§ 3.2 p.m.
§ Order of the Day for the Second Reading read.
§ THE EARL OF BIRKENHEAD
My Lords, I beg to move that this Bill be now read a second time. This is a somewhat complicated measure and I shall attempt to outline its main provisions as clearly and as briefly as I can. There has, quite recently, in speeches and elsewhere, been a good many references to other "hostilities"—I hope to explain that term later on. We on this side of the House expect a certain tranquillity in this measure which I do not anticipate, when the Transport Bill matures, from the noble Lord, Lord Lucas of Chilworth. I think we are all more or less agreed, however, that this Bill is an essential and prudent part of our general defence precautions.
As its name implies, the Bill is designed to give the Government powers relating to the insurance of ships and aircraft and cargoes against the perils of war. Certain powers covering ships and their cargoes, but not covering aircraft were included in the War Risks Insurance Act of 1939, but during the, course of the last war these powers had to be modified and extended by Defence Regulations which amended the 1939 Act to meet the changing circumstances of the war. These Amendments, unlike the original Act, have to be re-enacted annually under the Emergency Laws (Miscellaneous Provisions) Act, 1947, and we consider it very desirable that they should now be incorporated in permanent legislation. It is 627 also desirable that certain further changes, to which I shall refer, should be made, in order to bring the Government's insurance powers into line with present-day conditions.
The object of the 1939 Act, and of the present Bill, is to ensure that should hostilities occur, or even on the threat of hostilities, ships will not be held up or the trade of the country interfered with by lack of insurance facilities. The legislation is, therefore, so designed as to enable Her Majesty's Government to deal with emergency circumstances and, in such circumstances, to provide insurance cover which might not otherwise be available except perhaps at prohibitive premium rates. In peace time, of course, the ordinary facilities of the insurance market cater fully and most efficiently for the insurance needs of commerce. At this point I should like to give, on behalf of the Government, a most categorical assurance that the Government have no intention whatever of exercising the powers; to be conferred by the present Bill for the purpose of interfering in any way whatsoever with the legitimate interests and activities of the insurance market in peace time. That is a most important point, and I should like to emphasise it with all the power at my command.
The main provisions of the Bill will, in the first place, enable the Government to conclude reinsurance agreements in respect of ships, aircraft or their cargoes against war risks; and secondly, it will enable us to effect the direct insurance of ships, aircraft or their cargoes against war risks at any time when there are no other reasonable and adequate facilities available or against any risks, war or marine, in time of war or other hostilities. This is subject to the proviso—which is important—that risks other than war risks, that is to say, marine risks, may be covered by the Government only when this is necessary in the interests of the defence of the Realm or the efficient prosecution of any war or other hostilities in which this country may be involved. Your Lordships may think that this is giving the Government a wide latitude, and that, of course, is so; but I think that that fact must be accepted. The Bill also includes, as did the 1939 Act, a transitional provision for the payment of compensation in respect of cargoes which 628 might be at risk when moving between ships and warehouse, or vice versa, in the first few days of a war before there had been an opportunity to insure them with the Government Insurance Office. These risks are not insurable in the commercial insurance market, but when the Government Insurance Office is set up it will accept risks at an appropriate premium.
If I may sum up this matter at this point, I would say that in the main this Bill is a re-enactment of Part I of the 1939 Act, as amended during the war by Defence Regulations, and those provisions of Part III of the 1939 Act which related to the insurance of ships and cargoes; and on its enactment so much of the 1939 Act as dealt with ships and cargoes will be repealed. I should like to make clear what are the additional powers which we ask for in the Bill now before your Lordships. These are, first, to insure or reinsure aircraft; secondly, to enter into agreements in peace time to reinsure foreign ships against war risks when we are at war or involved in other hostilities; and thirdly, to insure goods moving between ship or aircraft and warehouse, or vice versa, at overseas ports.
As regards insurance or reinsurance of aircraft, it is desirable that the Government should have the power to insure or reinsure aircraft, because certain British civil aircraft may continue to operate commercially during a future war, and owing to the absence of market facilities it may become necessary for the Government to provide means for the insurance or reinsurance of such aircraft, particularly against war risk. There is also the possibility that certain foreign aircraft may be taken on charter during war for commercial purposes, or that, owing to the circumstances of the war, foreign aircraft may be based upon this country.
As regards power to enter into agreements in peace time, the 1939 Act authorised the insurance of foreign ships in war time, but it became necessary during the last war also to undertake the reinsurance of foreign ships, and the 1939 Act was amended in 1940 by Defence Regulation to make this possible. But even with this amendment the Government are not empowered to conclude in peace time any agreements with foreign countries for the insurance or reinsurance of their ships in 629 war time. It is, in our view, very desirable that the Government should be empowered to do this. In fact, a number of foreign Governments have indeed already approached us about the insurance or reinsurance of their ships against war risks in time of war, and it would clearly be an advantage if agreements could now be concluded so that they were available and could come into force as soon as any war or hostilities in which this country was involved occurred.
