrorism has taken place?
My second point concerns the definition of "terrorist", which lawyers doubtless have at their fingertips. Terrorism in London has not always been connected with such bodies as the IRA; London has experienced other forms of anarchistic, violent vandalism. At what point does such action become terrorism and qualify under the Bill?
Thirdly, how will Lloyd's fit in? The way in which companies and their reinsurance companies will join the Pool Reinsurance Company is fairly straightforward, but I am not sure how Lloyd's will do so without undermining the unlimited liability criteria on which it has been judged in the past. Agreement may have been reached and Lloyd's may have taken account of this in its plans for the future; none the less, I believe that the issue should be clarified.
We should pay tribute not only to the Government, but to the British insurance industry. It has taken some knocks; risks have gone wrong and it has had bad publicity from time to time. Ultimately, however, when something goes wrong in our households, businesses or jobs, it is to Lloyd's that we turn and it rarely lets us down. The Bill will ensure that it will not let us down in the event of terrorist acts of violence and vandalism.
§ Mr. BellWith the leave of the House, I should Like to wind up briefly on behalf of the Opposition.
The hon. Member for Battersea (Mr. Bowis) had the benefit of my legal advice earlier. I am happy to say that it was covered by privilege, being given on the Floor of the House, so I am not liable if it turns out to be wrong. I shall, however, leave it to the Minister to give his definition of terrorism as he sees it, and to define the participation of Lloyd's. It would be interesting to know how it can participate, given its syndicate system.
We enjoyed the eloquent speech of the right hon. Member of Westminster, North (Sir J. Wheeler) about the role of the City of London police. We sometimes forget that they are separate from the rest of our police Force. They have played a strong and significant role in the face of difficult and serious circumstances.
The hon. Member for Gordon (Mr. Bruce) demonstrated the unanimity of the House. When the hon. Member for Battersea congratulated the Government, I thought that he would also congratulate the Opposition not only on supporting the Government fully, but on making clear their support beforehand so that hon. Members unable to be present could leave earlier. The hon. Member for Gordon spoke of the Government as the reinsurer of last resort, and of the capital base behind them. It is, of course, money in the bank for anyone whose claim ends up on the desk of the Pool Reinsurance Company and could not be met in any other way.
The hon. Member for Ryedale (Mr. Greenway), who declared his interest at an early stage, made an interesting point. He said that he thought that there should be mutual cover for mutual risk, leading to mutual insurance. That was a valid point, which again demonstrated the significant role that insurance can play in the community and the need for all of us to pull together.
The hon. Member for Upper Bann (Mr. Trimble) based his speech on personal experience in Northern Ireland. He referred to what one might describe as the excessive publicity which follows terrorist acts. Having examined the press coverage of such events in preparation for the debate, I feel sure that there is excessive publicity. I am reminded of the sinking of an oil tanker off the Shetlands. The television reporter asked someone on the spot, "'What is the worst that can happen now?" I think that we spend too much time considering the worst that can happen, rather than the best. Given the means available to the state as the reinsurer of last resort and the flexibility of the insurance market, it is clear that we can respond to the crisis in the market and ensure that businesses continue.
The hon. Member for Beaconsfield (Mr. Smith) showed the Opposition a ray of light when he said that it was appropriate to intervene in markets when they failed. Opposition Members will remember that in times to come: every time we call for intervention, we can justify it on the basis of market failure. My hon. Friend the Member for Tottenham (Mr. Grant) made a first-class constituency speech, showing the kind of speech that hon. Members can make on the Floor of the House when they are not inhibited by the Whips and are free to speak on behalf of their constituents. The Whips look up in surprise, but one of the great attributes of today's debate has been the absence of any contribution from them other than benign nodding and an occasional glance at the clock.
1006 By drawing national attention to the plight of his two constituents, my hon. Friend the Member for Tottenham rendered a significant service not only to them but to the debate and to the standing of the House of Commons. We were also grateful for the contribution of the hon. Member for Gosport (Mr. Viggers), who spoke both as a former Northern Ireland Minister and a Lloyd's name. He brought some extremely helpful knowledge to the debate.
My hon. Friend the Member for Derbyshire, North-East (Mr. Barnes)—who has devoted a good deal of his parliamentary time to the group known as New Consensus—introduced an extra dimension in relation to what can and what should happen, and spoke of the possible role of Northern Ireland in making Bills such as this unnecessary in future.
The hon. Member for Eltham (Mr. Bottomley) made an interesting speech. He, too, is a former Northern Ireland spokesman. He mentioned Mr. Robert Adley. I must tell the House that when I heard of Mr. Adley's death this morning I put on this tie in his honour. He and I shared an interest in ties with the hon. Member for Gosport and other hon. Members, and I think that his wife Jane would be gratified to know that on the day of his death reference has been made to him in the Chamber.
