BCCI

HC Deb 07 December 1994 vol 251 cc293-4

1. Mr. Vaz

To ask the Secretary of State for Scotland if he will make a statement on when Scottish local authorities which lost money in the collapse of BCCI will receive compensation.

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

The Scottish local authorities that lost money in BCCI are in no different a position from the other creditors of the bank. I accordingly have nothing to add to the statements made by my hon. Friend the Minister of State, Treasury on 27 October in response to a question from the hon. Gentleman about this matter.

Mr. Vaz

The Minister is aware that Scottish local authorities and other depositors in Scotland have been waiting since 5 July 1991 for compensation. As the Government are aware that a new compensation package has been agreed, will the Minister give an undertaking that he will write—either himself or through the Foreign Secretary–to the Sheikh of Abu Dhabi asking for $1.8 billion to be transferred immediately, and that, once it is received, it should be transferred to those Scottish local authorities and others who have suffered enormous hardship because of this unfortunate incident?

Mr. Stewart

It is always a great pleasure to welcome an English Labour Back Bencher to Scottish questions.

Mr. Norman Hogg

My hon. Friend is a Front Bencher on the Back Benches.

Mr. Stewart

The House knows of the long-standing interest and involvement of the hon. Member for Leicester, East (Mr.Vaz) in the matter. However, the payment of BCCI creditors, which it is public knowledge is reported to be 30 to 40 per cent. of their loss, is entirely a matter for the liquidators, the majority shareholders and the creditors.

Mr. John Marshall

Does my fellow St. Andrean agree that it would be quite wrong for taxpayers who lost money through BCCI to be asked to pay higher taxes to bail out short-sighted Scottish local authorities that had money on deposit with BCCI?

Mr. Stewart

There is no question of taxpayers bailing out the local authorities involved. My hon. Friend is correct. My right hon. Friend the Secretary of State granted Western Isles islands council consent to borrow £24 million—the BCCI loss of £23 million plus anticipated interest of £1 million-and Ross and Cromarty district council consent to borrow £1.8 million to help it cope with its losses. My hon. Friend may be referring to allegations that the Scottish Office did a secret deal to compensate Western Isles islands council. I am happy to reassure the House that such allegations are complete nonsense.

Mr. McMaster

Does the Minister agree that BCCI is a financial success story compared with the record of the Secretary of State? First, the right hon. Gentleman gambles and loses £30 million on Health Care International, then he stands idly by watching the Scottish budget be slashed and axed and, finally, last night he led his own side into glorious defeat in the Lobby on VAT on fuel. Is it not time that he said sorry?

Mr. Stewart

I congratulate the hon. Gentleman on his ingenuity in raising those questions, but he is entirely wrong on HCI, as he well knows. My right hon. Friend's public expenditure statement is extremely fair for Scotland, in relation, for example, to local government expenditure. The hon. Gentleman, who is experienced in local government, will know that, on any measure, local government in Scotland receives far more help from the taxpayer of the United Kingdom than local government in England or Wales. Opposition Members should bear that fact in mind.