As regards the insurance of goods moving between ship or aircraft and warehouse, or vice versa, this is authorised by Section 2 of the 1939 Act, but it is authorised under that Act only in the United Kingdom, the Isle of Man and the Channel Islands. This power was taken because the insurance markets of the world have agreed not to cover goods on land against war risks. The market does not cover them until they are loaded on board a ship, and does not cover them after they have been discharged from the ship. In the absence of such cover, it is necessary for the Government to be able to afford the cover required and, having regard to the wider and lamentable range of modern warfare, it is obviously desirable that in future this cover should not be confined to the United Kingdom, the Isle of Man and the Channel Islands but should be given also to overseas countries. This power is accordingly taken in Clause 2 (1) (e) of the present Bill.
Before I close, I should like to draw your Lordships' attention to another change or modification that is made in this Bill. The 1939 Act, as amended by Defence Regulation, authorised insurance or reinsurance by the Government only against Queen's Enemy Risks—or, as it was in those days, King's Enemy Risks. But I have no doubt whatever that all your Lordships are perfectly well aware of the difference between "Queen's Enemy Risks" and "war risks." At the additional risk of fatiguing your Lordships, I will remind your Lordships that "Queen's Enemy Risks" are risks which are run when our country is at war with another State, which then becomes a "Queen's enemy." "War Risks" are much wider than "Queen's Enemy Risks," and they arise from other hostilities when countries other than our own are fighting; they include such things as 630 rebellion and civil war. In view of recent developments of the conditions under which our country might be involved in hostilities, though not technically at war, it has been deemed necessary throughout this Bill to refer not merely to "war" and "Queen's Enemy Risks," as were referred to in the 1939 Act, but to "war or other hostilities in which Her Majesty is engaged" and to "war risks." If the Government had had these powers at an earlier stage, they would have been able, if necessary, to afford cover in the kind of situation which now exists in Korea, where, although Her Majesty is still not technically at war, ships and aircraft are nevertheless subject to war risks, a kind of risk which would be rightly designated "Queen's Enemy Risks" if the Government were formally at war.
Lastly, I might make reference to the fact that the powers given to the Board of Trade under Part II of the 1939 Act to operate a scheme for the insurance against war risks of goods held for sale in this country (known as the "Commodity Insurance Scheme") are in no way affected by the present legislation. I hope your Lordships will agree that this is a necessary and prudent measure. It is, I feel, simply a matter of common sense, and I hope that your Lordships will give this Bill a Second Reading this afternoon. I beg to move.
§ Moved, That the Bill be now read 2a.—(The Earl of Birkenhead.)
§ 3.17 p.m.
§ LORD LUCAS OF CHILWORTH
My Lords, the noble Earl can rest assured that his Bill will have a tranquil passage, not only because of the charming and lucid manner in which he explained its complicated provisions to your Lordships, but also because the Bill had its birth in the Department at the time of the last Government. Therefore it can hardly be expected to be a bad Bill. I am not going to say very much except to note one thing, that the noble Earl was anxious to tell your Lordships—"to give a categorical assurance" I think, was the expression he used—that Her Majesty's Government did not intend to interfere in peace time with the ordinary course of business of the insurance market. What he meant to say, I suppose, was that, even though Her Majesty's Government have powers under this Bill, they do not intend to alter 631 the profit ratio of the insurance market in peace time. I can only add that I hope Her Majesty's Government will always be able to make a profit; in other words, that they will not be saddled with what I think is known in the City as the "dirty paper" after allowing all the good paper to go into other hands. We give this Bill our blessing, not only because we think it necessary but also because we agree with what the noble Earl has said. I sincerely hope that it will prove to be profitable for Her Majesty's Government in the future.
§ LORD PETHICK-LAWRENCE
My Lords, may I ask one question? Do I understand that no actual result follows from this Bill until the Government take steps to effect this insurance or reinsurance? In that case, what happens if a war comes along suddenly and there is an intervening period between the outbreak of the war or the hostilities, and insurance activity? If, on the other hand, it is a provision that is made before the war breaks out, then I would like to know at what time the premiums will begin to be paid.
§ THE EARL OF BIRKENHEAD
My Lords, I think the whole object of this measure is to attempt to anticipate the kind of trouble that the noble Lord envisages. I explained that as well as I could. The whole object of this Bill is to clean up the intervening difficulties to which the noble Lord refers, in order to be ready, immediately hostilities occur, to start our insurance. That is what I meant.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.