HL Deb 30 July 1918 vol 31 cc59-72

Order of the Day for the Second Reading read.

THE ADDITIONAL PARLIAMENTARY SECRETARY OF THE ADMIRALTY (The EARL OF LYTTON)

My Lords, this Bill sets forth the conditions and principles governing the distribution of naval prize money to the officers and men of the Fleet during the present war. Several questions have been asked from time to time in this House, notably by my noble and gallant friend Lord Beresford, as to the intentions of the Government in this matter of the distribution of prize money. In this Bill, and in the draft Proclamation which accompanied it, your Lordships will find embodied the policy which was foreshadowed in the answers given to the noble and gallant Lord and others from time to time. I am sorry that the noble and gallant Admiral is not able to be present this afternoon, because, on the last occasion when he questioned me on this matter, I asked him to wait for the introduction of this Bill; and I hope to-day to be able to reply to all the points he raised on that occasion.

The last time we had a discussion on this matter, my noble and learned friend Lord Desart complained that there had been considerable delay in the introduction of this Bill. I admitted to him that the Bill was considerably overdue, but I told him that I hoped to be able, when the Bill was introduced, to give some explanation of the reasons for the delay. I am sure that if he will consider for a moment what is involved in the adoption of the policy of pooling, which is the main principle of this Bill, the noble and learned Lord will realise that a considerable amount of time must have elapsed before the Bill could be introduced. In the first place, the adoption of this principle necessitated considerable discussion with the Treasury. Those discussions ranged over a number of points—some of which I will explain in a moment—but they were very necessary, and they occupied a good deal of time. Then, secondly, it was necessary that we should consult with the Governments of our Dominions, because they are interested in the Bill. That meant that copies of the Bill had to be sent to the various Dominions, and we had to wait for the answers and the criticisms of the Dominion Governments. Thirdly, we had to spend a considerable amount of thought upon the scale of distribution which is now embodied in the draft Proclamation that accompanies the Bill. All these things necessitated the spending of a great deal of time, and really the Bill has only been approved in its final form in the last few weeks, and it was introduced in the House of Commons at the earliest possible moment after that date.

I know that your Lordships are anxious to get as quickly as possible to the other matters on the Order Paper this afternoon, and I do not wish to detain you more than is absolutely necessary in explaining this Bill. I think I can explain its main pro- visions very shortly, but as some of your Lordships may not be acquainted with the technical expressions in the Bill, I should like at the outset to say one word to explain the difference between prize money and prize bounty, and also between droits of Admiralty and droits of the Crown. Prize money is an award to the Navy for the capture of enemy merchant ships and cargoes, paid out of the proceeds of the sale of the same. Prize bounty on the other hand is an award paid by the State out of money provided by Parliament, in accordance with the Naval Prize Act of 1864, for the destruction of enemy ships of war. There is only one clause in this Bill—namely, Clause 3—which deals with prize bounty, and that is introduced because aircraft, which are unessential arm of modern warfare, do not come within the definition of His Majesty's ships of war contained in the Naval Prize Act.

Both prize money and prize bounty have an historical origin of considerable antiquity. Prize bounty dates from the Commonwealth, but prize money, with which this Bill is chiefly concerned, is older still. Prize money is, in fact, older than the Navy itself, amid dates from a time before the existence of the Navy when various ports of the United Kingdom contributed their quota of ships for the defence of the country, and the crews of which ships were paid for their services out of the proceeds of the enemy vessels which were captured. This custom of awarding prize money has been continued down to the present day, and in all previous wars this money has always been paid to the crew of the ship which actually captured the prize. That system was a very simple one and very easily administered, but you will see that it necessarily involved a great deal of chance and luck and. the inequalities of distributing prize money in that way are very much accentuated by modern conditions of warfare. It might, for instance, be possible at the present time for a ship with a crew of anything under 100 to hold up and capture a vessel the value of which might be a million pounds sterling.

The Government have therefore decided to place the proceeds from all prizes captured during this war in a general pool from which they will be distributed throughout the Fleet according to a scale which I will refer to in a moment. I mentioned just now that the proceeds of all the prizes captured in war belonged to the Crown, and I may explain how these monies came to be divided into what are now known as droits of Admiralty and droits of the Crown. When in the course of time the office of Lord High Admiral originally held by the Sovereign was conferred upon a subject the proceeds of all merchant vessels captured in ports at the outbreak of war, or driven into port by stress of weather or accident, or captured by any other means in any other way than by commissioned ships, were given to the Lord High Admiral as perquisites of his office. On the other hand the proceeds of all enemy vessels captured at sea by commissioned ships of His Majesty's Navy belonged to the Crown, and they were given as prize money to the captors of the vessels. When King William IV surrendered his rights of Admiralty and other Crown property for a fixed grant from the Exchequer his droits of Admiralty belonged to the Treasury. As the result of these historical changes we now have the rather paradoxical results that droits of the Crown, which are the proceeds of ships captured by ships of His Majesty's Navy, go to the Navy, and droits of Admiralty, which are the proceeds of ships captured in port, belong to the Treasury. If your Lordships will keep this distinction in mind the provisions of the Bill will be easily understood and can be explained very shortly.

