HL Deb 10 March 1986 vol 472 cc400-2

3 p.m.

Lord Williams of Elvel

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they are satisfied with the current state of negotiations on the international tin crisis.

Lord Lucas of Chilworth

My Lords, the Government regret that the protracted negotiations between the International Tin Council and its bank and broker creditors broke down last week. It seems unlikely that a settlement can be reached which would secure a return to orderly trading in tin, although, if a substantial number of other ITC countries were willing to make a new effort, the United Kingdom would, of course, be willing to join in the discussions.

Lord Williams of Elvel

My Lords, I am grateful to the noble Lord for his response. I am sure that the whole House will deplore the inability of the members of the International Tin Council to live up fully to their obligations. However, is it not the case that the Bank of England informed the noble Lord's department many months before the crisis broke that the Tin Council's position was becoming untenable, and that his department did nothing about it? What legal advice have the Government received on whether the obligations of the signatories to the tin agreement are joint and several or only several, in the sense that if it is joint and several we shall be liable for all the obligations of the international tin agreement?

Lord Lucas of Chilworth

My Lords, it is true that the Bank of England—and, indeed, the Department of Trade and Industry—were becoming increasingly worried about the position in tin some months before October of last year, when the arrangements broke down. With regard to the legal advice received, I do not think that the noble Lord, Lord Williams, would expect me to describe in any form at all the advice which my department has had with regard to the position of the United Kingdom Government in so far as their obligations to the ITC are concerned. A number of authoritative persons have given different views as to where the legal responsibility may lie, whether in the United Kingdom courts or, since the arrangement is under a treaty through the United Nations, in the international courts.

Lord Campbell of Alloway

My Lords, could my noble friend say, if the crisis is not soon resolved, what is to happen to the tin mining industry in Wales in relation to the negotiations to resolve the crisis?

Noble Lords


Lord Lucas of Chilworth

My Lords, I am quite sure that my noble friend is as worried as we are as to the position for the tin mining companies—I think in fact that he meant in Cornwall. What I can say to your Lordships this afternoon is that we look very sympathetically at the problem which is about to arise in Cornwall in the event of there being no orderly return to the marketing of tin, and would want to pay proper and urgent regard to any representations the tin mining interest in Cornwall would make to us.

Lord Bruce-Gardyne

My Lords, is the moral of this affair that it is OK for sovereign governments to renege upon their debts provided they are sufficiently rich and belong to the northern hemisphere?

Lord Lucas of Chilworth

My Lords, I do not think that my noble friend would expect me to answer questions on morality.

Lord Bruce of Donington

My Lords, while conceding that the philosophy of the noble Lord in that matter occasioned some surprise, may we take it from him that the United Kingdom, for its part, is prepared to honour its obligations so far as the Tin Council is concerned? Is it not also a fact that other Governments are declining to honour their obligations? Therefore, what further steps do Her Majesty's Government propose to take before they declare certain countries to be in default—a term which in another context might have disastrous consequences for the monetary system of many of those Governments were the same philosophy adopted by the Governments of the developing countries who are seriously in debt to bankers?

Lord Lucas of Chilworth

My Lords, I am able to confirm that Her Majesty's Government have behaved with leadership and honour in this matter in that we have from the outset—that is, from October of last year—said that we are prepared to meet our obligations, which amounted to 4 per cent., and that during the course of negotiations have offered a further £50 million of taxpayers' money to help a return to orderly trading. That some other countries have not seen fit to honour, as we see it, their obligations and have allowed the tin market to collapse is, I believe, quite regrettable.

The full effects upon some of the developing countries have yet to be ascertained. We believe that there will be a number of questions to be asked and a number of problems to be resolved on the wider issues that the question of the noble Lord envisages.

Lord Morris

My Lords, would my noble friend agree that one of the major moral and legal responsibilities of any Government—this Government in particular in the context of this question—is as trustee of taxpayers' funds and that they should not throw the taxpayers' funds towards a state of affairs which resulted from overheated and ill-informed speculation?

Lord Lucas of Chilworth

My Lords, I do not think that this was a question of overheating or speculation. However, I agree with my noble friend that there comes a limit when the Government, on behalf of the taxpayers, have to call a halt. We believe that the offer we made of £50 million, which would have represented the vast bulk of the net consumer countries' indebtedness to the ITC, was a very significant and important offer. It is disappointing to us that other countries could not come alongside and meet their obligations and add anything more towards the return to orderly trading rather than to the express position of the ITC.

Lord Bauer

My Lords, can the noble Lord the Minister please confirm that in dealing with this crisis and its aftermath the Government will bear in mind that it arose out of the operations of a state supported cartel which moreover have benefited primarily relatively well-to-do people at the expense of the poor?

Lord Lucas of Chilworth

My Lords, I do not know that I can go totally along with the noble Lord. I think in more simple terms what I would say consistent with Government policy is that an artificial interference in the market place, where 22 different nations are concerned and where their manager is in the difficult position of having to meet his obligations to the member countries, on the one hand, and, on the other, to deal with a certain amount of secrecy in the deals that he does so that none of the 22 countries can take advantage, poses great difficulties. Had the market forces been able to prevail then I doubt very much whether the current position would have occurred.

Lord Williams of Elvel

My Lords, can I press the noble Lord a little further for an answer to my supplementary question on the matter of the legal advice that the Government are receiving? The sums of money involved are enormous—£400 million immediate debts and possibly £4 billion in terms of compensation. Is the noble Lord aware that banks are claiming that the obligation of signatories under this agreement is joint and several? It does not matter which jurisdiction we are talking about: it will be fought in whatever jurisdiction is convenient to the banks. What legal advice are the Government receiving on this matter?

Lord Lucas of Chilworth

My Lords, I am afraid that the noble Lord, Lord Williams, will not get very much more out of me than I have answered already. He mentioned a number of figures on which I am not prepared to comment. Those are his views. It is not the practice of the Government to divulge the advice that they receive in regard to legal matters. It would not be my intention this afternoon to do that, either. It is sufficient to say that we are receiving advice and that it is being evaluated.

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