§ Mr. ViggersWe do not often have an opportunity to pay tribute to an hon. Friend, but I should like to add to the comments made by the hon. Member for Middlesbrough (Mr. Bell). It was courteous of him to refer to our late colleague Robert Adley, who was held in great affection in the House.
§ Mr. BellI am grateful to the hon. Gentleman for those remarks.
I think that I have covered the issues raised, and I have one or two points to put to the Minister. It has been stated that the legislation is retrospective. The question is whether the Bill is genuinely retrospective. I am satisfied that it is, and that when enacted it will be retrospective. The Minister may wish to clarify that. There is consensus in the House on the measure.
§ 8 pm
§ Mr. Neil HamiltonWith the leave of the House, I shall reply to the debate. I congratulate all hon. Members who have participated—our proceedings have revealed a remarkable and rare unanimity among us.
In the debate, I have been accused of introducing interventionism. It just goes to show what a wet left-winger like myself, when introduced to the Department of Trade and Industry, can do to effect changes in Government policy. As I said in my opening speech, such interventionism is designed to correct a market failure where the national interest requires it.
I have never been an anarchist who does not believe in any Government intervention. I have always believed that the national interest should be safeguarded by the Government, but I have taken a different view of the national interest from that of, for example, the hon. Member for Derbyshire, North-East (Mr. Barnes). It is a sign of the unanimity in the House that the hon. Gentleman, from one wing of the Labour party, and myself, from the opposite extreme of the political spectrum in the Conservative party, were able to unite in support of the Bill.
1007 I accept the correction of the hon. Member for Middlesbrough (Mr. Bell), for whom I have the highest respect, when he referred to my mention of the infinitesimal chances of the IRA or any terrorist group succeeding in compelling the British Government to change policy as a result of acts of violence. He said that the correct word should be "non-existent", and I certainly accept his correction, although "infinitesimal" means so small as not to be perceived.
I certainly agree that we in this country can never allow Government policy to be dictated by acts of violence. We may have to respond to acts of violence with measures such as the Bill, but the achievement of the political objectives that inspire the violence will never be conceded by Her Majesty's Government, whatever their political complexion. To do so would be to subvert the basis of democratic society and institutions of democracy such as the House.
We should allow ourselves some general reflections on the Bill's purpose. My hon. Friend the Member for Ryedale (Mr. Greenway) was right to say that we should all become more vigilant. There have been some recent terrorist apprehensions by the police. I certainly agree with my right hon. Friend the Member for Westminster, North (Sir J. Wheeler) that the City police, the Westminster police and the Metropolitan police deserve the highest praise for the way in which they handled the consequences of the bombs in the City and elsewhere in the capital.
As a consequence of increased public vigilance, we have been able to apprehend terrorist suspects, and we hope that those responsible for all the acts of violence will be apprehended. Through our vigilance, we can all participate in the national interest.
My constituency borders the borough of Warrington. Bronwen Vickers, whose leg had to be amputated as a result of the explosion in Warrington, is one of my constituents. The effects of terrorist violence have been felt in the north-west of England, which is close to home for me. It must be the united desire of everyone in the House to remain vigilant and to help to defeat the current terrorist outbreak that is causing so much hurt.
I agree with the hon. Member for Upper Bann (Mr. Trimble) and my hon. Friend the Member for Eltham (Mr. Bottomley), who paid me a surprising compliment by commenting on the moderation that I have displayed during the debate: we would play into the hands of terrorists if we exaggerated the consequences of violence. I believe, and always have done, that the best response is to be resigned but determined.
We must be determined not to be deflected from our political objectives and to say, "Try as you might, and although it may hurt us or cost us money, we shall then bear the cost that you impose on us and redouble our efforts to preserve the essence of our democratic system free from the taint of violence." We shall respond by the counter-measures that we take—not only by policing, but by introducing measures such as the Bill—in order to neutralise, and more than neutralise, the effects of the violence used in an attempt to defeat the democratic process.
I have been asked a number of technical questions, and I shall try to respond to as many as possible. I know that there is considerable interest in the next debate, so I shall 1008 not delay the House too long. My hon. Friend the Member for Beaconsfield (Mr. Smith) mentioned the Bill's retrospective application. The Bill is drafted to apply to contracts of insurance entered into from 1 January. That date does not appear in the Bill, but that general power is contained in the Bill, and it has been made plain during the debate that it will apply to contracts of insurance from 1 January.
The sums of money that the Government ultimately may have to be paid will be identified in a separate vote within the Department of Trade and Industry's votes. Any accruals that may fall due will appear in the appropriation accounts. There will be opportunities in Parliament during the year to debate the way in which the scheme has worked. There will doubtless be other general debates as well.
I cannot commit the Leader of the House or the business managers, as I am now inhibited and no longer an inhibitor as a member of the Whips Office. Therefore, I cannot say to what extent we shall be able to debate matters related to the Bill once it is enacted, as I hope it will be. I am sure that there will be many opportunities for us to discuss the Bill's general principles and the way in which it has worked in practice.