The adoption of the principle of a common pool has prevented any distribution of prize money taking place during the war. Until the end of the war you cannot tell what sum will be available for distribution, and as ships have been brought from time to time into the prize courts of the Empire, no distinction has been made between droits of Admiralty and droits of the Crown. It is necessary therefore to establish a tribunal for the purpose of distinguishing between these two categories. The constitution and powers of that tribunal are contained in Clause 2 of this Bill. It will consist of the three distinguished gentlemen whose names are there mentioned. The tribunal is to have the powers of a High Court judge and it will be the duty of the tribunal to decide what sums are to be paid into the prize fund from which distribution is made to the Fleet.

On May 15 last the noble and learned Earl, Lord Desart, expressed a doubt as to whether if this distinction between droits of Admiralty and droits of the Crown were retained there would be a sufficient sum to meet the requirements of the Navy under this new system of distribution. The noble and learned Earl I know holds the opinion that we should have done better to abolish this distinction and to have placed all the proceeds from prize into one fund to be distributed to the Fleet; and I should like to tell him very shortly what are the reasons for the course which we have adopted. As soon as the policy of constituting a pool was decided upon we had three alternatives open to us. The first was to place all the proceeds of prize, both droits of Admiralty and droits of the Crown, in one fund and to distribute the whole of that fund on sonic scale such as that which has been adopted to the Navy. That I believe is the course which the noble Earl would himself recommend. The second alternative was, having created a fund in this way, to accept from the Treasury a certain proportion of it, to be agreed with them, as a gratuity to the Navy. The third alternative was to maintain the distinction which has always existed between droits of Admiralty and droits of the Crown and to take the latter for the Navy,

The first of these alternatives was not open to us because the Treasury were not willing to agree to the whole of the fund so created going to the Navy. Although unwilling to allow the Navy to distribute the whole of the fund which would be thus created, the Treasury were quite willing to agree with us upon either of the other two courses. Several discussions took place between the Treasury and the Department upon this point, and that was partly the cause for the delay in getting the Bill into its final shape. The Admiralty, of course, had to consider what was best for the Navy, and we came to the conclusion that in the interests of the Navy it was better that we should take the droits of the Crown which had by long custom come to the Navy, than take our chance of a Treasury grant by way of a gratuity, the amount of which was to have been the subject of discussion between us. It was for that reason that we adopted the procedure embodied in the Bill now before your Lordships.

I have now explained the historical origin of the grant of prize money and the Tribunal which has been set up to distinguish between the sums which will go to the Navy and those which belong to the Treasury. There remain two other matters which require some explanation—namely, firstly, who are the persons eligible to receive prize money, and, secondly, what is to be the scale of distribution to them. These matters are not contained in the Bill, but are to be found in a set of Regulations authorised by Proclamation as provided for in subsection (2) of Clause 1 of the Bill. A draft of the Proclamation which it is proposed to issue dealing with these matters has been issued as a White Paper, and this must be read in connection with the Bill. I regret that some words which I used in this House on May 15 have given an impression in some quarters that these matters of eligibility and scale of distribution would be contained in the Bill itself.

