§ 3.52 p.m.
§ LORD SHEPHERDMy Lords, perhaps with your Lordships' permission, this may be a convenient time to answer the Private Notice Question which the noble Lord, Lord Erroll of Hale, asked earlier this afternoon. May I remind your Lordships of the Question?
§ "To ask Her Majesty's Government whether they are aware that Lloyd's of London and the British insurance companies are not now being allowed to pay on claims arising in Rhodesia and if they will make a statement on this aspect of Government economic controls?"
839§ The reply given by my right honourable friend the Chancellor of the Exchequer is as follows:
§ "Yes, this is one of the types of contractual payments for which permission has been refused since December 1 of this year."
§ LORD ERROLL OF HALEMy Lords, may I thank the noble Lord for responding so promptly to my Private Notice Question, though I cannot say that the Answer gives me any cause for satisfaction? Do the Government realise that British insurance has a world-wide reputation for prompt payment and that overseas premiums make an important contribution to British invisible earnings? Has Her Majesty's Government taken into account that this petty restriction will do far more harm to British insurance in the eyes of the world than to the unfortunate Rhodesian claimants? In view of the Government's noble gesture in reversing their policy in the payment of pensions to Rhodesian pensioners, could the noble Lord urge Her Majesty's Government, and will they be prepared to consider what I am about to say, to at least allow payments to be made in cases of hardship, such as when life policies mature and when an unfortunate insurer has lost his house through fire or some other cause?
§ LORD SHEPHERDMy Lords, I certainly share the view of the noble Lord as to the reputation of British insurance and its benefits to this country in the balance of payments. I think the noble Lord will agree that very special circumstances are involved. The Government have taken the view that we must deny sterling to Rhodesia as part of our economic and financial measures. I think I should make it clear that contractual obligations are in no way involved. It is merely that payments cannot be made.
§ LORD ERROLL OF HALEMy Lords, will the noble Lord at least allow himself to make the statement that Her Majesty's Government will consider hardship cases?
§ LORD SHEPHERDMy Lords, in regard to that, the noble Lord will remember that in the original Treasury statement of December 1 the words "in general" were included in the paragraph dealing with restrictions on payment. Per- 840 haps I should say to the noble Lord that my right honourable friend is seeing to-morrow the chairmen of the two organisations mentioned in the question. I think it would be wrong for me to say anything which would affect that discussion.
§ VISCOUNT STUART OF FINDHORNMy Lords, confessing my interest in one of the insurance companies, may I say that this to all appearances is a complete breach of contract? Many of these undertakings by insurance companies were made years ago—at any rate, so long as they were made before independence was declared, it seems to me to be a breach of contract.
§ LORD SHEPHERDMy Lords, there is no question of breach of contract. The obligation of the companies to their clients in Rhodesia remains. However, it is a question of the Government's decision under the Exchange Control Act 1947, and part of their policy, which I thought had wide support in your Lordships' House, to bring Southern Rhodesia back to constitutional Government within the Commonwealth, is to apply these measures, which have been adopted with the greatest possible reluctance.
§ VISCOUNT STUART OF FINDHORNMy Lords, obviously the obligations remain; but if we are not allowed to pay we cannot fulfil our obligations.
§ LORD SHEPHERDMy Lords, payments will be made as soon as Southern Rhodesia returns to constitutional government within the Commonwealth.
§ LORD CONESFORDMy Lords, do not Her Majesty's Government realise that this particular action is taken, not against the purported Government with which Her Majesty's Government say they have a quarrel, but against private individuals who have contracts with legal persons in this country? This frustration of a contract seems to be exactly the same as it would be if there were war at this present moment between this country and Rhodesia. Is it really the desire of Her Majesty's Government that that should be the legal position and that all contracts should be frustrated in exactly that way?
§ LORD SHEPHERDMy Lords, perhaps the noble Lord, Lord Conesford, will remember the words I used when 841 speaking in a recent debate on this subject: that we had to bring it home to the peoples of Rhodesia—because all are going to be involved in sanctions, whether black or white, industrialists or farmers, or merely farm labourers—that there is no future for Rhodesia outside the Commonwealth and under an illegal régime. I should have thought that that was clear. Certainly it is the Government's policy. I recognise that these measures have to be lodged against individuals, but the noble Lord will appreciate, I am sure, that at this moment of growing tension, any retraction by Her Majesty's Government in applying sanctions, which have the long-term aim of bringing Rhodesia back to the Commonwealth, would have disastrous consequences to peace, not only in Africa but throughout the world.
§ LORD CONESFORDMy Lords, may I ask one further supplementary question? The noble Lord said that his right honourable friend would be meeting the insurance interests to-morrow. Do I understand from that that there was no consultation with Lloyd's and the insurance interests before Her Majesty's Government took a step which might have such great consequences on the permanent interests of this country?