My hon. Friend the Member for Beaconsfield also asked about the costs of the recent explosion at Bishopsgate. I return to the remarks of the hon. Member for Upper Bann, who deplored the knee-jerk reactions, scaremongering and exaggerations of the instant pundits that were so gleefully reported by the press. I think that people, particularly those who work in the City of London and the insurance industry, should know better than to respond with the comments that we heard in the immediate aftermath of the explosions, both at St. Mary Axe and at Bishopsgate.
As was proved in the case of St. Mary Axe, the pundits were talking through their hats and did nothing but damage to the cause we are debating. They gave nothing but help to the IRA by their intemperate and ignorant comments. If there is another explosion, I hope that the instant pundits will curb their desire for a brief moment of publicity and say nothing until they know what they are talking about.
As for the cost of the Bishopsgate explosion, I am not in a position to give an accurate figure, because too many uncertainties still surround it. It is not yet certain how much work has to be done on some of the buildings, so we do not know how much the work will cost. We do not know how much of the damage was insured against terrorist risk. Some insurance policies hang over from last year and include terrorist cover. They will not expire until later this year. So many buildings that may have suffered as a result of the attack may already be covered by contracts of insurance. We therefore will not know the total cost for many months.
It is not yet certain how much of what has been insured will fall within the current arrangements, so we do not know to what extent Pool Reinsurance will be called on to pay out. Finally, it is not yet certain how high the income of Pool will be this year, so we cannot at this stage predict what calls on the Government there may be.
Although this may not be regarded as an informative response, it at least has the merit of accuracy—unlike some of the specific figures given by people for previous 1009 explosions, figures that were subsequently found to be utterly misleading. It would be wrong to adopt that approach.
The hon. Member for Tottenham (Mr. Grant), in an excellent speech on behalf of his constituents, drew attention to the bravery of certain drivers and to their speed of thought. I share the regret expressed by other hon. Members about their loss, but I reiterate that the scheme is an insurance scheme. I cannot guarantee a solution to the sort of problem that the hon. Gentleman discussed. It depends on the degree of take-up as a result of the operation of the scheme.
I welcome other measures that are being taken, especially the establishment of a trust fund, from which I hope the losses sustained by public-spirited individuals such as the constituents of the hon. Member for Tottenham will be paid. I hope that people will contribute generously.
I have asked the insurance industry to ensure that third party, fire and theft policies always cover loss due to terrorism and explosions of this kind. There is no reason why such cover should be excluded; after all, the reason why we are debating the Bill is that, in the past, insurance companies did not consider the liability to which they might be exposed from terrorist explosions, because they were not a problem of which we had any great experience.
I fully accept the point made by the hon. Member for Upper Bann in support of the hon. Member for Tottenham—that there is a lacuna here; but it is not best plugged by Government compensation. The arrangement for Great Britain will be sufficient for our needs. The situation here is rather different from that in Northern Ireland, and we do not necessarily need a comprehensive scheme crafted in the same way to cover the whole country.
Unless I can be persuaded by some compelling argument to extend the scheme from Northern Ireland to Great Britain—no one has succeeded in persuading me yet, not even the eloquent hon. Member for Upper Bann —we will not adopt the scheme for Northern Ireland here. I cannot speak for my right hon. and learned Friend the Secretary of State for Northern Ireland. The attractions or otherwise of what I am introducing for Great Britain to the Northern Ireland Office and to Northern Ireland are a matter to take up with him. I am sure that the hon. Member for Upper Bann will receive the usual convincing response from my right hon. and learned Friend.
I will be happy to respond by letter to points that I have not been able to deal with this evening. I refer particularly to the small but important points raised by my hon. Friend the Member for Ryedale (Mr. Greenway). Meanwhile, I hope that the spirit of amity in which this matter has been debated this evening will survive. If we ever suffer a repetition of the appalling terrorist incidents of recent times, I hope that they will serve not to divide us, but to strengthen the unity that has been so amply demonstrated this evening.
I thank all hon. Members who have taken part, especially the hon. Member for Middlesbrough, who speaks with such authority for the Labour party on these matters. I thank hon. Members for assisting the quick passage of the Bill through the House, because people outside expect the Government to respond quickly in emergencies such as this.
I believe that the combination of swift action and measured response which this Bill represents is legislation 1010 and Government action at its best. Government action with the support of both sides of the House is all too rarely found in our political system or, indeed, in political systems anywhere in the world. That is to the credit of all, and it should be a further demonstration to the IRA that its cause will never win.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Motion made, and Question put forthwith pursuant to Standing Order No. 61 (Committal of Bills), That the Bill be committed to a Committee of the whole House.—[Mr. Robert G. Hughes.]
§ Question agreed to.
§ Further proceedings on the Bill stood postponed, pursuant to Order [7 May.]