I desire, therefore, to say that the grant of prize money is, and always has been, a prerogative of the Crown. It is not a matter which is under the control of Parliament or for which Parliament is responsible; and, therefore, the scale of distribution to the recipients of prize money has always been contained either in a Proclamation or an Order in Council, but not in a Bill. If your Lordships will look at this White Paper you will see, first of all, that those persons eligible to receive prize money are defined as being members of the Naval and Marine Forces who have during the war performed service at sea in ships and vessels of war. "Sea service" is defined as— having been borne for service at sea on the books of a seagoing ship of war which goes to sea or on the books of a parent ship for service in armed sea-going tenders. This expression "ships of war" is defined in such a way as to include armed boarding vessels, trawlers, drifters and those smaller vessels of the Admiralty patrol which have done during this war such magnificent service in combating the submarine danger. Members of the Air Service operating with the Fleet will also participate under conditions which are defined in the Proclamation. In the case of aircraft the following definition of sea service has been arrived at after much discussion and careful consideration— Trained pilots and observers, the crews of our naval airships and others who have had to fly continuously at sea shall, while borne on the books of one of H.M. ships and attached to a naval air station, be considered to have been performing service at sea, but no service at a training establishment or whilst employed on shore for service with our army or the armies of any of our Allies shall be so considered. The recipient will get a full share, according to his rank, if he has served at sea for a period which at the present moment is fixed at thirty months. That is considered to be a very severe test of service. Only those who have done thirty months' seaservice will qualify for a full share of prize money. We realise, however, that if the war is continued beyond, say, sixty months—that is to say, five years—it may be necessary still further to increase this period in some proportion to make it bear a relation to the duration of the war as a whole. Any man who has served at sea for one month will qualify to share in the distribution, and he will obtain a proportionate part of a full share corresponding to the period of his sea service. Men who have been prevented by death in action, or by wounds obtained either in action or in a manner attributable to sea service, or men, again, who have been taken prisoner through no fault of their own, if they have had ten months of sea service will be deemed to have served for the whole period. I feel sure that your Lordships will agree with the special consideration shown to these persons.

So much for the persons eligible for the receipt of the money. Let me say one word in conclusion about the scale of distribution. This has been very carefully considered both by a Departmental Committee and also by the Board of Admiralty, and the scale now adopted represents, I think, as near an approach to general agreement as is reasonably possible. Time scale is contained on the third and fourth pages of the White Paper. By the old scale of distribution Flag officers received one-thirtieth of the total sum available, of which one-half went to the senior Flag officer and the other half was divided among the remaining Fleet officers. Of the remaining twenty-nine-thirtieths one-tenth was divided among the captains, commanders and other officers in command, and nine-tenths was given to officers other than those in command, and to naval ratings. By the new scale contained in the Proclamation officers of Flag rank and officers in command will receive considerably less than under the old scale, but the shares of officers not in command and the shares of naval ratings will approximate to the old scale.

I do not propose to take up any more time in explaining this scale of distribution. It is set out in the Proclamation, and, of course, I shall be prepared to answer any questions that may be put to me upon it. I should like to explain that, although the scale of distribution is a prerogative of the Crown and is not a subject for which Parliament is responsible, we are, nevertheless, very anxious to have the views of Members of Parliament and of any of your Lordships interested in the matter before this scale is finally published, and ill order to provide an opportunity for this we have decided to divide this Proclamation into two parts. Tile first Proclamation, with such alterations as may be necessary to make it complete, will be issued at an early date. That will contain the first five paragraphs of this White Paper down as far as the figure one, on page one. That Proclamation will be issued at once because it is necessary to enable the tribunal set up under the Bill to start its work. The second Proclamation, containing the definition of persons eligible under the scale of distribution, will be issued at a later date. In the meantime the Financial Secretary to the Admiralty has undertaken to afford an opportunity to members of Parliament at a private conference to express their views to him upon it. That invitation will, of course, be extended to any of your Lordships who may be interested in the matter. I think that is all I need say on the present occasion. There may be other details in the Bill which require explanation, but they can be left for consideration when we get into committee.

Moved, That the Bill be now read 2a.—(The Earl of Lytton.)

THE EARL OF DESART

My Lords, the noble Earl who has just addressed the House always presents the measures of which he is in charge with such lucidity that it is a pleasure to listen to them. This is a Bill, which one has the ungrateful task of criticising, where one has at any rate before him a very clear account, not only of the measure itself, but of the policy which inspires the measure. In the remarks at the commencement of his speech the noble Earl made some comment on something I said a few weeks ago in this House about the delay in the presentation of any measure affording reward to the Navy for its services in connection with "prize" during the war. I accept fully the explanation, but, unfortunately, the course that has been adopted has produced results which, I think, have increased the, difficulties of framing a measure of award, and which would not have arisen if it had been possible to follow out the Order in Council of August, 1914, more immediately with some scheme in connection with the proper reward of the Navy in connection with prize.

The words of this Order in Council deserve, I think, a little consideration. They were not referred to by the noble Earl, and I cannot help thinking they had a meaning and adumbrated a form of reward for the Navy which, after full consideration, has not been adopted by His Majesty's Government. That Order in Council, which was submitted to His Majesty and issued almost immediately after the outbreak of war, recognised the objection to the old system of prize money. The Order says that "the conditions governing the distribution of the proceeds of prizes captured from the enemy to officers and men of your Majesty's Fleet require modification in order to bring them into accordance with modern conditions." And it proceeds: "In lieu of the system of distribution of prize money there should be substituted, under regulations and conditions to be hereafter announced, a system not of the distribution of prize money, but a system of prize bounties or gratuities for more general distribution to His Majesty's Forces."