§ LORD SHEPHERDMy Lords, I could not answer that without notice. This measure was all part and parcel of other actions taken, such as in regard to dividends, interest and the like. But I could not specifically answer the question now put to me.
§ LORD AIREDALEMy Lords, surely the proper interim measure would be first to open an account with the Bank of England into which British insurance companies and Lloyd's may pay monies which they admit are due from them to residents in Rhodesia, and the money should stay in the account until such time as it is possible to transfer it to the people to whom it is due. Otherwise it will start to be said all over the world that British insurance companies and Lloyd's are being enabled to escape from their admitted liabilities and to retain monies which they admit are due to people in Rhodesia.
§ LORD SHEPHERDMy Lords, I certainly take the point the noble Lord has made, but I would not accept what 842 I think was the reflection implied in the question: that the British insurance companies would use the particular circumstances to default in their responsibility to people in Rhodesia.
§ LORD AIREDALEOf course not. But there will be people in parts of the world who will start saying this.
§ THE LORD PRIVY SEAL (THE EARL OF LONGFORD)My Lords, the observations of noble Lords are becoming less and less interrogative. This is not the first one that has failed to be interrogative. I hope that noble Lords will preserve some semblance of the interrogative form.
§ VISCOUNT BRENTFORDMy Lords, is it not the utmost casuistry on the part of Her Majesty's Government to claim that the contracts of insurance are still perfectly effective and in existence, when at the same time they preclude the implementation of these contracts by making these regulations with regard to currency transactions?
§ LORD SHEPHERDMy Lords, I gather that that was a statement.
§ LORD SHEPHERDIf that is the case, could the noble Viscount repeat it in the form of a question?
§ VISCOUNT BRENTFORDMy Lords, I did put it in the form of a question. Is it not in the opinion of the Government the utmost casuistry for them first of all to claim that the contracts of insurance are effective, and at the same time to preclude their implementation by passing these currency regulations?
§ LORD SHEPHERDMy Lords, the contracts are still effective, and the obligation remains, but, as with the question of interest, dividends and other forms of payment, for the time being and in the present circumstances we have had to deny payment to Rhodesia.
§ LORD COLERAINEMy Lords, as a director of an insurance company that has policy-holders in Southern Rhodesia, as, I suppose, in most parts of the world, may I ask the noble Lord this question? He said it was impossible for the Government to retract. Why cannot they retract on this matter, as they did on Government pensions? Are not the cases 843 in some respects parallel? Is the noble Lord aware, for example (well, he cannot be aware) that there came to my notice this morning the case of a policyholder who died in Rhodesia within the last few days? It is impossible to pay to that policy-holder's estate what is due to it. I do not know the case in detail. It may be a case of tremendous hardship. Is not this exactly in parallel with the Government's pensions prohibition, on which the Government retracted; and can they not retract here?
§ LORD SHEPHERDMy Lords, on grounds of hardship—and the noble Lord, Lord Erroll of Hale, referred to this, I think, in his first supplementary—I indicated that the Chancellor of the Exchequer was going to have discussions with the chairmen of the two organisations concerned. With regard to pensions (and I should not have thought that pensions was in the same category as insurance), we did not retract. We took into account the humanitarian considerations which we said all along would be taken into consideration, and we made our decision: and I think it was the right decision.
§ LORD CITRINEMy Lords, is it not a fact that, in substance, we are in a state of economic war with Rhodesia? Is it not a fact that the principle of sanctions was unanimously agreed, or, at all events, authoritatively agreed, between the Opposition and the Government some weeks ago?
§ LORD CITRINEIs it not a fact that there has been a constant attempt on the part of some members of the Opposition to weaken the operation of those sanctions at a time when we are being urged by world opinion to make them still more severe and effective?
§ LORD SHEPHERDMy Lords, I think I can perhaps best reply to the question that has been asked by my noble friend by saying that responsible Members—responsible, that is, in the sense of having to decide what is the right policy for the Government and for the Opposition—have realised that there was a choice either of military force or of economic sanctions to deal with the situation in Southern Rhodesia. I think we have 844 rightly taken the view that we should use economic sanctions. As I said in the debate the other day, if economic sanctions fail, then the responsibility for Rhodesia will fall from our hands, and the dangers to Southern Rhodesia and to the world will increase.
§ LORD COLERAINEMy Lords, is it not—
§ THE EARL OF LONGFORDMy Lords, I am sure that there must come a moment when the House will feel that we have given this a good enough airing for to-day. I venture, with great deference, to suggest that that time has arisen.