HL Deb 27 April 1971 vol 317 cc1077-87

3.44 p.m.

THE LORD CHANCELLOR (LORD HAILSHAM OF ST. MARYLEBONE)

My Lords, I beg to repeat, by leave of the House, a Statement which is being made by my right honourable friend the Prime Minister in another place about certain matters relating to the Vehicle and General Insurance Company. The Statement is as follows:

"As the House will be aware, my right honourable and learned friend the Attorney General received this morning a final report from the Metropolitan Police of their investigation into the unauthorised disclosure of information from the Department of Trade and Industry in respect of the affairs of the Company.

"After consideration of all the evidence at present available, and after consultation with the Deputy Director of Public Prosecutions and Treasury Prosecuting Counsel, the Attorney General has decided not to institute any criminal proceedings under Section 2 of the Official Secrets Act 1911.

"This decision having been taken, the Government have concluded that it would be in the public interest that a Tribunal should be established under the Tribunals of Inquiry (Evidence) Act 1921 to inquire into wider issues in relation to the circumstances leading up to the cessation of trading by the Vehicle and General Insurance Company Limited—namely:

  1. (a) Whether, and if so by whom, the contents of certain documents or other information in the possession of the Department of Trade and Industry relating to the affairs of the company or any of its subsidiaries were improperly disclosed or obtained between November 4 and 18, 1970, and whether, should this be shown to be the case, any use was made of such information for the purpose of private advantage.
  2. (b) Whether there was negligence or misconduct by persons in the service of the Crown directly or indirectly responsible for the discharge, in relation to those companies, of functions under the Insurance Companies Acts, 1958– 67.
  3. (c) Whether there is any evidence that the interests of policy holders or shareholders of those companies were adversely affected as a result of any impropriety, negligence or misconduct found to have occurred.
"The necessary Resolution for this purpose will be tabled today; and the House will be asked to approve it tomorrow."

My Lords, that concludes the Statement which my right honourable friend has made.

3.48 p.m.

LORD SHACKLETON

My Lords, we are grateful lo the noble and learned Lord for repeating that extremely serious Statement. As usual, unfortunately, we have had very little time to consider it, though there may be opportunities when the Resolution comes before the House. I am personally pleased, and I think that other noble Lords will be pleased that apparently no criminal action has been committed by a civil servant. Of course, the discretions under Section 2 of the Official Secrets Act and the decision the Attorney General has to take are difficult ones. But this in no way minimises the seriousness of what has happened, and I should like to ask the noble and learned Lord one or two questions.

I notice in relation to the first part of the Inquiry that the Statement says: Whether, and if so by whom, the contents of certain documents or other information…were improperly disclosed…between 4 and 18 November". No doubt the Government regard this as the appropriate period. But as there are so many rumours, I would ask the noble and learned Lord (and we may wish to pursue this further) whether the Government ought not to widen the period so that there is no restriction on the Tribunal. I am not clear whether these words provide for a restriction upon the Tribunal, and it would be helpful if the noble and learned Lord could say so.

A further aspect of the Inquiry is to see whether there was negligence or misconduct in relation to those companies under the Insurance Acts and whether the interests of policy holders have been adversely affected. I take it that this part of the Inquiry is not confined to this rather short period. I understand that there have been rumours, and there is reason to believe that there were doubts about this company over a much longer period.

A particular point, which no doubt will be pursued in another place but which I think most of us would be reluctant to do here, is the possibility of Ministers themselves coming before the Tribunal. I take it that the Secretary of State and other Ministers who are involved will be called, because they are concerned in this and it is in their own interests that they should be able to give evidence. There are of course other inquiries going on. I do not know what happens now to the Companies Act investigation: I suppose it goes on. There is great concern that commercial secrets in the possession of the Government, which are normally so scrupulously protected, should continue to be protected. Clearly this will be ruthlessly investigated.

I should like to ask also whether, in setting up the Tribunal, the Government are doing so in full knowledge of and in accordance with the recommendations of the Salmon Commission on Tribunals and Inquiries, where certain definite criteria and views were laid down It would help us if the noble and learned Lord could answer that.