I cannot help thinking that when this Order was introduced it was not contemplated that you would merely distribute the old form of prize money to the Fleet, but that you would establish a new system of prize bounties, or gratuities, in a different form. If I have to say a few words in a perhaps barren task of criticising the framework of a Bill which must unquestionably pass through Parliament, and which I am glad should be passed as being the measure which the Government, with their responsibility, say they desire should be the way to recognise the services of the Fleet in this matter, I am bound to say that I think a good deal of difficulty and complication, perhaps a good deal of delay, might have been avoided if a somewhat simpler procedure had been adopted for dealing with the matter, not on the old lines but on the broader lines which, I think, were indicated by the Order in Council of August, 1914.

The actual situation, as I understand it, and I think I am right, is this. There is a very large fund in the hands of the Assistant Paymaster-General, which I will call for convenience the "produce of prizes." After the Order in Council up to the present date there has been no grant by the Crown of any produce of prize whatever, and the Crown now stands in the position that it is free to grant either to the Fleet, or by way of bounty to other people, either the droits of the Crown, or the droits of the Admiralty, as it pleases. There is, therefore, at the present moment a clean sheet. There is this fund to reward the Navy, or for whatever purpose it may seem right to use it.

There is another complication that has arisen from the delay. Although no grant has been made to the Navy during this time, it was decided by His Majesty's Government at the outbreak of war—and a Committee was formed to deal with the matter—to follow the old practice of grants being made out of bounty to persons who are British subjects, and in this case to Allies or neutrals, who had suffered hardship by the action of the Prize Courts in certain specified directions. The Committee was formed quite early in the war and has sat continuously ever since. It has dealt with about 1,700 applicants, and it has made awards—perhaps it is not right to express it so—but it has made recommendations to the Treasury, which the Treasury have adopted, dealing with considerable sums of money. So that, whether the fund be droits of the Admiralty or droits of the Crown, there is this charge of money which has already been paid, and which has to come out of it. The fund remains a very large fund subject to whatever this may amount to, but I may say there are still many claims to be considered and to be dealt with.

In these circumstances I should have thought that the line of least resistance, and the line which would give you the greatest liberty and the best result, would have been to abandon altogether the old distinction between the droits of the Crown and the droits of the Admiralty—all being now in the power of the Crown—and to have allowed, when the time came, grants to the Navy which would be a reasonable and proper remuneration in connection with its services for prize as a whole, and apply the residue as you like. I do not think it is necessary to say that the whole of the fund should necessarily have gone to the Navy at all. But you would have secured by this that the Navy could have had a proper reward, and I think that you would have been equally sure that there would be a balance of some kind for Greenwich Hospital or the Exchequer Or some other purpose. That, it seems to me, would have been a simpler way to deal with it, for it would have avoided any inquiry by any tribunal with a view to separating one from the other, an operation which I think is bound to occupy time and—I hope that I am wrong—one which may involve a much more difficult task than T thin k perhaps the Government have altogether realised.

What is the real objection to it? The noble Earl in his speech said, I think at the beginning, "prize money was granted in the old days for the Navy." In a sense that is true; but it is not really what the facts were. This money was really granted to the individual captors, and the crews of the ships which captured prizes, and it was not limited to the Navy, for in the eighteenth century it went also to privateers. It was a grant for a particular service done, and, subject to a small Treasury deduction, the proceeds of the condemned cargo or condemned ship went to the captors who themselves conducted the proceedings in Court and not the Crown. What you are doing now is to reward the whole Navy—a much bigger thing—for what they have done in producing the profits of prizes for the benefit of the Government and the State of this country. With some very small exceptions such as detained ships I venture to say that all prizes—droits of the Crown and droits of the Admiralty—are equally due to the vigilance of the whole Navy. You are rewarding the vigilance of the Navy, and not the act of the individual, and it seems to me that it is not only an easier line but it is a more logical one that the Navy should have some portion—whatever is right—out of the proceeds of prizes to the capture of which they have contributed, because there is no longer the reason for the limitation as a reward to an individual ecuring certain property and taking certain property away from the enemy. I cannot see, therefore, any logical objection to dealing with it in the way I suggest.

Moreover, yon would avoid what may be a very difficult inquiry, that of distinguishing between the cargoes of ships which are droits of the Crown and those which are droits of the Admiralty. The reason for that—it was touched upon by the noble Earl—is that in consequence of there having been no grant of any sort or kind it has not been necessary for the Courts to distinguish in their decrees and documents and forms between one and the other. I think, therefore, that it will be found that there are cases—very likely a great many—in which the ship may be condemned as a droit of the Crown when really, if the facts could be inquired into, she would turn out to be a droit of the Admiralty. Equally there would be cases—more of these, I think in which a ship would be condemned as a droit of the Admiralty when really she was a droit of the Crown. That is rather a serious thing. I could give several instances, but I will give only one illustration which is a typical one. It is that of a short case where there is no appearance. What happens in many cases is this. The officer of the Customs makes an affidavit that the ship came in, that the cargo was so-and-so, and that the cargo was condemned for such-and-such a reason. That is all. Nobody appears, and nobody opposes it, and it is not clear in which category it should be placed.

In the course of this war, it is extraordinarily probable that in a great number of these cases although the cargo is condemned as a droit of the Admiralty it is in fact a droit of the Crown, and as far as the record goes it will be a droit of the Admiralty. In order to ascertain which it is you would have to re-open the facts of the case, and it might not he very easy to do so. You might not have the material to do so. That is one illustration. Again, I think that the tribunal might have to deal with serious judicial questions. To that, of course, there is very little objection if my noble and learned friend Lord Phillimore presides, for nobody is more capable of dealing with such questions. But I do not think that is what was contemplated. Many new questions have arisen in this war and you will find that the documents in the Courts will not always show how the ships were condemned. There were sonic cases in which neutral ships came into our ports under agreement. There were other cases in which neutral ships were sent in to be examined. There have been cases in which British ships were diverted into a British port and in which possibly there was enemy cargo on board. In those cases it was the cargo which was condemned and not the ship, but there has sometimes been no judicial decision as to whether they were droits of the Crown or droits of the Admiralty. No one is more qualified to decide these matters than my noble and learned friend Lord Philli- more, and it may be that the tribunal will be able to decide upon a principle in those cases apart from the facts, which I think it will be extremely difficult sometimes to ascertain. A learned friend of mine, with whom I had a conversation with regard to this matter, went so far as to say that it would be almost impossible to disentangle the problem.

The real object that we all have at heart is that the Navy should get its reward, and get it within a reasonable time, and should understand what it is going to get. I think that if you had taken the opportunity that was afforded by the position of this fund you would have been able to deal with it more promptly, clearly, and comprehensively. I do not think that there is really any logical reason for distinguishing one class from the other. With regard to the charges on the fund which are referred to in the Bill, there is some language which is not quite clear, but I think that I understand it. I am personally, as chairman of the Committee, very familiar with the practice. Under direct authority from the Government any recommendation made by that Committee has only been acted on so far as it could come out of the particular condemned ship or cargo to which it related. Consequently it may happen in some cases that you would have a droit of the Crown which would result in there being little left to the Navy out of that prize. That involves an inquiry in each case in which the Prize Committee have made a grant to decide whether it was a droit of the Crown or whether it was a droit of the Admiralty.

There is also the possibility of a third fund. The question whether the monies arising from what are called the detained sin is will ever be available depends upon whether at the end of the war the provisions of The Hague Conference are acted on. I still think that the form in which this Bill is presented is cumbrous, and that you could have obtained the results we all in common desire more easily and more readily by not having adhered to this plan of distinguishing between droits of the Crown and droits of the Admiralty. It is not necessary technically, and I should have thought it was not necessary logically, and I think that if you could have avoided it it would have been much more convenient, and you would have obtained the result desired more readily and more speedily.

I should not dream of suggesting that your Lordships should do anything so unreasonable as to throw out a Bill which is approved by the Admiralty and is their means of meeting the proper claims of the Navy to recognition. But there is just this that I might say as an excuse for the few observations that I have ventured to make. It may turn out—and I really think it is likely—that when this inquiry is completed you will have an insufficient sum, and I only wish that we could have some assurance that if that should be the case nothing will be done with the money that represents Droits of Admiralty which will preclude the Crown from making out of that fund an additional grant to the Navy. My main object, as it is that of all of us, is that the great services which the Navy has rendered to this country, and in this respect particularly, should have the reward which is not necessarily confined to principles of old days but should be reasonably adequate for what they have done. Having regard to the fact that they have adopted this principle of distinguishing between droits of the Crown and droits of the Admiralty under this Bill, limiting the rights of the Navy to droits of the Crown, I hope that if these should hereafter prove insufficient the balance of the produce of prize now in the hands of the Admiralty will not have been dealt with so as to preclude its being available to supplement the produce of droits of the Crown if that should turn out to be too small to satisfy the reasonable claims of the Navy for remuneration in respect of prize.

On Question, Bill read 2a, and committed to a Committee of the Whole House.