Finally, I should like to ask if the noble and learned Lord is aware that there is a full report of the Government's policy in this matter in the evening papers, and whether this represents another leak. We are grateful to Ministers who repeat Statements in your Lordships' House, but whether this is necessary if they can be read in evening papers is open to doubt I would, in particular, draw attention to the fact that there is an actual quotation from this Statement: After consideration of all the evidence at present available and after consultation and so on, the Attorney General decided not to institute any criminal proceedings …. This is in the Statement. I hope that we do not need another tribunal to look into this. I have thought that this Government were perhaps doing better than the Previous Government in keeping Cabinet secrets, but it appears that they are not, unless there has been some official briefing, which I think is equally objectionable from the standpoint of Parliament.

THE LORD CHANCELLOR

My Lords, I think eight questions have been asked, and if the noble Lord, Lord Byers, can wait until I have dealt with them, it might be for the convenience of my memory. To deal first with the last point, the noble Lord is, I think, pursuing a false hare. I understand that what happened was that the Attorney General issued to the Press, more or less in the terms of the quotation, a statement disclosing his intention not to prosecute, and the Prime Minister in another place simply followed the lines of that statement in informing the House and explaining exactly why the Tribunal of Inquiry was being set up. If I am misinformed, no doubt I shall be corrected. That is my understanding of the matter. I do not think there is anything in it.

Secondly, the noble Lord began by saying that no offence had been committed by civil servants. That may be more than we know. What the Attorney General has decided is that he does not think it right to institute proceedings under the Official Secrets Act, Section 2. Obviously it will be for the Tribunal, when it is set up, to investigate, and perhaps then we shall know more than we do now. So far as I know, there is no particular desire to limit the Inquiry as regards dates. As I understand it, November 4 is the earliest and November 18 is the latest date at which the disclosure could have been made. Certainly the other parts of the terms of reference are not limited by the same period.

The Companies Act investigation will of course go on quite independently of this, and has a different subject matter. Obviously we shall be considering any recommendations that the Tribunal make, if any, about the preservation of commercial secrets. Hitherto we have been pursuing the same rules as were laid down by the previous Administration. The Inquiry will of course have before it any evidence that it considers available. Neither Ministers nor former Ministers are exempt from the terms of reference.

As regards the Salmon Report there are a number of recommendations in that Report. I think that all except one were pursued in the Aberfan Inquiry, which, speaking again from memory, is the only Tribunal to be set up since the Salmon Report, and no doubt this will be followed or closely adhered to by whoever is the Chairman of the Inquiry.

I think that covers the eight questions that I was asked. If the noble Lord, Lord Shackleton, wants to come back again, perhaps he will do so after the noble Lord, Lord Byers, has put his questions.

LORD BYERS

My Lords, I have no intention of taxing the noble and learned Lord on the Woolsack. I think, in the circumstances, that the Government have taken the proper action, and I commend them for doing it. However, I should like to endorse what the noble Lord, Lord Shackleton, said. I hope that in future we shall not have statements issued to the Press by Ministers before both Houses of Parliament are properly informed. This is a practice which is creeping in. and I think it is up to us to protest every time that we can. Having said that, I only want to ask the noble and learned Lord whether he has any idea when the Chairman of the Tribunal might be named, and when the Tribunal might be ready to start work.

THE LORD CHANCELLOR

My Lords, first of all, I think that the noble Lord is still under a misapprehension. The Attorney General, in coming to a conclusion whether or not to prosecute, is a figure independent of his colleagues. He is not acting as a Minister of the Crown; he is a quasi-judicial person deciding whether or not to institute proceedings. He announced his intention, I think, earlier than the time of the statement. The Prime Minister, as the noble Lord will see when he comes to look at my repetition of his Statement, simply repeated the conclusion to which the Attorney General had come. When the noble Lord, Lord Shackleton, referred to the evening papers, which I have not seen, my belief is—though I could not say this without having studied the papers—that what he was reading from his evening paper was the Attorney General's announcement of this conclusion in the matter of prosecution, which is not properly reported to the House in that form. That is the first point.

On the second point, I think previous precedents indicate that the two Houses approve a Resolution to set up the Tribunal, and the Home Secretary formally appoints, usually the following day. I do not anticipate that there will be a lack of suitable persons who can be appointed: and I would look to a judge and perhaps to a Tribunal formed on previous models as the most probable form that it would take.

As regards the question of dates, which was the third question, the noble Lord will remember that the Salmon Inquiry insisted upon a delay. This was to give persons who might be affected by the hearing before the Tribunal a chance to instruct solicitors and counsel and to prepare their case. I cannot say what the delay will be, or if there will be one, but I imagine that the Chairman of the Tribunal would read the Salmon recommendation and pursue it to the degree which would be necessary to see that injustice is not done. I cannot therefore give a positive answer on that this afternoon.

4.0 p.m.

LORD BROWN

My Lords, I have two questions that I should like to ask. If the affairs of the Tribunal are to be limited to events subsequent to November 4, I would draw the attention of the House to strong rumours—no more than that—that recommendations were made long before November 4 to the Minister of Trade and Industry about the advisability of investigating the affairs of this insurance company. I should like to ask whether such investigations as to previous recommendations by officials can be explored by the Tribunal. The second question is: will the Tribunal be able to investigate whether or not directions were given to the Secretary of State for Trade and Industry by the Cabinet, or other members of the Government, seeking to delay intervention in this insurance company on the grounds of interventionist policy?

4.0 p.m.

THE LORD CHANCELLOR

My Lords, I am not sure that I understand the last point. I cannot relate it immediately to the terms of reference that I have read out. So far as the Tribunal's terms of reference are concerned, they are the widest possible, but they have relation to the fact which has been ascertained to the extent of prima facie that there was an unauthorised disclosure of a document, or documents. As the noble Lord is aware, the company's affairs are under scrutiny by investigation under Section 165, and at least one Member of Parliament has submitted the earlier part of the story of the Vehicle and General Company, in so far as its relations with the Department are concerned, to the Parliamentary Commissioner. What the Parliamentary Commissioner will do in relation to his own inquiry when he sees the terms of reference of the Tribunal I cannot yet say. What is clear is that he has the widest possible scope for investigation, and so have the Tribunal within the limits of the general question which they are asked to investigate to the full.

LORD BALOGH

My Lords, may I ask two more questions of the noble and learned Lord? First, will it be a public Tribunal? Secondly, does the noble and learned Lord realise that the disclosure, however obnoxious, is really a minor matter? The major matter is the lack of up-to-date control over financial institutions, including insurance companies, in this country. Does he not think that an inquiry should be carried out into the organisation of the machinery of Government, especially into the new monster Department which contains the Ministry of Power and Technology and the Board of Trade? Then perhaps it would be possible in future to avoid these disagreeable disclosures and the very grievous losses to the public.

THE LORD CHANCELLOR

My Lords, in answer to the first question. I would say that the noble Lord will recollect that the Act of 1921 provides for public hearings and the inquiry must therefore be in public. In security matters there is discretion, but there is no question of national security here, as I understand it. Therefore there will be public hearings. On the second matter, if the Tribunal comes to the conclusion that the noble Lord is right, no doubt it will say so, and no doubt it will make recommendations to which we shall pay careful attention. The question which he raised about the machinery of Government, or the lack of control of financial organisation, is at first sight a question of policy for Parliament rather than a question for investigation by the Tribunal. What has given rise to the setting up of the Tribunal is an allegation which appears to have some substance that there was improper disclosure of information. The Tribunal is the proper vehicle for making that inquiry, and questions of policy are better pursued in the House.

LORD BALOGH

My Lords, may I follow up this point? Obviously the noble and learned Lord is under a misapprehension. I was asking whether the appointment of a Tribunal is, in the noble and learned Lord's opinion, an adequate measure, and whether it ought not to be followed by an inquiry into the organisation of financial institutions. Does he realise that this country is probably the only one which has, for instance, no legal regulation on the investments of insurance companies? In all other countries there is such a regulation. This is a problem which needs to be investigated urgently.

THE LORD CHANCELLOR

My Lords, I am sorry if I in any way misunderstood what the noble Lord said, but I am not sure that I did so. I still think that what he is arguing is a question of policy which is best pursued in Parliament and which is independent of the subject matter of this Statement. I am far from saying that the law regarding insurance companies, or the organisation of insurance companies, is perfect, but it is just the type of example where Parliament is the grand inquest of the nation.

LORD GARDINER

My Lords, may I raise two questions? First, as it is known that there were complaints about this company in October, and as the object of the Tribunal is to ascertain the facts, is it not unusual to limit them to such a narrow period of dates so that they will not be able to inquire into anything outside those dates? Secondly, will the noble and learned Lord the Lord Chancellor consider the position of the Attorney General? I think we will find that in the past wherever a Tribunal has been assisted by an independent nonpolitical counsel no trouble has arisen, but wherever a Minister may be concerned, and the Tribunal has been assisted by the Attorney General, it has never been possible for the public, however impartial he may be, to believe that he can really be impartial, particularly if he has to cross-examine his own colleague.

THE LORD CHANCELLOR

My Lords, as regards the dates, I think the noble and learned Lord is mistaken in thinking that the Tribunal is limited in its inquiry as to the facts regarding dates. The only limitation as to date is in relation to paragraph (a) of the terms of reference which I read out, where the dates refer to the definite allegation of disclosure of information which has been confirmed. Obviously the Tribunal has the widest possible rights of inquiry in relation to paragraphs (b) and (c), and also anything which is material to paragraph (a) which may have occurred before.

As regards the second point, I do not recollect (perhaps the noble and learned Lord does) an occasion when the Attorney General has not appeared on behalf of the Crown in such an inquiry. The Salmon Commission recommended against it, so far as I remember, and then the Aberfan Inquiry took place. The then Attorney General, Sir Elwyn Jones, was expressly invited to participate by the Chairman of the Tribunal, who took a view different from that of the Salmon Inquiry. I imagine that my right honourable and learned friend will wish to consult with the Chairman of the Tribunal, when appointed, because he would wish to place himself at the service of the Tribunal, although he must be well aware of any possible embarrassment of the kind to which the noble and learned Lord refers. It would be premature as yet to pronounce upon it.

4.8 p.m.

LORD SHACKLETON

My Lords, I do not wish to prolong this discussion, but this matter is important and it is the duty of Parliament to see that it is dealt with correctly. I do not find myself in disagreement with the general points made by the noble and learned Lord the Lord Chancellor. But while granting his point in regard to the Attorney General's independence, I think the fact is that the whole of the Government's decision was recorded; the only difference was that there was not a quote from it, as there was from the Attorney General's statement. This is a matter which should be looked at further. Secondly, I assume, and the noble and learned Lord the Lord Chancellor may not wish to comment fur-there on this point, because he has made the position clear, that the organisation of Departments is a matter for Parliament. But, none the less, Lord Balogh's point is valid, and it may well be that after the Tribunal reports this is an issue which will need to be pursued further. I will say no more than that at this moment.

With regard to the statement by my noble and learned friend Lord Gardiner, those of us who remember the Lynskey Tribunal will know that it was a very distasteful affair and I regret that this Tribunal is going to be a distasteful affair. It is not an Inquiry—though we are right to have one—that we should welcome. It is in relation to this that I refer the noble and learned Lord to the Salmon Inquiry concerning which he said: We are of the opinion that the inquisitorial machinery should always be confined to matters of vital public importance concerning which there is something in the nature of a nationwide crisis of confidence. These are strong words. I do not necessarily disagree with them, and I take it that this is the reason why the Government have decided to proceed.

I would ask the noble and learned Lord this We have no doubt that the Attorney General will conduct this Inquiry, if he conducts it, as Sir Elwyn Jones and, before him, Sir Hartley Shawcross con-ducted such inquiries. But it is going to be an unpleasant business and I think my noble and learned friend's point is one which the noble and learned Lord the Lord Chancellor might wish to consider further. I do not ask him to comment on it any further now.

THE LORD CHANCELLOR

My Lords, I am grateful to the noble Lord. It is not really a matter for me to consider as such, though no doubt, as I indicated to the House, the matter is very clearly in the mind of my right honourable and learned friend. I told him the course that my right honourable and learned friend was likely to pursue; that is to say, that he will consult the Chairman of the Tribunal when appointed. I do not know why the noble Lord should assume that the matter will necessarily be distasteful, or why he should draw any analogy with the Lynskey affair, which so far as I remember reflected the improper receipt of gifts by a Minister of the Crown. It was a totally different kind of thing. I do not think we should prejudge what facts are likely to emerge, or we might become deflated in the course of events. I do not want to comment further on the newspaper affair because, as I said, I have not read the report. I gave what I believe to be the true explanation, but if I am wrong in any way I shall of course cat the necessary portion of humble pie.

LORD SHACKLETON

My Lords, I have been trying to pursue a helpful line in this matter. I entirely agree that this is a different basis. None the less, serious allegations, at least of incompetence or failure to take the right decision, have been made; and I, for one, do not like seeing a Minister of the Crown being cross-examined by one of his colleagues. It is as simple as that.